Company Research and Analysis Report
FISCO Ltd.
http://www.fisco.co.jp

Helios Techno Holding 伪伪Sustaining upbeat earnings momentum led by
6927 Tokyo Stock Exchangemanufacturing equipment businessFirst Section
8-Jul.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Hiroyuki Asakawa

Helios Techno Holding <6927> (hereinafter, also “the Company”) is a holding company formed in2009 as a result of a business integration and business acquisition, including a renaming, undertakenby the former PHOENIX Electric Co., Ltd. It is now a pure holding company following a corporate
split. The Company has four businesses: the lamp business, the manufacturing equipment business,the inspection equipment business, and the human resources service business.
Helios Techno posted sharply higher sales and profits year on year (YoY) in FY3/16. A key driver ofthe steep 73.9% YoY net sales increase was booking a major plants deal (used equipment transfer)worth ¥11,700mn. Operating income climbed 38.8% thanks to the above-mentioned major plants
deal and booking revenue with high profit margin in the manufacturing equipment business.
The Company expects declines in FY3/17 sales and profits due to backlash from booking the large
deal and high-margin projects in FY3/16. We do not expect an increase in sales, but think it ispossible to post operating income on par with or higher than the previous year. We base our view
on benefits from growing sales and improved product mix. Our FY3/17 forecast projects a ¥3,700mn
rise in sales on a real basis excluding the large deal impact. Main anticipated drivers are alignment
layer manufacturing equipment, multi-lamp systems (MLS) used in photolithography equipment, andmaintenance and refurbishing business. All of these businesses involve products and services withhigher profit margins than the Company’s average, and we expect related contributions to offset theprevious fiscal year’s special factor.
Alignment layer manufacturing equipment and MLS, which are important income sources for theCompany, both are mainly utilized in production of television LCD panels in China, as the finaldemand driver, and have been enjoying robust demand recently. However, Helios Techno is working
earnestly to develop new products and applications in preparation for a change in the core businessowing to the prospect of demand peaking out in 2-3 years from now. The Company’s entry into
organic EL manufacturing equipment is likely to fuel rising expectations. In the MLS business, theCompany aims to leverage its UV technology to acquire opportunities in manufacturing equipment
markets for organic EL photomasks and printed circuit boards. We will be closely monitoring these
initiatives.

伪伪Check Point• Posted double-digit sales and profit growth rates in FY3/16• Manufacturing equipment consists of flexo printing machines, plants, new equipment(HRP), and others• Likely to sustain upbeat momentum in flexo printing machines and MLS during FY3/17

We encourage readers to review our complete legal statement on “Disclaimer” page.
1

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Helios Techno Holding

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8-Jul.-16
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㻲㼅㻟㻛㻝㻠FISCO Ltd. Analyst
Hiroyuki Asakawa㻢㻜㻜㻞㻡㻘㻣㻢㻥

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Important disclosuresand disclaimers appear
at the end of this document.

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6927 Tokyo Stock ExchangeFirst Section(¥mn)

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伪伪Review of FY3/16 Results
Posted double-digit sales and profit growth rates in FY3/16
Helios Techno posted sharp sales and profit increases in FY3/16 with net sales at ¥25,769mn (up73.9% YoY), operating income at ¥1,182mn (up 38.8%), ordinary income at ¥1,168mn (up 49.8%),
and net income at ¥807mn (up 6.6%). Management updated guidance on 5 February 2016 (at theannouncement of 3Q results), and full-year values were roughly on track with the revised view. The
smaller increase in net income, compared to operating and ordinary incomes, reflects the addition of
corporate taxes from FY3/16.
Review of FY3/16 Results
FY3/15Full year(unit: ¥mn)

FY3/16
Full year (E)Net sales
14,81725,950Operating income
851
1,180
(Operating margin)
5.7%
4.5%
Ordinary income
780
1,180
Net income
757
780
Source: Prepared by FISCO from the Company's materials

Full year
25,769
1,182
4.6%
1,168
807

YoY change
73.9%
38.8%
49.8%
6.6%

Difference vs.
estimates
-0.7%
0.2%
-1.0%
3.5%

Helios Techno Holding is a holding company with multiple business entities. Its business segments
largely correspond to specific business entities - PHOENIX Electric and subsidiary Lux for thelamp business segment, Nippon Gijutsu Center for the inspection equipment business and humanresources service business segments, and Nakan Techno for the manufacturing equipment businesssegment.

We encourage readers to review our complete legal statement on “Disclaimer” page.
2

■■Review of FY3/16 Results

Division of Group Companies and Business Segments
Company
Helios Techno
Holding

Helios Techno Holding
6927 Tokyo Stock ExchangeFirst Section

8-Jul.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Hiroyuki Asakawa

History
Changed name in 2009 fromthe former PHOENIX Electric,
established in 1976
Established in April 2009 througha corporate split of Helios Techno
Holding

Principle products and services
Complete holding company

Business segment
allocation–

Lamps for various applications,
Lamp business(projectors, automobiles,
illumination, LED lamps,
photolithography equipment lightsource units)
Established in 1991 as a sales
Sale of PHOENIX ElectricInspection
company of PHOENIX Electric
products and various products
equipment business,Luxof major Japanese lighting
Human resourcesmanufacturers, maintenanceservice business
operations
Established in 1967. Started with
Industrial equipment (such
Manufacturing
development and manufacture of
as inspection equipment andequipment businessindustrial equipment and developed photolithography equipment lightNippon Gijutsu into human resources dispatch
source units) manufacture, design
Centerservices. Merged with KANSAI
contracting, IT business technician
GIKEN Co., Ltd. in 2013. Absorbed
dispatch and human resources
group-firm Techno Provider on 1 April, service, nursing care business2015.
Established in 1937 as Nakanishi
Manufacture and sales of various Lamp business
Tekkojo Co., Ltd. Started fromprinting equipment LCD alignment
manufacture of printing machinery layer coating equipment, touchNakan Techno
developed into LCD alignment layer screen panel insulation coating
coating equipment. Received theequipment; used manufacturingbusiness in 2009.
equipment transactions
Source: Prepared by FISCO from the Company's materials
Note: Techno Provider became a subsidiary of Nippon Gijutsu Center in February 2014.
PHOENIXElectric

The manufacturing equipment business stands out in a review of segment sales trends with a178.3% YoY increase to ¥17,419mn. The large gain came from booking a major deal worth roughly¥11,700mn in the plants business (transferring used LCD manufacturing equipment to China). While
profit margin from the plants deal was low, the contribution to operating income still worked out
to about ¥200mn. The Company also booked income for a high-margin deal in alignment layer
manufacturing equipment used on LCD panel lines. It delivered four systems with same model
format, and the learning effect lifted profitability. Operating income received a boost of about ¥200mn
compared to a normal case. These factors helped raise operating income in the manufacturing
equipment business by 67.4% YoY to ¥1,111mn.
The lamp business results missed the previous year, despite efforts to expand sales of projector
lamps and UV photolithography lamps used in the light-source unit of UV photolithographyequipment. General-lighting lamps recorded stronger sales of LED bulbs, but faced setbacks from adecline in halogen bulbs and delayed booking of LED installation sales. This segment hence incurred
decreases of 6.9% in net sales and 29.0% in operating income.
The inspection equipment business promoted sales of inspection equipment light-source devices
and sought to broaden sales of existing MLS used in UV photolithography equipment. However,UV photolithography equipment light-source unit sales fell 20.6% YoY to ¥966mn, and the segment
slipped 15.2% in net sales to ¥1,346mn and 30.4% in operating income to ¥136mn.
The Company continues to achieve stable results for dispatching engineers and outsourced design
work in the human resources service business. It is increasing the number of dispatched workers
amid stronger corporate earnings and improved employment conditions. The segment posted a gainof 8.3% YoY in net sales to ¥3,463mn against this backdrop. Operating income, however, fell 7.4% to¥125mn because of a rise in hiring costs and higher expenses related to subsidiary Nippon Gijutsu
Center’s absorption of Techno Provider, a separate subsidiary handling manufacturing dispatches.

We encourage readers to review our complete legal statement on “Disclaimer” page.
3

■■Review of FY3/16 Results

Results Trends by Business Segment
FY3/15Full year

8-Jul.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Hiroyuki Asakawa

3,556
17,4191,346
3,463
25,785-16
25,769
130
1,111
136
125
1,505
-323
1,182

Operating income

6927 Tokyo Stock ExchangeFirst Section

Full year

Net sales

Helios Techno Holding

Lamp business
3,819
Manufacturing equipment business
6,258
Inspection equipment business
1,587
Human resources service business
3,198
Sub-total
14,864
Adjustment value
-46
Total
14,817
Lamp business
184
Manufacturing equipment business
664
Inspection equipment business
196
Human resources service business
135
Sub-total
1,180
Adjustment value
-329
Total
851
Source: Prepared by FISCO from the Company's materials

FY3/16(unit: ¥mn)
YoY change-6.9%
178.4%-15.2%
8.3%
73.5%
73.9%
-29.0%
67.4%-30.4%
-7.2%
27.5%
38.9%

伪伪Detailed trends by business segment
Focus on ultraviolet (UV ) lamps(1) Lamp businessa) Description of the lamp business
The lamp business is divided into five product types – projector lamps, halogen lamps, LED lamps,
and light sources for photolithography equipment, and products.
Projector lamps served as the light source for rear-projection projectors that expanded sales mainlyin the United States during the boom for large-screen TVs at the start of the 2000s. While rearprojection projectors enjoyed a phase as one of the major formats for large-screen TVs, they havelost their entire market share to LCD panels and other technologies at this stage. The Company
factored in growth from replacement and upgrade demand over the past few years, projectors areapproaching the end of their lifespan and we expect a steady downturn even if there is still some
replacement demand. We think this is the background to management’s first-ever projection of a YoY
decline by this business in FY3/17.

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Source: Prepared by FISCO from the Company's materials and interviews

The main use of halogen lamps, products, and LED lamps is lighting for stores and similar locations.
Demand is shifting to LED products with energy-saving benefits. The Company purchases LED chips
from external suppliers and manufactures LED lighting products and has completed its line-up. We
expect LED products to continue rising as a percentage of the Company’s sales.

We encourage readers to review our complete legal statement on “Disclaimer” page.
4

■■Detailed trends by business segment

Helios Techno Holding
6927 Tokyo Stock ExchangeFirst Section

8-Jul.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Hiroyuki Asakawa

Within the lamp business, light sources for UV photolithography have the most growth potential.
These light sources are utilized in photolithography equipment for manufacturing color filters, a
key component of LCD panels, which involves photolithography. While specialty firms manufacture
photolithography equipment, the Company ships its “light source unit (multi-lamp system: MLS),”
which integrates the light source (lamps) and the light-source housing, to photolithography equipment
manufacturers. Lamp sales are booked under the lamp business (while the chassis and other nonlamp portions are booked in the inspection equipment business). MLS demand remains very strong,
and the Company also guides for a steep rise in MLS-related product sales. We provide details in ourreview of the inspection equipment business.
The Company has outlined a policy for focusing on UV lamps from FY3/17. It makes UV lamps foruse as the light source in photolithography equipment and other applications, and this is a strong
area. Management aims to expand markets that utilize the Company’s UV lamp technology by
pursuing development of UV LED products and other new items and also focusing on new application
opportunities, such as combined use with UV hardening plastics.
b) Results trend
The lamp business faced sales declines in all five sub-segments in FY3/16, and segment net sales
were down 6.9% YoY to ¥3,556mn. Operating income slipped as well with a 29.0% decline to ¥130mn.
We already explained sales trends for projector lamps above. Halogen lamps are continuing togradually move lower due to replacement by LED products. LED lamps, which offer growth potential,
had upbeat lamp sales, but delays in LED lighting installations resulted in a sales decline. Lightsources for photolithography equipment were held to roughly flat sales, in part because of the highprevious-year level.
Helios Techno guides for a 4.8% YoY rise in net sales to ¥3,728mn in FY3/17. It expects continuationof sales decline trends in projector lamps and halogen lamps, but factors in gains in LED products,
photolithography equipment light sources, and products. LED products are headed for a strong sales
growth rate due to booking business from delayed projects in the previous fiscal year. We think
the outlook for higher sales of photolithography equipment light sources reflects robust demand forphotolithography equipment and build-up of confirmed orders, mainly in China.

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Source: Prepared by FISCO from the Company's materials and othersPeak sales in the lamp business since the Company adopted its current format in 2009 were FY3/11’s¥6,043mn. Existing projector lamps and halogen lamps were still increasing sales in that year, butthese two areas are receding now. We think Helios Techno needs to develop new products andapplications in order to exceed the past peak. We hence will be closely monitoring the Company’s
activities in growth areas, such as UV LEDs and other new products and organic EL and other new
applications.

We encourage readers to review our complete legal statement on “Disclaimer” page.
5

■■Detailed trends by business segment

Manufacturing equipment consists of flexo printing machines,
plants, new equipment (HRP), and others(2) Manufacturing equipment business

Helios Techno Holdinga) Description of the manufacturing equipment business
The subsidiary Nakan Techno handles the manufacturing equipment business. It manages thisbusiness in four sub-segments – flexo printing equipment, plants, new equipment (HRP), and others.

6927 Tokyo Stock ExchangeFirst Section㻿㼍㼘㼑㼟㻌㼎㼥㻌㻿㼡㼎㻙㼟㼑㼓㼙㼑㼚㼠㼟㻌㼕㼚㻌㼠㼔㼑㻌㻹㼍㼚㼡㼒㼍㼏㼠㼡㼞㼕㼚㼓㻌㻱㼝㼡㼕㼜㼙㼑㼚㼠㻌㻮㼡㼟㼕㼚㼑㼟㼟㻌(¥mn)

8-Jul.-16

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Important disclosuresand disclaimers appear
at the end of this document.

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FISCO Ltd. Analyst
Hiroyuki Asakawa

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Source: Prepared by FISCO from the Company's materials and interviews

Flexo printing equipment are currently the core product in the manufacturing equipment businesswith primary use as manufacturing equipment for the alignment layer used in LCD panels. The vast
majority of alignment layer manufacturing processes coat polyimide (PI), a polymer compound, on
a substrate and apply rubbing treatment to the surface. The Company’s manufacturing equipment
conducts PI coating with flexo printing, and it is the only firm using the flexo printing method. The rival
technology is inkjet printers.
However, flexo printing equipment’s applicability only appears to last until the 8.5G mother-glass sizefor LCD panels. While the Company currently primarily ships equipment for the 8.5G size, LCD panel
firms are already advancing to the 10.5G size. We think strong demand remains for the 8.5G size,
mainly in China, but expect a decline in 8.5G business at some point. The Company is addressing
this point by working on development of PI printing equipment using the inkjet method in order toaccommodate the 10.5G size.
New equipment (HRP) refers to high resolution printers utilizing a variety of printing technologies,
such as inkjet and gravure methods. Target markets are organic EL panels, printed circuit boards,
and semiconductors.
Near-term focus in new equipment is organic EL manufacturing equipment. Curvature is a key
feature of organic EL panels. The Company developed an insulation film coating system that utilizes
printing technology taking into account the applicability of printing technology to curvature. It has
already obtained orders from domestic and overseas organic EL panel firms, and we will closely
monitoring the expansion pace of this business.

We encourage readers to review our complete legal statement on “Disclaimer” page.
6

■■Detailed trends by business segment

Business Roadmap for Manufacturing Equipment

Helios Techno Holding
6927 Tokyo Stock ExchangeFirst Section
Source: Prepared by FISCO from the Company's materials and interviews

8-Jul.-16

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Hiroyuki Asakawa

We think it is difficult to accommodate semiconductors just with Nakan Techno’s technology becauseof a significant difference in the level of precision they require. This is why management talks about
utilizing M&A or an alliance to enter the market.
The plants business arranges transactions and handles transportation, and relocation of used
LCD manufacturing equipment and other systems. Its fundamental flow involves the sales of usedequipment from Japan and Taiwan to Chinese manufacturers. The Company takes on the entire
process of transportation to China and installation at local plants of used manufacturing equipment.
This activity comes with substantial risk. It is also generally considered to be a high-risk area becauseof difficulty collecting funds due to the business practices of Chinese firms. The Company’s handling ofused manufacturing equipment began with the establishment of Nakan Techno, and the backgroundto this is that Nakan Techno President and Representative Director Mr. Yoshihisa Sato possesses astrong personal network in China. While it depends on him as an individual, the Company manages
to lower risk in this high-risk business and also differentiate itself from competitors and build barriers
to entry by utilizing Mr. Sato’s personal contacts that largely avoid risk.
The plants business booked a large deal worth ¥11,700mn in revenue in FY3/16. Although thebusiness does not have that many deals of this scale, we think success in meeting the deadline andsecuring profits from the large deal significantly strengthened trust in the Company’s plants businessfrom counterparts and investors.
“Others” includes sales of consumables of manufacturing equipment delivered in past years, and workfor the maintenance, repairs, and improvement of existing manufacturing equipment. Maintenanceand repair work orders have grown rapidly in the past few years because cumulative sales of theCompany’s manufacturing equipment are well above 50 units. Maintenance and repair work is highly
profitable as a business, and the Company expects it to grow to be an important source of earnings.
b) Results trend
Results rose sharply in the manufacturing equipment business for FY3/16 to ¥17,419mn in net sales(up 178.4% YoY) and ¥1,111mn in operating income (up 67.4%). The steep increase in sales camefrom the large plants deal with a contribution of ¥11,700mn, as explained above. Operating income
benefited from the plant deal as well as booking high-margin projects for flexo printing equipment(manufacturing equipment for alignment layers in LCDs).
The main point in FY3/17 is how the Company covers the decline in sales from the large plants deal.
Management guides for ¥7,625mn in net sales with ¥3,000mn from flexo printing equipment (down
11.7% YoY), ¥2,000mn from plants (down 83.9%), ¥800mn from new equipment (32-fold increase),and ¥2,000mn from others (up 26.4%).
The plan envisions ¥2,000mn in sales for the plants business in FY3/17 due to vibrant inquiries
for used equipment from China, and management expects this scale of inquiries to continue from
FY3/18 as well. In new equipment, while sales of equipment applied to touch panels did not pick up
in FY3/16, potential deals are moving forward for organic EL panel equipment, and management
expects to book income in FY3/17. Maintenance, repairs, and improvement orders are headed for asteady rise under others business.
While the Company guides for a strong ¥3,000mn in sales of flexo printing equipment, a key income
source, again in FY3/17, it projects a decline from the previous year’s level due to backlash fromthe order for four large high-margin products from a single customer. Yet it forecasts continuation of
the same level as last fiscal year in FY3/17 in terms of the actual market environment and demand.

We encourage readers to review our complete legal statement on “Disclaimer” page.
7

■■Detailed trends by business segment

Helios Techno Holding
6927 Tokyo Stock ExchangeFirst Section

Last year’s operating income contained about ¥400mn in one-time profit factors (¥200mn fromthe large plants deal and ¥200mn from the high-margin alignment layer manufacturing equipmentdeal). The challenge in FY3/17 is the extent to which this ¥400mn can be offset by revenues at¥2,000mn in plants business and ¥800mn in new equipment and a roughly ¥400mn rise in sales forothers business (maintenance and improvement, consumables). The Company does not disclose
segment operating income targets, but we think it factors in a profit decline (YoY) based on theoverall operating-income guidance.
We believe others business (maintenance, improvement, etc.) is slightly more profitable thanthe manufacturing equipment segment’s roughly 10% in operating margin and see a reasonable
possibility of operating income matching FY3/16’s level.

㻾㼑㼟㼡㼘㼠㼟㻌㼕㼚㻌㼠㼔㼑㻌㻹㼍㼚㼡㼒㼍㼏㼠㼡㼞㼕㼚㼓㻌㻱㼝㼡㼕㼜㼙㼑㼚㼠㻌㻮㼡㼟㼕㼚㼑㼟㼟

8-Jul.-16(¥mn)

㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕㻝㻘㻝㻝㻝㻝㻤㻘㻜㻜㻜

Important disclosuresand disclaimers appear
at the end of this document.

㻝㻘㻞㻜㻜㻝㻡㻘㻜㻜㻜

㻝㻘㻜㻜㻜㻝㻞㻘㻜㻜㻜FISCO Ltd. Analyst
Hiroyuki Asakawa

㻥㻘㻜㻜㻜

㻤㻜㻜

㻢㻢㻠

㻢㻜㻜

㻝㻣㻘㻠㻝㻥

㻠㻠㻡

㻠㻠㻜

㻢㻘㻜㻜㻜

㻟㻘㻜㻜㻜

(¥mn)

㻠㻜㻜
㻠㻘㻥㻟㻟

㻡㻘㻠㻣㻢

㻢㻘㻞㻡㻤

㻲㼅㻟㻛㻝㻟

㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻡

㻣㻘㻢㻞㻡

㻜

㻞㻜㻜
㻜

㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣㻌㻱

Source: FISCO Ltd. based on company materials and others

MLS for photolithography equipment is the mainstay(3) Inspection equipment businessa) Description of the inspection equipment business
The inspection equipment business is operated by Nippon Gijutsu Center. It primarily handles lightsource units (MLS) for photolithography equipment used in manufacturing LCD-panel color filters.
MLS largely consist of lamps and housing and related equipment that contain the lamps. Nippon
Gijutsu Center assembles the light-source units using light-source lamps made by PHOENIXElectric and delivers them to photolithographic equipment firms. This business uses a structure that
separately books lamps income in the lamps business and housing and equipment income in theinspection equipment business.
b) Detailed review of photolithography equipment light-source units (MLS)
Multiple firms manufacture color-filter photolithography equipment (FPD photolithographyequipment), and the Company delivers MLS to one of these leading firms. Looking back at past MLS
results, MLS sales were less than ¥100mn in FY3/10, but reached about ¥1,500mn in FY3/16 andFY3/17 guidance expects close to ¥2,400mn.

We encourage readers to review our complete legal statement on “Disclaimer” page.
8

■■Detailed trends by business segment㻿㼍㼘㼑㼟㻌㼕㼚㻌㻼㼔㼛㼠㼛㼘㼕㼠㼔㼛㼓㼞㼍㼜㼔㼥㻌㻸㼕㼓㼔㼠㻌㻿㼛㼡㼞㼏㼑㻌㼁㼚㼕㼠㼟(¥mn)

㻱㼝㼡㼕㼜㼙㼑㼚㼠

㻸㼍㼙㼜㼟

㻞㻘㻡㻜㻜

㻢㻤㻞

㻞㻘㻜㻜㻜

Helios Techno Holding
6927 Tokyo Stock ExchangeFirst Section

㻡㻠㻠

㻝㻘㻡㻜㻜

㻡㻠㻝
㻟㻟㻞

㻝㻘㻜㻜㻜

㻝㻘㻢㻢㻥

8-Jul.-16

Important disclosuresand disclaimers appear
at the end of this document.

㻝㻘㻞㻡㻠

㻡㻜㻜

㻜

㻝㻣㻤
㻟㻤㻥

㻞㻝㻞
㻝㻥㻝

㻲㼅㻟㻛㻝㻝

㻲㼅㻟㻛㻝㻞

㻲㼅㻟㻛㻝㻟

㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻡

㻥㻥㻢㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣㻌㻱

Source: Prepared by FISCO from the Company's materials and interviews


FISCO Ltd. Analyst
Hiroyuki Asakawa

㻥㻞㻟

㻝㻞㻝
㻞㻡㻢



The Company’s MLS sales are likely to continue at a high level through FY3/19 because of steadybuild-up in deal volume with orders prospects from TV LCD-panel manufacturing equipment firms in
China. Current efforts are focusing on developing deals that place orders in FY3/19 and contributeto income from FY3/20. We cannot take an optimistic view of this outlook due to the possibility of amajor change in the capital investment sentiment of LCD panel manufacturers due to factors such as
the maturation level in China’s LCD TV market and technology shifts.
The Company is also promoting development of other MLS applications from a longer-term
perspective due to these conditions. Some areas under review include organic EL photomask
manufacturing equipment, peripheral seal UV equipment, and printed circuit board solder resist
formation equipment. While the Company has not provided details on technology completion levels
and market entry timing for any of these products, we will be monitoring these initiatives as a growthfield.
c) Results trend
The inspection equipment business booked ¥1,346mn in net sales (down 15.2% YoY) in FY3/16, andoperating income slipped to ¥136mn (down 30.4%), reflecting the sales setback.
Net sales weakened mainly because MLS housing and equipment sales fell 20.6% to ¥966mn.
In FY3/17, meanwhile, the Company guides for ¥2,469mn (up 83.4%) with stronger sales of MLS
housing and equipment as the driver.
While the Company does not offer guidance on segment profit, we think MLS offer profitability
roughly in line with manufacturing equipment business (about 10% operating margin) and expect alarge profit contribution from a steep increase in segment sales.

We encourage readers to review our complete legal statement on “Disclaimer” page.
9

■■Detailed trends by business segment㻾㼑㼟㼡㼘㼠㼟㻌㼕㼚㻌㼠㼔㼑㻌㻵㼚㼟㼜㼑㼏㼠㼕㼛㼚㻌㻱㼝㼡㼕㼜㼙㼑㼚㼠㻌㻮㼡㼟㼕㼚㼑㼟㼟(¥mn)

㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻟㻘㻜㻜㻜㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕

Helios Techno Holding

㻝㻤㻜

㻝㻢㻟

㻝㻟㻢

㻞㻘㻡㻜㻜

(¥mn)

㻝㻡㻜

㻝㻞㻝
㻞㻘㻜㻜㻜

6927 Tokyo Stock ExchangeFirst Section

㻝㻞㻜

㻝㻘㻡㻜㻜

㻥㻜
㻞㻘㻠㻢㻥

㻝㻘㻜㻜㻜

8-Jul.-16

㻢㻜

㻟㻤

㻝㻘㻡㻤㻣

㻝㻘㻠㻜㻤

㻡㻜㻜

㻝㻘㻟㻠㻢

㻟㻜

㻡㻤㻢

Important disclosuresand disclaimers appear
at the end of this document.

㻜㻜㻲㼅㻟㻛㻝㻟

㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣㻌㻱

Source: FISCO Ltd. based on company materials and others


FISCO Ltd. Analyst
Hiroyuki Asakawa

㻲㼅㻟㻛㻝㻡



Intends to continue pursuing M&A opportunities(4) Human resources service business
The human resources service business is operated by Nippon Gijutsu Center. Nippon Gijutsu Center
made KANSAI GIKEN a subsidiary in May 2013, and absorbed it by merger in November of the same
year. Furthermore, in April 2015, Nippon Gijutsu Center absorbed in a merger Techno Provider Co.,
Ltd., another Helios Techno Group company. We think these initiatives aim to lower management
costs and raise business profitability.
Human resources services include dispatch of manufacturing engineers, dispatch of workers, design
subcontracting, and nursing care. We think dispatching services for manufacturing engineers andworkers are primary income sources. Management intends to continue pursuing M&A deals in thehuman resources business. The dispatching industry is struggling to secure human resources,
and the Company sees appeal in M&A-led expansion because of opportunities to acquire humanresources and a sales base.
However, it plans to focus on certain operating regions in keeping with a business model of localitycentric dispatching that aims to broaden scope within an area. It emphasizes building operations that
expand the customer base in areas nearby existing customers and facilitate concentrated supply of
dispatched workers. The primary aim is obviously improving efficiency. The Company therefore plansto seek M&A deals that target companies with a base in regions that can readily obtain synergies
with existing customers.
Segment net sales climbed 8.3% YoY to ¥3,463mn in FY3/16, though operating income dropped
7.4% to ¥125mn. We think an upswing in hiring costs and costs related to absorbing Techno Provider
caused the profit setback. The Company guides for a 14.2% rise in FY3/17 net sales to ¥3,954mn,
and we believe this stance factors in expansion of the sales base and a rise in the dispatching
price. We project an increase in operating income, though management does not disclosure profit
guidance, on the prospect of benefits from higher sales offsetting larger costs.

We encourage readers to review our complete legal statement on “Disclaimer” page.
10

■■Detailed trends by business segment㻾㼑㼟㼡㼘㼠㼟㻌㼕㼚㻌㼠㼔㼑㻌㻴㼡㼙㼍㼚㻌㻾㼑㼟㼛㼡㼞㼏㼑㼟㻌㻿㼑㼞㼢㼕㼏㼑㻌㻮㼡㼟㼕㼚㼑㼟㼟㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕(¥mn)

㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕
㻝㻟㻡

㻠㻘㻞㻜㻜

(¥mn)

㻝㻠㻜

㻝㻞㻡

㻟㻘㻢㻜㻜

㻝㻞㻜

Helios Techno Holding

㻟㻘㻜㻜㻜

㻝㻜㻜

6927 Tokyo Stock ExchangeFirst Section

㻞㻘㻠㻜㻜

㻤㻜

㻝㻘㻞㻜㻜

8-Jul.-16

㻢㻜㻜

Important disclosuresand disclaimers appear
at the end of this document.

㻟㻘㻥㻡㻠

㻠㻥

㻝㻘㻤㻜㻜

㻟㻘㻝㻥㻤

㻢㻜
㻠㻜

㻞㻘㻝㻣㻣

㻝㻘㻤㻝㻤
㻤

㻞㻜

㻜

㻜
㻲㼅㻟㻛㻝㻟

㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣㻌㻱

Source: Prepared by FISCO from the Company's materials and others


FISCO Ltd. Analyst
Hiroyuki Asakawa

㻟㻘㻠㻢㻟



伪伪Performance Trends
Expecting higher sales for all segments besides the
manufacturing equipment business(1) FY3/17 forecast
Helios Techno guides for ¥17,700mn in sales (down 31.3% YoY), ¥1,050mn in operating income(down 11.2%), ¥1,040mn in recurring income (down 11.0%), and ¥680mn in net income (down
15.7%) in FY3/17.
Summary of the FY3/17 Forecast
FY3/16(unit: ¥mn)
FY3/17 (E)
YoY
Full
YoY
2H
change year change
8,700 -52.5% 17,700 -31.3%
350 -0.6%
1,050 -11.2%
4.0%
5.9%
340 -0.6%
1,040 -11.0%
3.9%
5.9%
230 -5.3%
680 -15.8%
2.6%
3.8%
-

Full
YoY
1H
year
changeNet sales
7,438 18,331 25,769
9,000 21.0%
Operating income
830
352
1,182
700 -15.7%(Operating income margin) 11.2%
1.9%
4.6%
7.8%
Ordinary income
826
342
1,168
700 -15.3%(Ordinary income ratio)
11.1%
1.9%
4.5%
7.8%
Net income
564
243
807
450 -20.2%(Net income ratio)
7.6%
1.3%
3.1%
5.0%
Source: Prepared by FISCO from the Company's materials
Note: YoY change rate and difference with forecast values calculated using million-yen unit values
1H

2H

Trends will differ to some extent in 1H and 2H. The plan expects higher sales and a decline in profitsin 1H. It projects a 21.0% rise in sales YoY due to extensive orders backlog in the manufacturing
equipment business and growing sales in the lamps business and other areas. However, it forecasts
a 15.8% drop in operating income because of the prospect of a decline in profit margin to the normal
level on the likely absence of high-margin deals in FY3/17 after concentrated bookings of alignment
layer manufacturing equipment with high profitability in the previous year.
In 2H, the Company expects a 52.5% YoY decline in sales owing to backlash after it booked a large
deal for a used equipment transfer at the end of FY3/16. However, it still projects profit roughly on
par with the previous year’s 2H due to an offsetting rise in profit from manufacturing equipment slated
for being booked in 2H. The anticipated upshot for full-year operating income thus is an 11.2% YoY
decline to ¥1,050mn.

We encourage readers to review our complete legal statement on “Disclaimer” page.
11

■■Performance Trends

Helios Techno Holding

The Company guides for higher sales in all business segments besides the manufacturing equipment
business headed for a 56.2% YoY drop because of backlash from the large deal with ¥11,700mn inrevenue in FY3/16. It expects LED products and MLS lamps to drive sales growth in the lamps
business, and it anticipates a steep increase in inspection equipment business in a rebound after
the FY3/16 decline in MLS sales. In the manufacturing equipment business, the Company projects
weaker sales of current mainstay flexo printing equipment used for alignment layer production, but
increases in sales of precision printing equipment and maintenance services revenue.
FY3/17 Forecasts by Segment6927 Tokyo Stock ExchangeFirst Section

FY3/16
1H

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Hiroyuki Asakawa

Full year

Lamp business
1,758
1,798
Manufacturing equipment business
3,456
13,963
Inspection equipment business
502
844
Human resources service business
1,728
1,735
Sub-total
7,446
18,339Adjustment
-7
-9
Total
7,438
18,331
Source: Prepared by FISCO from the Company's materials

Net sales

8-Jul.-16

2H

3,556
17,4191,346
3,463
25,785-16
25,769YoYchange-6.9%
178.3%-15.2%
8.3%
73.5%
73.9%

(unit: ¥mn)
FY3/17Full year
YoY(E)change
3,728
4.8%
7,625
-56.2%
2,469
83.4%
3,954
14.2%
17,776-31.1%-76
17,700-31.3%We think the Company outlook takes a conservative stance toward profits. It projects a roughly¥3,700mn rise in sales of ordinary products and services in FY3/17 based on a comparison thatremoves last year’s large deal (worth ¥11,700mn). Furthermore, the projected sales gains largely
involve products with high profitability in the respective business segments. We expect gross margin
to settle in a range of 25-28% in FY3/17 based on the gross margin trend over the past few years.
We hence believe the Company has a reasonable prospect of posting a profit increase in FY3/17,
exceeding guidance, if SG&A expenses increase at the same pace as the past few years.
Consolidated Income Statement
FY3/13
Net sales
YoY
Gross profit
Gross profit margin
SG&A expenses
SG&A margin
Operating income
YoY
Operating income margin
Ordinary income
YoY
Net income
YoY
EPS (¥)
Dividend (¥)
Net assets per share (¥)

11,139
10.8%
2,794
25.1%
2,443
21.9%
351
3.2%
431
443
26.82
8.00
381.81

FY3/14
12,900
15.8%
3,327
25.8%
2,807
21.8%
520
48.1%
4.0%
621
44.1%
889
100.7%
53.10
10.00
427.63

FY3/15
14,817
14.9%
3,892
26.3%
3,041
20.5%
851
63.7%
5.7%
780
25.5%
757
-14.8%
43.97
12.00
450.22

FY3/1625,769
73.9%
4,313
16.7%
3,131
12.2%
1,182
38.9%
4.6%
1,168
49.7%
807
6.6%
45.25
15.00
480.79(unit: ¥mn)
FY3/17
1H (E)
Full year (E)9,000
17,70021.0%-31.3%
700
1,050-15.7%-11.2%
7.8%
5.9%
700
1,040
-15.3%-11.0%
450
680-20.2%-15.7%
25.04
37.84
15.00
-

We encourage readers to review our complete legal statement on “Disclaimer” page.
12

■■Performance Trends

Balance Sheet

Helios Techno Holding
6927 Tokyo Stock ExchangeFirst Section

8-Jul.-16

Important disclosuresand disclaimers appear
at the end of this document.

FY3/12
6,051
1,638
2,808
1,373
3,195
2,680
243
272
9,246
2,567
751
1,072
828
237
5,847
2,133
2,563
2,718
-1,567
3
0
5,850
9,246

Current assets
Cash and deposits with banks
Notes and accounts receivable
Inventory assets
Fixed assets
Fixed assets
Intangible assets
Investments and other assets
Total assets
Current liabilities
Notes and accounts payable
Short-term borrowings
Long-term liabilities
Long-term borrowings
Shareholders’ equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Accumulated other comprehensive income
Subscription rights to shares
Total net assets
Net liabilities and assets

FISCO Ltd. Analyst
Hiroyuki Asakawa

FY3/13
6,081
1,632
2,794
1,548
3,049
2,602
150
296
9,131
2,141
910
439
649
268
6,291
2,133
2,563
3,161
-1,567
26
22
6,340
9,131

FY3/14
7,967
2,663
3,330
1,610
2,807
2,193
162
451
10,774
2,824
1,420
538
688
457
7,124
2,133
2,563
3,915
-1,48886
50
7,261
10,774

FY3/1518,802
1,836
4,213
12,144
2,726
2,093
149
483
21,528
12,629
1,271
2,969
857
654
7,911
2,133
2,563
4,459
-1,245117
12
8,041
21,528(unit: ¥mn)
FY3/16
11,898
3,158
4,884
2,553
2,765
2,181
109
474
14,663
5,400
1,417
519
617
434
8,532
2,133
2,563
5,047
-1,211106
6
8,645
14,663

FY3/13
840
-234
-629
0
-23
1,608
1,585

FY3/14
747
144
79
30
1,000
1,585
2,585

FY3/15-3,508
91
2,611
1
-804
2,585
1,780

(unit: ¥mn)
FY3/164,503-317-2,863
-1
1,322
1780
3102

Cash Flow Statement

Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Adjustments to cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

FY3/12
84
-166
93
0
11
1,597
1,608

伪伪Shareholder Returns
Raised the FY3/16 dividend by ¥3 to ¥15
The Company’s basic method of returning profits to shareholders is through dividends. The Company
has not announced an official level for dividends. However, looking at past dividends, it is clear that
the Company has basically paid a stable dividend, increasing it in line with growth in results.
The Company increased the FY3/16 dividend by ¥3 YoY to ¥15, reflecting steep sales and profit
gains. The dividend payout ratio worked out to 33.2% based on ¥45.25 EPS. Management aims tokeep the dividend at the same level as the previous year at ¥15, despite the outlook for lower sales
and profit in FY3/17. This stance puts the dividend payout ratio at 39.6%, using the FY3/17 EPS
estimate.

We encourage readers to review our complete legal statement on “Disclaimer” page.
13

■■Shareholder Returns

㻱㼍㼞㼚㼕㼚㼓㼟㻌㻼㼑㼞㻌㻿㼔㼍㼞㼑㻘㻌㻰㼕㼢㼕㼐㼑㼚㼐㻘㻌㼍㼚㼐㻌㻰㼕㼢㼕㼐㼑㼚㼐㻌㻼㼍㼥㼛㼡㼠㻌㻾㼍㼠㼕㼛㻌㻱㻼㻿㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕(¥)

Helios Techno Holding

㻡㻟㻚㻝㻜

㻟㻜㻚㻜㻜

㻟㻣㻚㻤㻠

㻝㻜㻚㻜㻜

㻞㻤㻚㻜㻑
㻞㻝㻚㻜㻑

㻞㻜㻚㻜㻜

8-Jul.-16

Important disclosuresand disclaimers appear
at the end of this document.

㻟㻡㻚㻜㻑

㻠㻡㻚㻞㻡

㻝㻤㻚㻤㻑

㻞㻢㻚㻤㻞

㻝㻜㻚㻜㻜

㻤㻚㻜㻜

㻠㻞㻚㻜㻑

㻟㻟㻚㻞㻑
㻠㻟㻚㻥㻣
㻞㻣㻚㻟㻑

㻞㻥㻚㻤㻑

㻠㻜㻚㻜㻜

6927 Tokyo Stock ExchangeFirst Section

（㻑）
㻟㻥㻚㻢㻑

㻢㻜㻚㻜㻜
㻡㻜㻚㻜㻜

㻰㼕㼢㼕㼐㼑㼚㼐㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕

㻝㻞㻚㻜㻜

㻝㻡㻚㻜㻜

㻝㻡㻚㻜㻜

㻝㻠㻚㻜㻑

㻣㻚㻜㻑

㻜㻚㻜㻜

㻜㻚㻜㻑
㻲㼅㻟㻛㻝㻟

㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣㻌㻱

Source: Prepared by FISCO from the Company's financial report summary and others


FISCO Ltd. Analyst
Hiroyuki Asakawa

We encourage readers to review our complete legal statement on “Disclaimer” page.
14

Disclaimer
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FISCO Ltd.