Analyst Report

C&A Investment Research【Update Short Report】| Company |TAMAGAWA HOLDINGS CO., LTD.

| Code |6838：JASDAQ| Analyst |C&A Senior Analyst

Kazuma Kanou| Date of Issue |May/21/2019
Ver：20190521-2【Update Short Report】

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TAMAGAWA HOLDINGS CO., LTD.
6838: JASDAQ

MAY/21/2019【Overview of the financial results】

V-shaped recovery & Significant increase in both income and profit
Significant increase in both income and profit (forecasts)(Operating income increased to 520 million yen, namely 3.4 times larger)
Upgraded to "Strong Buy" rating with share price targeted at 3,500 yen【Target Share Price】

3,500 yen
（as of May/21/2019）（as of Dec./20/2018: 2,750 yen）
（as of Jul./2/2018: 2,500 yen）
【Rating】
Strong Buy（UP-Graded）（as of May/21/2019）【Performance Forecasts】
FY03/2020 (official forecasts)
Net sales: 5,699 million yen; Operating income: 524 million yen;
Ordinary income: 372 million yen;
Net income: 319 million yen （as of May/21/2019）【Themes】
EDGs/ESG; defensive; national strategies; renewable energy; photovoltaic station; wind power station;
growth; 5G; IoT; analog high-frequency radio; global niche; still-remaining company（as of May/21/2019）

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TAMAGAWA HOLDINGS CO., LTD.
6838: JASDAQ

MAY/21/2019【Overview of the financial results in FY03/2019】
Both V-shaped recovery & Significant increase in both income and profit were achieved
On May 21, 2019, the Company announced its financial results of the 3Q, FY03/2019 as follows:
Net sales: 3,841 million yen (increased by 18.0%, 586 million yen YoY); Operating income: 153
million yen (increased by 187.7%, 100 million yen YoY); Ordinary loss: (79) million yen (decreased by(16) million yen from (63) million yen in the same period of the previous year); Net income attributableto owners of parent: 128 million yen (increased by 274 million yen from (146) million yen in the same
period of the previous year); namely, both revenues and earnings increased significantly.
It should be noted that Operating income significantly to about 2.9 times larger, and Net income
attributable to owners of parent increased by 274 million yen, namely from (146) million yen to 128
million yen, which means that both V-shaped recovery and surplus were achieved. Proceeds from salesof two power stations (Kamo station at Kasumigaura city and Hayashi station at Sodegaura city) ownedby the Company of 240 million yen was allocated to extraordinary income as gain on sales ofnon-current assets. However, considering the Company's business activities, normally this amountshould be allocated to net sales, so actual performance should be considered based on the assumptionthat operating income is 393 million yen (increased by 641.5%, 340 million yen), namely 7.4 times
larger, and ordinary income is 161 million yen (increased by 224 yen from (63) million yen in the same
period of the previous year).

【Performance forecasts for FY03/2020】
Significant increase in both income and profit (operating income of 520 million yen, namely
3.4 times larger)
On May 21, 2019, the Company announced its performance forecasts for FY03/2020 as follows: Netsales: 5,699 million yen (increase by 48.4%, 1,850 million yen YoY); Operating income: 524 million yen(increase by 242.2%, 387 million yen YoY); Ordinary income: 372 million yen (increase by 451 million yenfrom (79) million yen in FY03/2019); Net income attributable to owners of parent: 319 million yen (increaseby 148.7%, 191 million yen YoY), which means significant increase in both income and profit. It should be

noted that significant increase in net sales is projected in every business segment (electronic &communication devices; renewable energy system sales; and renewable energy power station).
TAMAGAWA ELECTRONICS, a subsidiary of the Company, has developed high-frequency radiotechnologies as its backbone since its foundation in 1968, and has engaged in development/manufactureof such as products applying optical technologies, those for millimeter-wave band, and those related todigital software, mainly deriving from its business in high-frequency circuit element. Therefore, theCompany would anticipate to a great extent more order-taking due to growing demands for the field of
5G technologies and those for overseas markets.
These forecasts for the next term would be achieved to a great extent, due to the fact that theCompany puts its efforts into its renewable energy business such as small wind power stations andsmall-scale hydraulic power generation, with a view to development/sales of power generation systemutilizing other kinds of renewable energy than photovoltaic generation, and that sales and operation ofpower stations are doing great for which orders were already received and which has become a sourceof stable revenues, and also that the Company considers selling off its own photovoltaic stations.

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TAMAGAWA HOLDINGS CO., LTD.
6838: JASDAQ

MAY/21/2019【Remarkable points】

In an effort to expand its business, the Company brings into view development/sales of power
generation system utilizing other kinds of renewable energy than photovoltaic generation, such as
small wind power stations and small-scale hydraulic power generation, and cooperates withTohoku University to research into evaluation of batteries for mobile IoT devices making use of
surplus electricity in the internally/externally expanding field of natural energy (e.g., solar energy,wind power, biomass, and hot spring), as an academic-industrial partnership, that is expected to agreat extent to become an approach to further business expansion in the future.

Rating criteria
Ratings are given based on the criteria as shown below.

Strong Buy
Share price is expected to outperform TOPIX by 30% or more within one year.

Buy
Share price is expected to outperform TOPIX by 10% or more within one year.

NeutralShare price is expected to vary in the range less than +/- 10% of TOPIX within one year.

Sell
Share price is expected to underperform TOPIX by 10% or more within one year.

Points of concern
This material has been created based on various data, for information only and is not intended to attract
investment. In addition, it does not guarantee accuracy and completeness of any information contained herein.
Opinions, projections and other statements contained herein are such prospects at the time of creation thereof andsubject to change without notice. There exists some potential for loss of investment principal due to, for example,
share price fluctuation, change in management/financial conditions of the issuing company, and change in external
evaluation about them. Accordingly investors are encouraged to make final decisions on investment solely basedon their own judgment. Meanwhile, C&A Investment Research., as well as its affiliate, employee, officer, or family
member of them may possibly possess and/or trade securities of any company shown herein. Copyrights of thismaterial belong to C&A Investment Research. Unauthorized reproduction or transfer of any content herein isprohibited, whether electronically or mechanically, for any purpose.

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