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

Advanex Inc.
5998 Tokyo Stock Exchange First
Section

22-Jul.-15

伪伪Concentrating on the competitive precision springbusiness, with increased revenue and earnings
expected for this term also
Advanex Inc. is a major precision spring manufacturer that was established in November 1946. In
July 2001 it changed the corporate name from KATO SPRING WORKS CO., LTD. to its current
name. Also, in March 2004 it changed its listing status from the Second Section to the First Section

Important disclosuresand disclaimers appear
at the end of this document.

of the Tokyo Stock Exchange.
From the 1980s to 2000, due to its superior technology and development capabilities, the company
successively produced products that captured leading market shares in both domestic and global

FISCO Ltd. Analyst
Ken Segawa

markets. These included tape pads for audio tapes, leaf springs for video tapes, shutters for 3.5 inch
floppy discs, hinges for mobile phones, and center hubs for optical discs. Subsequently, it shifted
its target markets from audio visual equipment and communications terminals, where Japanesemanufacturers of assembled products had lost their competitiveness, to markets where demand was
expected to be more stable. For one of those markets, the medical device field, its coil springs forindwelling needles built into medical equipment used in drawing blood and administering intravenous
drips now have a 60% market share in Japan. Also, its LOCKONE spring (formerly called Tamont)
which complies with NAS3350 (National Aerospace Standards) produced the best results in testingof locking pieces for railroad bolts and nuts carried out by the Railway Technical Research Institute.
With the financial crisis that occurred in September 2008, triggered by the collapse of Lehman
Brothers, Japanese manufacturers for the most part fell into the red. It was an extremely harsh
operating environment, suffering under an exchange rate of ¥80 to 1USD in 2011. Advanex, from2011, decisively undertook structural reforms, including closing factories and selling off subsidiaries,and succeeded in improving results and returning to profitability. At end-March 2015 it transferred theshares in its plastics business, Daiichi Kasei Holdings Co., Ltd., to the Taiwanese ABICO Group. As
a result, from FY3/16 the company will focus on its core precision spring business.
Given the disappearance of the plastics business, FY3/16 results expect lower revenue and earnings,
with net sales of ¥19,800mn (down 32.9% y-o-y) and operating income of ¥880mn (down 18.6%
y-o-y). However, in a comparison of only the precision spring business that excludes the plastics
business, there will be a 12.3% rise in net sales and 14.4% rise in profits.
Despite selling the plastics business, the business that manufactures insert molding components,
combining metal stamping and plastic injection molding remained. Also, in April 2014 Advanex
acquired and made a subsidiary of Funabashi Electronics Co., Ltd., which possesses the mostadvanced deep drawing processing technology in Japan in the field of metal stamping fabrication.
Subsequently, in April 2015 it merged operations by way of a transfer of that firm’s operations.
Currently, utilizing the Group’s management resources and leveraging that technology, the benefitsof that acquisition are being engaged not only domestically but have also spread to overseas.

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

In the Mid-term Management Plan “Breakthrough to 2020”, that covers the period from Fiscal 2015
to Fiscal 2019, the main theme is “Challenge to the Comprehensive Metalworking Manufacturer”. It
cites numerical targets in its final year FY3/20 of consolidated net sales of ¥35,000mn and operating
income of ¥4,000mn. Advanex’s core business domains are in the high market growth areas ofautomotive-, medical-, and infrastructure & housing facilities equipment, where the company is highly

Advanex Inc.
5998 Tokyo Stock Exchange First
Section

22-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Ken Segawa

competitive. At present, in Honjo City, Saitama Prefecture, a labor-saving, automated Smart Factory
specializing in automotive components is under construction, and is expected to be operational fromthe beginning of next year.

伪伪Check Point• Mid-term Management Plan with ¥35bn net sales, ¥4bn in operating income and 22% ROE• Automotive precision springs the best fit with management culture• Increasing dividends, aiming for a 30% payout ratio

Results Trends(¥mn)

40,000Net sales (left axis)

820

37,48829,55530,00031,459
326

470

542

25,191 23,551

992
27,100860

29,487
19,800-569

20,00010,000Ordinary income or loss (right axis)-1,4840

FY3/09FY3/10FY3/11

FY3/12

FY3/13

FY3/14

(¥mn)

1,000
750
500
250
0
-250
-500
-750
-1,000-1,250-1,500-1,750FY3/15 FY3/16 E

Source: Prepared from financial statements.

伪伪Company Overview
Selling the plastics business to become a precision spring
specialist○ Scope of operations
The breakdown of FY3/15’s ¥29,487mn in net sales by business for Advanex, which is a major player
in precision springs, shows 59.8% from the precision spring business and 40.2% from plastics.
However, given that it transferred the shares it held in Daiichi Kasei Holdings Co., Ltd., that engages
in the plastics business at the end of the previous term, it will become solely a precision springbusiness from FY3/16.

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

■■Company Overview

㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㼞㼍㼠㼕㼛㼟㻌㻔㻲㼅㻟㻛㻝㻡㻕

Advanex Inc.
5998 Tokyo Stock Exchange First
Section㻼㼞㼑㼏㼕㼟㼕㼛㼚㻌㼟㼜㼞㼕㼚㼓㻌㼎㼡㼟㼕㼚㼑㼟㼟
㻠㻜㻚㻞㻑

㻡㻥㻚㻤㻑

22-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Ken Segawa㻼㼘㼍㼟㼠㼕㼏㼟㻌㼎㼡㼟㼕㼚㼑㼟㼟

Source: Prepared from company materials.

○ Corporate history & operational milestones
The company was founded in 1930 when the first President established a specialist spring factory inTokyo. In 1946 it was reorganized as a kabushiki kaisha (joint-stock company) under the name KATOSPRING WORKS CO., LTD., and changed its name to the current Advanex Inc. in 2001. In 1964 it
listed on the Second Section of the Tokyo Stock Exchange, changing its listing status in 2004 to theFirst Section of the Tokyo Stock Exchange.
In 1976 it established its current key Kashiwazaki Factory (now the Niigata Factory) as a production
base. The company subsequently established its Oita Factory in 2008, Aomori Factory in 2009, andChiba and Miyagi Factories in 2015. Currently, a specialist factory for automotive (products) is underconstruction in Honjo City, Saitama Prefecture. The Saitama Factory is scheduled to be completedin October 2015, and be operational in January 2016.
Corporate History
Inaugural President, founded the specialist spring factory in Edogawa-ku, Tokyo as a privately
management enterprise.
Incorporated as joint-stock company and renamed KATO SPRING WORKS CO., LTD., it
Nov. 1946
shifted its factory headquarters to Nerima-ku, Tokyo.
Moved the factory headquarters to Kita-ku (with 2,224sq.m floor space), moving the
Dec. 1963
equipment from the old factory headquarters.
May 1964
Listed on Second Section of the Tokyo Stock Exchange.
Established the Kashiwazaki Factory in Kashiwazaki City, Niigata Prefecture (now the Niigata
Nov. 1976
Factory), and commenced operations.
Established the Fukushima Factory in Onomachi, Fukushima Prefecture, and commenced
Mar. 1986
operations. (Closed in 6/2009 )Jul. 2001
Changed the corporate name to Advanex Inc.
Mar. 2004
Listed on First Section of the Tokyo Stock Exchange.
Oct. 2008
Established the Oita Factory in Nakatsu City, Oita Prefecture.
Established the Hirosaki Factory (now the Aomori Factory) in Minamitsugaru-gun, Aomori
May 2009
Prefecture.
Mar. 2015
Established the Chiba Factory in Funabashi City, Chiba Prefecture.
Mar. 2015
Established the Miyagi Factory in Higashi-Matsushima City, Miyagi Prefecture.
Source: Prepared from company materials.
Apr. 1930

From the 1980s the company has continuously produced products that have been hits globally, withleading market shares. These include tape pads for audio tapes (70% domestic market share), leaf
springs for video tapes (50% global market share), shutters for 3.5 inch floppy discs (80% global
market share), hinges for mobile phones (50% global market share), and center hubs for opticaldiscs (90% domestic market share). Currently, it has captured a 60% domestic market share forsprings in indwelling needles for use in medical treatment.

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

■■Company Overview

Products with top market shares

Advanex Inc.
5998 Tokyo Stock Exchange First
Section

22-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Ken Segawa

Source: Prepared from company materials.

Overseas expansion was also early, with the company establishing a subsidiary in the US in 1971.
Subsequently, subsidiaries have been established in Singapore, the UK, Hong Kong, Thailand,
China and Vietnam. The UK subsidiary that was established in 1988 became the European
production base for the company’s shutters for 3.5 inch floppy discs that boasted an overwhelming
global market share. That subsidiary acquired a leading domestic UK spring maker, forming a two
factory structure. Its current core products are precision spring products for medical devices andreinforcing components for fasteners for the aerospace industry and automotive market. It has thehighest profitability among Group companies.
Strawberry Corporation, which was a business department carved out of that company, listed on the
JASDAQ Exchange in 2001 when hinges for mobile phones became a hit. It recorded consolidated
net sales of ¥11,000mn and ordinary income of ¥900mn in FY3/05. However, it fell into the red dueto the market for clam shell mobile phones shrinking significantly in line with the rise of smartphones,
and in FY3/11, with net sales having plunged to ¥2,500mn, ordinary losses of ¥1,000mn and net
losses of ¥1,800mn, became insolvent. This subsidiary was delisted in October 2011.
In 1984 the company acquired FUJI MICRO CO., LTD., which is engaged in the manufacture andsale of motors and motor components. Further, in October 2007 it acquired shares in Daiichi Kasei
Holdings, which manufactures and sells automotive-related plastic and other components. As aresult, in FY3/08 consolidated net sales were ¥38,892mn. The ratio of net sales by business was
52.5% for the precision spring business, 17.4% for the hinge business, 15.3% for the motor business,and 14.8% for the plastics business. Subsequently, as noted above, given that the market was
virtually wiped out, the company withdrew from the hinge business. Because adequate synergies
were not able to be created in the motor business, it transferred the majority of its shares in 2011,
switching it to an equity method affiliate. The acquisition of Daiichi Kasei Holdings enhanced thecompany’s insert molding technology; however, profitability was tight due to domestic and overseas
cost competition for its core large scale, stand alone plastic products business. Further, in maintaining
competitiveness it was necessary for the company to continue significant capital expenditure. As aresult, in July 2014 49% of the shares were transferred to Taiwan’s ABICO Group, and in March 2015
the remaining 51% were sold, the company choosing to focus on its core precision spring business.
The Taiwanese company has a large operational scale with production bases in 15 countries, sales
bases in 20 countries and over 15,000 employees.

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

■■Company Overview

㻼㼞㼛㼒㼕㼠㼍㼎㼕㼘㼕㼠㼥㻌㼠㼞㼑㼚㼐㼟㻌㼎㼥㻌㼎㼡㼟㼕㼚㼑㼟㼟㻌㼟㼑㼓㼙㼑㼚㼠㻌㻔㼓㼞㼛㼟㼟㻌㼜㼞㼛㼒㼕㼠㻌㼙㼍㼞㼓㼕㼚㼟㻕㻼㼞㼑㼏㼕㼟㼕㼛㼚㻌㼟㼜㼞㼕㼚㼓㼟㻯㼛㼚㼟㼛㼘㼕㼐㼍㼠㼑㼐㻼㼘㼍㼟㼠㼕㼏㼟

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Advanex Inc.
5998 Tokyo Stock Exchange First
Section

22-Jul.-15

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Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Ken Segawa㻜㻚㻜㻑㻲㼅㻟㻛㻜㻤

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Source: Prepared from company materials.

With the global financial crisis that occurred in September 2008, triggered by the collapse of Lehman
Brothers, Japanese manufacturers for the most part fell into the red. The company also in FY3/09
recorded a net loss of ¥3,595mn. All businesses, including the precision spring business, the hingebusiness, the motor business, and the plastics business were mired in operating losses. From thenext term FY3/10, despite the precision spring and motor businesses returning to profitability, losses
in the hinge business expanded. The plastics business finally recovered profitability in FY3/11.

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

■■Company Overview

㻼㼞㼛㼒㼕㼠㻌㼠㼞㼑㼚㼐㼟㻌㼎㼥㻌㼎㼡㼟㼕㼚㼑㼟㼟㻌㼟㼑㼓㼙㼑㼚㼠(¥mn)

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Advanex Inc.
5998 Tokyo Stock Exchange First
Section㻜

22-Jul.-15

㻙㻝㻘㻜㻜㻜

Important disclosuresand disclaimers appear
at the end of this document.

㻙㻞㻘㻜㻜㻜FISCO Ltd. Analyst
Ken Segawa

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The company has withdrawn or sold off operations in the hinge, motor and plastics businesses;
however, it is strengthening its core precision spring business. In April 2014 it consolidated Funabashi
Electronics as a subsidiary. Funabashi Electronics possesses superior technology in the field ofmetal stamping fabrication, and this technology will not only be utilized in the newly constructed
Saitama Factory, but rolled out to overseas factories, such as those in China and Thailand. Throughcross-usage of the metal stamping technology machinery and equipment of the Advanex Group, andutilizing its sales and material procurement capabilities, the company can create Group synergies.

伪伪Business Strategy
Mid-term Management Plan with ¥35bn net sales, ¥4bn inoperating income and 22% ROE○ Breakthrough to 2020 Mid-term Management Plan
In February, the company announced its Breakthrough to 2020 Mid-term Management Plan,covering Fiscal 2015-2019. The theme of the Mid-term Management Plan is the “Challenge to theComprehensive Metalworking Manufacturer”, with the key elements being to: (1) invest aggressively
for global business expansion, (2) adopt a growth strategy with the automotive-related market as thecore target, (3) enhance R&D and increasing sales of the company’s products (standard products),(4) expand technical domain and markets through M&A, and (5) improve financial health and return toshareholders. For the final fiscal period FY3/20, the company has cited numerical targets of ¥35,000mn
in net sales, ¥4,000mn in operating income, operating income margin of 11% and an ROE of 22%.
(1) Invest aggressively for global business expansion
In Japan, domestic demand is expected to shrink due to the decreasing birthrate and aging
population. Given that automobile manufacturers, which are the company’s major customers, seek tosupply globally, it is essential that Advanex also proactively pursues global expansion. In April 2014
the company established a global business unit and will strengthen its Asian strategy. Overseas thecompany has manufacturing and sales bases in the US, UK, Mexico, Singapore, China (Shanghai,
Dalian, Dongguan, and Changzhou), and Vietnam, and is additionally planning some in India. Goingforward, it is expected that demand will expand in Vietnam and Indonesia. In Vietnam the company
has located a factory and sales base in the north in the vicinity of Hanoi, and has engaged in the
production and sales of precision spring products for major Japanese-affiliated office automation andautomotive parts manufacturers. In the south, given that there are many clients that have developed
factories, the company has established a sales base in Ho Chi Minh City also, and is endeavoring tofind new customers, such as automotive parts manufacturers. In Europe the company is planning to
expand into Czechoslovakia as a mainland base. Also, In Central and South America it is considering
expansion in Mexico (a second factory) and into Brazil. The company also has received requests toenter local markets from automotive-related customers.

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

■■Business Strategy

Precision spring Group companies
Location

Advanex Inc.
5998 Tokyo Stock Exchange First
Section

22-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Ken Segawa

Date establishedJapan
Nov. 1946
Japan
Oct. 1989
US
Jul. 1966
UK
Sep. 1988
SingaporeJan. 1978
Hong Kong, China
Aug. 1994
Shanghai, China
Jan. 2001
Dongguan, China
Dec. 2002
Dalian, China
Jan. 2003
Changzhou, China
Jan. 2013
ThailandJan. 1998
VietnamJun. 2006
Source: Prepared from company materials.

Company name
Advanex (parent)
Funabashi Electronics Co., Ltd.
Advanex Americas, Inc.
Advanex Europe Ltd.
Advanex (Singapore) Pte. Ltd.
Advanex (Hong Kong) Ltd.
Advanex (Shanghai) Inc.
Advanex (Dongguan) Inc.
Advanex (Dalian) Inc.
Advanex (Changzhou) Inc.
Advanex (Thailand) Ltd.
Advanex (Vietnam) Ltd.

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Looking at the International Organization of Motor Vehicle Manufacturers’ automobile production
statistics by country for the last 10 years, growth in developing countries is remarkable. The 2014
global number of cars produced was 89.75 million, a rise of 2.6% y-o-y. The number of cars produced
in Japan was 9.77 million, up 1.5% y-o-y. The 2014 level is a 15.7% decline from 2007, which
was the peak for Japanese automobile production; however, globally there was a rise of 22.5%.
Japanese production declined significantly, the turning point being the September 2008 collapse of
Lehman Brothers, with yen appreciation and a shift to overseas production slowing any subsequent
recovery. While there is a sense that markets in developed countries are mature, production in China
and India, where there is remarkable growth in domestic markets, is growing strongly. From 8.6%
in 2005, the Chinese share of global production numbers has expanded to 26.4% in 2014, with anautomobile production number of 23.72 million clearly distancing itself from the second placed USwith 11.66 million.
Global automobile production trends (major manufacturing countries) & exchange rates(Unit: thousands of vehicles)
Year
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Global total
66,719 69,222 73,266 70,729 61,762 77,583 79,880 84,236 87,507 89,747
Japan
10,799 11,484 11,596 11,575
7,934
9,628
8,398
9,943
9,630
9,774
US
11,946 11,263 10,780
8,672
5,709
7,743
8,661 10,335 11,066 11,660
Germany
5,757
5,819
6,213
6,045
5,209
5,905
6,146
5,649
5,718
5,907
Korea
3,699
3,840
4,086
3,826
3,512
4,271
4,657
4,561
4,521
4,524
China
5,717
7,188
8,882
9,299 13,790 18,264 18,418 19,271 22,116 23,722
India
1,638
2,019
2,253
2,332
2,641
3,557
3,927
4,174
3,898
3,840
Brazil
2,530
2,611
2,977
3,215
3,182
3,381
3,407
3,402
3,712
3,146
Exchange rate (vs ¥)
USD
110.2
116.3
117.8
103.4
93.6
87.8
79.8
79.8
97.6
105.9
Euro
137.1
146.0
161.2
152.4
130.2
116.4
111.1
102.6
129.6
140.5
Korean Won (Note) 107.600 121.800 96.000
73.6
76
72.1
70.9
89.2
100.6
108.7
Note: For the Korean won the amount is per 1,000KRW.
Source: Prepared based on data from the International Organization of Motor Vehicle Manufacturers and the Bankof Japan, et al.

㻟㻜㻜㻭㼡㼠㼛㼙㼛㼎㼕㼘㼑㻌㼜㼞㼛㼐㼡㼏㼠㼕㼛㼚㻌㼠㼞㼑㼚㼐㼟㻌㼎㼥㻌㼙㼍㼖㼛㼞㻌㼙㼍㼚㼡㼒㼍㼏㼠㼡㼞㼕㼚㼓㻌㼏㼛㼡㼚㼠㼞㼥㻔㻞㻜㻜㻣㻌㻩㻌㻝㻜㻜㻕
㻶㼍㼜㼍㼚

㼁㻿

㻳㼑㼞㼙㼍㼚㼥

㻷㼛㼞㼑㼍

㻯㼔㼕㼚㼍

㻵㼚㼐㼕㼍

㻮㼞㼍㼦㼕㼘

㻞㻡㻜

㻞㻜㻜

㻝㻡㻜

㻝㻜㻜

㻡㻜
㻞㻜㻜㻡

㻞㻜㻜㻢

㻞㻜㻜㻣

㻞㻜㻜㻤

㻞㻜㻜㻥

㻞㻜㻝㻜

㻞㻜㻝㻝

㻞㻜㻝㻞

㻞㻜㻝㻟

㻞㻜㻝㻠

Source: Prepared based on data from the International Organization of Motor Vehicle Manufacturers.

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

■■Business Strategy

The company’s net sales by region (excluding the plastics business) anticipate the ratio represented
by Japan declining to 33.0% in FY3/20, after decreasing from 44.4% in FY3/14 to 40.4% in FY3/16.
Despite domestic sales being expected to increase, it is planned that overseas sales will expand
even more.

Advanex Inc.
5998 Tokyo Stock Exchange First
Section㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㼍㼚㼐㻌㼟㼍㼘㼑㼟㻌㼞㼍㼠㼕㼛㻌㼠㼞㼑㼚㼐㼟㻌㼎㼥㻌㼞㼑㼓㼕㼛㼚㻌㻔㼑㼤㼏㼘㼡㼐㼕㼚㼓㻌㼠㼔㼑㻌㼜㼘㼍㼟㼠㼕㼏㼟㻌㼎㼡㼟㼕㼚㼑㼟㼟㻕
(¥mn)

㻶㼍㼜㼍㼚

㻭㼟㼕㼍

㼁㻿

㻱㼡㼞㼛㼜㼑

㻠㻜㻘㻜㻜㻜
㻟㻡㻘㻜㻜㻜
㻝㻠㻚㻜㻑㻟㻜㻘㻜㻜㻜

22-Jul.-15㻝㻞㻚㻜㻑㻞㻡㻘㻜㻜㻜
㻞㻜㻘㻜㻜㻜

Important disclosuresand disclaimers appear
at the end of this document.

㻝㻡㻘㻜㻜㻜
㻝㻜㻘㻜㻜㻜㻡㻘㻜㻜㻜

FISCO Ltd. Analyst
Ken Segawa

㻝㻝㻚㻠㻑
㻥㻚㻥㻑

㻥㻚㻣㻑
㻥㻚㻣㻑

㻝㻝㻚㻡㻑
㻥㻚㻥㻑

㻟㻢㻚㻞㻑

㻟㻢㻚㻤㻑

㻟㻤㻚㻟㻑

㻠㻠㻚㻠㻑

㻠㻝㻚㻤㻑

㻠㻜㻚㻠㻑

㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢㻌㻱

㻠㻝㻚㻜㻑

㻟㻟㻚㻜㻑

㻜
㻲㼅㻟㻛㻞㻜㻌㻼

Note: FY3/14 and FY3/15 net sales exclude the plastics business.
Source: Prepared from company materials.

Precision springs for automobiles are the best fit with thecompany’s management culture(2) Adopt a growth strategy with the automotive-related market as the core target
The company has little direct competition in the field of precision springs, since most major
manufacturers of springs for automobiles specialize in large-sized products such as chassis springs.
The company’s competition is from the 3,000 to 4,000 small- and medium-sized manufacturers.
These companies largely do not have the capacity to expand overseas. Once adopted, despite being
able to expect stable demand to the extent that production continues, because it also affects human
life, rigorous quality control is essential. Further, continual cost cutting is demanded. Taking these
special business characteristics into consideration, precision springs for automobiles are arguably
the best fit for the company’s management culture. Looking at net sales ratio by market (excluding
the plastics business) the company is planning to raise it from 30% in FY3/14 to 40% in FY3/20.

㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㼞㼍㼠㼕㼛㻌㼎㼥㻌㼙㼍㼞㼗㼑㼠㻌㻔㼑㼤㼏㼘㼡㼐㼕㼚㼓㻌㼠㼔㼑㻌㼜㼘㼍㼟㼠㼕㼏㼟㻌㼎㼡㼟㼕㼚㼑㼟㼟㻕

㻞㻤㻚㻢㻑

㻟㻜㻚㻞㻑

㻭㼡㼠㼛㼙㼛㼠㼕㼢㼑㻻㼒㼒㼕㼏㼑㻌㼍㼡㼠㼛㼙㼍㼠㼕㼛㼚㻌㼑㼝㼡㼕㼜㼙㼑㼚㼠㻹㼑㼐㼕㼏㼍㼘㻌㼑㼝㼡㼕㼜㼙㼑㼚㼠㻵㼚㼒㼞㼍㼟㼠㼞㼡㼏㼠㼡㼞㼑㻌㻒㻌㼔㼛㼡㼟㼕㼚㼓㻌㼒㼍㼏㼕㼘㼕㼠㼕㼑㼟㻌㼑㼝㼡㼕㼜㼙㼑㼚㼠㻡㻚㻝㻑㻻㼠㼔㼑㼞㼟

㻢㻚㻝㻑

㻟㻜㻚㻜㻑

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

■■Business Strategy㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㼞㼍㼠㼕㼛㻌㼎㼥㻌㼙㼍㼞㼗㼑㼠㻌㻔㻲㼅㻟㻛㻞㻜㻌㻼㼘㼍㼚㻕
㻞㻜㻚㻜㻑
㻠㻜㻚㻜㻑

Advanex Inc.
5998 Tokyo Stock Exchange First
Section㻭㼡㼠㼛㼙㼛㼠㼕㼢㼑㻻㼒㼒㼕㼏㼑㻌㼍㼡㼠㼛㼙㼍㼠㼕㼛㼚㻌㼑㼝㼡㼕㼜㼙㼑㼚㼠㻹㼑㼐㼕㼏㼍㼘㻌㼑㼝㼡㼕㼜㼙㼑㼚㼠㻝㻜㻚㻜㻑㻵㼚㼒㼞㼍㼟㼠㼞㼡㼏㼠㼡㼞㼑㻌㻒㻌㼔㼛㼡㼟㼕㼚㼓㻌㼒㼍㼏㼕㼘㼕㼠㼕㼑㼟㻌㼑㼝㼡㼕㼜㼙㼑㼚㼠22-Jul.-15

㻻㼠㼔㼑㼞㼟

㻝㻜㻚㻜㻑

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Ken Segawa

㻞㻜㻚㻜㻑
Note: FY3/14 net sales exclude the plastics business.
Source: Prepared from company materials.

Even though product development and trial parts manufacturing are carried out domestically, there
are many calls for mass production overseas. The company’s Koriyama Testing Center and Niigata
Factory collaborate and are providing mass production support for overseas factories. The Testing
Center undertakes development keeping in mind the process of automated manufacturing from thetrial stage. Staff from overseas factories experience training at the Niigata Factory, making mutual
understanding easy. Given that the Niigata Factory is well acquainted with the facilities and productionlevels at overseas factories, it is able to examine problem points in advance. Also, the fact that thesame machines are installed in Japan and overseas makes it possible to respond worldwide.
In order for the company to expand its automotive business to another level it is constructing a
specialist factory in Saitama. One reason it chose Honjo City is the assumption that it may expand
dealings with Japanese and German parts makers. It is built to combine an R&D function within thefactory. It plans to obtain an automotive industry ISO/TS 16949 quality management system. An
outline of the new factory shows that it sits on a 12,000 sq.m. site, with 5,000 sq. m. floor space, aninvestment of around ¥1,300mn, approximately 30 staff, and estimated production of ¥3,000mn in
2-3 years time. In addition to having some production equipment transferred from existing domestic
factories, NC forming machines and other new equipment will also be installed. It will produce
products including wire springs, flat springs and deep drawing products. In addition to demand forautomotive fastening parts (insert collars) expanding in line with the trend for lightweight vehicles,
given that they are manufactured under a technique called the multi-forming process whereby
materials may be formed to width, reducing the proportion of scrap and also allowing cuts and folds
to be completed in the one process, they realize, amongst other benefits significant cost reductions
compared to traditional machining processes, and thus are positioned as strategic products for thecompany. The company is aiming for a Smart Factory, where the manufacturing process is highly
automated, with staff cut to a bare minimum. By developing this specialist factory, the company aims
to raise its presence within the automotive industry and expand business.
Looking at changes to the other net sales ratios by market from FY3/14 to FY3/20, office automationequipment will fall from 30% to 20%, medical devices will rise from 6% to 10%, infrastructure andhousing facilities equipment will rise from 5% to 10%, with other falling from 29% to 20%. Compared
to consumer electronics equipment, automotive demand is stable. Its scale is also large. Conversely,
trading partners are companies that are large Tier 1 automotive parts makers, making it hard to
pursue high profitability. On the other hand, the flip side to the high levels demanded for medical
device and infrastructure and housing facilities equipment products is that if the company can use
its technological capabilities and secure a position as a supplier, it may expect long-term demand.
Product model changes are also infrequent, and there is room to achieve high earnings.

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

■■Business Strategy

Advanex Inc.
5998 Tokyo Stock Exchange First
SectionA good example of this is in the UK subsidiary's precision spring products for medical devices.
Representing over 40% of net sales, it contributes to that subsidiary’s high earnings. Expanding into
the medical device business in 1977, in 1999 it received an order for springs used in anti-asthmaticmetered dose inhalers from a major European medical device manufacturer, which provided theopportunity for it to take a major step forward. Other companies’ products were unable to clear thebasic standards; however, springs developed at the Niigata Factory were passed, and succeededin securing the order. Manufacturing equipment was transported to the UK and mass productioncommenced. The company intends to rollout this example of success in the UK to other regions
including Japan. Coil springs for indwelling needles, which enjoy a 60% domestic market share, willapparently have no changes to specifications for the next 10 years.
A coil spring for indwelling needles

22-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Ken Segawa

Source: R eproduced from the company’s website

The company’s products are also on display in the infrastructure field. The LOCKONE spring (theformer product name for which was Tamont), which is a spring that prevents slippage on nut and bolt
threads, passed trials using impact vibration testing machines to meet NAS3350 (National AerospaceStandards) standards. In the results of field testing of half to one year by the Railway TechnicalResearch Institute on locking pieces for railroad bolts and nuts, the company’s LOCKONE produced
the best results. Further, it may be expected to also have applications for anti-slippage for highway
shielding and signposts. In places such as highways where there is a lot of vibration, loosening in
nuts and bolts occurs readily. An anti-loosening function is embedded in other companies’ products;
however, it must be changed for each nut. In the company’s case, a Tamont may be easily installedfrom above the nut using a commercially available socket wrench, making for ease of operation,
and also being inexpensive. The user may reduce the frequency of inspecting for loosening. In theinfrastructure and housing facilities equipment market, it is being used for preventing loosening in
nuts used in items such as acrylic plates for balconies in newly constructed apartments. Due to thecomplexity of the configuration, currently only the company is able to mass produce LOCKONE.
The President & COO, Mr. Tsuneo Shibano, states that if one keeps pursuing good, easy to use
products that customers are satisfied with, the results will be that functional beauty will be apparent
in the product and it will become a work of beauty; LOCKONE exemplifies that sort of functional
beauty.
Precision spring LOCKONE (a spring that prevents loosening and slippage in nuts andbolts)

Source: Reproduced from the company’s website

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

■■Business Strategy(3) Enhance R&D and increase sales of the company’s products (standard products)

Advanex Inc.
5998 Tokyo Stock Exchange First
Section

22-Jul.-15

The company is strengthening sales of standardized products via trading companies and online
sales. The product line-up has grown to more than 3,000. The LOCKONE product noted aboveis also being sold. The company is also undertaking an overseas rollout. In B2C retail sales thecompany wants to raise recognition for it and its products, and is planning develop B2B, including
overseas, and link this to orders for custom-made products.

Promote M&A aimed at acquiring technology, and expanding
sales channels and areas(4) Expand technical domain and markets through M&A
The company’s M&As are aimed at acquiring technology, and expanding sales channels and areas.

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Ken Segawa

Technologically, while the shares in Daiichi Kasei Holdings, which carries out the plastics business,were transferred, the company has retained its insert molding business and the production equipment
required for it.
Insert molding provides integrated forming of differing materials such as plastics and metals. Advanex
possesses complete metal plate stamping and plastic injection technology, undertaking integrated
production. Everything from the molds for stamping and injection molding to automation equipment isdesigned and fabricated within the company. As a result, product designs may be proposed to clientsthat take into consideration assembly time reduction, miniaturization, making products thinner, andprecision enhancement. Production equipment for insert molding products is planned to be shifted to
the Saitama Factory upon completion.
Funabashi Electronics also, which was acquired in April 2014, will utilize and roll-out that technology
within the Group. Funabashi Electronics possesses superior technology in the field of deep drawing
fabrication. Drawing fabrication usually involves a length of 3-4 times a pipe’s caliber, with evenwhat is termed deep drawing being around 10 times; however, the company’s technology allows
fabrication of lengths up to 30-40 times.
Deep drawing fabrication products

Source: Reproduced from the company’s website

Given that the scale of Funabashi Electronics is less than 40 staff, global development was
problematic. Advanex will seek synergies within the Group, rolling out its deep drawing fabrication
technology domestically and also overseas in China, Thailand and other locations. In the future
also, the company will target companies that possess superior technology, even if they are small inscale, where synergies may be expected with the Group’s sales, proposal making or technologicalcapabilities.
Apart from technology, the aim of M&As is to secure sales channels in the medical field, wherebarriers to new entrants are high. Further, to buy time in overseas markets the company will look foracquisition candidates from both a sales and manufacturing base perspective.

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

伪伪Results Trends
Both precision springs and plastics performed well last term,
significant improvement in financial health

Advanex Inc.
5998 Tokyo Stock Exchange First
Section

22-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Ken Segawa(1) FY3/15 results○ Income Statement – Precision spring business performs well
Net sales in FY3/15 were ¥29,487mn (+8.8% y-o-y), with operating income of ¥1,081mn (+31.8%
y-o-y), ordinary income ¥992mn (+21.0% y-o-y), and net income of ¥535mn (-21.6% y-o-y). Precisionsprings net sales were ¥17,628mn, an increase of 12.7% y-o-y, representing 59.8% overall. Withdouble-digit growth, core automotive (products) were overall drivers, and products for medical
devices in the UK increased significantly. Operating income from precision springs was ¥769mn, a
58.9% increase y-o-y. The operating income margin rose 1.1 percentage points y-o-y to 4.4%. On
the other hand, net sales in the plastics business were confined to a 3.4% y-o-y rise to ¥11,859mn.
Operating income from this business was ¥305mn, declining 8.4% y-o-y, with its operating income
margin declining 0.3 percentage points y-o-y to 2.6%. Demand for audio visual equipment in Malaysia
declined, with profitability also deteriorating.
The reason that the ordinary income growth rate was lower than the rate of increase in operating
income was deterioration in results at a 28% held subsidiary. The net loss in equity of affiliates rose
¥163mn y-o-y to ¥239mn, being recorded in non-operating income. Given that the subsidiary has
now been valued at zero, from FY3/16 a similar loss should not be incurred. Net income declined.
While gains of ¥147mn from the sale of Daiichi Kasei Holdings shares were recorded in extraordinary
income, mudslides occurred at the Fukushima Factory site due to localized torrential rains, with theestimated amount for repair work of ¥105mn being reserved under extraordinary losses. Further,because there was a partial sale of Daiichi Kasei Holdings shares, minority interests of ¥159mn
arose, which was also a factor increasing the reduction in net income. Given that the remaining
shares in Daiichi Kasei Holdings were transferred at term-end, while in FY3/16 net sales andoperating income from the plastics business will disappear, in return minority interests will not arise.
FY3/15 Results
FY3/14
ActualVs netForecast
resultssales
Net sales
27,100- 28,000
Precision spring business
15,408
56.9% 16,200
Plastics business
11,46542.3% 11,800
Gross income
5,840
21.5%
Selling, general and administrative expenses
5,020
18.5%
Operating income
820
3.0%
1,000
Precision spring business
597
2.2%
650
Plastics business
333
1.2%
350
Ordinary income or loss
820
3.0%
980
Net income or loss
682
2.5%
760
Source: Prepared from company materials.

Actualresults
29,487
17,628
11,859
6,652
5,571
1,081
769
305
992
535

FY3/15
Vs net
sales
59.8%
40.2%
22.6%
18.9%
3.7%
2.0%
1.0%
3.4%
1.8%

(Unit: ¥mn)
y-o-y
8.8%
14.4%
3.4%
13.9%
11.0%
31.8%
28.8%
-8.4%
21.0%
-21.6%

Vs
Forecast
5.3%
8.8%
5.0%
8.1%
18.3%
-12.9%
1.2%-29.6%

Operating income was ¥261mn. Apart from yen depreciation, the major factors tending to increase
earnings included increased revenue from the spring businesses in Asia and the UK (¥1,231mn),
and an increase in marginal profit due to a reduction in costs in the spring businesses in China andother countries (¥326mn). On the other hand, in addition to the negative impact of yen depreciation,
factors that tended to lower earnings (totaling ¥1,296mn) included increased staff costs domesticallyand in the UK, and increased fixed costs associated with the acquisition of Funabashi Electronics.

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

■■Results Trends㻹㼍㼖㼛㼞㻌㼒㼍㼏㼠㼛㼞㼟㻌㼎㼑㼔㼕㼚㼐㻌㻲㼅㻟㻛㻝㻡㻌㼛㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㼒㼘㼡㼏㼠㼡㼍㼠㼕㼛㼚㼟
(¥mn)

㻟㻘㻜㻜㻜
㻗㻟㻞㻢

Advanex Inc.
5998 Tokyo Stock Exchange First
Section㻙㻝㻘㻞㻥㻢

㻗㻝㻘㻞㻟㻝
㻞㻘㻜㻜㻜

㻝㻘㻜㻤㻝

22-Jul.-15

Important disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Ken Segawa

㻝㻘㻜㻜㻜

㻤㻞㻜

㻜
㻲㼅㻟㻛㻝㻠

㻵㼚㼏㼞㼑㼍㼟㼑㻌㼕㼚㻌㼚㼑㼠㼟㼍㼘㼑㼟㻵㼙㼜㼞㼛㼢㼑㼙㼑㼚㼠㻌㼕㼚 㻵㼚㼏㼞㼑㼍㼟㼑㻌㼕㼚㻌㼒㼕㼤㼑㼐㼙㼍㼞㼓㼕㼚㼍㼘㻌㼜㼞㼛㼒㼕㼠㼏㼛㼟㼠㼟㻲㼅㻟㻛㻝㻡

Source: Prepared from company materials.

○ Balance sheet – significant improvement in the shareholders’ equity ratio
As a result of the shares in Daiichi Kasei Holdings being transferred at the end of the term, thebusiness activities of the plastics business were reflected in the income statement; however, they are
excluded from the term-end balance sheet. In FY3/15 total assets were ¥16,554mn, down ¥3,686mn
y-o-y. Given that shareholders’ equity rose ¥2,274mn y-o-y to ¥7,002mn, the shareholders’ equity
ratio rose significantly from 23.4% in the previous term to 42.3%. As interest-bearing liabilities
declined ¥3,080mn y-o-y to ¥3,977mn, financial safety improved, with the D/E (interest-bearing
liabilities/shareholders’ equity) ratio falling below 1x to 0.57x.
ROE, which is one of the main indicators of corporate performance, declined from 15.5% in theprevious term to 9.1%. ROE may be divided into profitability (net income margin, net income/net
sales), asset utilization efficiency (total asset turnover, net sales/total assets), and borrowed capital
usage (the inverse of the shareholders’ equity ratio, financial leverage = total assets/shareholders’equity). A decline in net income against revenue means a decline in profitability, and a decline infinancial leverage counters any improvement in asset utilization efficiency.
Consolidated Balance Sheet

Current assets
Cash and time deposits
Trade notes and accounts receivable
Inventories
Other current assets
Fixed assets
Tangible fixed assets
Intangible fixed assets
Investments and other assets
Total assets
Current liabilities
Trade notes and accounts payable
Borrowings
Other current liabilities
Long-term liabilities
Long-term borrowings
Other fixed liabilities
Total liabilities
Shareholders’ equity
Total net assets
Total liabilities and net assets[Safety]
Current ratio (current assets/current liabilities)
Shareholders’ equity ratio: total shareholders’ equity / total assets[Profitability]
ROA (Ordinary income/total capital employed)
ROE (Net income/shareholders’ equity)
Source: Prepared from company materials.

FY3/13

FY3/14

10,292
2,424
4,945
2,527
395
8,177
6,932
204
1,040
18,46910,437
3,463
5,712
1,260
3,960
1,556
2,403
18,4694,934
4,072
18,469

11,770
2,808
5,784
2,816
361
8,469
7,232
191
1,045
20,240
8,892
3,779
3,444
1,668
6,606
3,453
3,153
15,491
5,571
4,741
20,240(Unit: ¥mn)
Amountchange10,304-1,466
3,485
677
4,474
-1,310
2,159
-657
185
-176
6,249
-2,2205,148-2,084
238
47
863
-182
16,554-3,686
5,619-3,2732,514-1,265
1,683-1,761
1,422
-246
3,902
-2,7042,255-1,1981,646-1,507
9,522-5,977
6,473
902
7,032
2,291
16,554-3,686

98.6%
22.0%

132.4%
23.4%

183.4%
42.3%

51.0pt18.9pt

2.9%
14.0%

4.2%
15.5%

5.4%
9.1%

1.2pt
-6.4ptFY3/15

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

■■Results Trends

Interest-bearing liability & D/E ratio trends㻵㼚㼠㼑㼞㼑㼟㼠㻙㼎㼑㼍㼞㼕㼚㼓㻌㼘㼕㼍㼎㼕㼘㼕㼠㼕㼑㼟㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕（㻰㻛㻱㻌㼞㼍㼠㼕㼛㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻕㻝㻞㻘㻡㻜㻜

㻡㻚㻜㻜㻥㻘㻥㻞㻤

Advanex Inc.
5998 Tokyo Stock Exchange First
Section㻥㻘㻜㻡㻣㻝㻜㻘㻜㻜㻜

㻠㻚㻜㻜
㻤㻘㻜㻢㻥
㻣㻘㻞㻢㻥

㻣㻘㻡㻜㻜
㻞㻚㻤㻣
㻡㻘㻜㻜㻜

㻞㻚㻣㻞

㻞㻚㻟㻜

㻟㻘㻥㻟㻤

22-Jul.-15

㻝㻚㻣㻥

㻞㻘㻡㻜㻜

Important disclosuresand disclaimers appear
at the end of this document.

㻟㻚㻜㻜

㻢㻘㻤㻥㻣

㻝㻚㻜㻜

㻝㻚㻠㻡
㻜㻚㻡㻢

㻜
FY3/10FY3/11

FY3/12

FY3/13

FY3/14

㻞㻚㻜㻜㻜㻚㻜㻜

FY3/15

Source: Prepared from company materials.

FISCO Ltd. Analyst
Ken Segawa㻾㻻㻱㻌㻒㻌㻯㼛㼚㼟㼠㼕㼠㼡㼑㼚㼠㻌㻵㼚㼐㼕㼏㼑㼟㻾㻻㻱㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻺㼑㼠㻌㼕㼚㼏㼛㼙㼑㻌㼞㼍㼠㼕㼛㻌㻔㼘㼑㼒㼠㻌㼍㼤㼕㼟㻕㻭㼟㼟㼑㼠㻌㼠㼡㼞㼚㼛㼢㼑㼞㻌㼞㼍㼠㼕㼛㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻘㻌㼠㼕㼙㼑㼟㻕㻲㼕㼚㼍㼚㼏㼕㼍㼘㻌㼘㼑㼢㼑㼞㼍㼓㼑㻌㻔㼞㼕㼓㼔㼠㻌㼍㼤㼕㼟㻘㻌㼤㻕

㻞㻜㻚㻜㻑

㻥㻚㻜㻜
㻤㻚㻜㻜

㻝㻡㻚㻜㻑

㻣㻚㻜㻜
㻝㻜㻚㻜㻑

㻢㻚㻜㻜

㻡㻚㻜㻑

㻡㻚㻜㻜

㻜㻚㻜㻑

㻠㻚㻜㻜
㻟㻚㻜㻜

㻙㻡㻚㻜㻑

㻞㻚㻜㻜
㻙㻝㻜㻚㻜㻑

㻝㻚㻜㻜㻙㻝㻡㻚㻜㻑

㻜㻚㻜㻜㻲㼅㻟㻛㻝㻜

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

Source: Prepared from company materials.

○ Cashflow status
The balance of cash and cash equivalents at term end in FY3/15 rose by ¥662mn y-o-y to ¥3,407mn.
Cashflow from operating activities rose ¥304mn y-o-y to ¥2,139mn as a result of increased profits
and increases in depreciation expenses. Cashflow from investment activities was ¥1,179mn, withincreases in the amount of capital expenditure at the company and its UK subsidiary, the negative
cashflow increasing by ¥134mn. Cashflow from financial activities was ¥794mn due to repayment ofinterest-bearing liabilities, the negative cashflow increasing by ¥248mn.
Consolidated Cashflow Statement
FY3/12
Cash flows from operating activities
Cash flows from investment activities
Cash flows from financing activities
Cash and cash equivalents at year-end
Source: Prepared from company materials.

1,435
-802
-248
2,534

FY3/13
1,857-1,275-1,002
2,362

FY3/14
1,835-1,045-546
2,745

FY3/152,139-1,179-794
3,407(Unit: ¥mn)
Amountchange
304
-134
-248
662

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

■■Results Trends

Lower revenues and operating income this period, only
precision springs performing well(2) FY3/16 forecast – with only the precision spring business double-digit revenue & earnings
growth expected

Advanex Inc.
5998 Tokyo Stock Exchange First
SectionIn FY3/16 revenues of ¥19,800mn (down 32.9% y-o-y) and operating income of ¥880mn (down
18.6% y-o-y) are expected. Lower revenue and earnings will result from the sell-off of the portion of
the plastics business. Net sales and profits this term shall be limited to the precision spring business.
In that business an increase of 12.3% in revenues and 14.4% in operating income is expectedcompared to levels in the previous term.
FY3/16 Results Outlook

22-Jul.-15

FY3/15
AmountImportant disclosuresand disclaimers appear
at the end of this document.
FISCO Ltd. Analyst
Ken Segawa

Net sales
29,487
Precision spring business
17,628
Plastics business
11,859Operating income
1,081
Precision spring business
769
Plastics business305
Ordinary income or loss
992
Net income or loss
535
Source: Prepared from company materials.

% net sales
59.8%
40.2%
3.7%
2.0%
1.0%
3.4%
1.8%

Amount19,80019,800
880
880
860
550

FY3/16 E
Amount% net sales
change-9,687100.0%
2,172
4.4%
-201
4.4%
111
4.3%
-132
2.8%
15

(Unit: ¥mn)
% change-32.9%
12.3%-18.6%
14.4%-13.4%
2.8%

伪伪Shareholder Returns
Increasing dividends, aiming for a 30% payout ratio
Due to deterioration in results, dividends were suspended from FY3/08; however, in FY3/13 dividends
were resumed. Subsequently, dividends have been repeatedly raised in line with results, with FY3/16
expected to return to the same level as prior to the suspension of dividends.
In FY3/16 it is planned that the dividend per share will be raised ¥0.5 year-on-year to ¥3.5. If thecompany implements as planned a 10 for 1 reverse stock split of its ordinary shares in October 2015,
the EPS shall be ¥132.84 and the full-year dividend per share ¥35. The forecast payout ratio will be
an unchanged 26.3%. Under the Mid-term Management Plan currently in force, the target payout
ratio is set at 30%.
In May 2015 the company effected a buyback of 500,000 of its own shares (with a total amount of¥91mn). The total return to shareholders from the combined forecast dividend and share buybackis 43.0%. Further, it will introduce a new shareholder incentive program. It plans to distribute QUO
cards, targeting shareholders of record as of end-September 2015.

㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻌㻒㻌㻼㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛(¥mn)

Dividend per share (left axis)

Payout ratio (right axis)

㻠㻚㻜

㻞㻢㻚㻟

（％）
㻟㻜

㻞㻟㻚㻞

㻟㻚㻜
㻞㻜
㻝㻞㻚㻞

㻞㻚㻜
㻤㻚㻣
㻝㻜

㻝㻚㻜
㻺㼛㻌㼐㼕㼢㼕㼐㼑㼚㼐

㻝㻚㻜

㻞㻚㻜

㻟㻚㻜

㻟㻚㻡

㻲㼅㻟㻛㻝㻞

㻲㼅㻟㻛㻝㻟

㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢㻌㻱

㻜㻚㻜㻜Note: If the reverse stock split proceeds as planned in October 2015, the dividend per share will be ¥35.
Source: Prepared from company materials.

We encourage readers to review our complete legal statement on “Disclaimer” page.
15

Disclaimer
FISCO Ltd. (the terms "FISCO", "we", mean FISCO Ltd.) has legal agreements with theTokyo Stock Exchange, the Osaka Exchange,and Nikkei Inc. as to the usage of stock
price and index information. The trademark and value of the "JASDAQ INDEX" are theintellectual properties of the TokyoStock Exchange, and therefore all rights to them belong
to the Tokyo StockExchange.
This report is based on information that we believe to be reliable, but we do not confirm or
guarantee its accuracy, timeliness,or completeness, or the value of the securities issued bycompanies cited in this report. Regardless of purpose,investors should decide how to use
this report and take full responsibility for such use. We shall not be liable for any result of its
use. We provide this report solely for the purpose of information, not to induce investment
or any other action.
This report was prepared at the request of its subject company using information provided
by the company in interviews, but the entire content of the report, including suppositions andconclusions, is the result of our analysis. The content of this report is based on informationthat was current at the time the report was produced, but this information and the content
of this report are subject to change without prior notice.
All intellectual property rights to this report, including copyrights to its text and data, areheld exclusively by FISCO. Any alteration or processing of the report or duplicationsof the report, without the express written consent of FISCO, is strictly prohibited. Anytransmission, reproduction, distribution or transfer of the report or its duplications is also
strictly prohibited.
The final selection of investments and determination of appropriate prices for investment
transactions are decisions for the recipients of this report.
FISCO Ltd.