Bridge Report Iriso Electronics Co., Ltd. (6908)

Transcription

1 Bridge Report Iriso Electronics Co., Ltd. (6908) Company Iriso Electronics Co., Ltd. Code No Exchange JASDAQ Chairman Sadao Sato President Toshiyuki Imazu Headquarters , Shinyokohama, Kohoku-ku, Yokohama, Kanagawa Sadao Sato Chairman Toshiyuki Imazu President Business Description Mid tier manufacturer of connectors, with main product applications in automobile, industrial equipment, digital consumer electronics realms. The bulk of products are custom manufactured. Year End March URL - Stock Information - Share Price Shares Outstanding Market Cap ROE(actual) Trading Unit 6,280 11,445,698 shares 71,878billion 16.1% 100 shares DPS(Est.) Dividend Yield(Est.) EPS(Est.) PER(Est.) BPS(actual) PBR(actual) % x 2, x * Share price as of close on November 28, Number of shares outstanding at end of the most recent quarter excluding treasury shares. - Earnings Trend - Fiscal Year Sales Operating Income Ordinary Income Net Income EPS DPS March ,138 2,008 1,767 1, March ,566 2,891 2,768 2, March ,722 2,760 2,660 1, March ,788 2,562 3,061 1, March ,838 5,635 6,233 4, March 2015 Est. 36,000 6,700 6,700 4, * Estimates are those of the Company This Bridge Report discusses the first half fiscal year March 2015 earnings results and full fiscal year March 2015 earnings estimates for IRISO ELECTRONICS CO., LTD. 1. Company Overview 2. First Half Fiscal Year March 2015 Earnings Overview 3. Fiscal Year March 2014 Earnings Estimates 4. Conclusions 1

2 Key Points Sales rose by 17.2% year-on-year to 18.1 billion during the first half of fiscal year March The main market of overseas in-vehicle components continued to trend favorably. Strength in consumer industrial applications and weakening of the yen helped to boost sales by double digits year-on-year to a record high for the first half. Higher sales, rationalization efforts, and the weaker yen helped to absorb lower sales pricing and higher labor and raw materials costs, allowing operating income to rise by 36.0% year-on-year to 3.4 billion. Fiscal year March 2015 earnings estimates have been revised upwards and call for sales to rise by 9.6% year-on-year to 36.0 billion, a 1.0 billion upward revision. However, this upward revision reflects an actual downwards revision to the second half sales of 1.0 billion given Iriso Electronics initial estimates for first and second half sales of 17.0 and 18.0 billion respectively. This revision is attributed to changes in production output by Japanese automobile manufacturers in the China and Korea regions, and front loading of applications for game equipment into the first half. However, development of traditional connectors used in drive trains and safety applications is being conducted and Iriso maintains its position as the market leader. At the same time, the Company remains conscious of the need to establish new cornerstones of its business and is promoting efforts to establish new businesses outside of the in-vehicle components realm. The dividend payment is expected to remain unchanged at 40 per share, for a dividend payout ratio of 9.5%. While Iriso s share price has underperformed the JADAQ market since November, this appears to be the result of strong growth in the previous term overshadowing growth in profits called for in the current term. However, looking at the share price over the past two years shows that Iriso has outperformed the market by a large margin. Based upon the outlook for strong growth due to the installations of millimeter wave radar and cameras in nearly all cars in coming years, Iriso is expected to see a strong tailwind because of its position as the industry s leader in related parts. In the near term, Iriso s efforts to beat its second half estimates and to establish new business applications need to be watched closely. 1. Company Overview IRISO ELECTRONICS CO., LTD. develops, manufactures, and sells connectors used to connect circuit boards. Including the main products of Floating B to B connectors, all of IRISO s products boast of high value addition. 80% of the Company s sales are connectors to be installed in a vehicle and are provided to major Japanese and overseas automobile manufacturers. The growing diffusion of electric and hybrid vehicles and the subsequent increase in demand for connectors presents an opportunity for IRISO to expand its sales. IRISO took aggressive steps to enter overseas markets at an early stage, and now the bulk of both its sales and production are derived from overseas markets. <Corporate History> IRISO was established in 1966 by Sadao Sato, the current Chairman. Along with the diffusion of televisions and audio equipments, demand for connectors as a replacement for traditional soldering techniques grew rapidly because of their ability to make connection of wiring easier. In response to this increase in demand, IRISO developed and began manufacturing high value added pin products with its entry to the connector market. In the 1980s, IRISO also entered the market for in-vehicle components, currently its main product area, with high value added products including the B to B. This product s unique mechanism of absorbing off-center load was highly regarded and allowed it to acquire high market share. IRISO took aggressive steps to enter overseas markets at an early stage in response to the client requests. The company name IRISO is derived from IRISO Village, Iruma-gun, Saitama Prefecture (Currently known as Sayama City, Saitama Prefecture) where its very first customer was headquartered, so that the Company would always remember that very first customer. 2

3 1966 December Established IRISO ELECTRONICS CO., LTD. in Shimonumabe, Kawasaki-shi, Kanagawa 1977 September Developed pins with tapered leading edges for use as connectors and began production and sales 1978 December Established IRS (S) PTE. LTD. in Singapore for production and sales of pins and multiple pin connectors 1982 July Began production and sales of jumper connectors with switching function, and launched a full scale entry into the connector field 1985 February Began production and sales of board-to-board connectors to connect printed circuit boards 1993 June Established Shanghai IRISO ELECTRONICS CO., LTD. in Shanghai, China for the production and sales of pins and multiple pin connectors 1994 April Established IRISO U.S.A., INC. in Chicago, Illinois for the sale of pins and multiple pin connectors 1994 September Listed its shares on the Over-The -Counter Market with the Securities Dealers Association of Japan (Currently the Osaka Securities Exchange JASDAQ Market) 1996 January Established IRISO ELECTRONICS PHILIPPINES INC. in Cavite Economic Zone, Philippines 1996 January Acquired ISO 9001 certification 1999 October Established IRISO ELECTRONICS SINGAPORE PTE., LTD. in Tuas, Singapore 1999 November Established IRISO ELECTRONICS (HONG KONG) LIMITED (Operation of Hong Kong Sales Office transferred to new company) 2000 April Established IRISO ELECTRONICS EUROPE GMBH in Germany (Operation of Europe Sales Office and German Liaison Office transferred to new company) 2000 October Opened IRISO (Shanghai) Trading Co., Ltd. in Shanghai, China 2003 March Opened IRISO ELECTRONICS (THAILAND) LTD. in Bangkok, Thailand (Operation of Bangkok Representative Office transferred to new company) 2006 August Opened IRISO ELECTRONICS (HK) LTD. Taiwan Branch Office in Taiwan 2006 November Established IRISO ELECTRONICS VIETNAM CO., LTD. in Hanoi, Vietnam 2008 August Established IRISO Shanghai R&D Center Co., Ltd. in Shanghai, China 2010 December Established IRISO Electronics Co., Ltd. India Liaison Office in Bangalore, India <Management Motto> As a Bridge to the Future Respecting individual values, creating abundant value, and contributing to society <Business Description> <What is A Connector?> A connector refers to a part or an instrument that is used to connect circuit boards used in electronic circuit and optical communications applications. In circuit boards connected by soldering or pressed bonding, connections need to be cut at the time of decoupling and reattachment is very difficult. However when connectors are used, the connections can be easily decoupled and reattached repeatedly using simple tools. Consequently, connectors are now used in almost all electronic devices. 3

4 (Source: IRISO Website) The most representative connector manufactured by IRISO is the B to B Connector, which is a registered trademark (Board to board connector). B to B connector is a connector used to directly connect circuit boards that allow them to be connected in vertical, parallel, and horizontal connections. Some B to B connector products include products called Floating B to B with the unique capability developed by IRISO which enables the connecting portion to move several millimeters so that it can withstand strong impacts. Because normal fixed connectors do not allow for any movement, workers must take special care at the time of assembling connectors to sockets to ensure a proper fit is achieved, which leads to lower productivity. However, floating connectors allow for some movement in the assembly of connectors to sockets and enable smoother and easier assembly, thereby raising productivity. Furthermore in response to requests from customers to make both connectors and sockets movable to increase assembly productivity, IRISO has developed products where both the sockets and connector plugs are movable (Double floating). This also makes the connectors resistant to strong impacts, and raises the productivity of the assembly process by the clients. In addition, the ability for the connectors and sockets to move makes them extremely attractive in in-vehicle components where they can absorb shock and vibrations during driving. In addition to those mentioned above, some of the other product lineup applications are described below. FPC/ FFC Connectors Connectors developed for FPC (Flexible Printed Circuits) boards and FFC (Flexible Flat Cable) cable applications are connectors that can be locked into position with FPCs/FFCs using only slight pressure. I/F Connectors I/F is an acronym for interface, and I/F connectors is a term that describes connectors used to transmit signals between various equipment and are also called I/O (Input, output) connectors. They are used in car navigation, personal computers, and various other equipments to provide electricity, and audio and visual output signals. P/H P/H is a term used to describe the basic form of plug connectors housing pins formed by cutting and processing wire material (Electrical conductor) used in a wide variety of applications to connect internal parts of equipment (Circuit board connections). A side view of the P/H looks like a kenzan, or spiky frog, a devise used in Japanese flower arrangements to hold flowers in place. The female half of the connector is called the socket, and male half called plug. Compression Connectors Compression connectors use a spring to aid in the insertion and removal process, and they contribute to reduce space required by the connectors. They are used for connector used within cellular telephone applications, and cradles. 4

5 <Business Segment Trends> (Source: IRISO website, FY3/14 results) Sales ( mn) Share Main Usages Automobile 26, % Audio, Visual, Navigation 16, % Car audio, visual, navigation systems Electronics 10, % Car air conditioning, power windows, seat heaters, other electric components Consumer 5, % Digital cameras, cellular telephones, game equipment, LCD televisions Industrial % Factory automation, medical equipment Total 32, % IRISO Electronics main customers in the realm of in-vehicle components are the Tier 1 automobile parts manufacturers that supply parts and products directly to automobile manufacturers. Moreover, IRISO s products are installed in products of all the domestic automobile manufacturers and most of the major overseas automobile manufacturers. In the in-vehicle components realm, a large amount of the products are high value added products that are customized according to the specifications of customers. Furthermore, the automobile manufacturers require parts manufacturers to produce parts that live up to the highest quality and safety standards. The long track record of IRISO s products used in in-vehicle components with their early entry to the market is an evidence of the superiority of their products. In the future, the importance of electrical systems will increase along with the diffusion of electric vehicles (EV), hybrid vehicles (HV) and plug-in hybrid vehicles (PHV). Furthermore, in response to the need for even higher levels of product safety, the increase in the number of vehicles equipped with vehicle distance measuring millimeter wave radars and onboard cameras will contribute to dramatic growth in demand for electronics parts and connectors. And while numerous connectors in electronic parts are found in audio and visual, and navigation equipment used in automobiles, demand from new in-vehicle components including connectors for high voltage and output electronic parts for drive-train motors of hybrid and electric cars is expected to grow strongly and lead to expanded opportunities for IRISO. In the realm of consumer applications, general purpose products are common and their simplicity tends to increase pricing competition. While the industrial applications realm is still small relative to overall sales, the know-how and technology accumulated in the highly demanding in-vehicle components can be used to grow this business in the future. 5

6 <Future Sales and Production Strategies> As described in the corporate history section, a subsidiary was established in Singapore 12 years after IRISO was founded in 1978, marking the start of overseas production and sales. And while their track record was still not that strong at the time, IRISO was able to strengthen its relationships with its customers by making investments to expand its business in overseas markets along with them. As a result of these efforts, its overseas business steadily grew and also led to an expansion in its business with these customers within Japan. Based on the management know-how and track record established over the course of the Company s operation, a decision has been made to further fortify its overseas business in order to expand its overall business. Currently approximately 70% of sales and 80% of production derive from overseas. Furthermore the strategy for future sales and production is outlined below. Sales Strategy IRISO will further fortify the four pillars of its sales structure in Japan, Europe and North America, China, and ASEAN. IRISO currently stations engineers in both Germany and the United States, but will also station engineers in Korea and Singapore. Furthermore, facilities will eventually be established in South America, which is currently covered by the United States operations, India and other parts of the ASEAN region to capture growing demand from emerging countries. The Company will establish a sales structure that combines technology with its sales function. Another important issue is the need to hire and cultivate highly skilled local staff, and to exchange and train human resources on a global basis in order to expand transactions with local companies in overseas markets. Production Strategy Currently, the following four projects are being implemented. 1 Cost Reduction Project Fortify cost competitiveness 2 Business Continuity Plan Creation Project The Business Continuity Plan (BCP) is an action plan that is designed to limit the impact of various crises upon important business tasks and enables quick recovery and restart from interruptions due to unforeseen conditions to ensure the continuation of business operations, and will be created as a response to natural disasters and accidents. The BCP will be implemented at IRISO s four manufacturing plants in Ibaraki Prefecture, Shanghai, Vietnam, and the Philippines. 3 Vietnam Business Expansion Project The share of the production of the Vietnam Plant to be raised relative to the other three plants Maximize marginal profitability 4 Production Rationalization Project Review material costs and fixed expenses, in order to reduce cost structure Through these projects, IRISO seeks to secure competitiveness in manufacturing through the realization of cost reductions, maintain mass production structure by standardizing production quality levels, and improve credibility of manufacturing by eradicating customer complaints. <ROE Analysis> FY3/11 FY3/12 FY3/13 FY3/14 ROE (%) Net Income Margin (%) Total Asset Turnover Ratio (x) Leverage (x)

7 <Reference: ROE by Industry for TSE First and Second Sections, and Mothers Market> (%) FY2013 (4/11 ~3/12) FY2014 (4/12 ~ 3/13) All Industries (Ex. Finance) Manufacturing Non-Manufacturing 5, Electrical Equipment * Source: Tokyo Stock Exchange Website Summary of Earnings Digest by Listed Companies * Return on equity is an indicator that multiplies the fundamental elements of net income margin, by total asset turnover ratio by leverage. Iriso Electronics boasted of a high return on equity ratio of 16.1% during fiscal year March This high ROE has been achieved without booking large amounts of extraordinary income and is attributed to the Company s ability to maintain low levels of leverage and its improved profitability. Also, further increases in total asset turnover ratio (To over 1.0x levels) could contribute to further improvements in ROE. 2. First Half Fiscal Year March 2015 Earnings Results Overview (1) Consolidated Earnings 1H FY3/14 Share 1H FY3/15 Share YY Change Divergence from Initial Est. Sales 15, % 18, % +17.2% +6.7% Gross Income 5, % 6, % +22.9% - SG&A 2, % 3, % +11.5% - Operating Income 2, % 3, % +36.0% +22.0% Ordinary Income 2, % 3, % +20.2% +24.8% Net Income 2, % 2, % +24.2% +23.1% Foreign Exchange Rates, Average $97.99 円 円 $ 円 円 $95.00 円 円 * Figures quoted in the Divergence from Initial Estimates column for foreign exchange rates average are the average exchange rate forecast at the start of the term. Growth in Automobile and All Other Applications Lead to Double Digit Growth in Sales, Profits, Exceed Estimates Sales rose by 17.2% year-on-year to 18.1 billion during the first half. The main car applications market continued to trend strongly overseas, and strength in consumer industrial applications contributed to double digit growth in sales. Furthermore, the weaker yen also helped to boost sales to a new record high for the first half. Higher sales, rationalization efforts, and the weaker yen helped to absorb lower sales pricing and higher labor and raw materials costs, and allowed operating income to rise by 36.0% year-on-year to 3.4 billion. Sales Trends by Market Application (1H) 1H FY3/15 YY Change Share In-Vehicle Components 14, % 80.4% Audio, Visual, Navigation 8, % 48.5% Electronics 5, % 31.9% Consumer 2, % 16.2% Industrial % 3.4% Total 18, % 100.0% 7

8 Continued strength in in-vehicle components in the United States and Europe allowed overseas sales to rise by 20.3% year-on-year. Domestic sales also rose by 4.4% year-on-year. By product application realm, car audio, visual and navigation (AVN) clusters rose, along with safety-enhancing products including applications for cameras and millimeter wave radars. In the consumer market, sales of products for game applications launched last year trended favorably. At the same time, sales to other product applications declined slightly. In the industrial category, sales to industrial equipment applications expanded. Sales Trends by Market Application (2Q: Jul-Sep) 2Q FY3/15 YY Change Share In-Vehicle Components 7, % 80.0% Audio, Visual, Navigation 4, % 47.2% Electronics 3, % 32.8% Consumer 1, % 17.0% Industrial % 3.0% Total 9, % 100.0% Regional Sales Trend (2Q: Jul-Sep) 2Q FY3/15 YY Change Share Japan 1, % 19.0% China, Korea 2, % 32.3% Europe 1, % 17.6% Singapore % 9.7% United States 1, % 15.0% Thailand % 6.4% Total 9, % 100.0% Product Application Sales Trend (2Q: Jul-Sep) 2Q FY3/15 YY Change Share FPC 2, % 30.3% BtoB 3, % 39.5% P/H % 5.3% In-Vehicle Interface 1, % 17.6% Others % 7.3% Total 9, % 100.0% (2) Financial Conditions and Cash Flow Financial Conditions End FY3/14 End 2Q FY3/15 End FY3/14 End 2Q FY3/15 Current Assets 22,189 24,818 Current Liabilities 6,261 6,604 Cash, Equivalents 7,634 9,137 Payables 2,819 3,103 Receivables 8,434 9,362 ST Interest Bearing Liabilities Inventories 5,099 5,140 Noncurrent Liabilities 1,113 1,094 Noncurrent Assets 15,146 16,260 LT Interest Bearing Liabilities Tangible Noncurrent Assets 13,955 15,153 Total Liabilities 7,375 7,698 Intangible Noncurrent Assets Shareholders Equity 28,566 30,688 Investments, Other Assets Net Assets 29,960 33,379 Total Assets 37,336 41,078 Total Liabilities, Net Assets 37,336 41,078 Total Interest Bearing Liabilities

9 Equity Ratio 80.2% 81.1% Current assets rose by 2.6 billion from the end of the previous fiscal year on the back of increases in cash and equivalents and accounts receivables. Noncurrent and total assets also rose by 1.1 and 3.7 billion respectively over the same period. Current liabilities rose by 0.3 billion on the back of increases in accounts payables. At the same time, noncurrent liabilities declined by 19 million due in part to a drop in long term debt, and total liabilities rose by 0.3 billion. Net assets rose by 3.4 billion on the back of increases in retained earnings and foreign exchange translation provisional accounts. Consequently, equity ratio rose by 0.9% points from the end of the previous fiscal year to 81.1% at the end of the first half. Cash Flow 1H FY3/14 1H FY3/15 YY Change Operating CF 2,203 3,598 +1,395 Investing CF -1,130-1, Free CF 1,073 1, Financing CF -1, Cash, Equivalents 5,871 9,137 +3,266 The margin of net inflow of operating cash flow rose by 1.3 billion from the previous first half on the back of increases in profits. At the same time, acquisition of tangible noncurrent assets caused the net outflow of investing cash flow to expand by 609 million over the same period. Consequently, the margin of net inflow of free cash flow rose by 786 million. Total dividend payment increased by 0.2 billion, but a 0.7 billion reduction in short term debt contributed to 0.5 billion decline in the margin of net outflow in financing cash flow. Cash position rose by 3.2 billion from the end of the previous first half. (2) Capital Investment, Depreciation, Research and Development FY3/13 FY3/14 1H FY3/15 FY3/15 Est. Capital Investments 2,331 2,478 1,739 2,902 Depreciation 2,317 2,743 1,368 3,095 Research and Development (4) Response to Foreign Exchange Fluctuation Risk The total overseas assets subjected to the influence of foreign exchange fluctuations of Iriso in dollars and euros amounts to 12 million dollars and 14 million euros respectively. Based upon the foreign exchange rates shown below, a 78 million translation gain was seen on dollar based assets, a 39 million translation loss on euro based assets, and a 31 million translation loss arising from affiliated companies, for a net translation gain of 13 incurred at the non-operating income level. End 3/14 End 6/14 End 7/14 End 8/14 End 9/14 Compared with End 3/14 Yen / Dollar Yen / Euro (5) Foreign Exchange Rate Sensitivity (Unit: Million Yen) Currency Sales Impact Profit Impact USD Approx. 119 Approx. 49 EUR Approx. 46 Approx. 3 RMB Approx. 47 Approx. 15 * Because of the small unit of RMB (Chinese Yuan) currency, the sensitivity of the RMB versus the yen has been calculated in terms of every 0.1 change 9

10 The impact of a 1 change in the foreign exchange rate for the United States Dollar is 274 and 75 million in sales and operating income respectively (Full year basis). 3. Fiscal Year March 2015 Earnings Estimates (1) Consolidated Earnings FY3/14 Share FY3/15 Est. Share YY Change Divergence from Initial Est. Attainment Rates Sales % 36, % +9.6% +2.9% 50.4% Operating Income 5, % 6, % +18.9% +7.5% 50.9% Ordinary Income 6, % 6, % +7.5% +11.7% 51.2% Net Income 4, % 4, % +9.1% +6.7% 53.9% Foreign Exchange Rates, Average $ 円 円 $ 円 円 $95.00 円 円 * Figures quoted in the Divergence from Initial Estimates column for foreign exchange rates average are the average exchange rate forecast at the start of the term. Full-Year Earnings Estimates Revised Upward on Foreign Exchange Effect, Both Sales and Profits Expected to Rise Full year sales have been revised upwards by increase of 9.6% or 1.0 billion to 36.0 billion, along with a 0.47 billion upward revision to operating income estimate. However as indicated in the table below, initial estimates called for first and second half sales of 17.0 and 18.0 billion respectively, and the 1.0 billion upward revision to full year sales represents an effective downward revision of 1.0 billion to second half sales. The main points of a presentation given by President Toshiyuki Imazu are outlined below. Revisions to unit production numbers by Japanese automobile manufacturers at operations in China, Korea, Japan and Singapore, delays in mass production, and cancelation and delays of model changes are reasons for the shortfall of our plans. However, our business remained favorable in the United States and Europe. With regards to the favorable trend in automobile related AVN applications, the diffusion of display audio equipment (*) is contributing to changes in business trends and a subsequent slowing in business was encountered. However, development of traditional connectors used in drive trains and safety applications is being conducted and Iriso is able to maintain its position as the market leader. Iriso remains conscious of the need to establish other cornerstones of its business and is promoting efforts to establish new businesses while demand for in-vehicle components remains favorable. The dividend payment is expected to remain unchanged at 40 per share, for a dividend payout ratio of 9.5%. (*) Display audio equipment: Car audio equipment that uses touch panel screens. This equipment offers connectivity with smartphones and is capable of displaying car navigation, and other information on its screen, using the applications installed on the smartphone s side. Along with the diffusion of smartphones and the fortification of navigation functions, some expect that conventional car navigation system will be replaced by display audio equipment in the future. Initial, Revised Estimates by Market, Geographic Region Initial Estimate Revised Estimates Full Year 1H 2H Full Year 1H 2H Revised Sales 35,000 17,000 18,000 36,000 18,144 17,856 Operating Income 6,230 2,800 3,430 6,700 3,415 3,285 Ordinary Income 6,000 2,750 3,250 6,700 3,433 3,267 Net Income 4,500 2,100 2,400 4,800 2,585 2,215 10

11 Initial Estimate Revised Estimates Full Year 1H 2H Full Year 1H 2H Revised Automobile 28,518 13,790 14,728 29,606 14,597 15,009 Commercial 5,238 2,661 2,577 5,260 2,933 2,327 Industrial 1, , Domestic 7,362 3,497 3,865 7,133 3,584 3,549 Initial Estimate Revised Estimates Full Year 1H 2H Full Year 1H 2H Revised Japan 7,362 3,497 3,865 7,133 3,584 3,549 China, Korea 10,764 5,292 5,472 11,134 5,761 5,373 Europe 5,761 2,821 2,940 6,400 3,231 3,169 Singapore 3,714 1,816 1,898 3,393 1,745 1,648 United States 5,270 2,522 2,748 5,529 2,670 2, Conclusions While full year earnings were revised upwards on the back of the favorable first half earnings due in part to the weakening of the yen, Iriso by no means seems satisfied with its own performance. The Company s share price has underperformed the JASDAQ index in November and later months. However, this appears to be the result of the strong growth of the previous term overshadowing the growth in profits called for in the current term. Looking at a longer time horizon, Iriso s share price has actually outperformed the market by a large margin during the past two years. Based upon the need to increase vehicle safety, expansion in installations of millimeter wave radar and cameras is expected to be implemented in nearly all car models in the coming years and this trend is expected to act as a strong tailwind for Iriso because of its position as the industry leader. Furthermore, this tailwind will help offset continued downward pressures on product pricing. In the near term, Iriso s efforts to beat its second half estimates and to establish new businesses needs to be watched closely. <List of Connector Related Companies> 11

12 Code Company Name Sales Operating Operating Operating Market ROE Estimated PBR Number Income Income (Y to Y,%) Income margin (%) Capitalization (%) PER 6640 Dai-ichi Seiko Co., Ltd. 45,500 2, , Suzuki Co., Ltd. 21, , SMK Corporation 66,000 2, , Yokowo Co. Ltd. 33,800 1, , Hosiden Corporation 165, , Hirose Electric Co., Ltd. 127,000 33, , Japan Aviation Electronics 180,000 21, , Industry, Ltd Honda Tsushin Kogyo Co. Ltd. 15,800 1, , IRISO ELECTRONICS CO., 36,000 6, , LTD KEL Corporation 9, , Enomoto Co., Ltd. 17, , Yamaichi Electronics Co. Ltd. 24,700 2, , Daito Electron Co. Ltd. 38, , Rhythm Watch Co., Ltd. 37,000 1, , * Units: Million Yen, %, Market capitalization based upon November 28, 2014 closing share price This report is intended solely for information purposes, and is not intended as a solicitation to invest in the shares of this company. The information and opinions contained within this report are based on data made publicly available by the Company, and comes from sources that we judge to be reliable. However we cannot guarantee the accuracy or completeness of the data. This report is not a guarantee of the accuracy, completeness or validity of said information and or opinions, nor do we bear any responsibility for the same. All rights pertaining to this report belong to Investment Bridge Co., Ltd., which may change the contents thereof at any time without prior notice. All investment decisions are the responsibility of the individual and should be made only after proper consideration. Copyright(C) 2014 Investment Bridge Co., Ltd. All Rights Reserved. 12