R

Tamagawa Holdings / 6838
COVERAGE INITIATED ON:

2014.01.08

LAST UPDATE:

2017.11.09

Shared Research Inc. has produced this report by request from the company discussed in the report. The aim is toprovide an “owner’s manual” to investors. We at Shared Research Inc. make every effort to provide an accurate,
objective, and neutral analysis. In order to highlight any biases, we clearly attribute our data and findings. We will
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R Tamagawa Holdings / 6838
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LAST UPDATE: 2017.11.09

Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp

INDEX
How to read a Shared Research report: This report begins with the trends and outlook section, which discusses the company’s most recent
earnings. First-time readers should start at the business section later in the report.

Key financial data ------------------------------------------------------------------------------------------------------------------------------------- 3
Recent updates ---------------------------------------------------------------------------------------------------------------------------------------- 4
Highlights ------------------------------------------------------------------------------------------------------------------------------------------------------------4
Trends and outlook -----------------------------------------------------------------------------------------------------------------------------------------------5
Business ------------------------------------------------------------------------------------------------------------------------------------------------ 16
Business description -------------------------------------------------------------------------------------------------------------------------------------------- 16
Strengths and weaknesses------------------------------------------------------------------------------------------------------------------------------------ 21
Market and value chain ---------------------------------------------------------------------------------------------------------------------------------------- 22
Historical performance ---------------------------------------------------------------------------------------------------------------------------------------- 29
Income statement ----------------------------------------------------------------------------------------------------------------------------------------------- 38
Balance sheet ----------------------------------------------------------------------------------------------------------------------------------------------------- 39
Cash flows --------------------------------------------------------------------------------------------------------------------------------------------------------- 41
Other information ---------------------------------------------------------------------------------------------------------------------------------- 42
History -------------------------------------------------------------------------------------------------------------------------------------------------------------- 42
News and topics ------------------------------------------------------------------------------------------------------------------------------------------------- 43
Corporate governance and environment/CSR-related information (as of June 2017) ---------------------------------------------------- 58
Major shareholders --------------------------------------------------------------------------------------------------------------------------------------------- 58
Top management ----------------------------------------------------------------------------------------------------------------------------------------------- 58
Company profile ------------------------------------------------------------------------------------------------------------------------------------------------- 60

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Key financial data
FY03/10

FY03/11

FY03/12

FY03/13

FY03/14

FY03/15

FY03/16

FY03/17(JPYmn)Income statement

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

FY03/18
Est.

Total sales

2,803

2,640

3,106

3,672

4,171

5,095

7,260

4,443

4,237
-4.6%

YoY

-34.8%

-5.8%

17.7%

18.2%

13.6%

22.1%

42.5%

-38.8%

Gross profit

392

326

590

1,049

1,198

1,479

1,550

1,292

YoY

-58.8%-16.8%

81.1%

77.8%

14.3%

23.4%

4.8%

-16.6%

GPM

14.0%

12.3%

19.0%

28.6%

28.7%

29.0%

21.3%

29.1%

-227

-286

-30

373

477

531

280

189

202

YoY

-

-

-

-

27.8%

11.3%

-47.4%-32.3%

6.8%

OPM

-8.1%

-10.8%

-1.0%

10.2%

11.4%

10.4%

3.9%

4.3%

4.8%

-224

-284

-24

375

478

514

211

107

107

YoY

-

-

-

-

27.6%

7.5%

-58.9%-49.6%

0.9%

RPM

-8.0%

-10.8%

-0.8%

10.2%

11.5%

10.1%

2.9%

2.4%

2.5%

Net income

-570

-351

-37

340

436

427

165

45

57

-

-

-

-

28.5%

-2.2%

-61.3%-73.0%

28.1%-20.3%-13.3%

-1.2%

9.3%

10.5%

8.4%

2.3%

1.0%

1.3%

Shares issued (year end; '000)

6,774

6,774

6,774

10,753

41,25942,031

42,59842,598

EPS

-35.1

-17.8

-1.9

15.7

11.7

10.4

4.0

1.1

-

-

-

14.8

10.6

10.2

3.9

1.1

Operating profit

Recurring profit

YoY
Net margin
Per share data

EPS (fully diluted)
Dividend per share
Book value per share

-

-

-

-

-

1.0

1.5

1.0

58.9

40.6

38.6

54.3

64.8

75.4

78.1

77.6

1.4
1.0-3.0

Balance sheet(JPYmn)
665

493

56

390

1,764

1,524

2,737

2,155

Total current assets

Cash and cash equivalents

1,918

1,530

1,293

2,114

3,421

3,606

4,221

4,088
2,584

Tangible fixed assets

295

205

133

564

718

2,410

2,464

Investment and other assets

89

30

18

27

38

154

169

476

Intangible fixed assets

39

-

-

1

31

194

309

279
7,446

Total assets

2,341

1,766

1,445

2,709

4,210

6,376

7,164

Accounts payable

443

430

364

386

474

620

321

524

Short-term debt

433

203

30

40

323

300

1,395

986
2,041

Total current liabilities

1,026

884

598

708

1,130

1,481

2,049

Long-term debt

67

-

-

151

294

539

612

614

Total fixed liabilities

153

83

85

251

442

1,733

1,820

2,144

Total liabilities

1,179

967

683

959

1,572

3,215

3,869

4,185

Net assets

1,162

799

761

1,751

2,638

3,161

3,295

3,261

500

203

30

192

618

839

2,007

1,600

Total interest-bearing debt
Cash flow statement(JPYmn)
Cash flows from operating activities

-1

68

-332

36

764

387

1,614

102

Cash flows from investing activities

12

93

77

-454

-265

-865

-392

-628

Cash flows from financing activities

-82

-299

-168

783

875

238

-2

-57

Financial ratios
ROA (RP-based)-8.4%-13.8%

-1.5%

18.0%

13.8%

9.7%

3.1%

1.5%

ROE

-43.4%-35.8%

-4.7%

27.4%

20.1%

14.8%

5.2%

1.4%

Equity ratio

49.6%

45.3%

52.7%

64.6%

62.7%

49.6%

46.0%

43.8%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

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Recent updates
Highlights
On November 9, 2017, Shared Research updated the report following interviews with Tamagawa Holdings Co., Ltd.

On August 10, 2017, the company announced earnings results for Q1 FY03/18; see the results section for details.

For corporate releases over three months old, see the News and topics section.

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Trends and outlook
Quarterly trends and results
FY03/17

Cumulative(JPYmn)Sales
YoY
Gross profit
YoY
GPM
SG&A expenses
YoY
SG&A-to-sales ratio
Operating profit
YoY
OPM
Recurring profit
YoY
RPM
Net income
YoY
Net marginQ1
476-30.2%
132-41.1%
27.8%
237
-4.1%
49.7%
-104
-129
-90
-

Quarterly(JPYmn)Sales
YoY
Gross profit
YoY
GPM
SG&A expenses
YoY
SG&A-to-sales ratio
Operating profit
YoY
OPM
Recurring profit
YoY
RPM
Net income
YoY
Net margin

Q2

FY03/18
Q3

1,814
2,538
63.7%
-24.0%
526
744
48.8%
-4.1%
29.0%
29.3%
522
788
1.6%
-9.1%
28.8%
31.0%
3
-43
0.2%
-43
-103
-4
-88
FY03/17

Q4

Q1

4,443

-73.0%
1.0%

674
41.6%
208
57.3%
30.9%
241
1.9%
35.8%
-33
-61
-72
-

-38.8%

1,292-16.6%
29.1%

1,103-13.2%
24.8%

189-32.3%
4.3%

107-49.6%
2.4%

45

Q1

Q2

Q3

Q4

Q1

476
-30.2%
132-41.1%
27.8%
237
-4.1%
49.7%
-104
-129
-90
-

1,338
214.0%
393
206.1%
29.4%
285
6.8%
21.3%
108
8.1%
86
6.4%
86
6.5%

724
-67.6%
219-48.3%
30.2%
265-24.7%
36.6%
-47
-60
-84
-

1,905

674
41.6%
208
57.3%
30.9%
241
1.9%
35.8%
-33
-61
-72
-

-51.4%

548-29.2%
28.7%

315-21.9%
16.5%

233
12.2%

209
11.0%

133
7.0%

Q2

FY03/18
Q3

Q4% of FY FY Est.
15.9%

4,237
-4.6%

-

202
6.8%
4.8%
107
0.5%
2.5%
57
27.7%
1.3%

-

-

FY03/18Q2

Q3

Q4Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Net income is net income attributable to the parent company shareholders.

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Segment breakdown (cumulative)(JPYmn)Sales
YoY

Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp

FY03/17
Q2
1,814

Q1
476

FY03/18
Q3
2,538

Q4
4,443

Q1
674

-30.2%

63.7%-24.0%-38.8%

41.6%

YoY-32.4%

0.2%

7.3%

24.6%

33.9%

YoY

-56.4%--50.1%-67.4%

252.7%

YoY

-5.0%

-2.8%

-4.1%

-1.1%

62.6%

372.0%-102.1%-52.0%-32.3%-68.5%----

Electronic and Communication Device
Renewable Energy System Sales
Solar Power Plant

402

948

8

735

67

Geothermal Power Plant
Operating profit

-104

YoY

Electronic and Communication Device
YoY

-22

131

3

6

1,474

891

173

-43
58

Renewable Energy System Sales

-64

81

34

Solar Power Plant

29

55

56

YoY

YoY

-

-

-1.9%

Geothermal Power Plant
Adjustments

7.4%

-46

-139

Segment breakdown (quarterly)(JPYmn)
Sales

1,610

228

189

246

Q2
1,338

2

-

-47

73

53

-61.3%

-

-0.7%

28.7%

85.3%

Q3
724

Q4
1,905

Q1
674

-1
-40

FY03/18214.0%-67.6%-51.4%

41.6%

YoY-32.4%

55.4%

22.9%

57.8%

33.9%

YoY

-56.4%--91.1%-77.2%

252.7%

YoY

-5.0%

-0.5%

-7.9%

9.8%

62.6%

-

-37.1%-

107.3%--75.6%

Renewable Energy System Sales
Solar Power Plant

402

8

67

Geothermal Power Plant
Operating profit

-104

YoY

-

546

727

64

108

-

527

156

41

-47

Electronic and Communication Device

-22

29

51

Renewable Energy System Sales

-64

145

-47

Solar Power Plant

29

26

1

YoY

YoY

YoY

-

-1.9%

Geothermal Power Plant
Adjustments

-46

-

19.9%

-93

Q4

-33

-30.2%

Electronic and Communication Device

Q3

109

111

-1
-240

Q4

27

-

-0
-191

Q3

538

FY03/17
Q1
476

YoY

2,605

Q2

-78.5%

-0
-52

1,131

719

55

233

538

27

109

-33

-

188

2

77

-47

17

53

-

-0
-49

Q2

-

85.3%

-1
-40

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The JPY240mn adjustment of the FY03/17 segment profit/loss comprises JPY44mn in adjustment of unrealized profit, JPY140mn in adjustment of dividends received
from consolidated subsidiaries, JPY5mn elimination of inter-segment transactions, and JPY51mn profit/loss of unallocated group administration division.

Q1 FY03/18 results▷ Sales:

JPY674mn (+41.6% YoY)

▷ Operating loss:

JPY33mn (operating loss of JPY104mn in Q1 FY03/17)▷ Net loss*:

JPY72mn (net loss of JPY90mn)▷ Recurring loss:

JPY61mn (recurring loss of JPY129mn)*Net loss refers to net loss attributable to parent company shareholders.
All segments posted sales and profit growth except Geothermal Power Plant Operations.

Electronics and Telecoms Equipment▷ Orders:

JPY321mn (+33.3% YoY)

▷ Operating profit:

JPY2mn (operating loss of JPY22mn in Q1 FY03/17)▷ Sales:

JPY538mn (+33.9%)

The company achieved higher sales owing to growth in orders in the public and government sectors despite a temporary drop inorder receipts due to delayed plans for capital investment by telecom carriers on countermeasures against radio wave
interference. Sales breakdown by sector was as follows: mobile telecoms-related JPY96mn (-7.1% YoY), public and government
sectors JPY151mn (+12.4%), and other (public sector/infrastructure, measuring instruments, etc.) JPY289mn (+77.5%). Sales of

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the Tamagawa-brand products, which have higher profit margins, totaled JPY142mn (+23.2% YoY) and the sales mix of theseproducts was 26.4% of the total versus 28.6% in Q1 FY03/17. Sales of products for transport infrastructure increased due torepeat orders for its commercial wireless optical transmission system.
Profits were up due to the sales growth effect and improved profit margins. The company focused on cutting costs bystreamlining operations. Cost reduction progressed as a result of increasing local procurement to 80% at Vietnamese subsidiary
Tamagawa Electronics Vietnam Co., Ltd.

Renewable Energy System Sales▷ Orders:

JPY10mn (-91.7% YoY)

▷ Operating loss:

JPY47mn (operating loss of JPY64mn in Q1 FY03/17)▷ Sales:

JPY27mn (+252.7％)

The company booked revenues from operation and maintenance of solar power plants and sales of small-scale wind power
generation equipment. Major sales projects will be concentrated in 2H, in line with the initial company plan.

Solar Power Plant Operations▷ Sales:▷ Operating profit:

JPY109mn (+62.6% YoY)
JPY53mn (+85.3%)

The segment booked electricity sales from mega solar power plants in Shimonoseki, Tateyama, Sodegaura, as well as
Kasumigaura, which started electricity sales in April 2017 (total capacity: approximately 2.4MW; power generation volume:
2,900MWh; electricity sales price: JPY36/kWh; and annual revenue from electricity sales: JPY105mn).

Geothermal Power Plant Operations
No sales were booked. Operating loss was JPY1mn due to expenses (vs. no sales or expenses in Q1 FY03/17).

For details on previous quarterly and annual results, see the Historical financial statements section.

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Full-year company forecasts
FY03/17FY Act.
4,443
3,151
1,292

(JPYmn)Sales
Cost of sales
Gross profit
GPM

FY03/18
FY Est.
4,237

YoY
-4.6%

202

6.8%

107

0.9%

57

28.1%

29.1%

SG&A expenses

1,103

SG&A ratio

24.8%

OPM

4.3%

4.8%

RPM

2.4%

2.5%

Net margin

1.0%

1.3%

Operating profit

189

Recurring profit

107

Net income

45

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

Company forecasts by segment
Forecasts by Segment(JPYmn)
Sales
Electronic and Communication Device
Renewable Energy Systems Sales
Solar Power Plant
Geothermal Power Plant
Operating profit
Electronic and Communication Device
Renewable Energy Systems Sales
Solar Power Plant
Geothermal Power Plant
Adjustments

FY03/17FY Act.
4,443
2,605
1,610
228
189
246
111
73
-1
-240

FY03/17FY Est.
4,237
2,700
1,154
379
202
210
13
75
-96

YoY

-4.6%
3.6%
-28.3%
66.4%
6.8%-14.6%-88.3%
2.8%-

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Adjustments in FY03/17 include adjustment of unrealized profit of JPY44mn.

FY03/18 forecasts▷ Sales:

JPY4.2bn (-4.6% YoY)

▷ Operating profit:

JPY203mn (+7.2%)▷ Net income*:

JPY57mn (+28.1%)▷ Recurring profit:

JPY107mn (+0.9%)*Net income refers to net income attributable to parent company shareholders.
Forecasts by segment are as follows.

Electronics and Telecoms Equipment▷ Sales:▷ Operating profit:

JPY2.7bn (+3.7% YoY)
JPY210mn (-14.6%)

Tamagawa forecasts a 24.0% YoY increase in mobile telecoms-related sales to JPY697mn. Although assuming little YoY change inmobile telecoms companies’ capex (see Market and value change section), the company expects its market share to increase,because its price competitiveness has improved thanks to products with over 80% local content made by consolidated subsidiary
Tamagawa Electronics Vietnam Co., Ltd. The subsidiary is not expected to book any overseas sales.
The company forecasts sales of JPY671mn (+4.4% YoY) in the public and government sector, where new project inquiries havebeen brisk, and aims for a recovery in sales to over JPY1.0bn (attained in FY03/15) in the medium term.

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The company forecasts other sales (public sector/infrastructure and measuring instruments) of JPY1.3bn (-5.7% YoY). For public
sector/infrastructure, the company targets repeat orders for commercial wireless optical transmission systems newly installed at
airports, subways, and meteorological observation facilities in FY03/17, plus orders from new customers. For measuring
instruments, Tamagawa plans to increase sales of power semiconductor testers and new applications. Testing equipment forelectromagnetic noise in the automotive sector (automobile EMC test equipment), which is a new sector for the company, is also
expected to contribute to results. Tamagawa has already delivered some EMC test equipment to major automakers and hasreceived inquiries from Tier 1 automotive suppliers.
Tamagawa’s development of a wireless optical transmission system for next-generation electro magnetic compatibility (EMC) testing was selected as a
research project for accelerated commercialization among public entries in April–May 2017 by the Kanagawa Institute of Industrial Science andTechnology, a Local Incorporated Administrative Agency. The theme of the research project is modification of RoF (radio over fiber) systems using
Aoyama Gakuin University’s technology for assessment of electromagnetic waves and the Kanagawa Institute’s EMC testing technology to adapt it for
use in next-generation EMC testing. Sophisticated electrical and electronic technologies are increasingly used in the automotive industry, such as
connected cars, automated driving systems, and wireless charging, which means that high-precision EMC measurement will become more important
than ever to ensure safety.
* EMC (electro magnetic compatibility) testing checks that electromagnetic waves emitted by electronic devices do not affect other devices, and thatdevices do not malfunction as a result of exposure to electromagnetic waves emitted by other devices.
* RoF (radio over fiber) is a technology that takes advantage of the low loss, wide bandwidth properties of optical fiber to achieve high-precision EMC
measurement.

Tamagawa looks for lower segment profit despite the sales growth effect, because it plans to increase R&D spending from
JPY83mn in FY03/17 to JPY120mn in FY03/18.

Renewable Energy System Sales▷ Sales:▷ Operating profit:

JPY1.2bn (-28.3% YoY)
JPY13mn (-88.3%)

Tamagawa plans to compensate for a sharp decline in revenue from the sale of solar power generation facilities with sales ofsmall-scale wind power generation equipment. The company has not factored sales in the form of development contracting feesthat it received for the Misawa Plant into its FY03/18 forecast.
The company forecasts sharply lower segment profit, due to sales decline and because it does not expect any development
contracting fees, which made a large contribution in FY03/17.

Solar Power Plant Operations▷ Sales:▷ Operating profit:

JPY379mn (+66.4% YoY)
JPY75mn (+2.8%)

Tamagawa forecasts higher sales due to the contribution of Kasumigaura mega solar power plant in Ibaraki Prefecture (2.4MW
capacity; electricity sales price: JPY36.0/kWh; estimated electricity sales revenue: JPY105mn) starting in Q1 and Noboribetsu
power plant (1.9MW capacity; electricity sales price: 40.0/kWh; estimated electricity sales revenue: JPY94mn) from 2H.
The company expects higher segment profit as a result of sales growth.
The Misawa power plant, in which Tamagawa has a 30% stake, began selling electricity amounting to 1.5MW in output (portion
allotted to the company) in Q4 FY03/17. Additional facilities that would increase the output by another 1.5MW (portion allotted)
are set for launch in 2H FY09/18. The Misawa plant’s earnings will contribute as equity-method profit/loss.

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Medium-term outlook
Tamagawa seeks to grow earnings in the medium term in the Electronic and Communication Device, Renewable Energy System
Sales, and Solar and Geothermal Power Plant businesses by implementing the following measures.

▷ Electronic and Communication Device: develop 5G products, expand the overseas business, and respond to 2020 Tokyo
Olympics-related demand▷ Renewable Energy System Sales: expand the scope of power plant development business; pioneer projects in used solar power
plant market▷ Solar and Geothermal Power Plant: increase power generation output (targets over 20MW in output capacity in FY03/19 versus
4.8MW in FY03/16)

Electronic and Communication Device Business
Since Masanori Kobayashi—CEO of Tamagawa Electronics—became a director at Tamagawa Holdings in June 2011, the plan has
been to exit unprofitable projects, which resulted in earnings improvement.
In the medium term, Tamagawa aims to grow sales and profits by developing products for the next-generation mobile telecoms
system (5G), expanding the overseas business, and responding to 2020 Tokyo Olympics-related demand. The company alsoplans to strengthen R&D to develop and launch new products to expand sales, while stepping up sales of more profitable
Tamagawa-brand products.

Product development for 5G
For 5G (Fifth-Generation Mobile Communications System) services, which NTT Docomo (TSE:9437) aims to launch in 2020,
technologies such as the SHF band, submillimeter and millimeter waves, carrier aggregation, massive-MIMO, beam forming, andNOMA are scheduled to be introduced in order to reach transmission speeds of up to 100 times those that are currently available.
The company is moving forward with development to meet these technological needs.
Develop test and evaluation devices for demonstration experiments
field sensor
for measurement
measurement of electromagnetic
filed, to test beamforming
1 . Electric Electricfield sensor
forof electromagnetic
field, to test
beamforming *Develop devices
1. Develop quasi-millimeter and millimeter band analog frontend modules

Developing sensors applying opticalfeeding radio over fiber (RoF) technology
to evaluate antenna performance

Developing transmitter and receiver for 18–
42GHz band, positioned just under antenna

2 . Develop reliability evaluation
device for semiconductors for the
next-generation mobile terminals

2. Co-developing multichannel filters for
multiple transmission frequency bands

Developing components that enable handlinghigher frequency and wider bandwidth thanconventional technologies, by applying power
semiconductor testing device technologies forspace and satellites

Hundreds of antennas integrated

3. Co-developing next generation highefficiency power amplifier* Beamforming refers to a technology to amplify wireless signals by concentrating radio waves into a selected direction

Source: Shared Research based on company data

Expansion of overseas businesses
In March 2015, Tamagawa established a second-tier subsidiary in Vietnam, Tamagawa Electronics Vietnam Co., Ltd. The
subsidiary began operation in October 2015. Following its launch, the company began production of high-quality,
high-frequency passive components for use in telecoms and broadcasting, as well as mobile base stations, geared toward theJapanese market. Reduced costs through increased local procurement are planned to lead to improvements in pricecompetitiveness, yielding an increase in orders. Consequently, the company aims to expand business into Southeast Asia and the
Middle East, focusing on capturing orders for overseas mobile infrastructure devices via low-cost proposals.

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Responding to Olympics-related demand
In other areas, Tamagawa plans in the medium term to win orders via product proposals in the areas of AM/FM rebroadcasting
equipment for dead zones and subsystems for next-generation digital terrestrial broadcasting equipment ahead of the Tokyo
Olympics. Expansion of business via M&A in related areas is also a possibility.

Development of new and Tamagawa-brand products◤ In terms of optical transmission equipment for trains, Tamagawa in FY03/16 has increased efforts to win contracts for telecomsand broadcasting-related public works projects to minimize the impact of restrained capex spending on the mobile-phone

infrastructure market. As a result, the company has won an order. According to Tamagawa, the product is an analog opticaltransmission equipment that can convert wireless signals (similar to radio waves) directly to optical signals and transmit them.
The system is simple and therefore cost effective. Further, compared to coaxial cables, optical fiber is suitable for transmitting
wireless signals over long distances because of its high frequency characteristics, in addition to fewer signal losses. The
wireless systems for trains that make use of this technology are expected to contribute to sales over the next three years.
◤ Since FY03/14, the company has increased investments in R&D for products of its own brand. It started sales of testing

equipment for power semiconductors and a high-definition-image monitoring system in FY03/15. The Yano ResearchInstitute’s “Global Power Semiconductors Market: Key Research Findings” estimates that the global power semiconductor
market will double to USD33.9bn in the ten years from 2015 to 2025.
◤ For the medium term, Tamagawa has been developing new products for electric noise resistance testing in the automotive

sector as one of its own-brand products. Because previous noise resistance test equipment had all used electric cords, theresulting electromagnetic induction and attenuation made it difficult to measure very small signals. To solve this problem, thecompany applied to the noise resistance test equipment its technology for converting radio wave signals into optical signals
through the use of fiber-optic cables, and was able to enhance the sensitivity of the test equipment and expand the range ofsignals that could be measured. This new noise resistance test equipment received an honorable mention in the 33rd
Kanagawa High-Tech Grand-Prix in October 2016. Its project to develop a wireless optical transmission system fornext-generation electro magnetic compatibility (EMC) testing was selected as a research project for accelerated
commercialization among public entries in April–May 2017 by the Kanagawa Institute of Industrial Science and Technology.
Electromagnetic noise testingRadio over fiber (RoF) unit

Automotive EMC
evaluation system
Optical feeding RoF, coaxial filter
attenuater, amplifier

Source: Shared Research based on company data

Renewable Energy System Sales BusinessIn the medium term, Tamagawa will aim for earnings growth by expanding the scope of its power plant development andpioneer projects in used solar power plant market.

Selling solar power plant equipment
In FY03/15, Tamagawa acquired land for solar power plants and obtained rights to the Feed-in Tariff (FIT) scheme, and after theconstruction of solar power plants, also began sales of solar power plant equipment to external clients. In FY03/15, the company

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reported sales of JPY1.1bn from selling 2.2MW equipment, and in FY03/16, sales of JPY5.0bn from selling 10.2MW equipment. In
FY03/17, the company booked sales of JPY1.4bn for selling 2.3MW equipment.
When tax incentives for promoting investments in facilities to improve productivity, under which a solar power producer can
immediately have related facilities fully depreciated, expired at the end of March 2016, the percentage of deprecation fell to 50%
from April onward. There has been no depreciation incentive since April 2017.
While Tamagawa still believes that it will be able to promote the selling of solar power plant equipment as a lucrative business in
FY03/18 and beyond, the company is anticipating a sales decline. Being proactive, however, it plans to offset the sales decline byadding the sale of small-scale wind power generation equipment (see below for details) to its portfolio and target development
contracting fees from FY03/18 onward. Entering the market for secondhand solar power generation plants is also included in themedium-term plan. Specifically, the company is considering revenue generation through direct or indirect investment in facilities
owned by struggling solar power generation companies or by functioning as a broker for such facilities. According to Teikoku
Databank, Ltd., 50 solar power-related companies went bankrupt in 1H 2017, up 2.2x YoY.
Solar power-related companies include those whose main business is sales/installation of solar power generation systems, and consulting and otherrelated services, and those that have a mainstay business as well as solar power-related operations.

Selling small-scale wind power generation equipment
Small-scale wind power generation refers to wind power generation equipment producing less than 20kW of electricity. As of
May 2017, the purchase period for a wind power generation equipment of less than 20kW is 20 years, at the price of JPY55/kWh.
Provided that wind speeds are sufficient, wind power generation can generate electricity during the night, differentiating it fromsolar power generation.
In order to demonstrate the reliability and functionality of this product, the company plans to construct and operate Small-scaleWind Power Generator Facility No. 1 (power output: 19.5kW) on grounds available at its Tateyama mega solar power plant(power output: approx. 2,000kW).
Tamagawa received approval to build small-scale wind power generation facilities in 21 locations in FY03/17. The company plans
to begin sales of wind power generation systems in earnest in FY03/18.
Small-scale wind power generation equipment (Tateyama plant)

Source: Company data

The unit price of Tamagawa’s small-scale wind power generation equipment is about JPY30mn.

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Development contracting fees in mega solar power plant development
For large-scale solar power generation projects with capacity of about 10MW or more, the company has a policy of securing
funding through joint development. During joint development of mega solar power generation facilities, in addition to
generating revenue from selling power, the company also derives sales in the form of development contracting fees, which
include fees received on disposal of land ownership rights and for the preparation of requisite legal documentation. The
company received such fees from the Misawa plant (power output of 9.5MW), scheduled to begin operation in FY03/17.
As of May 2017, the company is engaged in due diligence for potential large-scale solar power generation projects like theMisawa plant, equivalent to 50MW of output. By being involved in development of latent projects over the medium term,
Tamagawa aims to acquire development contracting fees in the medium term. In June 2016, with the intent of establishing aproprietary project financing system for the development of renewable energy power generation plants, the company newly
established a dedicated project financing office.

Solar and Geothermal Power Plant Businesses
Tamagawa seeks earnings growth in the medium term by increasing the combined power output of solar, geothermal, andsmall-scale wind power generation (plans call for combined output to grow from 4.8MW in FY03/16 to 20.0MW in FY03/19). The
company is also considering plans to move into small hydro, biomass, and hydrogen power generation businesses.
Power output under the medium-term plan
FY03/19

FY03/16
4.8MW

16.2MW

Geothermal power plants-

850kW (equivalent to 6.8MW of solar power)

Small-scale wind power plants-

351kW (equivalent to 2.8MW of solar power)

Solar power plants

Source: Shared Research based on company data

Generating capacity of solar power plants
In addition to the total output of 8.7MW from solar power facilities already in operation, the company is expecting an additional
capacity of 9.7MW (see “Solar power plant generation in the Business section”) from facilities in the planning stage as of May
2017. The company has also secured land and rights to develop solar power plants that can generate up to 18.4MW, exceeding
the company’s medium-term goal of 16.2MW.
The company utilized its own funds to develop the solar power generation plant at Shimonoseki—its first venture—but from the
Tateyama plant onward, Tamagawa has made use of leases and joint development initiatives to secure funding for facilities
development. Solar power plant construction under a leasing arrangement improves the internal rate of return (IRR); comparedwith an IRR of 7.5% for the Shimonoseki plant, the Tateyama plant achieved an IRR of 16.5%.
For large-scale solar power generation plants with generating capacity of about 10.0MW or more, the company as a policy
acquires funding via joint development. In June 2015, Tamagawa established an SPC (Etrion Energy 5 LLC) via joint investment
with Etrion Japan for development of the Misawa plant (Aomori Prefecture), with Tamagawa holding a 30% stake. The Misawa
plant began operation in Q4 FY03/17 with power generating capacity of about 10MW (Tamagawa is entitled to 3.0MW), and it isexpected to generate approximately JPY390mn per year in revenue (Tamagawa’s share is JPY130mn). Earnings from the plant,
booked as investment income from an equity-method subsidiary, began making contributions from Q4 FY03/17 onward.
According to the company, as of May 2017 due diligence was underway to build eight more large-scale solar power plants withcombined generating capacity of 50MW.

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Outline of Etrion Energy 5 LLC
EPC / O&M
Sumitomo Mitsui Trust Bank

Hitachi High-Technologies
Corporation

000

EPC / O&M contracts

Project finance

Misawa power plant 10MW
(Etrion Energy 5 LLC)
Development service agreement

Sale ofelectric power

IncomeSponsors (equity holders)Tamagawa Holding
groupElectric powercompanies

Etrion Japan 60%
Tamagawa Holdings 30%
Hitachi High-Technologies 10%

Source: Shared Research based on company data
*EPC refers to businesses comprehensively undertaking construction projects across the fields of engineering, procurement, and construction*O&M refers to businesses that undertake operation and maintenance of facilities after construction is complete

Geothermal power generation businessIn the medium term, Tamagawa will aim for geothermal power generation of 850kW (equivalent to 6.8MW of solar power) in
FY03/19. As of May 2017, the company was engaged in due diligence for two geothermal power generation plants withcombined power generating capacity of 800kW (equivalent to 6.4MW of solar power). It announced in June 2017 that it would
begin drilling work to release steam required for a geothermal binary power plant at a potential site in Ibusuki, Kagoshima
Prefecture.

Geothermal power generation
Geothermal power generation involves using steam and hot water produced under the earth’s surface to drive steam turbinesconnected to electricity generators. This type of generation produces less carbon dioxide than thermal power stations. Anotheradvantage is that geothermal generation is not affected by the depletion or rising prices of fuel, and it can be used in perpetuity.
Geothermal generation also provides stable power; it is not affected by the weather, seasons, or day/night fluctuations like othermajor renewable energy sources such as solar and wind power.
According to the company, the Japanese government mulled over next-generation energy sources during the oil shocks in the
1970s and determined nuclear power as a core source of electricity in Japan. However, due to the New Energy and Industrial
Technology Development Organization (NEDO)’s accumulation of data on geothermal power generation, it is now considered asource of energy with high potential in Japan.
The two main methods of geothermal power generation are steam and binary generation.
Steam generation: With this method, turbines are driven directly by natural steam at temperatures of 200–300C or more. Subterranean water at hightemperatures and pressures is dominated by either steam or hot water. With the former, moisture can be easily removed and the dry steam routed toturbines to generate electricity. If the source is dominated by hot water, the fluid is first run through a flasher, which separates the steam from the hotwater. In a double-flash cycle, turbines are driven by both high- and low-pressure steam.
Binary generation: This method is used when hot water and steam temperatures are 150C or less, and thus cannot drive turbines directly. Heat is
exchanged from the geothermal fluid to a medium that has a lower boiling point than water (such as a water/ammonia mixture), and steam from thatmedium drives turbines to generate electricity.

Feed-in tariff system for geothermal power generation
Under the FY2016 feed-in tariff system, the price for electricity produced by solar power plants is JPY24/kWh and the purchaseperiod is 20 years (for 10kW or more; excluding tax). In contrast, the price for electricity produced by geothermal power plants is
JPY40/kWh and the purchase period is 15 years (for less than15,000kW; excluding tax).

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According to the company, a wholly owned 1MW solar power plant requiring an investment of JPY301mn (assuming the site isrented) would generate annual electricity sales of JPY29mn (on assumption of an average daily quantity of solar radiation of
3.7kWh/sqm), annual operating profit of JPY3mn, and an average yield of 6.3%, for a payout period of 15.7 years. In contrast, a
125kW geothermal plant (which generates electricity roughly equivalent to a 1MW solar power plant) needs capital spending
worth JPY205mn (the site on rent) and generates annual sales of JPY41mn, annual operating profit of JPY18mn, and an average
yield of 15.5% for an expected payout period of 6.4 years.

Sale of Beppu geothermal power plants
In January 2015, the company announced that it planned to build a total of seven geothermal power plants, and to this end
acquired a total of seven separate plots of land. The company moved forward on construction at two of the seven sites butchanged its plan in December 2015. The company sold the two plants currently under construction to a third-party and sold backthe sites acquired for the five other geothermal power plants to their original owners.
Against risks of drilling springs, the company is apparently considering using its own drilling methods, which will have no direct
effect on the company’s business results but will enable the company to secure preferential rights to springs.

Other businessHydrogen power
In January 2016, Tamagawa announced that it would establish in internal division to prepare for future developments inhydrogen power. Plans call for research and exploration of methods to store power generated via hydrogen.
In the renewable energy field, limitations imposed by the impact of weather conditions on systems such as solar power and wind
power generation are an ongoing concern. Hydrogen power storage systems produce hydrogen from excess power generated
by solar and wind power generation systems, and store this hydrogen for future use. The stored hydrogen is then combined with
fuel cells, to release power as needed. Conventional batteries lose charge over time, but hydrogen—stored in tanks—can be
stored for much greater lengths of time, allowing for efficient energy storage. This stored energy can then be provided to various
areas on an as-needed basis.

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Business
Business description
Tamagawa has four business segments: 1) Electronic and Communication Device business, which it has been involved in since
the founding of consolidated subsidiary Tamagawa Electronics Co., Ltd. in 1968; 2) the Renewable Energy System Sales
business, engaging in sales of equipment for solar and other power plants, and purchase and sales of solar power generation
systems; 3) Solar Power Plant business; and 4) Geothermal Power Generation business.
Earnings by segment
Earnings by segment

FY03/09

FY03/10

FY03/11

FY03/12

FY03/13

FY03/14

FY03/15

FY03/16

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

Act.

4,299

2,803

2,640

3,106

3,672

4,171

5,095

7,260

4,443

2,709

2,390

(JPYmn)Sales

YoY
Electronic and Communication Device
YoY% of total

7.1%-34.8%-14.2%
75.6%
-

3,248

Renewable Energy System Sales
YoY% of total
Solar Power Plant
YoY% of total
Geothermal Power Plant
YoY
Operating profit
YoY
Electronic and Communication Device
YoY% of total
Renewable Energy System Sales
YoY% of total
Solar Power Plant
YoY% of total
Geothermal Power Plant
YoY

-

-

-

-5.8%

17.7%

18.2%

13.6%

22.1%

42.5%

-38.8%-16.6%
96.6%-11.8%
90.5%

0.7%
77.5%

31.2%
85.9%

2.3%
77.4%

5.3%
66.7%

-38.5%
28.8%

24.6%
58.6%

-

-

0.6%

12.0%

101.8%
21.3%

80.4%
31.5%

207.5%
68.0%-67.4%
36.2%

-

-

-

1.2%

70.7%
1.7%

161.8%
3.2%

-1.1%
5.1%

-

-

-

-

-

-

-

-

-

-

2,406

19
-

-

-

3,156
441
-

-

-68

-227

-286

-30

373

-162

-292

-236

63

375

-

-

-

-24

-

-

-

-

FY03/17

-

-

-

-

-

-

-

-

-

-

3,230
890

52
-

477

3,401

1,606

88
-

531

2,091

4,938

230
-

280

2,605

1,610

228
-

-

189

-

27.8%

11.3%

-47.4%-32.3%-

497.4%
99.8%

28.1%
93.8%

-2.7%
77.7%

-

57.3%

-

14.4%

-5.5%
10.0%

118.6%
18.6%

155.9%
92.3%-61.3%
25.8%

-

-

-

3.7%

155.2%
18.2%

28.7%
17.0%

-

-

-

-

-

54

-12
-

-

480

51

-20
-

467

112
22

-0

-12

287
57

246

111
73

-21

-1

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: In FY03/14, the company changed segments to include Solar System Sales and Solar Power Plant Business. Then in FY03/16, the Solar System Sales segment waschanged to the Renewable Energy System Sales Business.

Electronic and Communication Device Business(58.6% of FY03/17 sales; 57.3% of FY03/17 operating profit before adjustments)
Since the founding of consolidated subsidiary Tamagawa Electronics in 1968, Tamagawa has used its high-frequency wirelesstechnology to develop, manufacture and sell high-frequency devices (amplifiers, attenuators, filters, distributors and frequency
synthesizers). These products act as components in the wireless equipment used in mobile telecoms base stations, as well as inbroadcasting, infrastructure, and firefighting systems. High-frequency devices (circuits and measuring instruments) support anantenna’s radio wave transmissions by screening radio waves and adjusting signal intensity.
Tamagawa Electronics products: Components for LTE-Advanced mobile telecom base stations (left); Universal FPGA board with high-frequency frontend circuit(middle); and RoF system for optical power feeding (right)

Source: Company data

According to Tamagawa, high-frequency wireless is useful for data and video transmission as it uses wide-band radio waves,enabling fast transmission. In recent years, the usage of digital technology in telecoms and broadcasting equipment has been

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rising. However, digital technology is still not suitable for use in parts intended to directly trade high-frequency signals withfront-end parts, being unable to process these signals. As a result, these parts often make use of high-frequency analog
technology, which Tamagawa holds as its specialization. While many vendors, including Tamagawa, are able to provide digitaltechnology, few companies specialize in making high-frequency analog technology products. Tamagawa thus occupies a nichewith high market share.
In FY03/17, approximately 21% of Electronic and Communication Device sales came from devices for mobile telecoms basestations, about 25% from government and public sector-related sales, and 54% from devices for public sector/infrastructure.
Tamagawa’s main devices for mobile telecom base stations are high-frequency filters, distributors, synthesizers and attenuators,
which identify radio waves of certain frequencies from among the diverse range of radio waves both transmitted and received by
the antenna and amplify those specific radio waves. Other products (including public sector -related products) include wirelessoptical transmission systems for airports and subways and power semiconductor test systems.
Electronic and Communication Device sales by industry(JPYmn)Total
YoY
Mobile telecoms
YoY% of total
DefenseYoY% of total
Others (public sector, etc.)
YoY% of total

FY03/13
Act.
3,155
1,924
504
727
-

FY03/14
Act.
3,233
2.5%
1,422
-26.1%
44.0%
905
79.6%
28.0%
906
24.6%
28.0%

FY03/15
Act.
3,400
5.2%
1,404
-1.3%
41.3%
1,026
13.4%
30.2%
969
7.0%
28.5%

FY03/16
Act.
2,091-38.5%
486-65.4%
23.2%
688-32.9%
32.9%
917
-5.4%
43.9%

FY03/17
Act.
2,605
24.6%
549
13.0%
21.1%
643
-6.5%
24.7%
1,413
54.1%
54.2%

Source: Shared Research based on company data

Renewable Energy System Sales Business(36.2% of FY03/17 sales; 25.8% of FY03/17 operating profit before adjustments)
In this segment, consolidated subsidiary Tamagawa Energy sells solar power modules and solar power equipment. During
FY03/16, the main contributor to this segment was sales of solar power equipment. In FY03/17, revenue from development
contracting fees as well as sales of solar power equipment was booked in this segment.

Selling solar modules
In July 2011 Tamagawa entered an exclusive agreement to sell the solar modules of GPPV Solar Pte Ltd (GPPV below), and beganselling GPPV solar systems (the exclusive selling agreement was changed to a selling agreement in February 2014 for further
advancement of both companies’ businesses).
Through sales agencies the company provides customers with photovoltaic (PV) modules and power conditioners. Where
necessary the company also negotiates with electric utilities on behalf of customers and assists with loan applications to financial
institutions.
In Japan contracts under the Feed-in Tariff (FIT, for details see later in report) scheme of the Ministry of Economy, Trade and Industry (METI) oblige
electric utilities to buy electricity generated using 10-kilowatt or more solar power plants at a fixed price for 20 years. Prices and durations are revised
every year. In 2014 (April 2013 – March 2014) the price of solar electricity was JPY36/kWh (excluding tax) for 20 years. Prices for 2015 (April 2014 –March 2015) have been lowered to JPY32/kWh (excluding tax). Prices for 2016 are JPY29/kWh (excluding tax) when contracts with utilities are done byJune 2015 and JPY27/kWh (excluding tax) for contracts struck in July and later. The figure was later further reduced to JPY24 (excluding tax) for contracts
made during FY2016 (April 2016 to March 2017). Generation facilities must obtain FIT certifications from METI. If a solar power producer applies forGreen Investment Tax Incentives, related facilities can be fully depreciated immediately. The government also has similar regulations in place for wind,hydroelectric, geothermal, and biomass generation.

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Selling solar power plant equipment
The company began selling solar power plant equipment from FY03/15. Under this business, the company obtains certain rights
to sites for solar power plants and the FIT scheme from land and rights owners, then makes sales to outside customers. By selling
2.3MW equipment, it reported sales of JPY1.1bn in FY03/15. In FY03/16, sales were JPY5.0bn, the result of sales of 10.2MW in
equipment. In FY03/17, the company reported sales of around JPY1.4bn for sales of 2.3MW of equipment.
The company sells equipment for solar systems for about JPY400,000 per kW of installed capacity. Sales are determined bymultiplying installed generating capacity (kW) by the price per kWh of installed capacity. The solar system’s gross profit margin is
about 15%.

Development contracting fees in solar power plant development
For large-scale solar power generation projects with capacity of about 10.0MW or more, the company has a policy of securing
funding through joint development. During joint development of mega solar power generation facilities, the company generates
revenue not only from selling power, but by transferring ownership of the land to be used for the plant. Sales also come in theform of development contracting fees, which include fees received on disposal of land ownership rights and for the preparationof requisite legal documentation.
In FY03/17, Tamagawa received development contract fees of JPY150mn (booked as segment sales) from the Misawa plant(power output of 9.5MW), which was built in partnership with Etrion Japan K.K. and Hitachi High-Technologies Corporation.

Solar Power Plant Business(5.1% of FY03/176 sales; 17.0% of FY03/17 operating profit before adjustments)
The company has recorded electricity sales revenue by owning and operating mega solar (power generation solar parks) from
FY03/14.

What is mega solar?
Mega solar refers to solar power stations of 1MW-plus. Since the start of the FIT scheme for renewable energy in July 2012 it has
been easier to secure profits, and a number of players from different sectors have joined the fray. There is also a trend for local
governments and private-sector businesses to join forces and build mega solar businesses on vacant land.
While output varies with the location and amount of sunlight, a 1MW mega solar plant generates roughly 1,200MWh per year
(assuming 14% utilization rate; depends on the amount of sunlight and the module’s angle of inclination). A typical four-personhousehold uses 4,430kWh per year; a 1MW mega solar plant can supply about 270 households. Mega solar plants need land: a
1MW plant covers about 15,000sqm (Tokyo Dome: 47,000sqm).
To take advantage of the FIT scheme first the operator needs METI approval to certify that the generation facilities comply withthe law. The purchase price for power generated in the scheme depends on when the facilities were certified rather than when
operations started. From April 2017 after the revised FIT Law took effect, the approval system has changed so that the businessplan must be approved as well as the facility, and connection contracts with utilities became a prerequisite for certification.
Other than gaining licenses for the generating facilities and equipment, operators face no special requirements to qualify to sell
all the renewable power they generate under FIT. While it is necessary to appoint a chief electrical engineer, company operators
do not need to have electricity business experience.

Tamagawa’s solar power plant operating business
In June 2012 Tamagawa set up a planning office and in September that year set up subsidiary GP Energy. Its firstproject—Shimonoseki power plant in Shimonoseki, Yamaguchi Prefecture—began operations in June 2013.

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Tamagawa operates mega solar power plants in this subsegment, forming special-purpose companies (SPC). The SPC buys orleases land on which it builds and runs solar power plants of 1MW-plus capacity. The SPC scheme enables separate project
financing, i.e., finance based on expected revenues for a particular project.
The company said upfront investment in mega solar plants—covering PV modules, supporting structures, electrical facilities andlabor—runs to JPY260–320mn per MW.
Electricity is sold to electric utilities. Revenue is selling price per kWh multiplied by total amount of electricity sold. FIT defines
electric utilities’ purchase prices as JPY40.0 (excluding tax) per kWh for electricity generated at facilities that were FIT-certified in2012, JPY36.0 (excluding tax) for those certified in 2013, and JPY32.0 (excluding tax) for those certified in 2014. In 2015, thepurchase prices were JPY29 (excluding tax) per kWh for contracts between FIT-certified facilities and power utilities struck by June2015 and JPY27 (excluding tax) per kWh for contracts done in July and later. The figure was later reduced again to JPY24(excluding tax) for FY 2016 (April 2016 to March 2017), and to JPY21 (excluding tax) for FY 2017 (April 2017 to March 2018).
Purchase duration is fixed at 20 years. The company’s solar power generation plants were certified in FY 2014 or before, and its
average sale price of electricity appears to be at least JPY36.0 (excluding tax) per kWh.
Shared Research understands that a 1MW mega solar plant generates roughly between 1.0 to 1.4GWh of electricity per year.
Assuming the facility was FIT-certified in 2012, electric utilities will buy electricity for JPY40 (excluding tax) per kWh, which
implies a revenue of JPY40mn per year. Weather and other factors impact the amount of power generated. Panel aging cuts
output by 0.25-0.75% per year.
The main costs are depreciation, land rent, maintenance fees and insurance. Gross profit margins hover around 50% and theunlevered internal rate of return could be 9%.

Tamagawa’s solar power plants
In addition to the total output of 8.7MW from solar power facilities already in operation, the company is expecting an additional
capacity of 9.7MW (see “Solar power plant generation in the Business section”) from facilities in the planning stage as of May
2017. The company has also secured land and rights to develop solar power plants that can generate up to 18.4MW, exceeding
the company’s goal of 16.2MW set forth for FY03/19 under the medium-term plan. The company commented that it hasrecorded profits on all facilities that have started electricity sales and does not have a single loss-making power plant.
In the development of solar power generation facilities, the company utilized its own funds in the development of the solar
power generation plant at Shimonoseki—its first venture—but from the Tateyama plant onward, Tamagawa has made use ofleases and joint development initiatives to secure funding for facilities development. If a solar power plant is constructed under aleasing arrangement, the internal rate of return (IRR) is improved; compared with an IRR of 7.5% for the Shimonoseki plant, theTateyama plant achieved an IRR of 16.5%.
Shimonoseki Solar Power Plant

Source: Shared Research based on company data

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Tamagawa Holdings solar power plants
Feed-in-tariff Output(JPY/kWh)(MW)

Sales (JPYmn;

Operation
start

Solar parks

Location

Shimonoseki

Shimonoseki,
Yamaguchi

40.0

1.6MW

Q1 FY03/13

76

Tateyama mega solar

Tateyama, Chiba

40.0

1.9MW

Q4 FY03/15

95

Sodegaura mega solar

Sodegaura, Chiba

36.0

1.3MW

Q4 FY03/15

60

Noboribetsu

Noboribetsu,
Hokkaido

40.0

1.9MW

Q3 FY03/18

94

Kasumigaurasolarmega Kasumigaura,
Ibaraki

36.0

2.4MW

Q1 FY03/18

105

Shared Research estimates)

MisawaMisawa, Aomori

36.0

1.5MW

Q4 FY03/17

65

MisawaMisawa, Aomori

36.0

1.5MW

Q2 FY03/18

65

Goto

Goto,
Nagasaki

36.0

5.3MW

Q1 FY03/19

250

Minamishimabara

Minamishimabara,
Nagasaki

40.0

1.0MW

Q2 FY03/19

40

Total

-

18.4MW-

850-

Source: Shared Research based on company data
Shared Research estimate for sales, based on annual electricity sales of 1,200MWh per 1MW solar power facility.

Joint development with Etrion JapanFor large-scale solar power generation plants with generating capacity of about 10.0MW or more, the company as a policy
acquires funding via joint development. In June 2015, Tamagawa established an SPC via joint investment with Etrion Japan fordevelopment of the Misawa plant (Aomori Prefecture), with Tamagawa holding a 30% stake.
The Misawa plant has power generating capacity of about 9.5MW (Tamagawa entitled to 3.0MW), which translates toapproximately JPY390mn per year in revenue. The company plans to begin operation of the plant in two stages (Q4 FY03/17 andQ3 FY03/18). In March 2017, electricity sales began on approximately 5MW capacity. Earnings from the plant, to be booked as
equity-method investment income, began making contributions from Q4 FY03/17.
The Misawa plant is developed and operated by Etrion 5 LLC, owned 30% by Tamagawa, 60% by Etrion, and 10% by Hitachi
High-Technologies Corporation. The EPC is operated by Hitachi High-Technologies, and capital expenditure of JPY3.4bn iscovered by investments from the LLC and project financing from Sumitomo Mitsui Trust Bank Ltd.
According to the company, the alliance with Etrion Japan enables Tamagawa to expand business development options including
fundraising and also advance its mega solar business. As of May 2017, the company was engaged in due diligence on latent solar
power generation projects—much like the Misawa plant—equivalent to about 50MW of output. By being involved indevelopment of latent projects over the medium term, Tamagawa aims to gain development contracting fees. In June 2016, with
the intent of establishing a proprietary project financing system for the development of renewable energy power generation
plants, the company newly established a project financing office.
Etrion Japan KK is part of the Etrion Group under parent company Etrion Corporation, which constructs, owns, and operates full-scale solar power
plants. It is an independent power producer (IPP) with solar power plants totaling 139MW in output in Italy and Chile, and is listed on the Toronto andStockholm stock exchanges. Etrion is also a part of the Lundin Group, an acclaimed resource group in the oil, gas, mining, and energy sectors. The
Lundin Group is composed of 11 group companies and has operations in 25 countries worldwide. The top shareholder in Etrion is the Lundin Group,
owning about 24%. Etrion has become the most significant renewable energy company within the group.

Misawa power plant details
Solar parks

Location

MisawaMisawa, Aomori

Feed-in-tariff(JPY /kWh)

Output
(MW)

36.0

9.5

Area (sqm)

Operation
start

163,000 FY03/17

Investment(JPYbn)3.4

Sales (JPYmn;
Shared Research estimates)
390

Source: Shared Research based on company data

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Strengths and weaknesses
Strengths◤ Benefiting from stable demand the electronics business has regained competitiveness: The company said it hasregained its competitive edge in high-frequency devices. Selling higher value-added products via original equipment

manufacturer (OEM) channels, measures to cope with new product development, and government and public sector-related
demand have borne fruit. In public demand a preference for Japanese suppliers lends Tamagawa an advantage over overseas
rivals. Restarting R&D and selling under its own brand should enhance earnings.
◤ Finished and pending projects in solar power: Building up its solar power generation business from scratch, Tamagawa

has acquired experience in everything from solar panel installation to project financing. As of May 2017, the company was

engaged in due diligence on latent projects with a combined capacity of roughly 50MW that can be either developed into amega solar or to which solar power generation equipment can be sold. Tamagawa has also conducted due diligence on
potential geothermal power plants with combined capacity of 800W (which would generate about the same amount ofelectricity as a 6.4MW solar power plant). With the completion of these projects the company expects to see further growth inrevenues and earnings.
◤ Entrepreneurial management wants to rekindle investor trust: Shared Research flags a resolve to get it right this time. It

has entrepreneurial energy although is aware of investor skepticism. Liaising with investors and partners, Tamagawa wants torebuild its image. According to the company, investors appreciate its full disclosure.

Weaknesses◤ Reputation: Tamagawa has a history of business failures. CEO Toru Masuzawa is the subject of controversy. Masuzawa has

been a defendant in a number of civil lawsuits relating to his time at J Bridge, but asserts that he was a victim of circumstance,

and will rebuild his reputation and prove his management acumen. In addition to developing procedures to deal with
reputational risk, in February 2014, the company established a compliance committee, and contracts with an outside legal
firm for advisory services.
◤ Shortage of manpower in Renewable energy-related business: The renewable energy-related business only had 10 staff

as of May 2017. The complexity of projects requires personnel with high entrepreneurship, strong motivation and expansive
knowledge from fundraising to electrical engineering. However, efforts to hire appropriate personnel quickly may blocksound corporate growth. Considering the downtrend in the feed-in-tariffs of renewable energy and limited business
opportunities, this lack of human resources is concerning.

◤ Potential rate cuts for fixed-rate feed-in tariffs: The fixed FIT rate has been lowered each consecutive year, and it is likelythat demand for solar power generation construction will decline in the medium term and that the expected profitability of

new solar parks will decrease. According to the company, it will combat these issues by improving power conversion
efficiency of its solar cells and other components in an effort to continue providing benefits to consumers. Tamagawa is also
developing businesses using renewable energy sources other than solar power.

Group companies
As of end-March 2017, the group comprised Tamagawa Holdings Co., Ltd. and 14 consolidated subsidiaries.

▷ Tamagawa Electronics Co., Ltd. (100%): Electronic and Communication Device Business.

▷ Tamagawa Electronics Vietnam Co., Ltd. (100%): subsidiary of Tamagawa Electronics, manufacture and sale of components forcommunication devices.

▷ Tamagawa Energy Co., Ltd. (100%): Renewable Energy System Sales Business.

▷ GP Energy Co., Ltd., and other GP Energy companies (all 100%): Solar Power Plant Business, Geothermal Power Plant Business.

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Market and value chain
Market overview
Wireless telecoms infrastructure
Smartphones and tablets are revolutionizing the wireless telecoms market. Smartphones generate 10-20x as much data
traffic as traditional mobile phones. As bandwidth-hungry content mushrooms, data volumes swell. Dealing with the traffic surge
is a pressing issue, creating demand for network infrastructure that can handle serious data volumes and speeds. Telecoms
operators have rolled out high-speed mobile services like LTE and WiMAX. Spectrum reallocation is helping too. There is also anationwide trend toward data offloading—using Wi-Fi and the like to funnel data through the fixed-line network.
Mobile data traffic in Japan is accelerating rapidly alongside the proliferation of smartphones. According to projections publishedin the Cisco Visual Networking Index, this trend is likely to continue, and mobile data traffic within Japan during 2019 is projected
to reach 1.5 exabytes per month, an increase of 5.3x versus the 282 petabytes per month seen during 2014. It remains uncertain
whether network infrastructure will keep up.
As a solution to the traffic increase, telecoms carriers are pushing and developing LTE-Advanced, as well as a new high-speed,large-capacity service using a new frequency band. Companies are developing technologies in anticipation of the rollout of 5G
services. Currently LTE-Advanced (4G) services with features such as carrier aggregation (use of multiple frequencies) andMultiple Input Multiple Output (MIMO; use of multiple antennae for signal transmission) are becoming more common in mobile
telecoms. R&D with a view to starting practical use of 5G (the next stage of evolution from LTE-Advanced) in 2020 is under way.
5G will enable a big increase in speeds to over 10Gbps by combining low and high frequency bands and aims to create a future
where users can enjoy streaming high resolution (4k/8k) videos in crowded event venues and outdoors in major cities. The goal
is a low-cost, low power consumption solution to the steep increase in traffic expected in the IoT age. NTT Docomo is trialing its
5G technology in Odaiba’s Aomi district and Tokyo SkyTree from May 2017.

Capex trends at telecoms carriers
Actual investment trends at telecoms carriers are on an upward swing amid efforts to expand capacity and improve service, withfocus on new technologies and new frequency bands. For example, in investment for LTE—the latest communications
technology—the number of LTE base stations operated by NTT Docomo, Inc. (TSE1: 9437) was about 24,400 as of end-March
2013, but this number grew to 55,300 at end-March 2014, 97,400 at end-March 2015, 138,100 LTE at end-March 2016, and161,900 at end-March 2017.
Capex by telecoms carriers declined overall in FY03/17. NTT Docomo maintained a similar level as the previous fiscal year, up
0.3% YoY to JPY597.1bn, but mobile telecom capex at KDDI was down 3.8% YoY to JPY325.0bn. However, capex ahead of therollout of next-generation LTE Advanced technology is projected to increase going forward, because equipment must be
updated to support new frequency bands.
Capex by company(JPYbn)NTT Docomo
YoY
LTE
YoY
KDDI
YoY
MobileYoY
OthersYoY
SoftBank
YoY

FY03/09

FY03/10

FY03/11

FY03/12

FY03/13

FY03/14

FY03/15

FY03/16

FY03/17

FY03/18

Act.
737.6
-2.8%
575.1
14.7%
432.1
10.3%
140.6
28.3%
259.1
-11.8%

Act.
686.5
-6.9%
518.0
-9.9%
376.8
-12.8%
138.7
-1.4%
222.9
-14.0%

Act.
668.5
-2.6%
26.0
441.8
-14.7%
338.7-10.1%
103.1-25.7%
392.6
76.1%

Act.
726.8
8.7%
92.3
255.0%
421.6
-4.6%
304.2
-10.2%
115.6
12.1%
474.1
20.8%

Act.
753.7
3.7%
218.9
137.2%
467.0
10.8%
338.2
11.2%
128.8
11.4%
631.6
33.2%

Act.
703.1
-6.7%
331.1
51.3%
571.8
22.4%
374.0
10.6%
197.8
53.6%
712.5
12.8%

Act.
661.8
-5.9%
406.7
22.8%
667.7
479.1
188.6
583.7
-18.1%

Act.
595.2-10.1%
365.4-10.2%
531.4-20.4%
338.0-29.5%
193.4
2.5%
412.6
-29.3%

Act.
597.1
0.3%
519.4
-2.3%
325.0
-3.8%
194.3
0.5%
320.6
-22.3%

Planned
570.0
-4.5%
530.0
2.0%
330.0
1.5%
200.0
2.9%
-

Source: Shared Research based on data from respective companies
Note: Capex at KDDI from FY03/15 onward includes portions consolidated from UQ Communications.
Note: SoftBank figures only include group telecoms companies within Japan

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LTE Advanced
NTT Docomo, Inc. (TSE1: 9437) launched a new telecoms service in March 2015 using LTE-Advanced, the next-generation
mobile telecoms standard following LTE, paving the way for speedier data transmission. NTT Docomo began with urban areas in
22 prefectures and expanded the service to major cities nationwide during FY2015. KDDI also began providing its LTE-Advanced
service during FY2015.
LTE Advanced is a fourth generation mobile telecoms standard recognized by the International Telecommunication Union (ITU)*,
offering higher speeds than LTE which has spread globally. Under development, it aims at providing speeds of up to 1Gbps when
the user is stationary and up to 100Mbps when moving at high speed.
* In mobile and electronic telecoms the ITU aims to establish standards and regulations between countries. Main activities: standardization, allocation ofmobile spectrum, and coordinating connections between countries to enable international telephone calls.

Evolution of Telecommunications Technology

5G

Smoth introduction of 4G

System performance

4G

LTE-Advanced

Long-term
development of 3G
Super 3G

3.5GHｚ

3G
2000

LTE

HSPA

W-CDMA
2010

2020

Source: Shared Research based on various data

Faster speeds under LTE Advanced will be attained by adding technical elements to existing LTE technology. Two elements are
key: upgrading the multiple-input and multiple-output (MIMO) technology used in spatial multiplexing, and carrier aggregation
to enable bandwidth expansion.
It is Shared Research’s understanding that NTT Docomo’s current LTE network is composed mostly of 3G base stations that havebeen updated with LTE components. In contrast, new frequency allocations are planned for the introduction of LTE Advanced,
and this will require changes to base stations, including the antennas.

New frequency allocation for LTE-Advanced
In December 2014, the Ministry of Internal Affairs and Communications announced the allocation of 3.5GHz band for
LTE-Advanced (4G) to NTT Docomo, KDDI, and Softbank. Specific frequency bands allocated were 3,480 to 3,520MHz for NTT
Docomo, 3,520 to 3,560MHz for KDDI, and 3,560 to 3,600MHz for Softbank.

Renewable Energy System Sales
The increase in power output of renewable energy systems is essential to improving energy self-sufficiency and tackling global
warming.

Japan’s energy self-sufficiency rate is 6%; renewable energy accounts for only 12% of power generation output
Japan’s energy self-sufficiency rate remains low at 6%, second-lowest in the 34 OECD countries as of 2012. Japan continues todepend on imported fossil fuels for power generation. Dependence on imported fossil fuels for power generation was 76% at thetime of the first oil shock (FY1973) and was down to 62% (FY2010) before the Great East Japan Earthquake in March 2011.
However, due to the subsequent stoppage of nuclear power stations, dependence on imported fossil fuels surged to 88% in
FY2014. Imported fossil fuels carry an implied risk of supply and price instability.

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Introducing more renewable energy sources is critical for Japan to raise its energy self-sufficiency rate and reduce its dependence
on imported fossil fuels for power generation. Renewable energy accounted for only 12.2% of power generation output in 2014,
which is lower than other developed countries.
Renewable energy’s share of total power generation output

Source: Energy in Japan FY2016, Agency for Natural Resources and Energy

Spread of renewable energy essential to combat global warming
The IPCC’s Fifth Assessment Report (AR5) discusses the progress of global warming and how renewable energy is effective incounteracting it. The Paris Agreement requires all parties that ratified the Framework Convention on Climate Change to reducegreenhouse gas emissions to below FY2013 levels by FY2030.

Fifth Assessment Report points out need to increase supply of renewable energy to counteract global warming risk
The Intergovernmental Panel on Climate Change (IPCC) is under the auspices of the United Nations. Its Fifth Assessment Reportpublished in September 2013 forecasts a global average temperature increase of 0.3–4.8°C by the end of the 21st century.
The effects of global warming are apparent in many areas, such as abnormal weather patterns and loss of ecosystems. Even a 1°C
rise in global average temperature raises the risk of abnormal weather events such as heatwaves, heavy rain, and flooding. A 2°C
increase means a higher risk of severe impact on Arctic ice and coral reefs as well as lower agricultural crop yields. A 3°C risebrings the threat of rising sea levels as a result of melting ice sheets in Greenland and elsewhere. A 4°C rise implies a sharp
decline in grain production and fish catch, putting the world’s food security at risk.
The report also shows how much less damage would be caused by global warming in the +2°C scenario versus the +4°C scenario.
It clearly states that there is a high risk of flooding, heatwaves, and water and food shortages in Asia in the +4°C scenario, but therisk is reduced in the +2°C scenario.
According to the report, greenhouse gas (GHG) concentration must be no greater than 450 parts per million (ppm) in 2100 to
keep the global average temperature increase below 2°C compared with before the Industrial Revolution (1861–1880). To thisend, global GH emissions must be reduced by 40–70% by 2050 versus 2010. This requires fast improvement of energy efficiency
and tripling or quadrupling the supply of low-carbon energy such as renewable energy, nuclear power, and carbon capture andstorage (CCS).

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Paris Agreement also targets less than 2°C global average temperature increase
The Paris Agreement is a set of internationally agreed rules governing GH gas emissions by each country from 2020 onward. It
was agreed and ratified by more than 190 countries attending the 2015 Paris Climate Conference (COP21) in Paris, France, andtook effect in November 2016. The US announced that it would withdraw from the Paris Agreement in June 2017.
The main purpose of the Paris Agreement is to keep the rise in global average temperature to less than 2°C compared with before
the Industrial Revolution and attempt to keep it below 1.5°C. All countries must prepare voluntary CO2 reduction targets for
submission to the United Nations, as well as implement domestic measures to reduce CO2. Japan’s target is to cut GH emissions
by 26% from 2013 levels in FY 2030.
Breakdown of CO2 cuts under the +2°C scenario(bn tons)

380
340
300

Scenario based on eachcountry's commitment

36bn tons
Energy saving

32bn tons
2014

Renewable energy

260
220

Fuel conversion
Nuclear power
Carbon dioxide
capture and storage

Scenario to keep averagetemperature increase within 2℃

18bn tons
180

2010

2020

2030

2040

Source: Shared Research, based on International Energy Agency data

Promote introduction of renewable energy so that it accounts for 22–24% of total power generation output in FY 2030
According to METI’s Long-term Energy Supply and Demand Outlook (July 2015), the government plans to maximize the uptakeof renewable energy over three years or so from FY 2013 and continue these efforts thereafter to improve energy self-sufficiency
and combat global warming. As a result, renewable energy will increase its share of total power generation output to around 22–
24% in 2030 versus 14.6% in FY 2015.
Capacity of renewable energy facilities and estimated new capacity in 2030 (‘000 kW)
Solar power

Wind power

Small/medium
hydro

Geothermal

Biomass
2,300

Before introduction of FIT

5,600

2,560

9,600

500

December 2016 (A)37,610

3,240

9,830

510

3,070

FY2030 target (B)64,00010,00010,840～11,550

1,400～1,550

6,020～7,280

B/A (approx.)

1.7x

3.1x

1.1x

2.9x

2.2x

Source: Shared Research based on various materials

Brisk investment in renewable energy
According to New Energy Outlook 2017 published by Bloomberg New Energy Finance (BNEF), new investment in renewableenergy is estimated to reach USD7.4tn by 2040, accounting for 72% of USD10.2tn total investment in new power generation
facilities. Of this figure, solar power is forecast to increase capacity by 14x at an investment of USD2.8tn, while wind power will
increase capacity by over 4x at an investment of USD3.3tn. Thus the total for solar and wind power, which currently accounts for
12% of world capacity and 5% of total power generation output, is forecast to increase its share sharply to 48% of capacity and
34% of output, respectively.

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Projected world electric power mix in 2040
Power generation[TWh]
1 TWh = 1mn MWh
Coal, oil, natural gas

Solar and wind power:
3/4 of global electric power
investments by 2040

Solar, wind power

Hydro power

Nuclear power
power
Nuclear

Source: Shared Research, based on Bloomberg New Energy Finance (BNEF) data

Solar power market
A discussion follows of projections for Japan’s solar power market, government measures and incentives to increase solar power
generation, and the feed-in tariff (FIT) system, which all impact Tamagawa’s earnings.

Government policy and incentives to increase solar power generation
Renewable Energy Special Measures Act takes effect and FIT system introduced for renewable energy in July 2012
The Act on Special Measures Concerning Procurement of Electricity from Renewable Energy Sources by Electricity Utilities(Renewable Energy Special Measures Act) was passed into law in August 2011 and took effect in July 2012. The act introduced
the feed-in tariff (FIT) system that provides a government guarantee that power companies will buy electricity generated using
five renewable energy sources including solar, wind, and geothermal power generation at a set price for a set period of time. The
cost of purchasing electricity is added to electricity prices as a levy.
The spread of solar power in Germany and Spain is attributed to similar FIT systems. Renewable energy is more likely to gain
popularity if purchase prices of electricity generated using renewable energy sources are high.

Revised FIT Law takes effect in April 2017
The FIT system was introduced in July 2012. The Agency for Natural Resources and Energy estimates that total output of power
generation facilities using renewable energy sources increased around 2.5x from about 21mn kW at end-June 2012 to 53.3mn kW
at end-October 2016. The cost of purchasing renewable energy increased from JPY300bn in FY 2012 to JPY2.3tn in FY 2016, of
which JPY1.8tn was paid for by levies of around JPY675 per month for an average household. The Agency for Natural Resources
and Energy estimates the cost of increasing power generated using renewable energy sources at JPY3.7tn – JPY4.0tn in 2030.
The revised Renewable Energy Special Measures Act (Revised FIT Law) took effect in April 2017 to address the increased financial
burden on consumers and the increase in renewable energy facilities that were not in operation. The revised law sets medium- tolong-term electricity purchase price (FIT) targets and introduces an auction system (see below). Before the revision, connection
contracts with utilities were concluded after facilities were certified by METI, but under the new system, connection contracts
with utilities also became a prerequisite for certification so that only facilities with a high probability for operating as a businesswould be certified by METI.

Surplus power buyback for solar power generation facilities with under 10kW capacity
Surplus power buyback was introduced for solar power generation facilities with less than 10kW capacity, which means ahousehold with solar power generation equipment can sell power surplus to power companies. When this system started in 2009,
the purchase price was set high at JPY48 per kW (including consumption tax) to serve as an incentive, and was fixed for a periodof ten years beginning solar power equipment installation. For newer installations, the purchase price has been lowered year by
year. Purchase prices since FY2016 (March 2017) are shown below.

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Under the revised FIT Law, the target purchase price of power generated by household solar power generation equipment was
about the same as household electricity prices (JPY24/kWh) and the electricity sales price will be lowered to JPY11/kWh (in linewith electricity market prices) as soon as possible after 2020.
Solar power purchase price for power generation facilities with less than 10kW capacity
Purchase category
Under 10kW

Purchase price per kWh (JPY)

Purchase

FY2016FY2017FY2018FY2019period

31

28

26

24

10 years

33

30

26

26

Installation of output regulator is
not compulsory
Installation of output regulator iscompulsory

Under 10kW

Installation of output regulator is(Combination of solar

not compulsory

power and other energy

Installation of output regulator issource)compulsory

25

25

24

27

27

26

Source: Shared Research, based on Agency for Natural Resources and Energy data
Installation of output regulators is compulsory in the supply areas of Hokkaido Electric Power, Tohoku Electric Power, Chugoku Electric Power, Shikoku Electric Power,
Kyushu Electric Power, and Okinawa Electric Power.

Buyback of full output of solar power facilities with capacity of 10kW plus
The purchase of full output of solar power generation facilities with capacity of 10KW or more began in July 2012 under the FIT
system. Utilities will buy the full output of solar facilities regardless of the generator’s own consumption. The purchase price in
FY2012 was set at JPY40/kW (exclusive of tax) fixed for 20 years beginning equipment installation. The purchase price fell to
JPY36/kW in FY2013, JPY32/kW in FY2014, JPY29/kW in FY2015 (for connection contracts concluded by June; JPY27/kW forcontracts concluded in or after July), and as shown below for FY2016 onward (all prices exclusive of tax).
Purchase price of solar power generation facilities with output of 10kW or more
Purchase category

Purchase price per kWh (JPY)

Purchase

FY2016FY2017FY2018FY2019period10kW to less than 2,000kW

24

21

-

-

20 years

2,000kW or more

24

Determined by auction

Source: Shared Research, based on Agency for Natural Resources and Energy data

Purchase prices under the FIT system have fallen, because the three-year buyback period at a higher (incentive) price when thesystem was first introduced has ended, and solar power generation system prices have dropped. The total cost of installing a solar
power generation system with10kW plus capacity declined 23.9% (by an average of 6.6% per year) from 2012 to 2016 (seebelow).
Solar power generation system expenses (capacity of 10kW or more)
2012

2013

2014

2015

System expenses (JPY/kWh

426,000

377,000

343,000

323,000

2016
324,000

YoY change--11.5%

-9.0%

-5.8%

0.3%

Source: Shared Research, based on Agency for Natural Resources and Energy data

Under the revised FIT Law, which sets target prices for solar power generation, the target cost for non-residential solar power
generation is JPY14/kWh (system cost: JPY200,000/kWh) in 2020 and JPY7/kWh (JPY100,000/kWh) in 2030. Companies areworking to lower installation and equipment costs of solar power generation systems and improve the conversion efficiency ofsolar power modules to achieve these targets.
A research group at Kobe University’s Graduate School of Engineering has developed technology to raise the conversion
efficiency of solar cells to over 50% by using a new solar cell structure that absorbs long- wave spectral components of sunlight

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that passes through (and are thus not captured by) conventional solar cells. Raising the conversion efficiency of solar cells to over
50% sharply reduces power generation costs and will make power generation cost of JPY7/kWh possible.

Change from approving the facility to approving the business plan
Before the Revised FIT Law took effect, connection contracts with utilities were concluded after facilities were certified by METI,
but under the new system, connection contracts with utilities also became a prerequisite for certification so that only facilities
with a high probability for operating as a business would be certified by METI. METI does not only approve the facility, but thebusiness plan for the power generation business as well. Thus, approval depends on whether the applicant planning to run abusiness using a new solar power facility has a framework in place for appropriate management and operation. The approval
process entails an inspection before starting operation, and sets out compliance requirements for facility inspection andmanagement during operation and dismantling of facilities after the business closes down. METI will issue an improvement orderor cancel certification of a facility if a business fails to comply with these rules.
These changes are designed to eliminate solar power projects that are certified, but take a long time to begin operation due todelays in concluding connection contracts with utilities, and ensure the appropriate operation and management of solar power
generation businesses.

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Historical performance
Full-year FY03/17 results▷ Sales:

JPY4.4bn (-38.8% YoY)

▷ Operating profit:

JPY189mn (-32.3%)▷ Net profit*:

JPY45mn (-73.0%)▷ Recurring profit:

JPY107mn (-49.6%)*Net loss refers to net loss attributable to parent company shareholders.
Compared with the company’s initial forecast, FY03/17 sales were down 33%, operating profit 46.5%, recurring profit 59.0%,
and net income 76.8%. This is mainly attributed to lower-than-expected earnings of Renewable Energy System Sales for thefollowing two reasons.
◤ The original plan for solar power facility in Kasumigaura, Ibaraki Prefecture was for consolidated subsidiary Tamagawa Energy

to sell the plant to an outside customer and book earnings accordingly. However, the company later decided to operate thefacility as its own, instead of making a profit in the short term from selling the facility outright.

◤ Competition intensified for projects that can be connected to the grid in FY03/17 because of changes in the tax and projectapproval systems due to take effect in April 2017. As a result, purchase and sales volumes of Renewable Energy System Sales
projects declined. The company was also unable to undertake as much purchasing and sales as originally planned to winpurchasing projects, because the deadline for the Notification of Minor Change (which must be submitted to METI topurchase and sell solar power generation facilities before March 2017) was changed to January 20, 2017, affected by thetransition to the new approval system as notified by the Agency for Natural Resources and Energy in November 2016.

Earnings by segment were as follows. All segments except Geothermal Power Plant Operations posted segment profit.

Electronics and Telecoms Equipment▷ Orders:

JPY2.7bn (+26.9% YoY)

▷ Operating profit:

JPY246mn (operating loss of JPY12mn in FY03/16)▷ Sales:

JPY2.6bn (+24.6%)

Sales broke down by sector into mobile telecoms JPY549mn (+13.0% YoY), government and public sector JPY643mn (-6.5%),and other (public sector/infrastructure and measuring instruments) JPY1.4bn (+54.1%). Segment profit increased due to the sales
growth effect and improved profit margins. In addition to efforts to improve business efficiency and trim expenses, sales ofrelatively profitable Tamagawa-brand products grew 27.6% YoY. In addition, cost reduction progressed as a result of Vietnamese
subsidiary Tamagawa Electronics Vietnam Co., Ltd. increasing local content to 80%.
The company achieved higher sales and profits owing to gradual recovery from 2H of capital investment on countermeasuresagainst radio wave interference, growth in orders in the public and government sectors, as well as shrinking costs fromstreamlining operations, as summarized below.

▷ Although demand from mobile telecoms-related industries slumped, the company improved its price competitiveness byincreasing local content at Tamagawa Electronics Vietnam, which led to an uptick in orders and sales of 4G base station-related
products.

▷ Tamagawa is developing equipment and devices for pilot tests of 5G-related products with a view to trademarking them in 2020.
The company is developing a sensor for antenna performance testing and equipment to test the reliability of semiconductors fornext-generation mobile base stations. It is also developing devices such as front-end analog modules to handle millimeter and

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sub-millimeter waves (a part connected directly below the antenna to transmit signals), multi-wave duplexers capable ofhandling signals on multiple wavelengths, and next-generation high-efficiency power amplifiers.

▷ Sales declined YoY in the government and public sector business, but Tamagawa is targeting a recovery in sales to over JPY1bn(attained in FY03/15) in the medium term, because new project inquiries have been brisk.

▷ In other businesses (public sector/infrastructure and measuring instruments), the company won orders for its commercial

wireless optical transmission system for use in airports (Narita Airport) and in next-generation weather forecasting equipment.
The order for the subsystem for next-generation weather forecasting equipment was received from Toshiba Corporation. The
next-generation weather forecasting equipment is one of the R&D themes (heavy rain and tornado forecasting technology) inthe “Enhancement of Societal Resiliency against Natural Disasters” category of the Strategic Innovation Promotion Program (SIP),
a national project. In the longer term, the company aims to develop a next-generation weather forecasting radar system that
forecasts sudden weather events like guerilla rainstorms and tornados quickly and accurately, and promptly notifies major cities
and local governments.

▷ In the automotive business, the company developed a new electromagnetic noise tester using fiber-optics technology to convert
radio waves to light signals, thereby improving sensitivity and measuring a wider bandwidth. The new system was delivered to amajor automaker and the company has received inquiries from a Tier 1 automotive supplier.

▷ Tamagawa recorded a sharp increase in sales and orders for its power semiconductor testing equipment, with sales up 1.6x YoY
to JPY495mn.

Renewable Energy System Sales▷ Orders:

JPY1.6bn (-67.1% YoY)

▷ Operating profit:

JPY111mn (-61.3%)▷ Sales:

JPY1.6bn (-67.4%)

Lower sales and profit were prompted by a YoY decline in sales of solar power generation facilities. The company made a changeof plan, and decided to operate a solar power plant within the group rather than selling it to another operator. Further, sales
activities for winning purchasing projects were less successful than expected.
The company was unable to undertake as much purchasing and sales as originally planned to win purchasing projects eligible fortax incentives, because the deadline for the Notification of Minor Change (which must be submitted to METI to purchase and sellsolar power generation facilities before March 2017) was changed to January 20, 2017, affected by the transition to the new
approval system as notified by the Agency for Natural Resources and Energy in November 2016. As for the solar power plant in
Kasumigaura, Ibaraki Prefecture, scheduled for connection in late March 2017, the company had initially planned to sell the plant
to an outside customer for a profit through consolidated subsidiary Tamagawa Energy. However, the company later decided tooperate the plant within the group instead of selling it for short-term profit, thinking that owning and operating the plant would
generate steady cash flow for 20 years and help strengthen the earnings structure and finances of the company for the medium
to long term.
The company also received development contract fees in connection with the development of Misawa plant (power generating
capacity of roughly 10MW), which contributed to sales and profits.

Solar Power Plant Operations▷ Sales:▷ Operating profit:

JPY228mn (-1.1% YoY)
JPY73mn (+28.7%)

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The segment booked electricity sales from mega solar power plants in Shimonoseki, Tateyama, and Sodegaura. Reviewing SG&A
expenses and working to increase profitability resulted in higher OP.
In FY03/17, Tamagawa began construction of Noboribetsu power plant (1.9MW output; plans to begin electricity sales in Q2
FY03/18) in October 2016 and Goto power plant (5.3MW; Q1 FY03/19) in January 2017, and acquired the Kasumigaura power
plant (2.4MW, began sales in Q1 FY03/18) in March 2017.
In Q4 FY03/17, electricity sales began for two of the four zones of the Misawa power plant (total output: 10MW; 30% owned by
Tamagawa) with output of around 5MW.

Geothermal Power Plant Operations
No sales were booked. Operating loss was zero due to expenses (vs. operating loss of JPY20mn in FY03/16).

Q3 FY03/17 results▷ Sales:

JPY2.5bn (-24.0% YoY)

▷ Operating loss:

JPY43mn (operating loss of JPY90mn in Q3 FY03/16)▷ Net loss*:

JPY88mn (net loss of JPY180mn in Q3 FY03/16)▷ Recurring loss:

JPY103mn (recurring loss of JPY138mn in Q3 FY03/16)*Net loss refers to net loss attributable to parent company’s shareholders.

All segments posted profits, except for the Geothermal Power Plant business, in which the company is preparing to begin
operation.

Electronic and Communication Device▷ Orders:

JPY2.0bn (+32.7% YoY)

▷ Operating profit:

JPY58mn (operating loss of JPY102mn in Q3 FY03/16)▷ Sales:

JPY1.5bn (+6.1% YoY)

Mobile telecom providers restrained capital investment on base stations, leading to a drop in demand; the company focused onincreasing order flows from the public and government sectors. Sales in the mobile-telecom sector were JPY371mn (+12.2% YoY),
while government sector sales were JPY358mn (-25.1% YoY). Other sales (public, infrastructure, and measuring instruments)
were JPY745mn (-28.4% YoY). Profits rose in tandem with an increase in overall sales and improved profit margins. The company
made efforts to raise operational efficiency and reduce costs. Sales of the company’s own products, which are relatively more
profitable, also increased, accounting for 38.0% of the segment’s sales (23.4% in Q3 FY03/16). Local procurement ratio at
subsidiary Tamagawa Electronics Vietnam Co., Ltd. rose to 80% and contributed to reduction in CoGS.
Major initiatives undertaken in cumulative Q3 FY03/17 were as follows:◤ While demand fell in the mobile-telecom sector, improvements made in price competitiveness, thanks to increased local

procurement at Tamagawa Electronics Vietnam and lowered CoGS, led to a rise in orders and sales of products related to 4Gbase stations.

◤ In the area of 5G mobile telecoms equipment, the company pushed ahead with development work on 5G devices andequipment for field testing with the aim of a full-scale commercial rollout in 2020. The company is in the process ofdeveloping equipment to field test the reliability of next-generation mobile telecoms-use semiconductors and sensors for
gauging the performance of antennas. The company is developing front-end analog modules to handle millimeter andsub-millimeter waves (a part connected directly below the antenna to transmit signals, multi-wave duplexers capable ofhandling signals on multiple wavelengths, and next-generation high-efficiency power amplifiers.

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Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp◤ In the government sector, sales declined YoY during the cumulative Q3 period. However, the company said that sales were

expected to recover in FY03/18 since demand was on the mend and that it has seen a growing number of inquiries about
possible orders related to new projects.

◤ In the public sector, infrastructure, and measuring instruments areas, the company won orders for its commercial wirelessoptical transmission system for use in airports (Narita Airport) and in next-generation weather forecasting equipment. The
company also began to approach airports other than Narita Airport to drum up sales.

◤ The company won an order from Toshiba for a subsystem used in next-generation weather forecasting equipment. The new

weather forecasting equipment is being developed under Japan's Strategy Innovation Promotion Program as part of an

initiative to promote “Enhancement of Societal Resiliency against Natural Disasters” that would improve forecasting of heavy
rains and tornados and thereby help the government better prepare for natural disasters. The project team is now working on
a next-generation weather radar that will allow forecasters to make quick and accurate predictions of meteorologicalconditions, such as heavy cloudbursts and tornados, and create a system to quickly convey the information to local
governments and other interested parties.
◤ In the area of electric noise resistance testing equipment in the automotive sector, the company developed a new productthat converts the signals from the noise resistance test equipment into optical signals that could be sent via fiber-optic cables,

thereby enhancing the sensitivity of the test equipment and expanding the range of signals that could be measured. The
company delivered the product to a major automaker during cumulative Q3 FY03/17. The company also said that it hadreceived inquiries about this product from a certain Tier 1 automotive supplier.
◤ Testing equipment for power semiconductors saw an expansion in orders as the company targets FY03/17 sales of JPY495mn(1.6x YoY).

Renewable Energy System Sales▷ Orders:

JPY983mn (-73.7% YoY)

▷ Operating profit:

JPY34mn (operating loss of JPY28mn in Q3 FY03/16)▷ Sales:

JPY891mn (-51.1% YoY)

Sales in this segment during cumulative Q3 FY03/16 only reflected equipment sales. Meanwhile, in the latest cumulative Q3
period, sales reflected revenues from installation work at three different solar power facilities (with combined power generating
capacity of roughly 1.2MW), that included a profitable contract for operation and maintenance, which significantly contributed
to earnings. The company also received development contract fees in connection with the development of Misawa plant (power
generating capacity of roughly 9.5MW).
Major initiatives undertaken in cumulative Q3 FY03/17 were as follows:◤ The company plans to pursue joint projects to secure the financing needed for development of solar power plants with

output capacity of at least 10.0MW. As of February 2017, the company was considering a project following the Misawa power
plant project (joint development with Etrion Japan), that would allow it to continue earning development contract fees in
FY03/18.

◤ In the area of small-scale wind power facilities, in March 2016 the company erected its own small-scale wind turbine (capacity

19.5kW) on some extra land at its Tateyama solar park. For small-scale wind turbines with power generating capacity of 20kW
or less, the feed-in tariff is fixed at JPY55 per kWh during the 20-year purchase period (compared with JPY24 per kWh for solar

systems capable of generating 10kW or more). Wind turbines also have an advantage over solar power arrays of being able togenerate power more hours every day because, unlike solar panels, they can generate electricity at night. The company, as ofFebruary 2017, obtained seven permits to build small-scale wind power facilities.
The Agency of Natural Resources and Energy sent out a cautionary notice in November 2016 about the transition to a newfeed-in-tariff system. The notice set the deadline for submitting a notice of minor changes to the Bureau of Economy, Trade andIndustry—necessary for acquisition or sale of a power plant by March 2017—at January 20, 2017. This deadline made32/61

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it difficult for the company to carry out related acquisition and sales activities as originally planned.
As for the solar power plant in Kasumigaura, Ibaraki Prefecture, scheduled for connection in late March 2017, the company had
initially planned to sell the plant to an outside customer for a profit through consolidated subsidiary Tamagawa Energy. However,the company later decided to operate the plant within the group instead of selling it for short-term profit, thinking that owningand operating the plant would generate steady cash flow for 20 years and help strengthen the earnings structure and finances of
the company for the medium to long term.

Solar Power Plant Operations▷ Sales:▷ Operating profit:

JPY173mn (-4.1% YoY)
JPY56mn (-0.7% YoY)

The segment booked electricity sales from mega solar power plants in Shimonoseki, Tateyama, and Sodegaura.
Tamagawa is considering raising output capacity at solar power plants in Shimonoseki, Tateyama, and Sodegaura by building
additional power generation facilities. According to the company, in cases where the output capacity of a solar power plant isincreased through such additions, a feed-in-tariff rate equivalent to that of the preexisting facilities will also be applied to theadded facilities. The company said that it was making steady progress toward the medium-term goal of achieving total capacityof 20.0MW in FY03/20.

Geothermal Power Plant Operations
No sales or expenses were booked, as the company prepares to start operations of geothermal power plants.

1H FY03/17 results▷ Sales:

JPY1.8bn (+63.7% YoY)

▷ Operating profit:

JPY3mn (operating loss of JPY161mn in 1H FY03/16)▷ Net loss*:

JPY4mn (net loss of JPY249mn in 1H FY03/16)▷ Recurring profit:

JPY43mn (recurring loss of JPY190mn in 1H FY03/16)*Net loss refers to net loss attributable to parent company shareholders.

Electronic and Communication Device Business▷ Orders:

JPY1.3bn (+34.0% YoY)

▷ Operating profit:

JPY6mn (operating loss of JPY90mn in 1H FY03/16)▷ Sales:

JPY948mn (+0.2% YoY)

Amid cutbacks in capital spending on base stations by mobile telecom service providers and falling demand for telecom
equipment, the company focused on increasing its order flow from the government and public sector institutions. Overall sales
were basically flat versus a year earlier but varied by industry, with mobile telecoms-related sales of JPY202mn (-3.0% YoY), sales
to the government of JPY254mn (-16.8% YoY), and other sales (public sector, infrastructure, measuring instruments) of JPY491mn(+13.8% YoY). Along with the modest top-line growth, the Electronic and Communication Device segment was also able tomove back into the black with the help of operational streamlining and concerted cost-cutting.
Major initiatives undertaken during 1H FY03/17 were as follows:◤ Amid waning demand for mobile telecoms-related equipment, the company's subsidiary in Vietnam, Tamagawa Electronics

Vietnam Co., Ltd., worked to increase local procurement in an effort to lower production costs and increase costcompetitiveness. With the help of improved quality and cost competitiveness, the company is looking to increase productsales in overseas markets in 2H.

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Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp◤ In the area of 5G mobile telecoms equipment, the company pushed ahead with development work on 5G devices andequipment for field testing with the aim of a full-scale commercial rollout in 2020. The company is in the process ofdeveloping equipment to field test the reliability of next-generation mobile telecoms-use semiconductors and sensors for
gauging the performance of antennas. Devices under development include front-end analog modules to handle millimeterand sub-millimeter waves (a part connected directly below the antenna to transmit signals), multi-wave duplexers capable ofhandling signals on multiple wavelengths, and next-generation high-efficiency power amplifiers.
◤ In the government sector, the company says demand is on the mend and that it has seen a growing number of inquiries about

possible orders related to new projects since the start of 2H.

◤ In the public sector, infrastructure, and measuring instruments areas, the company won orders for its commercial wirelessoptical transmission system for use in airports and subways. It also reports that orders for its testing equipment for power
semiconductors have been growing rapidly and it expects sales in this area to double from last year.

◤ New products in the public sector, infrastructure, and measuring instruments areas include a subsystem used in

next-generation weather forecasting equipment, for which the company booked an order from Toshiba in November 2016.
The new weather forecasting equipment is being developed under Japan's Strategy Innovation Promotion Program as part ofan initiative to promote “Enhancement of Societal Resiliency against Natural Disasters” that would improve forecasting ofheavy rains and tornados and thereby help the government be better prepared to handle natural disasters.

Renewable Energy System Sales Business▷ Orders:

JPY778mn (-41.6% YoY)

▷ Operating profit:

JPY81mn (operating loss of JPY109mn in 1H FY03/16)▷ Sales:

JPY735mn (27x 1H FY03/16)

Although major sales projects tend to be concentrated in 2H, focusing on sales promotions led to higher sales and profits. At thistime last year the sales total for this segment reflected only sales of equipment. In contrast, the sales in 1H this year also reflect
revenues from the installation work done at three different solar power facilities (with combined power generating capacity ofroughly 1.2MW). Because the installation work also came with a profitable contract for operation and maintenance, it also made alarge addition to earnings. The company reported it also received additional compensation as a contractor for the development
work it had done in connection with the Misawa plant (power generating capacity of roughly 9.5MW).
In the area of small-scale wind power equipment, in March 2016 the company erected its own small-scale wind turbine (capacity
19.5kW) on some extra land at its Tateyama solar park. For small-scale wind turbines like this (with power generating capacity of
20kW or less), the feed-in tariff is fixed at JPY55 per kWh versus JPY24 per kWh for solar systems capable of generating 10kW or
more. Wind turbines also have an advantage over solar power arrays of being able to generate power more hours every day
because, unlike solar panels, they can generate electricity at night.
The company reports that it has fielded a large number of inquiries about its small-scale wind turbines and had filed a total of 46
applications for construction of wind-power generation systems using small-scale turbines as of September 2016, and expects toreceive permits for a total of 90 such projects by the end of FY03/17.

Solar Power Plant Business▷ Sales:▷ Operating profit:

JPY131mn (-2.8% YoY)
JPY55mn (+7.4% YoY)

The segment booked electricity sales from mega solar power plants in Shimonoseki, Tateyama, and Sodegaura

Geothermal Power Plant BusinessNo sales or expenses were booked, as the company prepares to start operations of geothermal power plants.

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Other: Misawa power plant (joint venture with Etrion Japan)
To secure the financing needed to develop large-scale solar power plants (capable of generating at least 10.0MW), the company
intends to enter into joint ventures. One such joint venture is Etrion Energy 5 LLC, a special-purpose company established jointly
by Etrion Japan and Tamagawa Holdings (30%) in June 2015 for the purpose of building and operating a utility-scale solar power
plant in Misawa, Aomori Prefecture. The Misawa plant was scheduled to begin operations in February 2017. With total power
generating capacity of about 9.5MW (of which Tamagawa will hold the rights to 3.0MW), the Misawa solar power plant is
expected to generate about JPY390mn per year in gross revenues. Tamagawa expects the Misawa plant to start contributing toearnings from 2H FY03/17 through equity-method investment income.
The Misawa solar power plant will be built and operated by Etrion Energy 5 LLC, in which Tamagawa Holdings has a 30% stake,
Etrion Japan a 60% stake, and Hitachi High-Technologies a 10% stake. However, Hitachi High-Technologies will be the company
that actually undertakes the engineering, procurement, and construction for the project. Of the JPY3.4bn in funding needed tocomplete the project, the equity portion will be funded by Tamagawa Holdings, Etrion Japan, and Hitachi High-Technologies,
and the debt portion will be funded by loans from Sumitomo Mitsui Trust Bank.
As a participant of this mega solar power plant joint development project, in addition to revenue from selling power, thecompany as the project's developer has received compensation for disposal of land ownership rights and the preparation ofrequisite legal documentation.
By undertaking this project as part of a joint venture rather than alone, Tamagawa is limiting the amount of capital it has tocommit as well as diversifying risk and generating incidental income (compensation for its role as the project's developer). The
joint venture is also helping Tamagawa improve its capital efficiency. In fact, Shared Research estimates that Tamagawa will also
generate a 16.0% internal rate of return (IRR) on the sales from its 3MW of generating capacity, much higher than the IRR of 8.2%
the company would earn if it built the solar power plant on its own.

FY03/16 results▷ Sales:

JPY7.3bn (+42.5% YoY)

▷ Operating profit:

JPY280mn (-47.4% YoY)

▷ Net income:

JPY165mn (-61.3% YoY)

▷ Recurring profit:

JPY211mn (-58.9% YoY)(*Net income refers to net income attributable to parent company shareholders.)

Electronic and Communication Device Business▷ Orders:

JPY2.2bn (-33.1% YoY)

▷ Operating loss:

JPY12mn (operating profit of JPY467 in FY03/15)▷ Sales:

JPY2.1bn (-38.1% YoY)

Mobile telecom providers changed their construction plans for base stations and restrained capital investment, leading to a drop
in both segment earnings and profits. In other areas (public sector, infrastructure, measurement, etc.), orders were acquired in
the wireless transport (railway and airports) sector for fiber-optic products for use in airport facilities, and in
Tamagawa-manufactured products, orders were favorable for testing equipment for power semiconductors.
A breakdown of sales is as follows:▷ Mobile telecoms: JPY486mn (-65.4% YoY)
▷ Government:

JPY688mn (-32.9%)▷ Other (public sector, infrastructure, measurement, etc.): JPY934mn (-3.6%)

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Renewable Energy System Sales Business▷ Orders:

JPY4.9bn (+187.9% YoY)

▷ Operating profit:

JPY287mn (+155.9% YoY)

▷ Sales:

JPY5.0bn (+176.4% YoY)

The sale of equipment for solar power plants resulted in both sales and profits rising YoY.

Solar Power Plant Business▷ Sales:▷ Operating profit:

JPY230mn (+161.8% YoY)
JPY57mn (+155.2% YoY)

Mega solar power plants in Shimonoseki, Tateyama, and Sodegaura sold electricity in line with forecasts.

Geothermal Power Plant BusinessNo sales were recorded, and operating loss was JPY20mn due to various expenses.

FY03/15 results▷ Sales:

JPY5.1bn (+22.1% YoY)

▷ Operating profit:

JPY531mn (+11.3%)▷ Net income:

JPY427mn (-2.2%)▷ Recurring profit:

JPY514mn (+7.5%)

Electronic and Communication Device Business▷ Orders:

JPY3.2bn (-7.8% YoY)

▷ Operating profit:

JPY467mn (-2.7%)▷ Sales:

JPY3.4bn (+5.3%)

Mobile telecom providers increased their investments in wireless facilities at the beginning of 2H. However, they changed
construction plans during Q4.
The company sought to win new orders in the area of 3.9-generation mobile facilities, government facilities, and public sector/
infrastructure. As a new business area, the company began to sell testing equipment for power semiconductors in June 2014.
Since Tamagawa has secured orders in the new business, it expects to report sales in FY03/16. The company also installed a new
high-definition monitoring system essential for the safe and smooth management of its group solar-power plants. Sales of thecompany’s own products totaled JPY1.4bn (+22.5% YoY), accounting for 40.4% in the segment.
Operating profit declined due to spending on research and development worth JPY239mn (JPY124mn in the previous year).
Segment profit after allocation of corporate costs and others was JPY420mn (-7.3% YoY), surpassing the initial target of JPY370mn.
The company attributed the more profit than planned to a rise in sales of its own products, efficient procurement of materials dueto the introduction of a core system, and disappearance of the cost to cope with defects.

Solar System Sales Business▷ Orders:

JPY1.7bn (+102.8% YoY)

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JPY1.8bn (+101.8%)
JPY112mn (+118.6%)

The company streamlined its operations and expanded sales reach to all parts of the country.
The company started sales of solar power plant equipment. By selling 2.3MW equipment, it reported sales of JPY1.1bn.

Solar Power Plant Business▷ Sales:▷ Operating profit:

JPY87mn (+70.7% YoY)
JPY22mn (operating loss of JPY19mn a year earlier)

The Shimonoseki solar park, which operated for nine months in the previous year, was in full-year operation in FY03/15. Plants in
Tateyama (1.9MW) and Sodegaura (1.3MW), both in Chiba Prefecture, began operations in February and March, respectively, of
2015.

Geothermal Power Plant BusinessThis segment was created during FY03/15. The company is preparing to start operations of geothermal power plants during
FY03/16. No sales were recorded, and operating loss was zero.

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Income statement
Income statement

FY03/08

FY03/09

FY03/10

FY03/11

FY03/12

FY03/13

FY03/14

FY03/15

FY03/16(JPYmn)

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Total sales

4,012

4,299

2,803

2,640

3,106

3,672

4,171

5,095

7,260

4,443
-38.8%

FY03/17

YoY

28.8%

7.1%

-34.8%

-5.8%

17.7%

18.2%

13.6%

22.1%

42.5%

CoGS

3274

3,348

2,412

2,314

2,516

2,623

2,973

3,616

5,710

3,151

Gross profit

738

951

392

326

590

1,049

1,198

1,479

1,550

1,292

18.4%

22.1%

14.0%

12.3%

19.0%

28.6%

28.7%

29.0%

21.3%

29.1%

620

1,020

619

612

619

675

721

947

1,270

1,103

15.5%

23.7%

22.1%

23.2%

19.9%

18.4%

17.3%

18.6%

17.5%

24.8%

GPM

SG&A expenses
SG&A-to-sales ratio

Operating profit

118

-68

-227

-286

-30

373

477

531

280

189

YoY

71.0%

-

-

-

-

-

27.8%

11.3%

-47.4%-32.3%

OPM

2.9%

-1.6%

-8.1%

-10.8%

-1.0%

10.2%

11.4%

10.4%

3.9%

4.3%

Non-operating income

49

45

16

18

14

19

9

8

16

16

Non-operating expenses

58

105

14

16

8

17

8

25

84

99

109

-128

-224

-284

-24

375

478

514

211

107

Recurring profit
YoY

9.9%

-

-

-

-

-

27.6%

7.5%

-58.9%-49.6%

RPM

2.7%

-3.0%

-8.0%

-10.8%

-0.8%

10.2%

11.5%

10.1%

2.9%

2.4%

Extraordinary gains

16

52

0

45

-

1

2

5

61

18

Extraordinary losses

492

341

346

109

7

0

0

0

3

14

Tax charges

39

-7

-1

3

6

36

44

92

104

66

Implied tax rate

-11%

1.6%

0.1%

-0.8%

-20.9%

9.6%

9.1%

17.7%

38.6%

59.5%

Net income

-408

-408

-570

-351

-37

340

436

427

165

45

-

-

-

-

-

-

28.5%

-2.2%

-61.3%-73.0%-10.2%-9.5%-20.3%-13.3%

-1.2%

9.3%

10.5%

8.4%

2.3%

1.0%

YoY
Net margin

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

Historical forecast accuracy
Results vs. Initial Est.

FY03/08

FY03/09

FY03/10

FY03/11

FY03/12

FY03/13

FY03/14

FY03/15

FY03/16

FY03/17

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Sales (Initial Est.)

3,000

3,870

3,389

3,110

2,980

3,378

4,504

4,534 5,600-7,300

6,633

Sales (Results)

4,012

4,299

2,803

2,640

3,106

3,672

4,171

5,095

7,260

4,443
-33.0%(JPYmn)Results vs. Initial Est.

33.7%

11.1%

-17.3%-15.1%

4.2%

8.7%

-7.4%

12.4%

-

Operating profit (Initial Est.)

40

129

139

191

22

69

493

506

590-850354

Operating profit (Results)

118

-68

-227

-286

-30

373

477

531

280

189
-46.5%

Results vs. Initial Est.

195.2%----

441.1%

-3.2%

5.0%

-

Recurring profit (Initial Est.)

52

71

133

179

18

65

488

489

520-790260

Recurring profit (Results)

109

-128

-224

-284

-24

375

478

514

211

107

Results vs. Initial Est.

109.5%----

476.5%

-2.0%

5.1%

-

-59.0%Net income (Initial Est.)

50

63

133

179

13

60

449

450

400-570

192

Net income (Results)

-408

-408

-570

-351

-37

340

436

427

165

45

Results vs. Initial Est.

-

-

-

-

-

466.3%

-2.8%

-5.1%

-

-76.8%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

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Balance sheet
Balance sheet(JPYmn)ASSETSCash and deposits
Marketable securities
Accounts receivable
Inventories
Other current assets
Total current assets
Buildings
Tools, furniture and fixtures
Machinery and equipment
Land
Construction in progress
Accumulated depreciation
Total tangible fixed assets
Investment securities
Other
Investment and other assets
Software
Other
Total intangible assets
Total fixed assets
Total assets
LIABILITIES
Accounts payable
Short-term interest-bearing debt
Accounts payable
Other current liabilities
Total current liabilities
Long-term interest-bearing debt
Lease obligations
Other fixed liabilities
Total fixed liabilities
Total interest-bearing debt
Total Liabilities
NET ASSETS
Capital stock
Capital surplus
Retained earnings
Total net assets
Working capital
Total interest-bearing debt
Net debt

FY03/08Cons.

FY03/09Cons.

FY03/10Cons.

FY03/11Cons.

FY03/12Cons.

FY03/13Cons.

FY03/14Cons.

FY03/15Cons.

FY03/16Cons.

FY03/17
Cons.

706
256
2,046
580
134
3,722
174
458
20
198
1,142
855
90
7
97
301
22
323
1,275
4,997

820
1,033
345
47
2,245
162
88
2
198
1,151
451
251
16
267
25
22
47
765
3,010

665
915
275
63
1,918
132
36
1
126
997
295
69
20
89
25
14
39
423
2,341

493
663
328
45
1,530
94
5
1
106
959
205
23
7
30
235
1,766

56
864
299
74
1,293
80
1
0
52
899
133
8
9
18
150
1,445

390
1,345
328
52
2,114
87
58
22
52
346
884
564
14
13
27
1
1
593
2,709

1,764
1,112
347
197
3,421
114
87
430
52
35
908
718
19
19
38
19
12
31
788
4,210

1,524
1,377
447
258
3,606
130
126
1,458
540
156
966
2,410
23
131
154
88
106
194
2,759
6,376

2,737
985
318
181
4,221
157
88
1,407
652
159
966
2,464
17
152
169
77
232
309
2,942
7,164

2,155
1,456
343
133
4,088
144
74
1,321
406
639
1,187
2,584
23
453
476
67
212
279
3,339
7,446

1,301
404
253
336
2,293
441
208
649
844
2,942

511
507
108
99
1,226
216
101
318
724
1,544

443
433
39
111
1,026
67
86
153
500
1,179

430
203
31
220
884
83
83
203
967

364
30
48
156
598
85
85
30
683

386
40
108
173
708
151
100
251
192
959

474
323
86
247
1,130
294
148
442
618
1,572

620
300
169
392
1,481
539
947
247
1,733
839
3,215

321
1,395
101
232
2,049
612
925
283
1,820
2,007
3,869

524
986
165
366
2,041
614
1,246
284
2,144
1,600
4,185

1,029
1,196
-119
2,055

1,029
1,024
-619
1,466

1,102
1,096
-983
1,162

1,102
1,096
-1,335
799

1,102
1,096
-1,372
761

1,387
1,381
-991
1,751

1,625
1,620
-555
2,638

1,656
1,077
445
3,161

1,677
1,057
611
3,295

1,677
994
655
3,261

1,325
844
138

867
724
-96

747
500
-165

562
203
-290

800
30
-26

1,287
192
-198

986
618
-1,146

1,204
839
-685

982
2,007
-730

1,276
1,600
-555

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

AssetsDuring FY03/17, current assets accounted for 54.9% of total assets. The ratio of fixed assets has increased since FY03/13.
Primary factors of current assets were cash and deposits (52.7% of current assets in FY03/17) and accounts receivable (35.6%).
Operating cash flows stemming from improved profitability, stock issuances, and financing activity were factors in cash anddeposits increasing from JPY390mn in FY03/13 to JPY2.2bn in FY03/17.
Tangible fixed assets shrank to JPY133mn in FY03/12 owing to a string of impairment losses amid slumping profits. In FY03/13 andonward, tangible fixed assets have been on an uptrend due to construction of solar parks and capex in the Electronic andCommunication Device business.

Liabilities
In FY03/17, a majority of liabilities is comprised of accounts payable, interest-bearing debts, and lease obligations.
Interest-bearing debts shrank from JPY844mn in FY03/08 to JPY30mn in FY03/12. Shared Research estimates that borrowing wasdifficult due to the profit slump, so Tamagawa repaid short- and long-term borrowings, corporate bond redemptions continued,
and there was no debt refinancing. In FY03/13 interest-bearing debts increased for the first time in five years, and in FY03/17 thefigure was JPY1.6bn.

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In FY03/17 net debt (interest-bearing debts minus cash and deposits) was positive, amounting to positive JPY555mn.
The company newly reported lease obligations in FY03/15 because it built the solar parks in Tateyama and Sodegaura, both in
Chiba Prefecture, on leases.

Net assets
Due to the extended profit slump and net losses, net assets declined from JPY4.2bn in FY03/07 to JPY761mn in FY03/12. Retained
earnings were minus JPY1.3bn in FY03/12. Net assets totaled JPY3.3bn in FY03/17 as a result of financing and building up net
income over subsequent years.
In FY03/13, capital increased due to the exercise of share subscription rights issued via third party allotment in January 2013. In
FY03/15 and FY03/16, capital also increased slightly due to the exercise of share subscription rights. Factors that increased capital
similarly increased capital reserve. That said, capital reserve decreased in FY03/15 to cover negative retained earnings, and due to
distribution of retained earnings as dividends in FY03/16 and FY03/17. Since FY03/13, retained earnings have increased as a resultof posting net income and covering negative retained earnings in FY03/15.

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Cash flows
FY03/08

FY03/09

FY03/10

FY03/11

FY03/12

FY03/13

FY03/14

FY03/15

FY03/16

FY03/17(JPYmn)Cash flow statement

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cons.

Cash flows from operating activities (1)

-136

259

-1

68

-332

36

764

387

1,614

102

Cash flows from investing activities (2)

-111

-17

12

93

77

-454

-265

-865

-392

-628
-526

-247

242

11

162

-255

-418

499

-478

1,222

Cash flows from financing activities

Free cash flow (1+2)

-121

-194

-82

-299

-168

783

875

238

-2

-57

Depreciation and amortization (A)

58

217

76

20

14

22

84

106

187

177
-569

Capital expenditures (B)

-134

-82

-22

-7

-12

-446

-254

-866

-662

Working capital changes (C)

-179

-459

-120

-186

238

488

-301

219

-222

294

-305

186

-397

-152

-272

-572

568

-552

-87

-641

Simple FCF (NI + A + B - C)

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

Cash flows from operating activities
Cash flows from operating activities hinge on net income, depreciation, goodwill amortization and changes in working capital.
The reason that operating cash flow topped net losses plus depreciation and goodwill amortization from FY03/09 throughFY03/11 was impairment losses, valuation losses on investment securities and a drop in working capital. In FY03/12 operating
cash flow fell despite a narrower net loss due to an increase in accounts receivable. In FY03/13 and later operating cash flow
stayed in the black as the company continued to report annual net income.
Cash flows from operating activities were significantly higher than net income during FY03/16 due to equipment sales in the
Renewable Energy System Sales business, which caused cash inflows from the increase and decrease in inventories.

Cash flows from investing activities
Through FY03/12 Tamagawa was restrained in its investments with capex below JPY100mn, so cash flows from investing activities
were minus JPY17mn in FY03/09 but positive from FY03/10 through FY03/12. Tamagawa’s investment cash flow remained innegative territory in FY03/13 and the subsequent years due to capital investments in the Electronic and Communication Device
Business and capex in the solar parks.

Cash flows from financing activities
Interest-bearing debt declined from FY03/09 through FY03/12, so cash flows from financing activities remained negative. In
January 2013 Tamagawa made a placement of 2.1mn shares and issued options (if exercised would prompt the issuance of 4.8mn
additional shares) to fund solar park construction. There were 1.8m shares issued in FY03/13 on the exercising of options. In
FY03/13 Tamagawa saw JPY783mn in financing cash flows: JPY554mn from the issuance of shares; JPY47mn from option issuance;
JPY170mn from long-term borrowing; and JPY100mn from corporate bond issuance.
During FY03/14, inflows included JPY450mn from the issuance of shares, and inflows from borrowings, leading to JPY875mn infinancing cash flows.
In FY03/15, cash flows from financing activities came to JPY238mn, due to JPY58mn in revenue from issuing new shares, JPY26mn
in revenue from issuing share purchase warrants, and borrowings.

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Other information
HistoryFounded in 1968, the company was a leader in analog high-frequency wireless technology. By the mid-2000s thebusiness was derailed by Korean competitors. After several missteps and ownership changes Tamagawa found itself with thecurrent leadership in 2012.
J Bridge Corp became a shareholder in 2007. In 2007 J Bridge Corp (now Asia Development Capital Co Ltd; TSE2: 9318)
became a shareholder. J Bridge in turn installed an executive from a company in which it held an equity stake (J CapitalManagement Co Ltd, 14.7% stake) to Tamagawa’s board in 2007. The new board member was then made CEO and proceeded
to make a number of failed acquisitions, speculative investments and unwise decisions, leading to further deterioration.
Raised capital for biomass energy in 2010. After the J Bridge-appointed CEO stepped down in 2009, the company liquidated
some money-losing subsidiaries in a bid to regain profitability. But amid declining sales its core electronics andtelecommunications equipment business continued to lose money in FY03/09-FY03/11. In 2010 the company raised JPY144mn in
new capital to launch a biomass energy business. It was liquidated in March 2012 after posting operating losses in FY03/11
through Q2 FY03/13.
Masanori Kobayashi joins core business in June 2011. In June 2011, Masanori Kobayashi, a veteran of the company, wasappointed a director of Tamagawa Electronics Co Ltd, a subsidiary that is the core business. Kobayashi was subsequently
appointed CEO of Tamagawa Electronics in April 2012 and he took charge of rebuilding the electronics and telecommunications
equipment business. The reform included exiting unprofitable projects, something Tamagawa was routinely doing while battlingoverseas rivals. The segment returned to operating profitability in FY03/12.
The company is actively engaged in renewable energy-related businesses, setting up an internal division to prepare for entering
the solar energy business in October 2010. It began selling electricity at a mega solar power plant in Shimonoseki, Yamaguchi
Prefecture in June 2013. It also launched the geothermal power plant business in December 2014 and began electricity sales at asmall-scale wind power facility in Tateyama, Chiba Prefecture in March 2016.
Focusing on profits. In April 2012, following a request from a major Tamagawa HD shareholder, Toru Masuzawa became
executive director of Tamagawa Holdings, and CEO in June 2012. In June 2014, Tamagawa shifted to a joint leadership system of
two representative directors to cope with difficult market conditions. In addition to the incumbent Representative Director Toru
Masuzawa, the company promoted Masanori Kobayashi to new representative director with the aim to establish a fair andtransparent management base by maintaining and improving its compliance system and ensuring strong corporate governance.
In June 2016, Akihiro Ushiroda became Executive Vice President to form a management team of three representative directors.
Yean

Month

Remarks

1968

Nov.

Tamagawa Electronics founded in Ota-ku, Tokyo (capital: JPY1mn)

1999

Aug.

Shares registered on Japan Securities Dealers’ Association registry of OTC-traded shares

2007

Oct.

2010

Oct.

Established internal division to prepare for entry into solar energy business

2011

Oct.

Internal division above changes name to solar power department

2013

Jan.

Capital increase by third party allotment

2013

Feb.

Founded wholly-owned subsidiary Tamagawa Solar Systems

2013

Jun.

Began electricity sales at mega solar power plant in Shimonoseki, Yamaguchi Prefecture

2014

Dec.

Began geothermal power generation business

2015

Feb.

Began electricity sales at mega solar power plant in Tateyama, Chiba Prefecture

2015

Mar.

Began electricity sales at mega solar power plant in Sodegaura, Chiba Prefecture

2015

Mar.

Announces memorandum of understanding regarding business alliance with Etrion Japan

Trade name changed to Tamagawa Holdings Co., Ltd. after company split; new company Tamagawa Electronics
Co., Ltd. founded

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2015

May

2015

Jun.

Subsidiary Tamagawa Electronics established Vietnamese subsidiary Tamagawa Electronics Vietnam Co, Ltd.

2016

Jan.

Established internal division to prepare for hydrogen power business

2016

Jun.

Acquired equity interest in Etrion Energy 5 LLC (becomes equity-method affiliate)

2017

Mar.

Began electricity sales at solar power plant in Misawa, Aomori Prefecture

2017

Apr.

Began electricity sales at solar power plant in Kasumigaura

Tamagawa Solar Systems changes name to Tamagawa Energy

News and topics
July 2017
On July 24, 1017, the company announced that the construction of its solar power plant in Misawa (Aomori Prefecture) has
been completed.
The construction work of the solar power plant in Misawa (Aomori Prefecture), which the company developed jointly with Etrion
Japan K.K. and Hitachi High-Technologies Corporation as announced in June 2016, has been completed. The new plant
constitutes of four separate plots and has a generating capacity of about 10.0MW in total.

Overview▷ Location:

Misawa, Aomori Prefecture▷ Total area:

Approx. 163,000m2▷ Feed-in tariff:

JPY36/kWh before tax (fixed for 20 years)▷ Operator:▷ Capacity:▷ First year generation volume:

Etrion Energy 5 LLC

Approx. 9.5MW

Approx. 10,740,000kWh (planned)

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Solar power plant in Misawa, Aomori Prefecture

Source: Company data.

June 2017
On June 19, 2017, the company announced that it will begin drilling work at a plot in Ibusuki (Kagoshima prefecture) where itplans to build a geothermal power plant.
The company’s consolidated subsidiary Tamagawa Energy resolved on the same day to begin drilling work at the plot in Ibusuki(Kagoshima prefecture) chosen for its geothermal power plant. The drilling is to allow the discharge of steam required ingeothermal binary power generation.
As part of efforts to develop a new base for renewable energy, the group has been independently pushing forward power
development initiatives targeting the launch of a geothermal power plant business in Ibusuki. The company will begin drilling
work at this time, since it has received drilling approval and completed examination of the geothermal reservoir.

Geothermal binary power generation
Geothermal binary power generation uses the technology where heat is exchanged from subterranean hot water or steam to a
medium with a lower boiling point than water, and steam from that medium is in turn used to drive turbines for power
generation. Since the majority of discharged steam can be reinjected to its underground reservoir through a reinjection well, thetechnology makes it possible to generate renewable energy with almost no negative effect on the environment.

Benefits of the geothermal power business▷ Unlike solar power, geothermal power allows for stable 24-hour power generation, as it is not affected by the weather, seasons,or day/night fluctuations▷ Due to the above reasons, a geothermal power plant with capacity of around 125Kw can generate the same amount of electricity
as a 1.0MW solar power plant. The space required is also relatively small, and therefore enables efficient power generation

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Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp▷ The feed-in tariff for electricity produced by geothermal power plant is fixed at JPY40/kWh (for less than 15,000Kw; excludingtax) for FY2017▷ An analysis of investment versus projected revenues shows that the geothermal power business is highly cost effective; thecompany can aim to maximize its return on investments

Schedule
The drilling work is expected to continue for about six months, and the company expects a power generation capacity of about
500Kw. Actual production capacity will become evident once steam is actually discharged and a discharge test is completed, andthe company plans to make a separate announcement once details become clear.
Drilling work for geothermal power plant

Source: Company data.

April 2017
On April 3, 2017, the company announced that its Kasumigaura solar power plant (Ibaraki Prefecture) has begun operation tosell electricity.
The company began electricity sales for its Kasumigaura (Ibaraki Prefecture) solar power plant with a generating capacity of about
2.4MW, upon completion of grid connection with Tokyo Electric Power Company.

Overview of the Kasumigaura solar power plant▷ Location:▷ Operator:

Kasumigaura, Ibaraki Prefecture
GP Energy B LLC(a subsidiary of Tamagawa’s wholly-owned subsidiary)▷ Total area:

Approx. 40,354m2▷ Feed-in tariff:

JPY36/kWh before tax (fixed for 20 years)▷ First year generation volume:

Approx. 2,900,000kWh (planned)▷ Capacity:▷ Generation revenue:

Approx. 2.4MW

JPY105mn/year (planned)

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Kasumigaura solar power plant in Ibaraki Prefecture

Source: Company data.

Tamagawa Holdings solar power plants
Feed-in-tariff Output(JPY/kWh)(MW)

Operation
start

Sales (JPYmn;

Solar parks

Location

Shimonoseki

Shimonoseki,
Yamaguchi

40.0

1.6MW

Q1 FY03/13

76

Tateyama mega solar

Tateyama, Chiba

40.0

1.9MW

Q4 FY03/15

95

Sodegaura mega solar

Sodegaura, Chiba

36.0

1.3MW

Q4 FY03/15

60

Noboribetsu

Noboribetsu,
Hokkaido

40.0

1.9MW

Q3 FY03/18

94

Kasumigaurasolarmega Kasumigaura,
Ibaraki

36.0

2.4MW

Q1 FY03/18

105

Shared Research estimates)

MisawaMisawa, Aomori

36.0

1.5MW

Q4 FY03/17

65

MisawaMisawa, Aomori

36.0

1.5MW

Q2 FY03/18

65

Goto

Goto,
Nagasaki

36.0

5.3MW

Q1 FY03/19

250

Minamishimabara

Minamishimabara,
Nagasaki

40.0

1.0MW

Q2 FY03/19

40

Total

-

18.4MW-

850-

Source: Shared Research based on company data
Shared Research estimate for sales, based on annual electricity sales of 1,200MWh per 1MW solar power facility.

March 2017
On March 13, 2017, the company announced that its Misawa solar power plant (Aomori Prefecture) has begun sellingelectricity through partial operation of the plant.
The Misawa plant, which the company constructed jointly with Etrion Japan K.K. and Hitachi High-Technologies Corporation,
constitutes of four separate plots and has a generating capacity of about 10.0MW. The plant began electricity sales uponcompletion of grid connection with Tohoku Electric Power on two of the four plots, allowing total output of about 5.0MW.

Overview of the Misawa solar power plant▷ Location:

Misawa City, Aomori Prefecture▷ Total area:

Approx. 163,000m2▷ Operator:▷ Capacity:▷ Feed-in tariff:

Etrion 5 LLC (30% owned by Tamagawa)Approx. 9.5MW
JPY36/kWh (fixed for 20 years)▷ First year generation volume: Approx. 10,740,000kWh (planned)

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Misawa solar power plant in Aomori Prefecture

Source: Company data.

On March 1, 2017, the company announced the acquisition of a mega solar power plant in Kasumigaura, Ibaraki Prefecture, andrevisions to its full-year FY03/17 earnings forecasts.

Acquisition of mega solar power plant in Kasumigaura, Ibaraki Prefecture
Tamagawa’s consolidated subsidiary GP Energy B G.K. passed a resolution on an installment sales agreement with Ricoh Leasing
Company, Ltd., for the purchase of a 2.4MW solar power plant in Kasumigaura, Ibaraki Prefecture, scheduled for connection inlate March 2017.
The plant is ready to start selling electricity from late March 2017. Originally Tamagawa was considering the plant for resale to an
outside customer through consolidated subsidiary Tamagawa Energy, which conducts the Renewable Energy System Sales
business, but decided to operate it as its own project.

Overview of mega solar power plant in Kasumigaura, Ibaraki Prefecture▷ Acquisition cost equivalent:

JPY1.0bn▷ First installment:

Late March 2017 (planned)▷ Feed-in tariff:

JPY36/kWh (fixed for 20 years)▷ First-year generation volume:

Approx. 2,900MWh (planned)▷ Total cost paid in installments:▷ Capacity:

JPY1.3bn

Approx. 2.4MW▷ Generation revenue:▷ Start of the sale of electricity:

Approx. JPY105mn/year (planned)

Late March 2017 (planned)

Revisions to full-year FY03/17 earnings forecasts
Full-year FY03/17 earnings forecasts▷ Sales:

JPY4.4bn (previous forecast JPY6.6bn)▷ Operating profit:

JPY133mn (JPY354mn)▷ Net income:

JPY12mn (JPY192mn)▷ Recurring profit:

JPY51mn (JPY260mn)

Reasons for the revisions
There are two reasons for the revisions:

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Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp◤ The power plant GP Energy B will acquire in Kasumigaura, Ibaraki Prefecture, was originally slated for resale by Tamagawa

Energy to an outside customer, with the proceeds to be booked as earnings. However, the company decided to operate theplant as its own project instead of selling it for a one-time profit.

◤ Because of revisions in tax and application systems scheduled to take effect in April 2017, there has been intense competition

for plants that can be connected before the end of March 2017. As a result, the amounts spent for acquisition, and received insales, of plants in the Renewable Energy System Sales business have stayed below original plans. Further, the Agency of
Natural Resources and Energy sent out a cautionary notice in November 2016 about the transition to the new system. The
notice set the deadline for submitting a notice of minor changes to the Bureau of Economy, Trade and Industry—necessary for
acquisition or sale of a power plant by March 2017—at January 20, 2017. This deadline made it difficult to carry out acquisitionand sales activities as originally planned.

January 2017
On January 16, 2017, the company announced that GP Energy 2 Co., Ltd., a consolidated subsidiary, will acquire a solar power
plant through a leasing agreement. The company has been planning to construct the plant in Goto City, Nagasaki Prefecture.
The plant is a large-scale, mega solar power plant with an approximately 5.3MW output, connecting to an extra-high voltage grid,
the company’s first of its kind. The power plant will be able to sell electricity at a feed-in tariff of JPY36 per kWh (excluding
consumption tax) for twenty years, with expected yearly generation revenue (planned) of approximately JPY250mn.

Details of lease▷ Description of lease assets: Solar power generation systems, for a total lease fee of JPY2.9bn▷ Lessor: Ricoh Leasing Company, Ltd.

▷ Conclusion of the agreement: January 15, 2017

▷ Lease start date: March or April 2018 (planned)

November 2016
On November 1, 2016, the company announced that it received an order for a subsystem that will be used in a next generation
weather instrument.
The company received an order from Toshiba Corporation for a subsystem that will be used in a next-generation weather
instrument. This device is part of the “research and development of technology to predict heavy rains and tornadoes,” one itemof the national project “Enhancement of Societal Resiliency against Natural Disasters” under the Strategic Innovation Promotion
Program (SIP). The results of this project are expected to be used in the 2020 Tokyo Olympics and Paralympics.
Resiliency is used in this case to refer to the ability of a society to recover and withstand natural disasters that result from climate change.

October 2016
On October 31, 2016, the company made an announcement regarding the acquisition of fixed assets (mega solar electricity
generation facilities) through a lease.
GP Energy 6 Co., Ltd., a subsidiary of Tamagawa Holdings’ consolidated subsidiary GP Energy Co., Ltd., has passed a resolution
to acquire the mega solar power plant in Noboribetsu city, a facility with an output of approximately 2MW that the company has
been planning for construction in Hokkaido’s Noboribetsu city. GP Energy 6 intends to acquire the power generation plant byentering into a contract with Ricoh Leasing Company, Ltd., with the lease planned to begin in August 2017.
The mega solar electricity generation facility in Noboribetsu city, Hokkaido occupies a favorable site approximately 72,000sqm inarea, and will be able to sell electricity at a fixed feed-in tariff of JPY40 per kWh (excluding consumption tax) for twenty years, withan expected yearly generation revenue (planned) of approximately JPY94mn. Further, twelve units of tracking systems that can be

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anticipated to improve the efficiency of solar energy power generation are planned for installation within the same site, and are
expected to contribute to earnings of the company. KCCS Mobile Engineering Co., Ltd., the company responsible forconstruction of this power generation facility, is a Kyocera group company that has worked on installation and construction of
public and industrial solar power generation system facilities throughout Japan. Shared Research believes that the construction ofthis facility to proceed in a rapid, reliable manner.
Description of assets to be leased (mega solar power generation facility in Noboribetsu city, Hokkaido)▷ Operator: GP Energy 6 Co., Ltd.

▷ EPC operator: KCCS Mobile Engineering Co., Ltd.
▷ Capacity: Approximately 2MW▷ First year output (planned): About 2,350,000kWh▷ Outline of leased assets and total lease fee: Solar power generation systems for JPY711mn▷ Acquisition cost equivalent: JPY490mn

On October 6, 2016, the company announced the operational launch of a system for which the company had earlier won a
consignment contract in the public and social infrastructure field.
The company’s Tamagawa Electronics Co., Ltd. unit (Tamagawa Electronics), sought to win more contracts in the public andsocial infrastructure field to expand its business territory. As a result, the company received an order from Nippon Airport Radio
Service Co., Ltd. for development and production of an optical distributed antenna system (DAS) for an airport multi-channel
access (MCA) radio network. The system has begun operation at Narita International Airport.
Tamagawa Electronics supplied the DAS system, an optical transmission device for dead zones aimed at increasing the number ofcommunications lines and enhancing the overall network functionality. One of the major features of this system is that it can be
expanded with the addition of more units, allowing the user to easily enlarge the wireless communications area. The system canalso be used with a surveillance application using the ethernet to monitor various devices in operation.

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Optical distributed antenna system (DAS)
for an airport multi-channel access (MCA) radio network

Remote unit
Remote unit
Transmitterand receiver

Master unit

Optical fiber

Remote unit

Remote unit
Remote unit

Optical DAS system Tamagawa Electronics deliveredRadiobase station

AntennasharingdeviceService operation
Source: Shared Research based on company data

September 2016
On September 12, 2016, the company announced the status of its mega solar power plant in Noboribetsu, Hokkaido
Prefecture.

Status of the mega solar power plant in Noboribetsu
The company already received certification for the land and power sales business at the mega solar power plant in Noboribetsu,
Hokkaido Prefecture. It had been applying for development permits and preparing for construction. It received permission from
Hokkaido Prefecture to develop forested area necessary to build a large solar power plant.
The price has been approved under METI’s feed-in tariff scheme for renewable energy, at JPY40 per kWh (excl. tax; fixed for 20
years).

Overview of the plant▷ Capacity:

About 2MW

▷ Feed-in tariff (fixed for 20 years):

JPY40/kWh (excl. tax)

▷ First-year output:

About 2,350,000kWh▷ Generating revenue (planned):

About JPY94mn/year

June 2016
On June 29, 2016, the company announced a new medium-term management plan, covering from FY03/17 to FY03/20.
The new plan calls for FY03/20 sales of JPY10.1bn and operating profit of JPY1.1bn. Detailed targets for each segment are outlined
below:

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Medium-term management plan: Segment sales and profit targets
Long-term outlook

FY03/16

FY03/17

vs. FY03/16

FY03/20

vs. FY03/16(JPYmn)

Act.

Plan

ChangesPlan

Changes

Sales

7,259

6,633

-8.6%

10,14039.7%

Electronic and Communication Device

2,091

2,600

24.3%

3,500

67.4%

Renewable Energy System Sales

4,938

3,787

-23.3%

5,100

3.3%

Solar Power Plant

230

246

7.0%

1,190

417.4%

New businesses

-

-

-

350

290.7%

279

354

26.9%

1,090

Electronic and Communication Device

-11

214

-

350

-

Renewable Energy System Sales

286

223

-22.0%

370

29.4%

Solar Power Plant

56

61

8.9%

335

498.2%

New businesses

-

-

-

35

-

Operating Profit

Source: Shared Research based on company data
Note: Figures may differ from company documents due to differences in rounding methods.

◤ Electronic and Communication Device Business: Generate stronger earnings by capturing orders for power amplifiers (used innext generation mobile phones), increasing overseas market share, and M&A targeting related businesses.

◤ Renewable Energy System Sales Business: Expand sales of small-scale wind power generation equipment, commercialize

geothermal power generation, biomass power generation and small-scale wind power generation equipment, and launch
initiatives to win orders in the second-hand solar power plant market, expand the sales network, and strengthen its
organizational structure by expanding the sales network and hiring more personnel.

◤ Solar Power Plant and Geothermal Power Plant Businesses: Expand capacity at the company’s power stations from the present

5MW to 20MW, generate stronger earnings by acquiring customers for its upcoming geothermal power plant operations andevaluate the possibility of setting up renewable energy plants in the overseas Asian market.

◤ New businesses: Undertake initiatives related to hydrogen power storage and business investment, and explore ways torealize synergies with existing businesses and to directly/indirectly tap opportunities at related businesses.

On June 22, 2016, the company announced that it had obtained an equity interest in Etrion Energy 5 LLC (to become an
equity-method affiliate).
As it announced on March 30 and June 11, 2015, Tamagawa was in talks with Etrion Japan KK (Etrion) as to how to proceed on a
joint solar power generation venture in Misawa City, Aomori Prefecture. At a board of directors meeting held on June 22, 2016, a
resolution was passed on obtaining an equity interest in Etrion Energy 5 LLC (Etrion 5GK). The effective date of the equity
purchase is June 22, at a price of JPY300,000, and this will give Tamagawa a 30% stake in Etrion 5GK, making it an equity-method
affiliate.
With the equity interest Tamagawa is obtaining from Etrion in Etrion 5GK, the operation will proceed as a joint venture, andconstruction will begin as early as possible so that the sale of electricity can begin in the near future. According to a term sheet
agreed with Etrion, Tamagawa will hold a 30% stake in the special purpose company that will oversee the project, and the equity
purchase is based on this agreement.
Tamagawa will also make an additional investment of JPY53mn in Etrion 5GK effective the same date as the aforementioned
equity purchase (June 24, 2016). The other investors in the project will make additional investments in proportion to their stakes,
so that even after this additional round of investments, the equity interest ratio will remain unchanged. Furthermore, on the samedate as the aforementioned equity purchase and in keeping with their respective stakes, the various investors in Etrion 5GK will
provide subordinated loans in accordance with subordinated loan agreements they have with Etrion 5GK. Tamagawa’s planned
loan is JPY106mn.

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By conducting development operations jointly with a major corporation and a major EPC contractor, Tamagawa believes it caneffectively operate this large solar power generation facility. This will also be the first project to receive financing through a
project finance scheme with a major financial institution, so this is an important project in terms of the company’s businessstrategy. Once Etrion 5GK receives the initial loan from the financial institution, Tamagawa plans to transfer land for the project toEtrion 5GK at a price of JPY274mn (book value).

Power plant overview▷ Location: Misawa City, Aomori Prefecture▷ Operator: Etrion Energy 5 LLC▷ EPC: Hitachi High-Technologies Corporation▷ Capacity: approximately 9.5MW (total)▷ Feed-in tariff: JPY36/kWh (before tax; fixed for 20 years)▷ First-year output: 10,740,000kWh (estimate)▷ Construction to start: July 2016

▷ Commercial operation to start: February 2017
Outline of Etrion Energy 5 LLC
EPC / O&M
Sumitomo Mitsui Trust Bank

Hitachi High-Technologies
Corporation

000

EPC / O&M contracts

Project finance

Misawa power plant 10MW
(Etrion Energy 5 LLC)
Development service agreement

Sale ofelectric power

IncomeSponsors (equity holders)Tamagawa Holding
groupElectric powercompanies

Etrion Japan 60%
Tamagawa Holdings 30%
Hitachi High-Technologies 10%

Source: Shared Research based on company data
*EPC refers to businesses comprehensively undertaking construction projects across the fields of engineering, procurement, and construction.
*O&M refers to businesses that undertake operation and maintenance of facilities after construction is complete.

March 2016
On March 28, 2016, the company announced successfully completed grid connections for its small-scale wind power
generation facility.
As announced on February 1, 2016, the company has decided to begin power sales from small-scale wind power generationequipment. Following the construction of Small-scale Wind Power Generator Facility No. 1 (power output: 19.5kW) on grounds
available at its Tateyama mega solar power plant (power output: approx. 2,000kW), connections with Tokyo Electric Power
Company’s grid were completed and sales of electrical power started on March 25, 2016.

On March 14, 2016, the company announced upward revisions to its FY03/16 earnings forecasts.

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Revisions to full-year earnings forecast▷ Sales:

JPY7.1bn (previous forecast JPY5.4bn)▷ Operating profit:

JPY258mn (JPY159mn)▷ Net income:

JPY176mn (JPY106mn)▷ Recurring profit:

JPY187mn (JPY105mn)

Reasons for the revision
At the Renewable Energy System Sales segment, the company was able to win more new orders for its solar power plant
equipment than projected in its previous forecast (December 10, 2015), and based on these favorable sales expects both sales
and profits to outstrip the previous forecast.

On March 1, 2016, the company announced the development of optical transmission equipment for trains.
Subsidiary Tamagawa Electronics Co. Ltd. (Tamagawa Electronics) has increased efforts to win contracts for telecoms andbroadcasting-related public works projects to minimize the impact of restrained capex spending in the mobile-phone
infrastructure market. As a result, Tamagawa Electronics has won an order for optical transmission equipment for use in trains, andhas decided to start developing these products.
According to the company’s press release, one benefit of Tamagawa Electronics’ analog optical transmission equipment is thecost effectiveness due to system simplification. They enable wireless signals that are the same as radio waves to be directly
converted to optical signals and transmitted. Further, compared to coaxial cables, optical fiber is suitable for transmitting wirelesssignals over long distances because of its high frequency characteristics, in addition to fewer signal losses.
The company expects the development of these products to boost earnings from FY03/17–FY03/19, and plans to have a separate
release regarding the earnings impact of this product when announcing its FY03/17 earnings forecast.

February 2016
On February 22, 2016, the company announced the establishment of a new subsidiary.
The company plans to expand its renewable energy business overseas, starting with Vietnam. In order to carry out accurate andprecise assessments of the business environment, it has established a subsidiary to increase its understanding of the joint
crediting mechanism (JCM) and the local electric power system in Vietnam, as well as to facilitate joint research with educational
institutions as it seeks to develop businesses overseas in the future.

Subsidiary details▷ Name:THD Research Institute Co., Ltd.

▷ Date of establishment:

March 7, 2016 (planned)▷ Owner:Tamagawa Holdings Co., Ltd. (100%)▷ Capital:▷ Business:

JPY1.0mn

Investigation, promotion of research, and the holding of seminars relating to the company’s overseas
renewable energy business, starting with Vietnam

On February 1, 2016, the company announced new products (small-scale wind power generation equipment) in its Renewable
Energy System Sales segment. The new product will be sold by Tamagawa Energy, a subsidiary of the company.

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Summary of small-scale wind power generation equipment
Small-scale wind power generation refers to wind power generation equipment producing less than 20kW of electricity, with apurchase period of 20 years. Provided that wind speeds are sufficient, wind power generation can generate electricity during thenight, differentiating it from solar power generation. The company thinks that demand for such power generation will increase in
the future.
In order to demonstrate the reliability and functionality of this product, the company plans to construct and operate Small-scaleWind Power Generator Facility No. 1 (power output: 19.5kW) on grounds available at its Tateyama plant (power output: approx.
2,000kW). The wind turbines are to be supplied by C&F Green Energy, the manufacturer of models the company plans to sell.
The Tateyama plant has already received approval from the Ministry of Economy, Trade and Industry, and approval from Tokyo
Electric Power (TSE: 9501) to provide power through its grid. Tamagawa aims to complete construction and began sales ofpower in March 2016.

Summary of turbine manufacturer
C&F Green Energy—a C&F Group member company based in Ireland—is set to provide wind turbines to Tamagawa. C&F Green
Energy began development, production, and installation of small and medium scale wind power generation facilities in 2006. It
has installed over 1,000 wind turbines across Europe, including in Ireland, the United Kingdom, Italy, France, and Switzerland.
The C&F Group began design, manufacturing, and supply of metal and chrome parts for automotive applications in 1989, andprovides its products to companies across the globe.
The current wind turbine units—manufactured by C&F Green Energy—to be provided to Tamagawa have received ClassNK
approval from Nippon Kaiji Kyokai, a necessity for facilities to receive approval under the feed-in tariff system.

Sales plans
From an efficiency standpoint, the small-scale wind power generation equipment should ideally be placed in regions where thewind speed is at least 5m/s. In FY03/16, Tamagawa plans to perform final checks on the functionality of wind power generationequipment it owns, prior to beginning sales of the same models in FY03/17. By actively acquiring and developing areas that meet
the aforesaid standard, the company aims to sell about 100 units during FY03/17.

January 2016

On January 25, 2016, the company announced plans to install a solar power tracking system at its solar park in Sodegaura.
As announced on March 24, 2015, the company launched electricity sales at its solar park in Sodegaura, Chiba (hereafter,
Sodegaura solar park) last year. In order to explore new possibilities for its Solar Power Plant Business, it has decided to establish asolar power plant at this park which makes use of an automatic tracking system—the company’s first usage of this technology.

About the tracking system
The tracking system the company plans to use is known as a universal-axis solar tracker. It automatically adjusts the solar panel tothe optimal angle in relation to the sun’s position, allowing it to gather more sunlight than a fixed panel and as such make full useof the available solar energy. This in turn greatly increases its energy output. The company expects that the total amount ofenergy generated will be 20-30% more than that generated by the fixed solar panels it has been using until now, and anticipates
an increase in its power generating efficiency.

About the tracking system’s installation▷ Location:▷ Capacity:

Sodegaura City, Chiba Prefecture
Approx. 12kW

▷ Feed-in tariff: JPY32/kWh (excluding tax, fixed for 20 years)▷ Maker: TopperSun (Taiwan)

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On January 12, 2016, Tamagawa Holdings Co., Ltd. announced an update on the status of its plans to construct a solar park in
Goto City, Nagasaki Prefecture.
As announced on November 18, 2014, the company is planning to construct and operate a solar park in Goto City, Nagasaki
Prefecture. Tamagawa has now selected a contractor to carry out the construction work for the solar park.
The solar park plans to utilize a 5.3MW extra high voltage system—the first of its type for Tamagawa. The company has been
preparing to start the sale of electricity there as soon as possible.
Nangoku Corporation, which is scheduled to perform construction work for the solar park, is a general trading company based in
Kagoshima that operates businesses such as construction materials, machinery and equipment, telecommunications, and energy
throughout the Kyushu region and has more than 40 subsidiaries and affiliates. Nangoku plans to build 30 solar energy power
plants on its own in Kyushu for a total generating capacity of around 200MW and has constructed more solar power facilities.

About the Goto City solar park
▷ Location:

Yoshikugi-cho, Goto City, Nagasaki Prefecture▷ Area:10 hectares▷ Operator:

GP Energy 2 Co., Ltd. (wholly owned subsidiary)▷ Capacity:

Approx. 5.3MW▷ Generation revenue:

JPY250mn/year (tentative)▷ Feed-in tariff:

JPY36/kWh (fixed for 20 years)▷ First-year generation volume: Approx. 6,790,566kWh▷ Start of the sale of electricity:

April 2017 (planned)

On January 4, 2016, the company provided an update on the status of its plans to launch a power plant business in Misawa,
Aomori Prefecture.
As indicated in its December 26, 2014 announcement, the firm plans to construct and operate solar energy power plant facilities
with a total capacity of approximately ten megawatts in Misawa, Aomori Prefecture (hereafter “power plant business”). It is in theprocess of performing the necessary procedures and hopes to start electricity sales at an early stage. Tohoku Electric Power Co.
has now officially approved a request for grid connections to Tamagawa’s power plant facilities (procedure for connecting to a
power company’s grid, which is a precondition for selling power).
As the firm indicated on June 11, 2015, it reached a basic agreement with Etrion Japan KK (hereafter “Etrion”) to jointly operatethese power plant facilities. The official approval of the grid connection request should encourage quicker and more concrete
discussions with Etrion as the company looks to start operations.
Tamagawa Holdings expects this power plant business to begin selling power from FY03/17 and plans to promptly report any
concrete developments regarding this joint project with Etrion.

Power plant overview▷ Location:

Misawa, Aomori▷ Premises:

Approx. 153,000sqm▷ Operator:▷ Capacity:

GP Energy A, GP Energy B, GP Energy C, GP Energy D (wholly owned units)

Approx. 10MW

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JPY36/kWh (before tax; fixed for 20 years)▷ First year output:

Approx. 10,852,814kWh (estimate)▷ Revenue:

Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp

JPY390mn a year (estimate)

December 2015
On December 10, 2015, the company revised its sales and earnings forecast for FY3/16, and also provided an updated status
report on its Geothermal Power Plant Business.

Revised FY 3/16 forecast▷ Sales:

JPY5.41bn (previously JPY5.6–7.3bn)▷ Operating profit:

JPY159mn (previously JPY590–850mn)▷ Net income:

JPY106mn (previously JPY400–570mn)▷ Recurring profit:

JPY105mn (previously JPY520–790mn)

Reasons for the revision
Moves by telecommunications carriers to restrain abrupt spending on mobile phone infrastructure and a lull (due to seasonality)
in work on large government projects hurt sales at the Electronic and Communication Device segment. As this left 1H sales shortof the company's initial forecast and put the Electronic and Communication Device segment below its breakeven point, thecompany revised its full-year earnings forecast.
Tamagawa Holdings had previously given its full-year forecast as a range estimate, owing to its Renewable Energy System Sales
segment, where sales and earnings vary depending on changes in the operating environment caused by external factors. As
indicated in the Geothermal Power Plant Business status report released the same day, the upper end of the forecast range wasbased on the assumption that upon the completion of construction of the two geothermal power plants that are currently underconstruction, the company would sell electrical power from the geothermal power plant and the geothermal power plants
themselves, and would also sell the sites previously acquired for two other geothermal power plants where construction has not
yet begun. However, the company has sold the two plants that were under construction to a third party, resold the land acquired
to build the two other geothermal power plants, and halted the sale of geothermal power plants. In addition to lowering the
expected sales amount at the Electronic and Communication Device segment, these moves caused the company to revise down
earnings figures at both the upper and lower end of the expected range.
The sharp drop in expected profits relative to the company’s full-year revised sales forecast is due to the fact that the decline insales was at the high-margin Electronic and Communication Device segment.
Given the current operating environment, company plans for restoring orders and sales at the Electronic and Communication
Device segment call for focusing on expanding sales to the government market and the public sector/ infrastructure--related
market, and also on acquiring new customers. These efforts have brought in new large scale orders and improved the segment's
order flow but, since most of the deliveries under these orders will not be until April 2016 or later, the contributions to earnings
from will not appear until next fiscal year.

Current status of previously planned geothermal power plants
On January 29, 2015, the company announced that it planned to build a total of seven geothermal power plants, and to this end
acquired a total of seven separate plots of land. The company moved forward on construction at two of the seven sites butchanged its plan. Under the new plan, the company will sell the two plants currently under construction to a third-party and sellback the sites acquired for the five other geothermal power plants to their original owners.
At the geothermal power plant located in Beppu City, Oita Prefecture, a reexamination of data acquired after work had begun
showed that Tamagawa Holdings was unlikely to get the return on the project it originally envisioned. After a series of talks with

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the outside party that originally proposed the project, Tamagawa Holdings reached an agreement to sell the two power plants
currently under construction to a company owned by the party that originally proposed the project at a price that would begreater than the total amount Tamagawa Holdings had invested in the two projects. The transaction and payment under thisagreement are be completed by the end of January 2016.
As for the remaining five sites at which construction of geothermal power plants has not yet begun, Tamagawa Holdings chose to
exercise its right under the original purchase contract to sell the land back to the original owner at the same price for which it waspurchased. Two of the five sites have already been sold back to their original owners and the sales of remaining three sites are
expected to be completed by the end of December 2015.
The company had expected to use some of the capital that was raised by a warrant issue for its geothermal power plant
operations. However, after only 10 of the warrants issued were exercised, adverse changes in the operating environment and thestock market pushed the company's share price down to a level where it made sense for the company to buy back and cancel allof the remaining 9,990 warrants and finance construction at the first geothermal power plant site with cash on hand.

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Corporate governance and environment/CSR-related information (as of June 2017)
Organizational form

Organizationand capital structure

Controlling shareholders

Directors

Number of directors (per Articles of Incorporation)

Company with Audit & Supervisory Board
None
8

Directors' term of office (per Articles of Incorporation)

1 years

Number of directors

6Outside directors

2

Independent outside officers

0

Audit & Supervisory

Existence of Audit & Supervisory Board

Y

Board

Number of Audit & Supervisory Board members (per Articles of Incorporation)

5

Number of Audit & Supervisory Board members

3

Other

Outside members of Audit & Supervisory Board

2

Independent outside officers

2

Independent officers
Implementation of measures regarding director incentives
Eligible for stock option

Other

2
Performance-linked remuneration and stock option
Directors, others
Y

Preparation of convening notices in English
Disclosure of individual director's compensation
Policy to determine amount and calculation method of remuneration

Environmental
conservation
activities,
CSR activities

Online disclosure

None
Y

Corporate takeover defenses
Obtained ISO14001 certification

None

Contribution to society through product development of high frequency microwave technologies, required in the age of 5G/IoT
Contribution to society through economic effects sand natural environment improvements by expanding renewable energy business

Major shareholders
Top shareholders

Voting rights
ratio

Marilyn Tang

14.88%Pershing Division of Donaldson, Lufkin & Jenrette Sec. Corporation

5.05%

Hiromasa Shimanuki

4.74%

HS Securities Co., Ltd.

3.97%

Toru Masuzawa

3.25%

Rakuten Securities, Inc.

2.51%

Sada Kubota

2.38%

Japan Securities Finance Co., Ltd.

2.27%

Yuichi Sunaga

1.37%

Hideto Komai

0.98%

Source: Shared Research based on company data
As of end-March 2017

Top management
President & CEO: Toru Masuzawa
Masuzawa joined Wako Securities Co., Ltd. (now Mizuho Securities Co., Ltd.) in April 1985. He gained experience at
Commerzbank Southeast Asia from 1994, HSBC Securities from 1998, Barclays Private Bank from 1999, and Time Square Venturefrom 2004. Later in 2004, he became an executive officer at J Bridge Corp (now Asia Development Capital Co. Ltd) and thenpresident in 2005. In April 2012, he became an executive officer at Tamagawa and, in June 2012, became the company president(current position).

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R Tamagawa Holdings / 6838
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Executive Vice President: Akihiro Ushiroda
Ushiroda joined U-EN Corporation in July 2005 and then KDA Audit Corporation in 2007. He joined Tamagawa in January 2012 as
manager of the business administration department, was promoted to director of the corporate planning department and financeand accounting department in 2015, and was then promoted to executive vice president in June 2016 (current position).

Executive Vice President: Masanori Kobayashi
Kobayashi joined Fuji Keiki Co., Ltd. in April 1977, then moved to Tamagawa in December 1981. He became manager of themeasuring instruments department in 1999 and was put in charge of director information in 2005. He became an auditor in 2006,
an executive officer at Tamagawa Electronics Co., Ltd., in 2011, president of Tamagawa Electronics in 2012 (current position),and executive vice president of Tamagawa Holdings in 2014 (current position).

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R Tamagawa Holdings / 6838
Coverage

LAST UPDATE: 2017.11.09

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Company profile
Company

Head officeTamagawa Holdings Co., Ltd

1-6-15, Hamamatsu-cho, Minato-ku

VORT Hamamatsu-cho I,
Tokyo, Japan 105-0013
Phone

Listed on+81-3-6435-6933

JASDAQ

EstablishedExchange listing

May 7, 1970

August 31, 1999

WebsiteFiscal year-end

http://www.tmex.co.jp/english/index.html

March

IR Webhttp://www.tmex.co.jp/english/ir-info.html

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