Business Outlook 2024

Long-term Goals ofShinhokoku Material Corp.
towards our 80th anniversary in 2029

February 9, 2024

Business Outlook 2024

Shinhokoku Material Corp.

2Market Outlook
Long-term

Diversifying Frontier Fields
Space, Aviation
andEnvironmental

Semiconductors as Strategic Materials
Geopolitical Risks & Economic Security
Establishment of Reliable Supply Chain
Investment of Over 150B$ in 10years

Explosion of Demand for Our Invar Alloys
Outlook 2024
Slight increase over the previous period,

Total Sales : 6.6B¥

mainly due to delay in recovery in semiconductor-memory and to inventory
accumulated in user side. Recovery is expected from the latter half with FPD
equipment at the same level and a decease in seamless-related products.
Shinhokoku Material Corp.

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Outlook of 2024 Performance

We expect an increase in ordinary profit of 70M¥, which in turn is projected toboost in dividends by 10¥ to 40¥. This financial improvement is largely attributed
to a substantial cost reduction achieved through quality improvement, despite amodest increase in sales. Note that this projection takes into account potential
cost inflators such as transportation and electricity expenses.
unit＝M¥

2023 results

2024 plan

Full year

1st Half

2nd Half

Full year

Sales

6,484

3,200

3,400

6,600

Operating Income

628

270

430

700

Ordinary Profit

644

280

430

710

Net Income

476

210

320

530

Earnings per share

142¥

62¥

96¥

158¥

ROE

9.5%

−−9.5%Dividend

40¥
Ordinary 30¥
Special 10¥

40¥（Ordinary 30¥ ＋ 10¥ Increased）
Shinhokoku Material Corp.

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Long-term Goals of Shinhokoku Material
towards our 80th Anniversary in 2029

Shinhokoku Material Corp.

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Long-term Goals of Shinhokoku Material
INVAR GLOBAL NICHE LEADER leads to further growth
We aim to become a company which is an indispensable partner of our customers
contributing to society prosperity and one filled with smiles of our employees, eventuallyachieving sales of 10 billion yen.
橋本 英二
1. Indispensable to society
2. Trusted by customers and society
3. Supported by shareholders
We are a company with the world's leading Invar alloy design and manufacturing technology,
providing the best solutions with unique alloys tailored to our customers,
making full use of casting, forging, and 3D additive manufacturing according to particular needs andcontinuing to grow through constant technological innovation.

Shinhokoku Material Corp.

6Long-term Roadmap
Accelerated growth ofSemiconductor and FPD markets

LCD panel boom

Generative AI
Data Center

Autonomous
Drive
Flying Car

Aerospace
Astronmy

HydrogenSociety
Environmental

Radical restructuring: The 2nd founding

Targeted Sales
10B¥ in 2029

Semicon depression
COVID-19 pandemic

Lehman Shock

Shinhokoku Innovation
Invar Global Niche Leader

Sales 6.5B¥
in 2023

Establishment of three pillars
of manufacturing withCasting, 3D AM and Forging

Carbon Neutral, Environmental Sustainability, SDGs
Sales 1.8B¥
2000

Strengthening phase2010

Expanding phase

Growth phase
2020

Shinhokoku Material Corp.

2030
7Our Vision
Long-term Goals towards our 80th anniversary in 2029
FutureVision

INVAR GLOBAL NICHE LEADER

Corporate
Philosophy

Provide tailored solutions for our customers

Management
Philosophy

 Create innovative materials and develop their manufacturing process
 Establish advanced fundamental technology
 Contribute to sustainable society and human life and culture

Our credo

New Innovation by a small excellent R&D
leading to a world’s leader in invar alloy development

 Act honestly
 Continue challenging the status quo for achieving a better future Work diligently with honesty and put our heart and soul into our products
 Produce valuable products and contribute to sustainable society and the nation
 Contribute to all the stakeholders; customers, stockholders and our suppliers Make our employees and their family happy
Shinhokoku Material Corp.

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Company Image We Aim toUnwavering Trust from customers

Strong Support from shareholders
 Continuous growth High profitability
 High Return to shareholders
 Increase in stock liquiditySupport
 Strengthening IRfrom
 Engaging communication
shareholders
on the website
SocialContribution

 Quick response for diversified needs
 Steady supply with highest quality
 Prompt recovery upon an urgent issue Compliance with legal regulations
Trust fromcustomers

Smiles onemployees

Social Contribution
 Alloy development for society prosperous
 Development and supply of sustainable resources Growing together with a local community
 Carbon reduction through SDGs activities

Shinhokoku Material Corp.

Shining Smiles on every employee
 Work with dreams, proud and fulfilment
 Strong trust relationship like a family Fair evaluation for efforts
9 Top wage level in Japan

Shinhokoku Innovation
CreativeInnovative

Research&Development

Manufacturing
technologies

ActiveSales strategy

Invar Global Niche Leader（Exploration of dream metals as the key technologies to achieve a prosperous society）
Shinhokoku Material Corp.

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Our strategy
Creative Research & Development
Pioneering the new future by creative R&D
To become Invar Global Niche Leader

Shinhokoku Material Corp.

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Creative R&D
1. Invar alloys(1) Recent investment in R&D (-2023)

Thermal expansion measurement equipment

 Thermal expansion measurement equipment x 2 : 22M¥
 Vacuum arc button melting furnace : 16M¥
 High precision magnetic measurement equipment, VSM : 21M¥
 Inductively coupled plasma optical emission spectrometer : 20M¥

(2) Future investment in R&D (2024-2029)

Vacuum arc button melting equipment

 High precision thermal expansion measurement equipment : 60M¥
 3D additive manufacturing testing machine : 20M¥
 X-ray diffraction spectrometer : 30M¥
 Oxygen/Nitrogen analyzer, X-ray fluorescence analyzer : 40M¥
VSM magnetic measurement equipment
Shinhokoku Material Corp.

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Shinhokoku’s invar alloy lineup
Hightemp

800

Temperature [ºC]600

Current lineup tailored to the application

Warmtemp

400

200

Roomtemp

0

Low temp
Cryogenic temp

−2000

2.0

4.0

6.0

8.0

Coefficient of thermal expansion[10-6/ºC]
Shinhokoku Material Corp.

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Creative R&D Future Targets
1. Further R&D of invar alloys
a. Establish state of the art technology of invar alloys
Evolve into a professional of invar alloys as number one in development andmeasurement precision

Clarify the mechanism of invar properties nobody else would try to Origin of invar effect using VSM magnetic measurement
 Relationship between invar property and its substructure of invar alloyb. Development of invar alloys for some particular environments
For advanced semiconductor manufacturing equipment
 Under high magnetic field Under ultra-high vacuum environment
For industrial machinery Under high stress field At cryogenic and under hydrogen environment
Shinhokoku Material Corp.

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Creative R&D Future Targets
2. Environmental solutions
 Grate material：Customize EGNIS series alloys to individual environment ofeach incinerator
 Spinning tray material : Achieve creep strength as well as corrosion resistance Hydrogen production material : High strength under hostile environments

Firm steps forward toexploration of dream metals

Shinhokoku Material Corp.

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Innovative manufacturing technologies
Establish three pillars of manufacturing: casting, 3D AM and forging

Growth potential
Sales power
Casting

３DAMForging

R&D capability,
manufacturing strength,
technical skills
Shinhokoku Material Corp.

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Innovative manufacturing technologies Facility investment
1. Investment during last 6 years (-2023)
 Induction furnace for melting : 62M¥
 Carbon analyzer : 10M¥
 Shakeout machine : 30M¥
 High recision lazer welding machine 50M¥

High precision laser welder（ALPHA LASER JAPAN）

2. Major planned investment (2024-2029)
 3D additive manufacturing equipment : 400M¥ (phase 1-3)
 Automation and labor-saving investment : 300M¥
3D sand molding machine, Learning machines for welding and sand mixing,
Automatic melting facility
Shinhokoku Material Corp.

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Innovative manufacturing technologies Casting
1. Proprietary Casting Simulation Technology
 Optimal procedure of casting based on the fluid dynamics and metallurgy
 Significant reduction of set-up period based on high precision analysis (shorten lead time)

2. 3D Sand Mold Manufacturing
 Sand mold manufacturing without wooden mold frame using 3D printer

3. Restructuring of Melting and Casting Process by AI assisted system Introducing a learning system to the sand mixer (labor-saving) Feasibility study on automation of melting process (automation)

4. Innovative Welding & Repairing Technology High Precision Finishing using Sophisticated Laser Welding Machine (Shorten lead time from 2023)

 Automatic Welding based on the Teaching System (Labor-saving)
Shinhokoku Material Corp.

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3D Additive Manufacturing Technology
1. Establishment of 3D Additive Manufacturing (AM) Best 3D AM machine, selected through a detailed comparison of the machines (quality and cost) Accelerating development of unique products through collaboration with manufacturers
 Achieving integration and weight reduction of complex shaped products(reducing machining, eliminating welding, shorten lead time and cost saving) Hybrid structure corresponding to customer’s need

2. Accelerating Development of AMed and Powder Alloys Products(a) Commercialization of AMed invar type alloys
 Optimization of raw material powders and establishment of supply chains Prototyping and performance evaluation of model parts
 Optimal performance and cost according to the respective usage(b) Long-term development of AM products Development of ultra-lightweight integrated structure products Development of high rigidity alloys・高耐食性合金の開発
Shinhokoku Material Corp.

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Innovative manufacturing technologies Forging
1. Innovation of Forging Technology
Through collaboration with a forging manufacturer, we establish
 Achieving optimal microstructure control technology of the alloys(a combination of precise alloying elements control and forging technology)

 Establishing adequate plastic deformation technology for various shapes (plates, rods, pipes, wires, etc.)

By utilizing the established manufacturing technology of large scale ingots, we aim to improving quality, reducing costs, and expanding the product range
Utilizing the established innovative manufacturing technology,
we provide the best solutions to the customers by three pillars with casting, 3D AMand Forging according to the respective need and desired properties.

Shinhokoku Material Corp.

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Our strategy
Aggressive Marketing Strategy
Further Expansion in Semiconductor and FPD Market
Seek for Aerospace and Environmental Fields and Global expansion

Shinhokoku Material Corp.

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Marketing strategy for Base Field
World outlook for semiconductor (unit: 10B$)
Ref. SEMI Japan

1200

Average growth rate = 10% from 2023 to 2030

1000
800
600

577

586

2021

2022

461

522

599

670

1000

714

400
20002020

2023

2024FC

Shinhokoku Material Corp.

2025FC

2026FC

2030FC
22Marketing strategy for Base Field
1. Semiconductor Manufacturing Equipment
 Further expansion of demand for low thermal expansion alloys with increasing
the demand for Generative AI, Data center, Autonomous driving, Nextgeneration communication
 Providing various high performance low thermal expansion alloys to the mostadvanced semiconductor manufacturers
2. FPD (OLED and LCD panel) manufacturing equipment
 The demand is steadily increasing due to investments in equipment for
OLED panels for high-definition large-screen TVs, tablets, computers, etc.

Shinhokoku Material Corp.

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Marketing strategy for New Fields : Space / Aviation / Environmental /Hydrogen Society
1. Space / Astronomy, JAXA (invar type alloys)(1) Space Rocket 'IC-DX' will be used for parts of the fuel supply line for space rockets very soon.
 'IC-LTX' is scheduled to be installed in JAXA's projects, 'Mars Exploration Satellite-MMX' and 'JASMINE'.
(2) Flying Cars & Commercial Drones (Invar Alloy Mold)
 Completed the development of Invar alloy for CFRTP molding for mass-produced aircraft.
(3) Environment
 Invar type alloys applicable under cryogenic temperatures and hydrogen environments
 Developed 'EGNIS', corrosion-resistant alloy series for incinerator grates
 Developed 'G Alloy' for biomass power generation boiler floor nozzles
 New demand for seamless tools for decarbonization.
(The demand has expanded from traditional oil/gas drilling to new technology (CCS) that buries CO2underground.)Shinhokoku Material Corp.

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Numerical Targets
Unit: M¥

2023
results

Further acceleration of aggressive management

Sales

6,484

Base
field

Operating Income644

Expansion of Semiconductor market

Steady FPD market
New seamless-related demandNewfield

Entry into aviation and aerospace sector2029
targets
10,000
1,500

ROE

9.5%

PBR

0.7

Contribution to decaronization>1.040¥Establishing three pillars with casting, 3D
AM and Forging

90¥

DividendInvestments

Ordinary 30¥
Special 10¥

200

Flying cars

15%

Invar Global Niche Leader
Shinhokoku innovation
Shinhokoku Material Corp.

2000 in 6 years
25Major facility investment in the past 6 years
Category

Unit: M¥

Facility and equipment

Amount

Thermal expansion measurement equipment, 2 sets
Vacuum arc button melting furnace,
Magnetic measurement device (VSM),
high precision laser welding machine,
2-ton induction furnace, carbon analyzer

400

Rationalization

Automatic polishing machine, etc.

60

Infrastructure
strengthening

Shake out machine,
Enhancement of power system for melting furnaces

140

Manufacturing strategic

R&D

Environmental
Facility renewal

Factory heat countermeasure, etc.
Essential facility enhancement for implementing BCP
Modernization of existing facilities, etc.
total
Shinhokoku Material Corp.

140
260
1,000
26

Facility investment plan in the next 6 years to 2029
Unit: M¥

Category

Facility and equipment

Manufacturing strategic,

3D printers for additive manufacturing, phase 1 to 3

R&D

High precision thermal expansion measurement device, etc.

Amount600

3D printer for sand molds
Rationalization
Infrastructure strengthening

Automation and labor-saving in melting, molding andwelding process, etc.

400

X-ray transmission device, etc.

400

Decarbonization and SDGs
Environmental

Facility enhancement for implementing BCP, etc.

300

Cleanliness improvement in the casting factory, etc.
Facility renewal

Strengthening and renewal of power receiving facilities, etc.

total
Shinhokoku Material Corp.

300
2,00027

Human Resource Strategy to create an attractive workplace for every employee

and hence to achieve sustainable growth even with a small but elite workforce.
Creating an attractive workplace Rewarding and engaging workplace
Based on a wage system for stable living,An evaluation system that appreciates
efforts and contributes to motivation

Creating an attractive workplace
Creating an attractive workplace
Realizing employee’s happiness Continuing to improve compensation(Closely supporting each employee) Further improving the workplaceenvironment (Making it cleaner) Aiming for top level wage in JapanEducation
Addressing aging,
andlow birthrate,and recruitment training system

Education and training system

Addressing aging, low birthrate, and recruitment
 Transition to diverse work styles based on continuous
employment system
 Diverse recruitment regardless of gender or nationality
 Multiskilling (Job rotation)
 Automation, labor-saving, and systematization through the use of AI, etc.
 Enhancement and expansion of outsourcing
 Promotion of health management
 Advancement of diversity

Shinhokoku Material Corp.

 Transforming tacit knowledge into explicit one(Passing on technology and knowledge,sharing throughout the company)
Making individual's inner knowledge visible
 Further skill improvement(Internal and external training) The company fully supports obtaining adoctoral degree at university
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Efforts towards Carbon Neutral in 2050
Direct Reduction
 Energy-saving activities
 Company cars transition to EV, HEV, FCEV

Indirect reduction

 Utilization of renewable energy Recycling of in-house materials

 Develop materials contributing to carbon neutral Use of carbon offset
 Participate in international initiatives (CDP, SBT) Collaboration with local communities(process scraps) Reduction of high CO2 raw materials

 Educational activities in collaboration withindustry and academia

with the Community

Contributing to Decarbonization
Background: A relaxing forest (open to the public) adjacent to the Kawagoe headquarters.

Shinhokoku Material Corp.

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The performance forecasts, plans, and future predictions contained inthis document are based on the information available as of the date ofthis document's release and assumptions related to uncertain factorsthat may affect future performance as of the date of this document'srelease. Please understand that actual performance may varysignificantly due to various factors in the future.

Shinhokoku Material Corp.

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