HIRANO TECSEED (6245 JP) RESEARCH UPDATE – 21 June 2024

Page | 1

HIRANO TECSEED CO., LTD. (6245 JP)
THE NEW MEDIUM -TERM PLAN SUGGESTS LESS SALES FROM T HE SECONDARY LI B BATTERY BUSINESSFY23 RESULTS
Hirano Tecseed (hereafter HT) reported FY23 OP of ¥3,236mil (+4.6% YoY) on
sales of ¥46,946mil (+10.7% YoY). Both FY23 sales and OP overshot thecompany guidance by 14.5% and 10.8%, respectively.
FY23 orders in the Coating and Laminating Machinery [C&LM] segment
slumped -47.9% YoY to ¥24,222mil as customers (1) had front-loaded orders
since FY21, on expectations of high growth in the EV market. However, (2)they have since, pended orders due to changes in their production locations
and updates in machine specifications. Consequently, deliveries have been
delayed, and (3) HT’s customers are now more cautious on the outlook for
the EV market.
Sales landed above guidance, thanks to converting C&LM] order backlogs tosales. The segment reported record sales of ¥37,374mil (+19.9% YoY) in FY23
and order backlogs, though down -19.1% YoY to ¥55,760mil, the absolutelevel remain approx. 1.5x FY23 sales due to long lead times on the back ofchange in specifications by HT’s LiB electrode coating machine customers.
Hirano Tecseed (6245 JP): Earnings Summary and Guidance
FY22

FY23

(¥mil)

1H

FY

1H

FY

FY CE

YoY (%)

vs CE (%)

Sales

18,27042,423

22,346

46,94641,000

10.7

14.5

GP

3,012

6,679

3,030

7,511

N/A

12.5

N/A

GPM (%)

16.5

15.7

13.6

16.0

N/A

+0.3ppt

N/A

SG&A

1,515

3,585

2,260

4,275

N/A

19.2

N/A

8.3

8.5

10.1

9.1

N/A

+0.6ppt

N/A

1,496

3,093

769

3,236

2,920

4.6

10.8
-0.2ppt

SG&A/Sales (%)
OP
OPM (%)RP
RPM (%)

8.2

7.3

3.4

6.9

7.1

-0.4ppt

1,557

3,219

814

3,394

3,000

5.4

13.1

8.5

7.6

3.6

7.2

7.3

-0.4ppt-0.4ppt

NP*

1,078

2,243

564

2,438

2,100

8.7

16.1

EPS (¥)

71.59

148.8737.42

161.69139.34

8.6

16.0

EXECUTIVE SUMMARY• Hirano Tecseed (hereafter HT)
reported FY23 OP of ¥3,236mil (+4.6%
YoY) on sales of ¥46,946mil (+10.7%
YoY). Both FY23 sales and OP overshot
the company guidance by 14.5% and10.8%, respectively.
• Coating and Laminating Machinery[C&LM] segment sales hit a record of¥37,374mil (+19.9% YoY) and a highabsolute level of order backlogs,(¥55,760mil -19.1% YoY), due tolonger lead times for specifications
changes from Hirano’s LiB electrodecoating machine customers.
• HT is guiding for FY24 1H OP of¥1,200mil (+55.9% YoY) on sales of¥22,600mil (+1.1% YoY), and FY24 OPof ¥2,900mil (-10.4% YoY) on sales of¥44,000mil (-6.3% YoY). Guidance for
the C&LM segment assumes a decline
in growth for both sales and OP as
customers’ sentiment for CAPEX ismore cautious given the uncertainty
surrounding global EV markets.
• While HT aims to become a global
leader in C&L machinery and istargeting FY27 sales of ¥60,000mil
and ROE of 10%, the medium-termplan (FY24~27) is regarded a period
during which HT will focus onestablishing foundations for growth
so as to improve corporate value.

Source: Nippon-IBR based on Hirano Tecseed's results presentation material* NP attributed to the parent's shareholders

Despite the surge in raw material costs, C&LM production levels recovered+16.7% YoY. This resulted in a +0.3ppt YoY gain in HT’s full year FY23 grossprofit margin to 16.0%, which was supported by some success in pricenegotiations and production cost reductions.
HT’s FY23 full year OP expanded just +4.6% YoY / ¥142mil, as pricenegotiations and improvement in production efficiency did not offset surge
in costs of raw materials and labour. As a result, OPM deteriorated -0.4ppt
YoY 6.9%.

• HT announced its revised capital
allocation policy under the new
medium-term plan. The estimatedtotal capital of ¥8,000mil which iscomprised of operating cash flow,
debt and cash surplus will beallocated to the following areas:
1)
2)
3)
4)

Growth investment ¥3,000mil+,Strategic alliance, or shareholder
return ¥3,000mil+,Higher of DOE of 3.5% or dividend
pay-out ratio of 60%
Maintenance CAPEX ¥2,000mil,
Working capital.

FY23 C&LM segment SG&A rose ¥449mil YoY (negative for the segment OP)
but was ¥147mil YoY lower for the Industrial Machinery segment, taking thefull year SG&A to +¥690mil / +19.2% YoY. The largest single increase camefrom a +7.6% YoY / ¥335mil rise in sales commissions to distributors in the
C&LM segment as LiB coating machinery sales expanded.
HIRANO TECSEED CO., LTD (6245 JP)

NIPPON INVESTMENT BESPOKE RESEARCH UK LTD

HIRANO TECSEED (6245 JP) RESEARCH UPDATE – 21 June 2024

Page | 2

The performance by segment is as follows:• C&LM Segment: The segment GP rose +¥1,633mil along with increase in sales by consuming order backlog, which
offset the surge in prices of industrial materials, cost increases associated with change in machine specifications tomeet shipping locations, and delays in manufacturing period, and resulted in improvement in FY23 segment OP by¥1,183mil. However, the improvement in GP was well offset by higher SG&A (¥449mil) including sales commission
paid to LiB electrode coating machinery distributors as sales increased (¥335mil).
• Industrial Machinery segment: Sales declined -19% YoY and saw a deterioration in product mix (-¥959mil YoY),
which resulted in the segment OP declining -39.2% YoY / -¥812mil YoY. This was partially offset by a reduction insegment SG&A by ¥147mil.
Hirano Tecseed (6245): Sales, Production, Order and Order Backlog Breakdown
FY22
Q1

Q2

Q3

Q4

FY

Q1

Q2

Q3

Q4

FY

Sales

6,657

6,163

8,495

9,862

31,17910,441

7,785

9,771

9,376

37,374

19.9

Production

5,783

5,493

7,672

8,402

27,352

9,050

6,939

7,667

8,257

31,915

16.7

Order Received

24,44915,308

1,270

5,474

46,503

849

2,730

9,070

11,572

24,222-47.9

Order Backlog

71,43080,52573,30068,912

68,91259,31954,26553,56455,76055,760

-19.1

Sales

2,262

2,533

3,035

1,942

9,774

1,720

1,540

2,268

2,321

7,850

-19.7

Production(¥mil)
Coating and
Laminating
Machinery

Industrial
Machinery

OthersYoY (%)

1,729

1,751

2,104

1,611

7,196

1,364

1,247

1,814

1,804

6,232

-13.4

Order Received

715

1,462

910

1,668

4,757

626

1,620

1,128

773

4,149

-12.8

Order Backlog

13,221

12,15010,024

9,750

9,750

8,657

8,737

7,597

6,049

6,049

-38.0

Sales

306

346

427

389

1,470

422

434

325

538

1,720

17.0

Production

235

264

342

352

1,195

354

360

67

505

1,287

7.7

Order Received

623

356

926

327

2,233

337

530

343

265

1,476

-33.9

Order Backlog

Total

FY23

796

807

1,304

1,242

1,242

1,157

1,253

1,272

998

998

-19.6

Sales

9,226

9,044

11,95812,19442,423

12,584

9,761

12,363

12,236

46,946

10.7

Production

7,748

7,509

10,12010,36635,744

10,769

8,547

9,549

10,56839,434

10.3

Order Received

25,83817,079

3,105

7,471

53,494

1,812

1,767

13,657

12,611

29,848-44.2

Order Backlog

85,44893,48384,62979,90879,906

69,13464,25662,43362,80862,808-21.4

Source: Nippon-IBR based on Hirano Tecseed's FY22 and FY23 Tanshin

As of FY23-end, the C&LM segment order backlog fell -19.1% YoY to ¥55,760mil – a sharp contraction from the FY22
Q2 peak of ¥80,525mil, as sales increased.
HT had procured materials and components upfront during the COVID pandemic when costs were much higher due tosupply shortages. To tackle these cost issues and improve profitability, the firm aims to improve sales by:•

Reviewing its supply contracts when a change in specifications is required when customers alter the shipment
location.
3•

Pass on cost increases associated with the required upgrades/ changes in specifications.

•Improve production systems, including those of its subcontractors, by preparing for potential change in
specifications, and increase production capacity to monetise order backlogs so as to gain new orders.

At the same time, HT aimed to reduce COGS and SG&A by the following measures:•

Reduce production costs by using standardised designs and specifications across product models.

•Raise the in-house production of core components.

•

Increase monitoring of production costs.

•

Review distributor contracts to negotiate less punitive commission rates.

•

Improve productivity firm-wide by promoting digital transformation.
HIRANO TECSEED CO., LTD (6245 JP)

NIPPON INVESTMENT BESPOKE RESEARCH UK LTD

HIRANO TECSEED (6245 JP) RESEARCH UPDATE – 21 June 2024

Page | 3

PERFORMANCE BY SEGMENT
HT has three business segments, of which two – the C&LM segment and the Industrial Machinery segment – combined
generate 96.3% of total consolidated sales and almost all of consolidated OP. Consolidated sales can also be divided
into the following applications.

C&LM Segment:
The largest component of this segment is electrode coating equipment for secondary LiBs. FY23 segment OP improved+59.6% YoY to ¥3,168mil on sales of ¥37,374mil (+19.9% YoY) – comprising domestic sales of ¥1,217mil (-47.7% YoY)
and export sales of ¥36,157mil (+25.3% YoY).
The segment OPM continued to deteriorate until FY23 1H – FY22 1H 6.6% / FY22 6.4% / FY23 1H 5.0% – but thenrecovered to 8.5% in FY23. In 2H alone, the segment produced OP of ¥2,250mil (+96.7% YoY /+ 2.4x HoH) on sales of¥19,147mil (+4.3% YoY / +5.0% HoH), generating an OPM of 11.8%. Although there was a recovery in the segment OPM
during 2H, the firm does not think that this it is a sustainable figure.
C&LM sales are recognised based on the percentage of completion method. Delays in revenue recognition wereextended to as much as 12 months due to changes in specifications as customers changed the location to receive their
coating machine orders. As a result, any delays to the production process will be reflected in the order backlog andcontract assets on the BS.
Despite significant sales growth (3-year CAGR +34.1%), the C&LM segment OPM has worsened due to:•

The rapid surge in material and energy costs over the past year has not been reflected in the order backlogs,•

Production delays caused by customers changing machine specification to ensure they are fit for purpose at new
shipment locations increase HT’s production cost, and•While HT’s customers are pending sales, HT pays its suppliers and subcontractors within 30 days of placing orders.

Management acknowledges the earnings risk associated with the existing order contracts and have therefore started
negotiating a payment cycle as well as implementing price hikes. Sales are currently recognised when the machinery is
loaded on a container ship. HT is willing to modify the payment method to include upfront advanced payments andthereafter royalty-based payments. However, it is still premature to fully reflect such changes on the existing orderbacklog. Although the FY23 segment order backlog declined by -19.1% YoY to ¥55,760mil on the back of improved levelsof production, it is still as much as 1.5x above FY23 segment sales.

Industrial Machinery Segment:
FY23 segment OP fell -39.2% YoY to ¥1,257mil on sales of ¥7,850mil (-19.7% YoY) – comprising domestic sales of¥4,072mil (+21.1% YoY) and exports of ¥3,778mil (-41.1% YoY). Deposition equipment mainly used in electronicmaterials applications, such as MLCCs and forming polyimide films, saw increasing interest from customers both inJapan and in China. The Chinese market was rather sluggish on the back of the region’s economic climate and led to
FY23 segment orders falling -12.8% YoY to ¥4,149mil, and the order backlog declining -38.0% YoY to ¥6,049mil. However,
CAPEX by electronics components makers remained solid.
The Industrial Machinery segment FY23 OPM deteriorated by -5.1ppts YoY to 16.0%, due to changes in product mix.
Sales of deposition equipment still remains the core growth driver for the segment, however, sales declined.

HIRANO TECSEED CO., LTD (6245 JP)

NIPPON INVESTMENT BESPOKE RESEARCH UK LTD

HIRANO TECSEED (6245 JP) RESEARCH UPDATE – 21 June 2024

Page | 4

Sales by Application
FY22(¥mil)
Display - relatedElectronic materials-related
Household product-related

Q1

Q2

Q3

662

1,144

2,123

2,005

FY23
Q4

FY Total

Q1

Q2

1,223

783

3,815

661

291

2,495

1,579

8,203

1,257

1,654

Q3

Q4

FY Total

528

724

2,205

2,002

1,701

6,615

256

108

168

157

690

95

79

52

84

311

Energy- related

5,036

4,517

6,861

8,633

25,048

9,481

7,201

9,327

9,057

35,067

Other

1,147

1,268

1,208

1,041

4,666

1,089

535

452

668

2,746

Total

9,226

9,044

11,95812,19442,423

12,584

9,761

12,363

12,236

46,946

Source: Hirano Tecseed Co., Ltd.

Hirano Tecseed (6245): Segment Financial Summary
FY21

Industrial Machinery

Others

FY23

FY

1H

FY

1H

Sales

26,533

12,821

31,17918,22742.2

37,374

Operating Profit

2,796

841

1,985

918

9.2

3,168

59.6

OPM (%)

10.5

6.6

6.4

5.0

-1.4ppt

8.5+2.1ppt

Sales

9,998

4,796

9,774

3,261

-32.0

7,850

-19.7

Operating Profit

1,946

1,107

2,069

504

-54.5

1,257

-39.2

OPM (%)

19.5

23.1

21.1

15.5

-5.6ppt

16.0-5.1ppt

Sales

1,334

653

1,470

857

31.2

1,720

17.0

(¥mil)
Coating and Laminating
Machinery

FY22
YoY (%)FY

YoY (%)
19.9

Operating Profit

204

63

82

47

-25.4

269

227.7

OPM (%)

15.3

9.7

5.6

5.5

-0.1ppt

15.7+10.1ppt

Source: Nippon-IBR based on Hirano Tecseed's FY21, FY22 and FY23 Tanshin

FY24 OUTLOOKHT is guiding for FY24 1H OP of ¥1,200mil (+55.9% YoY) on sales of ¥22,600mil (+1.1% YoY), and full year FY24 OP of¥2,900mil (-10.4% YoY) on sales of ¥44,000mil (-6.3% YoY). Management expects the C&LM segment will see declines
in both sales and OP due to customers’ sentiments on CAPEX is waning given the uncertainty surrounding the global EV
markets.
Hirano Tecseed (6245 JP): Earnings Summary and Guidance
FY23(¥mil)

FY24

1H

FY

1H CE

YoY (%)

FYCE

Sales

22,346

46,946

GP

3,030

7,511

GPM (%)

13.6

SG&A
SG&A/Sales (%)

YoY (%)

22,6001.1

44,000

-6.3

N/A

N/A

N/A

N/A

16.0

N/A

N/A

N/A

N/A

2,260

4,275

N/A

N/A

N/A

N/A

10.1

9.1

N/A

N/A

N/A

N/A

OP

769

3,236

1,200

55.9

2,900

-10.4

OPM (%)

3.4

6.9

5.3

+1.9ppt

6.6-0.3ppt

RP

814

3,394

1,300

59.7

3,000

-11.6

RPM (%)

3.6

7.2

5.8

+2.2ppt

6.8-0.4ppt

NP*

564

2,438

910

61.3

2,100

-13.9

EPS (¥)

37.42

161.69

60.34

61.3

139.25-13.9

Source: Nippon-IBR based on Hirano Tecseed's results presentation material* NP attributed to the parent's shareholders

Although production levels have recovered as issues with the supply of materials have eased, shipment delays due tochanges in machine specifications likely continue. Therefore, the firm remains conservative in its sales guidance and isbasing the FY24 performance on order backlogs that are highly likely to be completed. Consequently, HT is forecasting
HIRANO TECSEED CO., LTD (6245 JP)

NIPPON INVESTMENT BESPOKE RESEARCH UK LTD

HIRANO TECSEED (6245 JP) RESEARCH UPDATE – 21 June 2024

Page | 5

full-year sales to decline -6.3% YoY due to ongoing equipment specifications adjustments – such as changes in delivery
location which result in different requirements – which will likely lead to delivery delays.
Management is also guiding for the FY24 OPM to contract to 6.6% from 6.9% in FY23. HT continues to engage in pricenegotiation to pass on cost increases and costs associated with updating and upgrading machine specifications tocustomers. While the firm had some success in FY23 2H, HT thinks it would be premature to reflect potential pricing
changes to the company’s current estimates.
NEW OPPORTUNITIESAs well as aiming to promote further delivery management and productivity improvements, while also keeping a close
eye on customers' CAPEX trends, HT is looking to capture new market demand to ensure growth over the medium tolong term, especially in the US.
The company set up a subsidiary in the US to gain turnkey contracts, rather than just selling coating machinery, and has
established a service and maintenance businesses. However, HT’s lack of production capacity remains an issue.
Although HT’s LiB electrode coating equipment is highly rated by global battery makers, a shortage of production
capacity can cause delays in shipments.
With the order backlog at record levels, the average lead time from order receipt to the equipment delivery(installation) currently takes between 2~2.5 years. Some 80% of the current order backlog comprises orders received
before FY22. Currently, HT is in a position not to drastically increase orders without risking longer delivery cycle.
Since orders for LiB electrode coating equipment rapidly surged in FY21, the firm’s requirement for working capital tomeet production levels hit ¥10,100mil. However, due to changes in specifications of LiB electrode coating equipment,
some of the current order backlogs have become less profitable – though not unprofitable. Consequently, as noted
above, HT is considering renegotiating prices in some cases.
In the case of cancellations, the firm has already realised revenue based on the percentage of completion basis, hence
will unlikely report impairment losses. To enhance negotiation capabilities, HT changed its sales and marketing director
whose responsibility includes exchanging contracts that works better with projects with longer lead time.
LONG-TERM VISION 2030 AND NEW MEDIUM-TERM PLAN

Vision and Target – Recap
Hirano Tecseed announced its Long-Term Vision 2030 plan in May 2023, during which the firm’s aim is to become a
global leader in coating machines. HT is looking to enhance corporate value by establishing a stable revenue base basedon the following three goals:
1. Capturing the top market share in coating equipment for energy-related and electronic materials.
2. Expanding its coverage globally from manufacturing to maintenance through enhancing its overseas network.
3. Contributing to industrial development and the global environment through its coating technology
HT will continue to focus on expanding growth in 1) energy-related applications, including LiB electrode coating
equipment and also extending to next generation batteries, such as solid-state batteries and fuel cells, and 2) electronicmaterials applications, including coating equipment for capacitors loaded in EVs, and for electronic materials used in
5G high-frequency wave.
By expanding its existing business, as well as developing cutting-edge technologies, HT is targeting an OPM of 12.0% in
FY30 vs 7.3% in FY22, on sales of ¥60,000mil (8-yr CAGR +4.4%), and ROE of more than 10.0% (vs 6.4% in FY22).
Capital Allocation Policy to optimise shareholder equity.
With the 1H results announcement, HT outlined its capital allocation plan for its surplus cash, which is estimated at¥7,000mil+, during the medium-term management plan. Capital will be allocated to capture growth as well as directed
to improve shareholder equity so as to improve ROE and PBR.
HIRANO TECSEED CO., LTD (6245 JP)

NIPPON INVESTMENT BESPOKE RESEARCH UK LTD

HIRANO TECSEED (6245 JP) RESEARCH UPDATE – 21 June 2024

Page | 6

HT plans to allocate capital into the following five areas:
1. Growth investment ¥3,000mil+
Approx. ¥2,000mil will be dedicated to global production capacity expansion, and the remaining ¥1,000mil will beon digital twin / smart factory technology to improve production efficiency. The firm may invest additional capital
to expand its service and maintenance business in the US and other investment to enhance enterprise value.
2. Strategic Alliance ¥3,000mil+ or allocated to shareholders return if not spent
HT plans to allocate funds to build strategic alliances to solidify its procurement capability of core components. If
strategic alliances are not realised during the medium-term plan, the excess funds will be allocated to either growthinvestments, or to shareholder return including share buyback.
3. Dividend Payments
As for shareholder returns, management commits to pay higher of dividend on equity [DOE] of 3.5% or dividend
yield of 60%. Dividends will be regularly reviewed to optimise shareholder equity which will subsequently improve
PBR and ROE.
4. Maintenance CAPEX ¥2,000mil
HT plans to allocate ¥2,000mil on updating existing factories.
5. Working CapitalThis will be equivalent to three-month sales.

Medium-term Plan FY24~FY27
During the previous medium-term plan, HT achieved constant growth of C&LM segment although piling order backlog
remained as an issue. Still earnings heavily rely on the segment as the size of the LiB secondary battery market is far
bigger compared to that for MLCCs and electronics components. Although the segment achieved +34.1% sales CAGR
over the past three years, the OPM deteriorated because shipments were delayed by customers changing specifications,combined with the fact that HT pays its subcontractors within 30 days of an order being placed.
In addition to achieving record sales in C&LM, HT has also drastically altered its shareholder return policy after
reviewing the strength of its balance sheet and will either pay out 3.5% DOE from retained earnings or 60% of the year’s
NP, whichever higher.
Hirano Tecseed (6245 JP): Previous Medium-term Plans (FY21~23)
Base Year

MT FY21~FY23
FY22

FY20

FY21

FY23

3-yr CAGR (%)

Total Sales (¥mil)

25,80037,86642,423

46,946

22.1

Coating and Laminating Equipment (¥mil)

15,48526,53331,17937,37434.1

OPM (%)

9.9

10.5

7.3

6.9

N/A

ROE (%)

5.9

9.5

6.4

6.5

N/A

Source: Hirano Tecseed Medium-term Management Plan Presentation FY24-FY27

While HT aims to become a global leading company in coating and laminating equipment and to realise sales of¥60,000mil and ROE of 10% by the end of its medium-term plan (FY24~27), management sees this period as a time toestablish a foundation for future growth in order to further enhance corporate value. Given one of the key issues forinvestors has been how HT can shorten the lead time and solve the order backlog issues, HT will focus on the following
three main issues:
1. Diversify revenue streams
2. Expand supply capabilities
3. Improve organisational capabilities.
Details of the plan can be found on HT’s website below:(https://www.hirano-tec.co.jp/en/mt_asset/Medium-Term%20Management%20Plan%20FY2024-FY2027.pdf).

HIRANO TECSEED CO., LTD (6245 JP)

NIPPON INVESTMENT BESPOKE RESEARCH UK LTD

HIRANO TECSEED (6245 JP) RESEARCH UPDATE – 21 June 2024
Medium-term Target and Revenue Breakdown by Segment(¥mil)

Page | 7
FY23

FY27

4-year CAGR

Coating and Laminating

35,10027,500-5.9

Industrial Machinery

6,600

9,000

8.1

Optical Film etc.

3,600

9,000

25.7

After Services

1,600

3,500

21.6

0

2,000

N/A

Total Sales

46,94651,0002.1

OP

Others

3,236

4,100

6.1

OPM (%)

6.9

8.0

N/A

ROE (%)

6.5

7.5

N/A

Source: Hirano Tecseed Medium-term FY24-27 presentation material

Medium-term Outlook by Segment
Coating and Laminating: HT expects FY27 sales of ¥27,500mil (4-yr CAGR -5.9%) based on 1) shipment delays over
FY24~FY25 as the outlook for the global EV market and the corresponding unwillingness of its customers to further
spend on CAPEX, and 2) lack of profit growth in FY24 for FY24 sales do not include final shipment of LiB electrodecoating machine.
Although the firm is expecting the current weak outlook for the EV market to be a short-term factor, it is still seeing
solid demand in LiB. To capture the medium- to long-term demand, the firm plans to undertake orders on a turnkey
contract basis. HT also aims to establish business for the next generation batteries.
Industrial Machinery: This segment can be split to two businesses, (1) machinery for electronics components with FY27
revenue guided to reach ¥9,000mil (4-yr CAGR +8.1%), and (2) FY27 optical film coating equipment with revenues
expected to enjoy 4-yr CAGR of +25.7% to ¥9,000mil. The firm aims to realise growth by diversifying the segment’s
revenue stream by capturing both domestic and overseas demands.
Service and Maintenance: HT is keen to establish a service and maintenance business as it leads to capturing
replacement demand. The firm is guiding for FY27 segment sales of ¥3,500mil (4-yr +21.6%). Moreover, given thissegment is expected to enjoy higher margins, it will help stabilise segment earnings.
Others (incl. new businesses): HT plans to make some seed investments on newly developed high value-added
businesses and M&A with offers long-term growth opportunities. HT guides for FY27 segment sales of ¥2,000mil fromno sales in FY23.

HIRANO TECSEED CO., LTD (6245 JP)

NIPPON INVESTMENT BESPOKE RESEARCH UK LTD

HIRANO TECSEED (6245 JP) RESEARCH UPDATE – 21 June 2024

Page | 8

GENERAL DISCLAIMER AND COPYRIGHTThis report has been commissioned by Hirano Tecseed Co., Ltd. (the Sponsor) and prepared and issued by Nippon
Investment Bespoke Research UK Ltd (Nippon-IBR), in consideration of a fee payable by the Sponsor. Fees are paid ondelivery of the report in cash without recourse. Nippon-IBR may seek additional fees for the provision of follow-up
research reports and associated IR services for the client but does not get remunerated for any investment banking
services. We never take payment in stock, options, or warrants for any of our services.
Accuracy of content: All information used in the publication of this report has been compiled from publicly available
sources that are believed to be reliable, however Nippon-IBR does not guarantee the accuracy or completeness of thisreport and has not sought for this information to be independently verified. Opinions contained in this report represent
those of the Nippon-IBR analyst at the time of publication. Forward-looking information or statements in this reportcontain information that is based on assumptions, forecasts of future results, estimates of amounts not yet
determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause theactual results, performance, or achievements of their subject matter to be materially different from current
expectations.
Exclusion of Liability: To the fullest extent allowed by law, Nippon-IBR shall not be liable for any direct, indirect, orconsequential losses, loss of profits, damages, costs, or expenses incurred or suffered by you arising out or inconnection with the access to, use of or reliance on any information contained on this note.
No personalised advice: The information that we provide should not be construed in any manner whatsoever as,
personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective
subscriber as Nippon-IBR’s solicitation to effect, or attempt to effect, any transaction in a security. The securities
described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.
Investment in securities mentioned: Nippon-IBR has a restrictive policy relating to personal dealing and conflicts ofinterest. It does not conduct any investment business and, accordingly, does not itself hold any positions in the
securities mentioned in this report. However, the respective directors, officers, employees, and contractors of NipponIBR may have a position in any or related securities mentioned in this report, subject to its policies on personal dealing
and conflicts of interest.
Copyright: Copyright 2024 Nippon Investment Bespoke Research UK Ltd.
For further enquiry, please contact:
Yumi Yamamoto-Tyrrell
Nippon Investment Bespoke Research UK Ltd
118 Pall Mall
London SW1Y 5EA
TEL: +44 (0)20 7993 2583
Email : enquiries@nippon-ibr.com

Nippon Investment Bespoke Research UK Ltd (formerly known as NIB Research UK Ltd.) is registered in England and Wales (9100028) and isauthorised and regulated by the Financial Conduct Authority <FRN: 928332>.

HIRANO TECSEED CO., LTD (6245 JP)

NIPPON INVESTMENT BESPOKE RESEARCH UK LTD