Securities Code: 6262 (TSE)

Mid-Term Management Plan
FY3/2025-FY3/2027(April 2024-March 2027)

Beyond the Limits

Table of contents
1. Why PEGASUS―Introduction―

Two Business Pillars―

Global Niche Differentiation Strategy―

Production Bases

2. Where We Are―

Business Environment―

Financial Performance―

Financial KPIs―

Progress of Key Measures

3. Growth Strategy & Priority Measures―

Basic Policies & Mid-Term Management Plan

―

KPIs

―

Business Portfolio―

Industrial Sewing Machine―

Automotive Parts―

PEGASUS Sustainability Plan―

Financial Strategy―

IR System2

Why PEGASUS: Introduction
Corporate Philosophy
Through our people & technology, we strive to provide better
Products, Service and Quality and make a positive contribution
to the world of “social development”
Since its founding in 1914, PEGASUS has developed its businesses as a manufacturer ofindustrial chainstitch sewing machines with the group’s shared philosophy of“contributing to the development of clothing cultures around the world through ourpeople and technology.”
Our operations have now expanded into automotive business field, in addition to clothing
space, supporting people’s necessities in daily lives through providing die-casting partsfor automobile industry which requires stringent quality standards including seat belt
retractors and engine room related parts utilizing our precision metalworking
technologies cultivated over the years.
In view of the business expansion into the automotive space, we changed our corporatename to PEGASUS CO., LTD. from the previous PEGASUS SEWING MACHINE MFG. CO.,LTD. in April 2023.

Shigemi Mima
Representative Director and President

Beyond the Limits
We decided to put up the slogan “Beyond the Limits” for this Mid-Term Management
Plan.
In a rapidly changing world, it is important for us to receive “recognition” from ourcustomers and we consider that as our mission. With that in mind, we will continue to
strive to differentiate ourselves in three areas; products, service and quality, so we cango beyond our customers’ imagination, our own limitations, and common sense of society.
Industrial sewing machine production

Automotive parts production

3

Why PEGASUS: Two Business Pillars
Industrial Sewing Machine*Japan, China, and Vietnam

We manufacture and sell industrial sewing
machines used for apparel production at
sewing factories with a focus on
chainstitching machines used mainly for
knitted clothing.

✓ Sold in about 70 countries

Automotive Parts*China, Vietnam, and Mexico

We manufacture and sell automotive parts
that require technological capabilities suchas safety belt retractor (wind-up device)
parts and other automobile parts.

✓ 4 production bases in
3 countries✓ Manufacturing globally*✓ Manufacturing globally*✓ 3,500+ types of sewing
machines in product lineup✓ Production capacity ofover 100 mil units/year

Characteristics & Strengths

Characteristics & Strengths

We pride ourselves on the world-leading technological capabilities we havefostered over the years. We offer high precision machine types that reach 10,000rpm. We address a wide range of needs for ever-evolving functional materials suchas highly elastic materials and thin but durable fiber materials.

We took advantage of our technological capabilities nurtured through our industrial
sewing machine business and entered into the automobile industry that requires
competitive production capability, quality, and cost. We provide high value-added
products with our precise processing technologies and global production network.

Basic Policy

Basic Policy

By thoroughly differentiating in the 3 areas of products, service and quality as wellas creating and expanding our markets, we will establish a strong position in theindustrial chainstitch sewing machine industry.

By adding higher value to products and reinforcing sales and marketing, we will
facilitate the expansion of our distribution channels.

4

Why PEGASUS: Global Niche Differentiation Strategy⚫ We have been actively investing in overseas markets and expanding our sales and production bases globally providing quality
products and services that satisfy local needs with a focus on niche products such as industrial chainstitch sewing machines
produced with our world-leading technological capabilities.
⚫ In addition, we aim to build a stronger management foundation and to improve our corporate value through generating andexpanding the markets we serve with our advanced technological capabilities and unique production processes through the
pursuit of our core technologies.

Nantong, China

Tianjin, China
Tianjin, China

Suzhou, China

Qingdao, China

Dongguan, China
Kaiserslautern, Germany

Shiga, Japan

Istanbul, Turkey

Osaka, Japan (HQ)

Tokushima, Japan
Ningbo, China
Hong Kong, China

Ludhiana, India
New Delhi, India
Bangalore, India
Tirupur, India

Hai Duong, Vietnam

Miami, USA

Nuevo Leon, Mexico
Honduras

Ho Chi Minh, Vietnam

Dong Nai, Vietnam

Sri Lanka

Narayanganj, Bangladesh
Chittagong, Bangladesh
Dhaka, Bangladesh

Columbia
EcuadorPeru

Industrial sewing machine production baseIndustrial sewing machine sales office
Singapore

Automotive parts production baseSemarang, Indonesia

5Why PEGASUS: Production Bases
Shiga, Japan

Shiga, Japan

Established in October 1968
Mother factory producing high-end
sewing machines and custom products
ISO9001:2015

Industrial Sewing Machine
Automotive Parts

Tianjin, China

Established in January 2007
Founded jointly with Shimamoto Die casting Co., Ltd.
PEGASUS automotive parts business started from this location.
Production base for automobile parts for China and Europe
IATF16949:2016, VDA6.3, VDA6.5

Tianjin, China

Nantong, China
Tokushima, Japan
Tokushima, Japan

Established in March 1962
Production of sewing machine parts,
maintenance of processing equipment

Established in June 2021
Established as a production base close
to China’s automobile industry cluster
IATF16949:2016, VDA6.3, VDA6.5

Nantong, China

Tianjin, China

Tianjin, China

Established in May 1985
Main production plant for sewing
machines with R&D capabilities
ISO9001:2015/14001:2015/
45001:2018

Nuevo Leon, Mexico
Established in February 2016
Production base for automobile
parts for North America
Currently expanding the plant

Nuevo Leon, Mexico

IATF16949:2016

Hai Duong, Vietnam

Hai Duong, Vietnam

Established in January 2008
Second main production plant for
sewing machines
Currently expanding the production
capacity
ISO9001:2015 / ISO14001:2015

Dong Nai, Vietnam
Established in April 2013
Production base for automotive partsfor Southeast Asia and Japan
IATF16949:2016

Dong Nai, Vietnam

6Where We Are: Business Environment
Industrial Sewing Machine
Impact from apparel consumer trend⚫ Cautious stance continues toward capital
investments due to the issue of mass disposalof clothing and changes in consumer needs
deriving from rising middle-income class✓ Establish high-mix small-lot production system✓ Develop products with balanced quality andpricing

Evolution and diversification infunctional materials for fabrics

Labor shortage issue in the sewing
industry⚫ Development of sewing machines suitable forfabric materials⚫ Compliance with sewing quality standards⚫ Shifting of leading production countries as a
backdrop of soaring labor costs⚫ Lack of human resources with technical skills✓ Strengthen mid to long term productdevelopment and basic research✓ Reinforce labor-saving/deskilling products✓ Respond to globalization of sewing factories

Adapting to next-generation vehicle
technology

Rising labor costs and pricing
pressure⚫ Increasing demands for precision die castingproducts for sensor components especially for
EVs.

⚫ Rising wages due to global inflation⚫ Cost reduction requests from customers andintensifying price competition with competitors✓ Tap into new product demand with precision
metalworking technologies cultivated throughindustrial sewing machine business✓ Expand applicable product sizes from small items
to medium-sized items✓ Reduce costs (automation and labor saving in
fabrication processes)

Automotive Parts
Geopolitical risks⚫ Continued instability in supply chain due to
U.S.-China trade friction, unrest in the Middle
East, and international logistics issues (RedSea crisis, Panama Canal water shortage, etc.)✓ Establish the position as a global supplier
responding to the needs to procure parts inneighboring regions

Reaffirm the risks in our business environment and execute upfront investment.
We aim for sustainable growth by grasping the business opportunities brought by changes surrounding our businesses.
7

Where We Are: Financial Performance
Net Sales

Operating Profit
Million yen

Industrial Sewing
Machine

工業用ミシン

Million yen

Operating
営業利益
ProfitAutomotive Parts
オートモーティヴ

6,366

1,847

17,542

4,015

12,422

7,921

2,799
16,482

18,922

516

9,622

9.0%

10.5%

9,620

38

4.2%
2021年
FY3/21
3月期

Profit Ratio

2,657

25,28820,498Operating
営業利益率

2022年
FY3/22
3月期

2023年
FY3/233月期

2024年
FY3/243月期• Industrial sewing machine business saw demand recovery
after the Covid-19 pandemic, but the demand peaked out inearly 2023 and became sluggish in FY3/2024 due to backlash,which affected the sales revenue temporarily (currently inrecovery trend).
• On the other hand, automotive parts business experienced
good sales increase.

0.2%

2021年
FY3/21

2022年
FY3/22

2023年
FY3/23

2024年
FY3/24

3月期

3月期

3月期

3月期

• The operating profits saw steady performance between
FY3/2021 and FY3/2023.
• The total operating profit declined due to the decrease of net
sales in the industrial sewing machine division in FY3/2024,
however, we expect its recovery in FY3/2025 and onward withthe market revival.

8

Where We Are: Financial KPIs
ROE

Stock Price and P/B Ratio
8.1%

株価
Stock Price

Cost of shareholders’ equity:
approx. 7%

0.60
0.53

6.4%

PBR Ratio
P/B

0.56
0.45

3.3%

¥595

¥634

2022年
FY3/22
3月期

2023年
FY3/23
3月期

¥458

¥535

-0.3%
2021年
FY3/21
3月期

2022年
FY3/22
3月期

2023年
FY3/233月期

2024年
FY3/243月期

Our ROE has been struggling to go above the recognized cost ofshareholders’ equity (approx. 7%).

2021年
FY3/21
3月期

2024年
FY3/243月期

The level of the ROE required by the capital market (8.0% orabove) has not been achieved leading to inadequate evaluation.

We will manage our business operation with the capital cost and share price in mind
and be committed to improve corporate value and sustainable growth in mid to long run
by implementing measure described in this Mid-Term Management Plan.

9

Where We Are: Progress of Key Measures
Key measures

Industrial
Sewing Machine
Division

Automotive Parts
Division

Reinforcement ofManagement
Foundation

Progress (review)

Develop machine types supporting
flexible manpower lines

Developed multifunctional and electrical equipment integrated models

Expand market share throughimprovement of existing models

Renewal of design and functionality to make our products more competitive

Acquire new market by introducing
strategic models

Introduced price competitive models to tap into lower-end market where
Chinese brands have high sharesStrengthen production system torespond to order increase

Secured up to 4x production capacity by a new plant constructed in Vietnam(growth investment of approx. 2 billion yen) *In operation from April 2024

Reinforce production system toward
acquiring new orders

Expansion of Mexico plant and new plant construction in Nantong, China (growthinvestment of approx. 1.6 billion yen) and installed additional die casting machine

Improve casting/machining technologies forbetter quality and additional cost reduction

Labor cost reduction by automation of finishing process, complete prevention of defective
products released outside of the company by installing camera inspection system, andshortened MC processing cycle by replacing tools (blades)

Facilitate introduction of newtechnology

Realization of casting products previously considered difficult to produce by die castingby introduction of vacuum puller and push-in devices for special die casting process

Stronger governance system

Achieved external officer ratio of more than 50% and female officer ratio 25%
Appointment and Compensation Committee and Sustainability Committee established andin operation

Enhancement of human capital

Proactive recruitment of new graduates and career professionals and implementation ofvarious education plans for human resource training and development
Appointment of local staff to managerial and officer positions

Financial and capital policies

Implementation of growth investments (active capital investments and overseas expansion)
Stable return to shareholders

10Growth Strategy & Priority Measures: Basic Policies & Mid-Term Management Plan
Beyond the Limits
We continue to strive to achieve differentiation in 3 areas (products, service and quality) and to exceed customers’ imagination,
our own limitations, and common sense of society by implementing growth strategy and priority measures described in this
Mid-Term Management Plan to reach the targets: 30 billion yen in Net Sales and 3.2 billion yen in Operating Profit.

Sustainable growth ofexisting business
Further evolution throughnew business

Mid-Term Management Plan FY3/25-FY3/27

30 bn yen
Operating Profit 3.2 bn yen
Net Sales

MarketStrategy
Production
Strategy

Geographic
expansion of sales& enhancement ofcustomers

Reinforcement ofequipment &optimization of
production area

Product
Strategy
Enrichment of
product lineup

Issues to be addressed
Enhance production system

Strengthen product development capabilities
and improve processing technologies

Promote sales ofmarket penetration products

Implement financial and capital measures

March 2024

Improve corporate value
Execute growth strategy and priority measures

March 2027

BeyondSustainable growth
Further advancement
11

Growth Strategy & Priority Measures: KPIs

Net Sales
Operating Profit
Operating Profit
Ratio

FY3/2024

FY3/2027(actual)(target)17,542 mil yen

30,000 mil yen

38 mil yen

3,200 mil yen

0.2% ▶

10.5%

Executegrowth strategy &priority measures▼
Improve
corporate value
ROE

ROE
Dividend Payout
Ratio

-0.3%

-

8.6%
30%+

8%+

(Cost of shareholders’ equity:
approx. 7%)

Improve P/B ratio

12Growth Strategy & Priority Measures: Business Portfolio⚫ We aim to establish stable profit structure by increasing the share of automotive parts in both net sales and profit.

Changes in Business Portfolio

Automotive
Parts

Net Sales18.3 bn yen

Automotive
Parts

29%

FY3/22-FY3/243-year total

Industrial
71% Sewing Machine▶

35%

27.4 bn yen

FY3/25-FY3/27
3-year total

45 bn yen

65%
Industrial
Sewing Machine

51.1 bn yen

AutomotiveParts

1.9 bn yen

Segment Profit

Automotive
Parts

25%

FY3/22-FY3/243-year total

75%

Industrial
Sewing Machine

5.9 bn yen▶

4.6 bn yen

40%

FY3/25-FY3/27
3-year total

60%

Industrial
Sewing Machine

6.8 bn yen
13Growth Strategy & Priority Measures: Industrial Sewing Machine

Industrial
Sewing Machine

FY3/2024

Net Sales

9.6

FY3/2027

bn yen ▶ Net Sales

20 bn yen

Development of
New Products

Stronger Production
Structure

Expansion ofDistribution Network

Priority Measures toward FY3/2027

Priority Measures toward FY3/2027

Priority Measures toward FY3/2027⚫ Development of labor-saving devices(User-friendly support)⚫ Full-scale operation of Vietnam plant andexpansion of processing facilities⚫ New market development (10 countries
in South America, Africa, etc.)⚫ Development of motor integrated sewing
machine⚫ Introduction of 24-hour production
system⚫ Development of wholesale distributors (4countries)⚫ Development of next generation sewing
machine (digital control)⚫ Establishment of two major production
bases with China⚫ Sales collaboration with JUKI Corporation⚫ Adaptation to sewing specifications
addressing market needs⚫ Focusing on basic research on sewing
and technologies⚫ Introduction of new processing
equipment and expansion of production
capacity⚫ High-mix, small-lot production system⚫ Strategic introduction of popular models⚫ Improvement of existing models⚫ Expansion of product lineup withbalanced quality and price14

Growth Strategy & Priority Measures: Automotive Parts

Automotive Parts

FY3/2024

Net Sales

7.9

FY3/2027

bn yen ▶ Net Sales

10 bn yen

Establishment ofSupply System

Technological
Development

Expansion ofDistribution Network

Priority Measures toward FY3/2027

Priority Measures toward FY3/2027

Priority Measures toward FY3/2027⚫ Substantial expansion of production
facilities.
Establishment of stable supply system
for China, North America, and Asia.

⚫ Enrichment of product lineup.
Experimenting new technologies andincreasing the size of existing parts.

⚫ Acquiring customers leveraging ourstrength with 4 production bases in 3
countries (sharing customer information).

⚫ Active promotion of automation andlabor-saving.
Realizing stable quality, higher
productivity, and cost reduction byautomation of finishing processes etc.

⚫ Supply chain optimization.
Production and sales expansion at
locations closer to customers.

⚫ Expansion into the EU region.
Examined establishment of new
production base in the EU region tofurther strengthen local production andsales.
Detailed investigation of businessenvironment etc. for the potential
countries for expansion.

⚫ Improvement of mold design andmanufacturing technologies.

⚫ Tap into Japanese and non-Japanese
auto parts manufacturers at eachlocation.

15

Growth Strategy & Priority Measures: PEGASUS Sustainability Plan
Since its founding, PEGASUS has strived to solve social issues through daily business activities based on our corporate philosophy:“Through our people & technology, we strive to provide better Products, Service and Quality and make a positive contribution to
the world of social development.”
We formulate our basic business policy with consideration for the importance of sustainability of society and the global environment andwill continue to strive to develop a sustainable society through the business activities based on the spirit of our corporate philosophy.

E

Environment

S

SocialG

Governance⚫ We are installing solar panels on
our production facilities andpromoting effective use of
rainwater at the headquarters
building.

⚫ We are aiming for the female
employee ratio of 35% and 15% for
the ratio of women in managerial
positions by 2030.

⚫ We enhance dialogue with various
stakeholders from different angles
including our businessperformance and policies.

Solar power generation
at Tianjin production facility

Facilitate further participation of
female employees

Enrich IR communication

16

Growth Strategy & Priority Measures: PEGASUS Sustainability PlanE
(Environment)

S

Issues tackled

Main activities

Contribution to reducing
environmental impacts• Development of highly energy-efficient small motors• Development of a clean environment at die-cast production sites (installation of equipment that
purifies wastewater and reduces air pollutants)• Saving resources by providing digital instruction manuals for sewing machines• Introduction of renewable energy and equipment with high environmental performance• Introduction of solar power generation equipment as part of carbon neutral initiative

Enhancement of
human capital• Appointment of local staff to managerial and officer positions at overseas subsidiaries• Improvement of operational efficiency by introducing remote work and using IT to promote diverse
work styles• Sharing technology and knowledge with local staff at overseas subsidiaries• Active recruitment of new graduates and career professionals• Implementation of various educational plans for human resource training and development

Contribution to improving
the working environment• Development of user-friendly products that are safe and easy for customers to use (improved
usability has reduced the work of operators and improved quality and productivity)• Improvement of safety by introducing automatic carrying system at production facilities• Revitalization of the organization and improvement of productivity by introducing a refreshing time

Reinforcement of corporate
governance system• External officer ratio of more than 50%, emphasis on female officer ratio(appointment of three directors and two auditors among independent external officers (three men
and two women))• Diversity of the Board of Directors (proactive appointment of those active in various fields todirector and managerial positions regardless of nationality)• Increased communications with investors• Thorough financial strategy (cash allocation, equity ratio, etc.)(Social)G(Governance)

Future policies

Discussions are underway toward disclosure of non-financial information including responding to TCFD and disclosure of
integrated reports. We will implement sustainable business to establish a sustainable business model and highly
transparent relationships with stakeholders.
17Growth Strategy & Priority Measures: Financial Strategy
FY3/2025-FY3/2027 3-year total
Cash In

Cash Out
Investment Policy

Growth Investment
Approx. 4.2 bn yen

Operating Cash Flow
Approx.

Industrial Sewing Machine(core business)

Automotive Parts(growing business）

Sustainability
Investment

Approx. 1 bn yen

Approx. 3 bn yen

Approx. 0.2 bn yen

Production capacity expansion &streamlining

Production capacity expansion &streamlining

IT/Infrastructure investment- New Vietnam plant construction- Investment in production facilities- Mexico plant expansion- Investment in production facilities

R&D investment

R&D investment

Human Resource investment- Education & training- Recruitment

Shareholder Return Policy▶

Dividend payout ratio of
30% or above

7 bn yen
Return to
Shareholders
Approx. 1.6 bn yen

Interest-Bearing Debt
Reduction
Approx. 1.2 bn yen

Shareholder Benefit Program
To express our gratitude to the shareholders for their continued
support and patronage, we offer the shareholder benefit program:■ Catalog gift (equivalent to 2,000 yen)

Our basic policy is to provide stableshareholder returns with a target payout ratioof 30% or above as profit distribution inaccordance with consolidated businessperformance.

[Number of shares held] 500+ [Holding period] Not specified■ Catalog gift (equivalent to 4,000 yen)
[Number of shares held] 3,000+ [Holding period] 1 year or longer*■ Delivered at each fiscal year end (March 31)*”[Holding period] 1 year or longer”: Shareholders who have been listed or recorded
three or more times consecutively on the shareholders' register at the end of Marchand September of each year under the same shareholder number and who haveheld 3,000 or more shares of the Company's stock at any time during the period.

Fund Procurement Policy
Securing funds on hand for expansions and risks
Securing extra financing capacity for large investment opportunities

18

Growth Strategy & Priority Measures: IR System

Enrichment of information disclosure

Dialogue with shareholders/investors

Provide information:

Increase communications:⚫ Information disclosure in English for overseas
investors (earnings briefings, financial reports,
convocation notices, other presentation materials, etc.)⚫ 50+ IR/SR meetings annually with the
Representative Director and President etc. as themain speaker⚫ Promote disclosure of non-financial informationsuch as materialities related to sustainability⚫ Dialogues regarding the topics such as changes inbusiness environment and our business model andstrengths reflecting the area of interest of theshareholders and investors⚫ Responding to climate change and promoting
initiatives related to reduction and mitigation ofenvironmental impact⚫ Hold business briefings per business segment

We aim to deepen our relationships with existing shareholders/investors and to facilitate
investments from new shareholders/investors through our enhanced IR system.

19

PEGASUS SEWING MACHINE MFG. CO., LTD. changed its corporate nameto “PEGASUS CO., LTD.” on April 1, 2023.

<Notes regarding this document>
Financial results forecast and other forward-looking information contained in this document are based on information currently available to theCompany as well as estimates on the economic environment and are therefore subject to a number of uncertainties. Actual results may differ fromthese forecasts due to a variety of factors.

<Contact>
Takashi Kaneko, Senior Executive Officer
PEGASUS CO., LTD.
Corporate Office: 5-7-2, Sagisu, Fukushima-ku, Osaka 553-0002, Japan