COMPANY RESEARCH AND ANALYSIS REPORT

Sun-Wa Technos Corporation
8137
Tokyo Stock Exchange First Section

22-Dec.-2017
FISCO Ltd. Analyst

Hiroyuki Asakawa

FISCO Ltd.
http://www.fisco.co.jp

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Sun-Wa Technos Corporation
8137 Tokyo Stock Exchange First Section

22-Dec.-2017https://www.sunwa.co.jp/■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Net sales and net income achieved record highs in 1H at halfway point of FY3/18. ....................................

01

2. Raised FY3/18 forecast, expects vibrant business conditions to continue in 2H. ........................................

01

3. Making healthy progress in the Challenge 1500 three-year medium-term management plan,
focus on revisions to FY3/19 goals........ ......................................................................................................

01■Company profile---------------------------------------------------------------------------------------------------------------------------------------------------------- 02
1. Background........................................... ......................................................................................................

02

2. Business overview................................. ......................................................................................................

04■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 05
1. 1H FY3/18 results........................................................................................................................................

05

2. Divisional and regional trends................ ......................................................................................................

06■Overview and progress of the medium-term management plan---------------------------------- 08
1. Overview of the medium-term management plan. .......................................................................................

08

2. Medium-term management plan targets. .....................................................................................................

09

3. Progress of the engineering business .........................................................................................................

10

4. Progress on the global SCM solutions business. .........................................................................................

12■Business outlook-------------------------------------------------------------------------------------------------------------------------------------------------------- 14■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 17■Information security------------------------------------------------------------------------------------------------------------------------------------------------ 18

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

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Sun-Wa Technos Corporation
8137 Tokyo Stock Exchange First Section

22-Dec.-2017https://www.sunwa.co.jp/██Summary
Possibility of a prolonged phase of upbeat earnings with multiple
demand drivers (OLEDs, automobiles, and semiconductors)
Sun-Wa Technos Corporation <8137> (hereinafter, also “the Company”) is an independent trading company thatspecializes in technology products. One of the strengths of the Company is that it has three business divisions ofelectrical machinery, electronics, and general machinery. Another strength is the Company’s two-way trade in which
it sells equipment and materials for manufacturers’ production lines and then buys and sells the products made bythese manufacturers to other companies. By utilizing these strengths, the Company has expanded its businesses.
1. Net sales and net income achieved record highs in 1H at halfway point of FY3/18
The Company reported 1H FY3/18 results with ¥67,348mn in net sales (+34.7% YoY) and ¥1,773mn in operating
income (+63.9%). It achieved sharply higher sales and earnings and set all-time highs in net sales and net income for
1H. Key factors contributing to the upbeat results were continuation of vibrant capital investments by Chinese local
smartphone manufacturers that picked up in 2H FY3/17, healthy capital investments in semiconductor productionlines on heightened demand for semiconductors with advances in IoT, and strong capital investments by theautomotive industry led by electric vehicles (EVs), advanced driver-assistance systems (ADAS), and other themes.
2. Raised FY3/18 forecast, expects vibrant business conditions to continue in 2H
The Company has raised the FY3/18 forecast twice thus far and currently projects ¥139,000mn in net sales (+19.2%
YoY) and ¥3,500mn in operating income (+16.1%). While some observers believe that investments have been
largely exhausted in the smartphone industry, we anticipate ramp-up of OLED investments, which are likely to be
increasingly utilized as display devices. Investments in semiconductor and automotive industries should also remain
vibrant. We think the updated forecast is still conservative. Even if lower-margin businesses, such as automotive,
gain a larger presence, we see a possibility of sales beating the forecast and expect profit contributions from thisupside to have an impact exceeding companywide margin.
3. Making healthy progress in the Challenge 1500 three-year medium-term management plan, focus onrevisions to FY3/19 goals
The Company is currently implementing Challenge 1500, its 9th three-year medium-term management plan, andsteady progress with this plan constitutes the Company’s longer-term growth strategy. Upward revisions in the
FY3/18 forecast have increased the likelihood of revisions to FY3/19 target. The two main growth strategies are
expansion of the engineering business and the global SCM solutions business. The Company is broadening thescope of these businesses and approaching its near-term goal of lifting sales above ¥10bn each.
Key Points
Capital investments are vibrant in a wide range of areas – smartphones, automobiles, semiconductors, andindustrial machinery• Achieving double-digit sales growth in the three divisions; sales are rapidly growing for automobile interior
products in the electronics division• Likely to sustain healthy expansion in the engineering business with labor shortages and personnel cost
cutbacks as drivers•

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

01 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Sun-Wa Technos Corporation

22-Dec.-2017

8137 Tokyo Stock Exchange First Section

https://www.sunwa.co.jp/

Summary㻾㼑㼟㼡㼘㼠㼟㻌㼠㼞㼑㼚㼐㼟(¥mn)

㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻝㻡㻜㻘㻜㻜㻜

(¥mn)

㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻕

㻠㻘㻜㻜㻜

㻟㻘㻠㻣㻝
㻟㻘㻞㻝㻝

㻟㻘㻜㻝㻠

㻝㻞㻜㻘㻜㻜㻜

㻟㻘㻞㻜㻜
㻟㻘㻞㻜㻜

㻞㻘㻠㻠㻠
㻥㻜㻘㻜㻜㻜

㻝㻞㻢㻘㻜㻜㻜

㻢㻜㻘㻜㻜㻜
㻝㻜㻝㻘㻟㻣㻤

㻝㻝㻝㻘㻞㻣㻢

㻝㻜㻡㻘㻣㻠㻤

㻞㻘㻠㻜㻜
㻝㻘㻢㻜㻜

㻝㻝㻢㻘㻢㻝㻝

㻟㻜㻘㻜㻜㻜㻤㻜㻜㻜㻜㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻤㻌㻱

Source: Prepared by FISCO from the Company’s financial results██Company profile
Unique trading company handing three different types of products –electrical machinery, electronics, and general machinery
1. Background
The Company traces its roots to a self-run business created by the late Tokuro Yamada in July 1946 that leveraged
his experience selling electrical machinery in China since before the war. It was incorporated in November 1949 as
YAMADA KOGYO CORPORATION and concluded a distributor contract with YASKAWA Electric Manufacturing Co.,
Ltd. (currently, YASKAWA Electric Corporation <6506>), marking the full-fledged start of the Company’s history. While
the Company is a major sales distributor of YASKAWA Electric, it went beyond this relationship to conclude sales
distributor contracts with other leading electric equipment and machinery manufacturers as an independent trader oftechnology products, expanding products that it handled and the customer base, and broadening business scope.
The Company established a position as a unique trading company that specializes in technology products, handlingthree different types of products (electric machinery, electronics, and general machinery) that it continues to hold today.
In overseas activities, the Company rapidly broadened its network of local entities from the 1990s in response
to offshore moves by customer firms spurred by yen appreciation, trade friction, and other factors. Following thelaunch of entity in Singapore in 1995, it proceeded to build an overseas subsidiary network in major Asian countries,
Europe, and North America. It recently established local entities in Indonesia, Vietnam, Mexico and the Philippines
as countries with strong growth potential.
The Company listed its shares on the OTC market in May 1982, moved to the Second Section of the Tokyo Stock
Exchange in April 2003, and advanced to the First Section in March 2005.

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

02 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Sun-Wa Technos Corporation
8137 Tokyo Stock Exchange First Section

22-Dec.-2017https://www.sunwa.co.jp/

Company profile

History
November 1949
December 1952
November 1960
October 1966
March 1969
July 1970
November 1970
September 1971
June 1974
November 1977
May 1978July 1978
November 1979
May 1981
May 1982
June 1990
April 1993
May 1995
December 1997
April 1998

Domestic business development
Established YAMADA KOGYO CORPORATION
Sales agent contract with Osaka Transformer Co., Ltd. (nowDAIHEN Corporation)
Sales agent contract with NIPPON GEAR Co., Ltd.
Agent contract with Origin Electric Co., Ltd.
Distributor contract with Toyo Carrier Engineering Co., Ltd (nowToshiba Carrier Corporation)
Exclusive contract with Tateisi Electric Manufacturing Co. (now,OMRON Corporation)
Established Yamada Kucho Co., Ltd. (now SUN-WA-TRINITY
CORPORATION)
Sales agent contract with NIKKISO CO., LTD.’s equipment
sales division
Started sales of YE DATA INC. products
Established Yamada Kogyo Kenkyusho
Agent contract with Sumitomo 3M Limited
Special agent contract with STANLEY ELECTRIC CO., LTD.
Special agent contract with Nemic-Lambda Co., Ltd. (now
TDK-Lambda Corporation)
Sales agent contract with SANKI ENGINEERING CO., LTD.
Listed shares on the OTC market
Established Yamada Butsuryu Co., Ltd. (now SUN-WAN
LOGISTICS CO., LTD.)
Changed to the current company name

Established SUN-WA TECHNOS (SINGAPORE) PTE. LTD.
Established SUN-WA TECHNOS (HONG KONG) CO., LTD.
Established Sun-Wa Technic Europe Co., Ltd. (now SUN-WA
TECHNOS EUROPE GmbH; Dusseldorf)
Established SUN-WA TECHNOS AMERICA, INC. (Chicago)
Established SUN-WA TECHNOS TAIWAN CO., LTD. (joint
venture)Established SUN-WA TECHNOS (MALAYSIA) SDN. BHD.
Dissolved SUN-WA TECHNOS TAIWAN CO., LTD. (joint
venture) and established SUN-WA TECHNOS TAIWAN CO.,LTD. (subsidiary)
Established SHANGHAI SUN-WA TECHNOS CO., LTD.
Opened the Shenzhen Representative Office

July 1998
November 1998
April 2000
January 2001

December 2001
September 2002
April 2003
March 2005
October 2006
January 2009
August 2013

Listed on the TSE Second Section
Listed on the TSE First Section
Established SUN-WA TECHNOS ASIA (THAILAND) CO., LTD.
Established SUN-WA TECHNOS (SHENZHEN) CO., LTD.
Opened the Hanoi Representative Office of SUN-WA TECHNOS(HONG KONG) in Vietnam
Opened the Hong Kong Logistics Center
Opened Taichung Representative Office of SUN-WA TECHNOSTAIWAN
Established PT. SUN-WA TECHNOS INDONESIA
Established SUN-WA TECHNOS MEXICO S.A. DE C.V. and
SUN-WA TECHNOS (PHILIPPINES), INC.

October 2013
March 2014
October 2014
September 2015
December 2015
January 2016

Overseas business development

Moved the head office to 3-chome Kyobashi, Chuo Ward
Merged the electronics division into the headquarters

May 2016
April 2017

Opened the Los Angeles Branch of SUN-WA TECHNOS(AMERICA), INC.
Established SUN-WA TECHNOS (VIETNAM) CO.,LTD.

Opened the Nagoya Office (upgraded from a branch) andYokohama Branch (upgraded from a sales site)
Source: Prepared by FISCO from Company materials

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

03 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Sun-Wa Technos Corporation
8137 Tokyo Stock Exchange First Section

22-Dec.-2017https://www.sunwa.co.jp/

Company profile“Broad and deep” coverage of three areas
Capital investments in production lines are the most importantdemand driver
2. Business overview
The Company is an independent trading company that specializes in technology products and stands out in its
coverage of three product fields – electric machinery, electronics, and general machinery. Product information andunderstanding tends to be broad and superficial when a single company handles three separate fields becauseof the differences in users and demand drivers. However, the Company derives its strength from pursuit of “broadand deep” interactions. This approach stems from having numerous employees with engineering backgrounds as atechnology-oriented trading firm. Another factor is that the Company has accumulated knowledge and experiencein each of the three fields through processes carried out over a lengthy period, as it began in general machinery andelectrical machinery fields as a sales agent for YASKAWA Electric and DAIHEN <6622> and then added electronic
components as “two-way transactions.”
The electrical machinery division handles AC servo motors, programmable controllers, linear motors and othermotors, inverters, and vacuum chamber robots. The general machinery division covers semiconductor production
equipment, industrial robots, clean room robots for conveying liquid crystal displays (LCDs), and medical equipment.
The electronics division handles connectors, semiconductors, sensors, LEDs, LCDs, and CPU boards.
List of products handled by Sun-Wa Technos by business division
ElectricalmachineryAC servo motors, programmable controllers, linear motors and various other motors, inverters, power conditioners, clean room robots
and vacuum chamber robots for semiconductor manufacturing equipment, power substations and other products, and electricalengineering work

Generalmachinery

Semiconductor manufacturing equipment, industrial robots, clean room robots for conveying liquid crystal panels, valve control
devices, conveyors, wind- and hydro-power equipment, air conditioners and kitchen equipment, various inspection devices, medical
equipment, and other productsElectronics

Power supplies, connectors, semiconductors, sensors, miniature fans, LEDs, LCDs, personal computers for industrial use, circuitboards for central processing units, memory modules, and other products

Source: Prepared by FISCO from Company materials

We can use LCDs as a way of explaining the relationship among the three divisions. LCD plants are equipped witha variety of manufacturing systems. The general machinery division sells these systems (such as glass transport
robots) to corporate customers. Meanwhile, the electrical machinery division sells motors that are parts for thesesystems to the manufacturer of the glass transport robots. The electronics division subsequently sells compact LCD
panels produced by the LCD plant to mobile phone manufacturers. In this business model, the Company handles
all distribution channels from upstream (production equipment parts/materials) to downstream (end products) forthe category of LCD panels due to its coverage of the three fields. The Company also stands out with “two-way
transactions.” It often procures products (such as LCD panels in the example given above) for trading purposes from
customer companies that received its deliveries of manufacturing equipment. The Company calls these “two-way
transactions.”
The general machinery and electronic machinery divisions both rely on capital investments by corporate customers
as the demand driver. Trends affecting demand for electronics division products are corporate production activities
and consumer spending. Furthermore, while the “electronics division” sounds as if it mainly handles electronic
devices, the Company’s electronics division actually has extensive sales of raw materials and parts to the automotive
industry and FA and industrial machinery industry.

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

04 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Sun-Wa Technos Corporation
8137 Tokyo Stock Exchange First Section

22-Dec.-2017https://www.sunwa.co.jp/

Company profile

Customers and demand drivers for each business division
Source of demand

Drivers of demand, macroeconomic
indicators

Plants of customer companies

Capital investment by manufacturers,
machinery orders, and other measures ofindustrial expansion

Manufacture of final products

Consumer spending, industrial production
index, etc.

Products handledElectricalmachinery

Electrical components forcustomers’ products

Generalmachinery

Production lines of customer
companies

Electronics

Components produced bycustomer companies

Source: Prepared by FISCO from Company materials██Results trends
Capital investments are vibrant in a wide range of areas –smartphones, automobiles, semiconductors, and industrial
machinery
1. 1H FY3/18 results
The Company reported 1H FY3/18 results with ¥67,348mn in net sales (+34.7% YoY), ¥1,773mn in operating income(+63.9%), ¥1,951mn in ordinary income (+76.9%), and ¥1,359mn in net income attributable to owners of the parent(+78.0%). It achieved sharply higher sales and earnings and set all-time highs in net sales and net income for 1H.
While the Company raised 1H targets at the announcement of 1Q results, both sales and earnings exceeded the
updated figures. It had upside of 9.5% in sales and 14.4% in operating income compared with the initial outlook.
1H FY3/18 results(¥mn)
FY3/17

1H FY3/18
Growth rateversus initial
forecasts

1H results

Full-year
results

Initialforecasts

Revisedforecasts

Results

Growth rate
(YoY)

Net sales

50,006116,61161,50065,00067,348

34.7%

9.5%

Operating income

1,082

3,014

1,550

1,550

1,773

63.9%

14.4%

Ordinary income

1,102

3,215

1,700

1,700

1,951

76.9%

14.8%

763

1,584

1,050

1,050

1,359

78.0%

29.4%

Net income attributable to owners of
the parent

Source: Prepared by FISCO from the Company’s financial results

Earnings sharply recovered from 2H FY3/17, including almost ¥40bn in net sales in 4Q for an all-time quarterly high.
Continuation of the favorable trend in FY3/18 is a significant factor behind the upbeat results.
Vibrant activity in the industrial electronics and mechatronics industry that is tied to the Company’s core businesses
provided the direct and main source of strong growth in 1H. Demand drivers in this industry broadly include
smartphones, automobiles, semiconductors, industrial machinery, and other areas. The Company steadily harnessed
this broad demand expansion to increase its own earnings thanks to involvement in three different fields – electricalmachinery, electronics, and general machinery.

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

05 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Sun-Wa Technos Corporation

22-Dec.-2017

8137 Tokyo Stock Exchange First Section

https://www.sunwa.co.jp/

Results trends

The Company used a ¥110/$ forex rate in its FY3/18 forecast. The 1H results included benefits from yen depreciation
because the actual 1H rate was ¥112. Specific impacts were about ¥1.6bn on net sales and around ¥70mn on
operating income. These levels show that real demand growth primarily fueled the Company’s advances in 1H.

Achieved double-digit sales growth in the three divisions
Sales are rapidly growing for on-board products in the electronics
division
2. Divisional and regional trends
The Company has three business divisions, and trends in these divisions are reviewed below.
In the electrical machinery division, net sales rose 35.9% YoY to ¥12,390mn on increased supply of electricalequipment for capital investments in the industrial machinery industry. Smartphone-related capital investment interest
remained strong, particularly in China, as explained above. Demand climbed for electrical equipment used in
production systems delivered to these sites.
In the electronics division, net sales expanded 37.1% YoY to ¥50,339mn. This division posted stronger sales ofelectronic parts to automotive and industrial machinery industries and higher sales of electronic equipment to social
infrastructure facilities. We are paying close attention to automotive-related business for the electronics division. The
Company launched the automotive sales department in April 2015, and this department’s sales grew more than
twofold YoY in 2Q FY3/18. While related sales did not actually double because content included some capex-related
products, we think the strong result symbolizes rapid growth in demand for ADAS on-board electronic parts andequipment.
In the general machinery division, net sales increased 10.4% YoY to ¥4,619mn on stronger sales of manufacturing
equipment to the electronic parts industry and transport equipment to the FPD industry. We attribute slightly weakersales growth than in the other two divisions to decline in sales of FPD manufacturing equipment related to the capital
investment cycle.
Net sales trend by division(¥mn)
FY3/16
Electrical machinery

FY3/17

FY3/18

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

1H

3,880

5,080

3,857

5,258

4,575

7,046

6,056

6,333

12,390YOY-25.3%-28.8%-17.3%

-3.4%

17.9%

38.7%

57.0%

20.5%

35.9%

Electronics

16,937

20,186

17,12819,576

20,351

28,764

23,68026,65850,339YOY-16.7%-14.8%-12.7%

-6.2%

20.1%

42.5%

38.2%

36.2%

37.1%

1,935

3,269

1,667

2,518

1,875

3,994

1,617

3,001

4,619

38.8%

19.1%

38.5%

-5.9%

-3.1%

22.2%

-3.0%

19.2%

10.4%

General machinery
YOY
Total net sales
YOY

22,75428,53722,65427,35226,80139,80431,35535,99367,348-15.5%-15.0%-11.1%

-5.6%

17.8%

39.5%

38.4%

31.6%

34.7%

Source: Prepared by FISCO from the Company’s results briefing materials

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

06 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Sun-Wa Technos Corporation

22-Dec.-2017

8137 Tokyo Stock Exchange First Section

https://www.sunwa.co.jp/

Results trends

In regional trends, Japan posted sharply higher sales and profits with net sales at ¥52,385mn (+27.6% YoY) andoperating income at ¥935mn (+24.5%). Main drivers were stronger sales of electric equipment for manufacturingsystems delivered to the industrial machinery industry and electronic parts used by automotive and industrial
machinery industries. Other additions came from manufacturing systems for the electronic parts industry andtransport equipment for the FPD industry.
Asia also recorded sharply higher sales and profits, similar to Japan, with net sales at ¥17,734mn (+49.7% YoY) andoperating income at ¥674mn (+118.3%). Chinese income growth was a major source of Asian gains. Key momentum
sources were increased sales of electronic parts and electric equipment to the industrial machinery industry.
US and Europe reported very robust growth with net sales at ¥3,758mn (+98.6% YoY) and operating income at¥162mn (vs. ¥16mn a year earlier). Income from one-time special demand fueled the very strong growth rates (YoY).
Viewed by quarter, special demand occurred in 1Q and business returned to the ordinary pace in 2Q.
Results trends by geographical market(¥mn)
FY3/16Japan

US andEuropeFY3/18

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

1H

Net sales

18,57021,523

17,89622,005

17,931

23,136

21,962

29,18324,09828,28752,385

YOY

1.7%

0.8%

-5.5%

-5.1%

-3.4%

7.5%

22.7%

32.6%

34.4%

22.3%

27.6%

93

832

34

620

-85

837

260

1,154

154

781

935

-54.6%

8.2%-91.0%-19.9%-

0.6% 664.7%

86.1%

-

-6.7%

24.5%

0.5%

3.9%

0.2%

2.8%

-0.5%

3.6%

1.2%

4.0%

0.6%

2.8%

1.8%

Operating income
YOY
Operating income
marginAsia

FY3/17

Net sales

7,816

8,520

6,384

7,376

5,774

6,068

6,647

11,406

8,110

9,624

17,734

YOY

32.7%

21.3%

-27.8%-34.5%-26.1%-28.8%

4.1%

54.6%

40.5%

58.6%

49.7%

257

242

142

210

141

167

202

306

338

336

674

YOY

16.3%

-26.8%-48.9%-51.0%-45.1%-31.2%

42.3%

45.7%

Operating income
marginOperating income

139.7% 101.0% 118.3%

3.3%

2.8%

2.2%

2.8%

2.4%

2.8%

3.0%

2.7%

4.2%

3.5%

3.8%

Net sales

837

888

722

1,236

1,044

847

1,171

3,260

2,306

1,452

3,758

YOY

8.7%

26.0%

-3.7%

2.6%

24.7%

-4.6%

62.2% 163.8%

120.9%

71.2%

98.6%

22

-14

-7

2

-14

31

1

-3

185

-22

162

YOY

37.5%

-

-

-94.3%

-

-

-

-

-

Operating income
margin

2.6%

-1.6%

-1.0%

0.2%

-1.3%

3.7%

0.1%

-0.1%

8.0%

Operating income

Source: Prepared by FISCO from the Company’s results briefing materials

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

07 18- 868.1%
-1.5%

4.3%

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Sun-Wa Technos Corporation
8137 Tokyo Stock Exchange First Section

22-Dec.-2017https://www.sunwa.co.jp/██Overview and progress of the medium-

term management plan

Aiming for steady attainment of Challenge 1500 goals in engineeringand global SCM solutions businesses
1. Overview of the medium-term management plan
The Company formulates three-year medium-term management plans and strives for longer-term growth throughsteady implementation of the plan. Longer-term growth strategies hence are essentially equivalent to the medium-term management plan.
The Company is currently implementing Challenge 1500, its 9th three-year plan that covers FY3/17-19. The plan
aims to deepen and advance results from the previous JUMP 1200 medium-term plan that ended in FY3/16. The“Challenge 1500” name embodies management’s aim to establish a solid foundation for realizing ¥150bn in net
sales in FY3/20, the Company’s 70th anniversary.
The Company is pursuing three business strategies aimed at achievement of medium-term plan goals - “systems,
equipment, and parts/components sales business,” “engineering business,” and “global SCM solutions business.”“Systems, equipment, and parts/components sales business” overlaps with the three existing divisions. The engineering business and global SCM solutions business deserve attention as strategies that are vital to realizing uniquegrowth in the medium-term plan. Details are given below. We understand the engineering business as a catalyst to
expand income by organically linking and achieving synergies in the Company’s three existing divisions. The global
SCM solutions business has a role of cutting across the three existing divisions, similar to the engineering business,and offers an opportunity with its potential to develop into a standalone business division in the future.
Four basic policies and three business strategies in Challenge 1500

Source: Prepared by FISCO from Company materials

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

08 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Sun-Wa Technos Corporation
8137 Tokyo Stock Exchange First Section

22-Dec.-2017https://www.sunwa.co.jp/

Overview and progress of the medium-term management plan

Likely to update final-year FY3/19 goals in light of healthy progress
through FY3/18
2. Medium-term management plan targets
Demand rapidly recovered and expanded in the latter half of FY3/17, the plan’s initial fiscal year, overshooting theforecast. FY3/18 is the second year of the medium-term plan. The Company realized very healthy progress through1H and has already raised the FY3/18 forecast twice. The latest update puts the net sales target at ¥139,000mn,
which exceeds the plan’s ¥137,000mn goal for FY3/19.
Given these conditions, we think the Company is currently reviewing its plan for the final year of Challenge 1500 and
expect disclosure of a revised outlook by the time of the FY3/18 results announcement in May 2018. We see various
scenarios for income in the new plan depending on the possibility of continuation of recent robust demand and thesales share of fast-growing automotive industry business. Separately from sales, we are interested in management’s
outlook for operating margin that has been a focus of improvement efforts for a lengthy period.
Looking back at JUMP 1200, the previous medium-term management plan, the Company made healthy progress
toward targets through the second year, but missed in the final fiscal year. Management is keenly aware of thisoutcome and putting considerable emphasis on realization of plan targets in the final fiscal year in the current
medium-term plan. While it is obviously important to attain plan targets from the standpoint of laying the groundworkfor the next medium-term plan, setting excessively low goals to ensure attainment could wind up disappointing
investment and shareholder expectations. We think a key point is determining how to strike a balance between
these two aspects.
Challenge 1500 management targets(¥mn)
FY3/17

Net sales
Operating income
Operating income margin
Ordinary income

FY3/18

Managementtargets

Results

Managementtargets

Initial forecasts

Revisedforecasts

FY3/19managementtargets

117,000

116,611

126,000

126,000

139,000

137,000

2,800

3,014

3,500

3,200

3,500

4,300

2.4%

2.6%

2.8%

2.5%

2.5%

3.1%

3,000

3,215

3,700

3,450

3,800

4,500

Ordinary income margin

2.6%

2.8%

2.9%

2.7%

2.7%

3.3%

Forex assumption (JPY/USD)

117

116.5

117

110

110

117

Source: Prepared by FISCO from Company materials

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

09 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Sun-Wa Technos Corporation
8137 Tokyo Stock Exchange First Section

22-Dec.-2017https://www.sunwa.co.jp/

Overview and progress of the medium-term management plan

Expecting sustained healthy expansion of engineering business withsupport from labor shortages and personnel cost reduction
3. Progress of the engineering business(1) Business overview
The engineering business at the Company is a sales approach for “proposing products from the three divisionsof electrical machinery, electronics, and general machinery as system solutions, rather than standalone items.”
We can use the example of a food supermarket to help explain the positioning of the engineering business.
Up to now, the Company had been selling ingredients, such as meat, fish, and vegetables, to customers. The
engineering business, meanwhile, involves preparing these individual ingredients for delivery to customers. The
extent of pro¬cessing can vary from selling a prepared item to a meal box. The Company does not book sales
as the engineering business and related income is allocated to the electrical machinery, electronics, and generalmachinery divisions.
Engineering business

Source: Company website

Deployment of robots (industrial robots), a strong area, offers a typical case of the engineering business. Robots
began with development and deployment in the automotive industry and subsequently spread to the entire industrial community. Although robot deployment is entering a full-fledged adoption stage outside of the automotive
industry, these new users often are unable to sufficiently harness robots after installations. In the engineeringbusiness, the Company seeks to expand income by helping customers to smoothly deploy robots and realize theirbenefits with internal engineers to formulate system concepts and external system integrators to build systems.
We have become increasingly confident in the Company’s ability to succeed in the engineering business for anumber of reasons. Key points are manpower shortages and rising personnel and labor costs. These conditions
obviously exist in Japan. The situation in China is getting worse too, and we expect broadening of the trend
throughout Asia. Industrial robot deployment offers an effective way of dealing with this challenge. We believe
the Company is capable of obtaining major business opportunities in this field if it accumulates experience andenhances service quality in the engineering business.

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

10 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Sun-Wa Technos Corporation
8137 Tokyo Stock Exchange First Section

22-Dec.-2017https://www.sunwa.co.jp/

Overview and progress of the medium-term management plan

Additionally, we see room to expand transactions with end users as new trend facilitated by the engineeringbusiness. Direct counterparts in the engineering business up to now have been equipment manufacturers. The
flow involves equipment manufacturers delivering manufacturing systems to plants and other sites of end users.
End-user transactions for the Company, meanwhile, consist of direct delivery of automation equipment andsystems to end-user companies. The Company had its first case in FY3/17. While its technology and solution
capabilities obviously made this possible, the presence of experts on plant manufacturing lines at the end user
was an important factor too. We do not expect immediate expansion of end-user transactions at other customers,
but there should be potential for repeat orders with the “existing customer,” where success has been achieved,
via application to other plants and other facilities.
As this demonstrates, the engineering business might substantially expand business opportunities, in comparison
to past standalone sales of existing products. The resulting increase in added value that the Company can deliver
to customers is likely to lift profit margin as well.
(2) Update on progress
The Company has been making necessary investments to accelerate the engineering business. Using the example
cited above, it has been expanding capabilities, including external hires of human resources to handle the roleof processing ingredients into prepared items and meals. It restructured in April 2015, establishing the factory
automation sales headquarters (now, the FA system sales department), the industrial solutions headquarters(industrial solutions department), and engineering department and accelerating proposals and sales that cut
through the three product types.
The Company is also seeking to further strengthen the organization in FY3/18. It merged the mechatronics
sales and machinery systems sales departments to create the FA system sales department in April 2017. This
reorganization aims to enhance comprehensive capabilities by combining electrical and general machinery.
Furthermore, in October 2017, it reorganized the engineering department into the sections of robot promotion, IoT
promotion, monitoring and control promotion, automated recognition promotion, electrical equipment technology,
and technology services. This framework aims to make internal collaboration more effective through clarificationof individual team roles. It should also enable the teams to contribute more actively to engineering businessproposals. We think the Company has largely completed efforts to solidify the framework for promotion of theengineering business and arrived at the stage of just accumulating results.
Investments in the engineering business over the past few years have been steadily producing results. The
Company started disclosure of the procurement amount from 2Q to serve as an indicator of the scale of its
engineering business. Net sales in the engineering business work out to this amount plus a certain amount of
profit. The procurement amount steadily increased from about ¥6bn in FY3/16 to roughly ¥9.5bn in FY3/17 andis likely to be about ¥8.8bn in FY3/18. The anticipated YoY decline in the FY3/18 value stems from the existenceof an extraordinary major deal in FY3/17. This business appears to be growing at a healthy pace in terms of thenumber of deals. The Company is pursuing a ¥10bn sales goal for the engineering business and has moved withinreach of attaining the goal in the current medium-term management plan.

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

11 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Sun-Wa Technos Corporation
8137 Tokyo Stock Exchange First Section

22-Dec.-2017https://www.sunwa.co.jp/

Overview and progress of the medium-term management plan㼀㼞㼑㼚㼐㻌㼕㼚㻌㼑㼚㼓㼕㼚㼑㼑㼞㼕㼚㼓㻌㼎㼡㼟㼕㼚㼑㼟㼟㻌㼜㼞㼛㼏㼡㼞㼑㼙㼑㼚㼠㻌㼍㼙㼛㼡㼚㼠㻝㻜㻭㼎㼛㼡㼠㻌¥㻥㻚㻡㼎㼚㻭㼎㼛㼡㼠㻌¥㻤㻚㻤㼎㼚㻲㼅㻟㻛㻝㻣

㻲㼅㻟㻛㻝㻤㻌㻱

㻤㻭㼎㼛㼡㼠㻌¥㻢㻚㻜㼎㼚㻢㻠㻞㻜㻲㼅㻟㻛㻝㻢

Source: Prepared by FISCO from the Company’s results briefing materials

The engineering business is contributing to profits as well. It generates margin from the added value of the“solution” in contrast to selling agent business as a trading company. This aspect supports expectations forrealization of higher margin. We think the Company is making steady progress toward achieving its initial goal inearnings thus far. The Company has already raised the FY3/18 forecast twice versus the period-start view, as
noted earlier, and is pointing to profits from the engineering business as an important source.

Within reach of ¥10bn in net sales thanks to the tailwind of increased
customer outsourcing needs
4. Progress on the global SCM solutions business
The Company prepared for global SCM solutions during JUMP 1200, the previous medium-term management
plan, and officially started this business in the current medium-term plan period. Going back further, however, theCompany had already been offering procurement agent, logistics agent, and delivery management services for sometime. The global SCM solutions business is an advanced version of these past services that leverages the Company’s
overseas network (13 overseas local entities and 25 global sites) to create a profitable business.
We think the global SCM solutions business can be implemented in a variety of ways. One example is described
here. The Company delivers other items required by the customer at the same time, regardless of whether they
are the Company’s catalog products or not, in addition to the ordered product when delivering products based onan order from the customer. It intends to operate this service as a profitable business, obtaining margin on eachof the products.

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

12 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Sun-Wa Technos Corporation
8137 Tokyo Stock Exchange First Section

22-Dec.-2017https://www.sunwa.co.jp/

Overview and progress of the medium-term management plan

Conceptual image of global SCM solutions business

Source: Company website

The Company is making healthy progress in expansion of the global SCM solutions business, similar to engineering.
Net sales totaled about ¥4.1bn in FY3/17, the FY3/18 outlook is around ¥6.7bn, and this business is expected to
grow further to about ¥8.6bn in FY3/19. The Company is aiming for ¥10bn in sales for the global SCM solutions
business too as a goal and already has an outlook for reaching this level.
Upbeat conditions in the global SCM solutions business reflect the lengthy history and accumulated knowhow inthis area mentioned above as well as the reality of manpower shortages in global logistics, inventory management,materials procurement, and other areas, even at large manufacturers (some observers might say even more soat large manufacturers) because past reorganization reforms and restructuring processes targeted these areas.
Meanwhile, large companies are more likely to frequently move businesses across countries in pursuit of efficient
production operations. We think the overall environment is moving in a direction that increases demand for theCompany’s global SCM solutions business.
Expansion of the global SCM solutions business is clearly positive for the Company. An important point is that it
reliably generates profit because of accumulated knowhow over many years amid rising demand for these services.
Nevertheless, profit margin appears to be lower than in the Company’s other businesses and rapid growth in related
sales is likely to reduce overall profitability. The Company listed improved profitability as an important goal in thecurrent medium-term management plan. We will be closely watching how it strikes a balance between expansionof business scale and securing profitability.

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

13 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Sun-Wa Technos Corporation
8137 Tokyo Stock Exchange First Section

22-Dec.-2017https://www.sunwa.co.jp/

Overview and progress of the medium-term management plan㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼓㼘㼛㼎㼍㼘㻌㻿㻯㻹㻌㼟㼛㼘㼡㼠㼕㼛㼚㼟㻌㼎㼡㼟㼕㼚㼑㼟㼟㻌㼟㼍㼘㼑㼟㻝㻜㻭㼎㼛㼡㼠㻌¥㻤㻚㻢㼎㼚㻤㻭㼎㼛㼡㼠㻌¥㻢㻚㻣㼎㼚㻢㻭㼎㼛㼡㼠㻌¥㻠㻚㻝㼎㼚㻠㻞㻜㻲㼅㻟㻛㻝㻣

㻲㼅㻟㻛㻝㻤㻌㻱

㻲㼅㻟㻛㻝㻥㻌㻱

Source: Prepared by FISCO from the Company’s results briefing materials██Business outlook
Raised FY3/18 forecast but still has upside room
The Company forecasts ¥139,000mn in net sales (up 19.2% YoY), ¥3,500mn in operating income (up 16.1%),¥3,800mn in ordinary income (up 18.2%), and ¥2,650mn in net income attributable to owners of the parent (up67.3%) in FY3/18. The Company raised the FY3/18 forecast at 1Q and 2Q announcements in reaching current
targets.
Overview of FY3/18 forecasts(¥mn)
FY3/17

FY3/18Full year

1H

Results

Results

Forecasts

2H

Full year
Growthrate (YoY)

Initialforecast

Growthrate (YoY)

Updatedforecast

Growthrate (YoY)

116,611

67,34871,6527.6%

126,000

8.1%

139,000

19.2%

Operating income

3,014

1,773

1,727

-10.6%

3,200

6.2%

3,500

16.1%

Ordinary income

3,215

1,951

1,849

-12.5%

3,450

7.3%

3,800

18.2%

Net income attributable to owners of
the parent

1,584

1,359

1,291

57.2%

2,150

35.7%

2,650

67.3%

Net sales

Source: Prepared by FISCO from the Company’s financial results

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

14 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Sun-Wa Technos Corporation
8137 Tokyo Stock Exchange First Section

22-Dec.-2017https://www.sunwa.co.jp/

Business outlook

To attain the updated target, the Company needs ¥71,652mn in net sales (+7.6% YoY), ¥1,727mn in operating
income (-10.6%), and 2.4% operating margin in 2H. While it appears that these levels could be realized without
difficulty in 2H based on related growth rates (YoY) and operating margin thus far, the Company is adhering to a
cautious stance.
We think one reason for the caution is a tough sales hurdle from 2H FY3/17. In particular, 4Q sales totaled¥39,804mn, an all-time high on the verge of ¥40bn. While setting a new record is well within reach if recent
momentum continues, the Company has taken a stance of avoiding easy optimism even toward the relatively near
future.
The Company is also taking a cautious approach to earnings and does not see a 10.6% YoY decline in 2H operating
margin as conservative. This view factors in growth in automotive-related (facilities and on-board electronic parts)
sales. Margin is often very low in automotive businesses, as is widely known, and this is true at the Company aswell. Management finds the current 2H outlook reasonable because of concern about decline in margin from lessattractive product mix related to growth in automotive sales.
We advise a favorable view of the Company’s cautious stance described above and are convinced by management’s
explanation. Nevertheless, we also believe the current 2H outlook is overly conservative.
We apply the following logic. The Company’s outlook takes a realistic view of low margin in automotive-related business. It is difficult to imagine a scenario in which margin exceeds expectations and operating income and following
figures beat the forecast. Sales upside, meanwhile, is very possible. This reflects our view that robust demand for
the Company’s products is likely to continue from 2H FY3/17 and 1H FY3/18 during 2H. Smartphones remain an
important final product, but automobiles and semiconductors are also contributing in this cycle. The Company
benefited from these industries on multiple occasions in the past, though content has considerably changed.
In the automotive business, demand for on-board parts related to ADAS and EVs has grown into a major area,
besides capital investment activity, and the Company is effectively tapping into this wave as explained above. In
semiconductors, the Company’s involvement is capital investments, and this business is receiving support fromtwo major structural trends of the shift from HDDs to SSDs and the emergence of China’s semiconductor industry.
With these conditions, we expect a healthy business environment for the Company to continue in 2H, even withsome temporary fluctuations. We thus think the Company has a good chance of beating its ¥139,000mn target for
FY3/18 net sales.
Sales upside works out to about ¥2,000mn at a double-digit sales growth rate in 2H FY3/18. We estimate operating
income upside of ¥50mn using a 2.5% operating margin in this case. In fact, however, margin on excess sales(¥2,000mn in this case) often greatly exceeds the Company average and comes close to incremental margin (grossmargin in the Company’s case as a trading company). Operating income upside might reach about ¥200mn fromthis perspective. We believe this amount is enough to trigger a positive surprise.

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

15 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Sun-Wa Technos Corporation
8137 Tokyo Stock Exchange First Section

22-Dec.-2017https://www.sunwa.co.jp/

Business outlook

Summary income statement(¥mn)
FY3/18

FY3/15

FY3/16

FY3/17

1H

Full year E

Net sales

111,276

105,748

116,611

67,348139,000

YoY

9.8%

-5.0%

10.3%

34.7%

19.2%

Gross profit

13,98813,256

14,255

7,945

-

12.6%

12.5%

12.2%

11.8%

-

10,516

10,812

11,240

6,172

-

YoY

11.1%

2.8%

4.0%

17.6%

-

Ratio of SG&A expenses to sales

9.5%

10.2%

9.6%

9.2%

-

3,471

2,444

3,014

1,773

3,500

YoY

8.1%

-29.6%

23.3%

63.9%

16.1%

Ratio of SG&A expenses to sales

3.1%

2.3%

2.6%

2.6%

2.5%

3,761

2,645

3,215

1,951

3,800
18.2%

Gross profit margin
SG&A expenses

Operating income

Ordinary income

9.4%-29.7%

21.6%

76.9%

2,466

1,690

1,584

1,359

2,650

YoY

13.8%

-31.5%

-6.3%

78.0%

67.3%

EPS (¥)

171.83117.76113.64

98.11

191.22

Dividend (¥)

26.00

28.00

28.00

14.00

28.00

YoY
Net income attributable to owners of the parent

Source: Prepared by FISCO from the Company’s financial results

Summary balance sheet(¥mn)
FY3/14

FY3/15

FY3/16

FY3/172Q FY3/18
59,94845,32949,23946,85755,507

Cash and deposits

6,937

7,584

6,359

6,759

7,510

Notes and accounts receivable

33,07534,41933,00634,141

34,810Current assets

8,369

9,509

8,581

9,309

10,857

Tangible fixed assets

4,038

3,879

3,788

3,056

3,132

Intangible fixed assets

76

243

240

222

195

4,254

5,386

4,553

6,030

7,528

Total assets

53,69858,74855,43964,81670,805Current liabilities

30,73532,37028,691

36,59637,528Notes and accounts payable – trade25,91727,496

24,732

31,18232,305

Short-term loans payable, etc.

2,528

2,782

2,317

2,489

2,488

4,309

4,426

4,484

4,581

7,539

2,205

2,100

2,400

2,300

4,700

Shareholders’ equity

16,80718,92920,217

21,03422,199

Capital stock

2,553

2,553

2,553

2,553

2,553

Capital surplus

1,958

1,958

1,958

1,958

1,958

Retained earnings

12,35014,472

15,761

16,95018,116

Non-current assets

Investments and other assets

Non-current liabilities
Long-term loans payable

-53

-54

-54

-427

-427

Net assets

18,654

21,951

22,26323,63725,737

Total liabilities and net assets

53,69858,74855,43964,81670,805

Treasury shares

Source: Prepared by FISCO from the Company’s financial results

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

16 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Sun-Wa Technos Corporation
8137 Tokyo Stock Exchange First Section

22-Dec.-2017https://www.sunwa.co.jp/

Business outlook

Cash flow statement(¥mn)
FY3/14

FY3/15

FY3/16

FY3/17

FY3/18 2Q

Cash flow from operating activities-1,374

Cash flow from investing activities

-127

1,353

-60

1,679

-1,301

-444

-384

-235

Cash flow from financing activities

-66

769

-470

-654

-818

2,144

Cash and cash equivalent conversion difference

236

208

-127

-226

-26

Cash and cash equivalent change

-496

647

-1,225400

750

Cash and cash equivalent period-start balance

6,949

6,453

7,100

5,875

6,275

Cash and cash equivalent period-end balance

6,453

7,100

5,875

6,275

7,026

Source: Prepared by FISCO from the Company’s financial results██Shareholder return policy
Possible dividend revision, though expecting priority on stable
increases
The Company’s basic policy is to provide returns to shareholders in the form of dividends. Management prioritizes
providing stable, continuous dividends, as demonstrated in its track record to date. While remaining very aware of
the need for stable dividends, the Company has also increased them in keeping with earnings growth.
The Company disclosed a FY3/18 dividend target of ¥28 (with an interim dividend of ¥14 and a period-end dividendof ¥14), which is flat YoY, and decided to pay a ¥14 interim dividend in line with the period-start outlook. It raised the
FY3/18 outlook and currently expects ¥191.22 in net income per share. The estimated dividend payout ratio at thispoint has dropped to 14.6% due to maintaining the dividend target at the period-start level of ¥28 for the full year.
We see a reasonable chance of the Company raising the dividend target in light of the past. However, its stanceon the dividend gives priority to stable increases and does not alter the dividend based on profit fluctuation using
a fixed dividend payout ratio. We expect the Company to cautiously approach changes to the dividend outlook inlight of business conditions in not only FY3/18, but also from FY3/19 and advice investors to avoid overly simplisticbuild-up of dividend hike expectations.

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17 18

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Sun-Wa Technos Corporation

22-Dec.-2017

8137 Tokyo Stock Exchange First Section

https://www.sunwa.co.jp/

Shareholder return policy㻺㼑㼠㻌㼜㼞㼛㼒㼕㼠㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻘㻌㼐㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻺㼑㼠㻌㼕㼚㼏㼛㼙㼑㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻌㻔㼘㼑㼒㼠㻕(¥)

㻰㼕㼢㼕㼐㼑㼚㼐㻌㻔㼘㼑㼒㼠㻕㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻌㻔㼞㼕㼓㼔㼠㻕㻞㻜㻜㻚㻜㻜
㻝㻤㻜㻚㻜㻜

㻟㻜㻚㻜㻑㻝㻣㻝㻚㻤㻟

㻝㻢㻞㻚㻥㻤

㻞㻟㻚㻤㻑

㻞㻠㻚㻢㻑
㻝㻡㻡㻚㻝㻠

㻝㻢㻜㻚㻜㻜
㻝㻠㻜㻚㻜㻜

㻝㻝㻣㻚㻣㻢

㻝㻞㻜㻚㻜㻜
㻝㻜㻜㻚㻜㻜

㻝㻟㻚㻡㻑

㻝㻤㻚㻜㻑

㻝㻝㻟㻚㻢㻠

㻝㻡㻚㻝㻑

㻞㻡㻚㻜㻑
㻞㻜㻚㻜㻑
㻝㻡㻚㻜㻑

㻤㻜㻚㻜㻜
㻝㻜㻚㻜㻑

㻢㻜㻚㻜㻜
㻠㻜㻚㻜㻜

㻞㻞㻚㻜

㻞㻢㻚㻜

㻞㻤㻚㻜

㻞㻤㻚㻜

㻞㻤㻚㻜

㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣

㻲㼅㻟㻛㻝㻤㻌㻱

㻡㻚㻜㻑

㻞㻜㻚㻜㻜
㻜㻚㻜㻜

㻜㻚㻜㻑

Source: Prepared by FISCO from the Company’s financial results██Information security
Utilizes a wide range of measures to manage customer information
As a listed company, the Company is keenly aware of the need for information security to combat cyber-terrorism andother threats. It adopts a wide range of measures that leverage strong IT-related knowledge as a technology-centric
trading company. We think losses and leaks of private information and credit card numbers are the primary risks
in information security in the minds of investors. From this perspective, the Company’s risk exposure related to
information security is relatively low because it does not operate B-to-C business.

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

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Disclaimer
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