COMPANY RESEARCH AND ANALYSIS REPORT

SUN-WA TECHNOS CORPORATION
8137
Tokyo Stock Exchange Prime Market

26-Jan.-2024
FISCO Ltd. Analyst

Yuzuru SatoFISCO Ltd.
https://www.fisco.co.jp

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

26-Jan.-2024
https://www.sunwa.co.jp/en/ir/index.html■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. 1H FY3/24 results achieved record highs backed by an ample orders backlog. ..........................................

01

2. In the FY3/24 full-year forecast, only net sales have been revised downward while ordinary profit has
been revised upward because of factors including the recording of a foreign exchange gain due toeffects of yen depreciation .........................................................................................................................

01

3. Focusing on improving profitability and enhancing shareholder return to quickly achieve a PBR ofover 1.0x.. .............................................. ......................................................................................................

02■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 03
1. 1H FY3/24 results overview................... ......................................................................................................

03

2. Segment and regional trends.......................................................................................................................

05

3. Outlook for FY3/24 results..................... ......................................................................................................

08■Long-term vision and medium-term management plan------------------------------------------------------- 09
1. Long-term vision..........................................................................................................................................

09

2. Progress of Medium-term plan, “SNS2024 (Sun-Wa New Stage 2024)” . ....................................................

10

3. Measures to enhance corporate value... ......................................................................................................

16■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 18

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

26-Jan.-2024
https://www.sunwa.co.jp/en/ir/index.html■ SummaryEngaged in improving profitability and enhancing shareholder return
to quickly achieve a PBR of over 1.0x
SUN-WA TECHNOS CORPORATION <8137> (hereinafter, “the Company”) is an independent trading company that
handles equipment, devices and parts related to industrial electronics and mechatronics. The Company has steadily
expanded its businesses by leveraging coverage of three major areas (electrical machinery, electronics, and generalmachinery) and two-way trade in which it sells equipment and materials for manufacturers’ production lines andthen procures the products made by these manufacturers. In terms of the number of business partners, customers
amount to around 3,100 companies while suppliers amount to around 2,000 companies on a non-consolidated
basis. The Company’s main suppliers are YASKAWA Electric Corporation <6506> and OMRON Corporation <6645>.
1. 1H FY3/24 results achieved record highs backed by an ample orders backlog
In consolidated results for 1H FY3/24, net sales increased 5.3% year on year (YoY) to ¥88,867mn and operating
profit rose 4.3% to ¥3,442mn, for increases in sales and profit that surpassed the Company’s forecasts (net salesof ¥85,300mn and operating profit of ¥2,600mn) and set record highs for consecutive periods. In the overall manufacturing sector, orders received declined by 25.8% to ¥75,877mn due to a difficult business environment caused
by factors such as the continuation of inventory adjustments as a repercussion of the accelerated procurementof parts. Despite this, sales and profits rose due to the capture of demand from China for products for the solar
power-related industry, as well as sales recorded from previous fiscal years’ backlog orders. The orders backlog
as of the end of 1H FY3/24 had decreased slightly from the end of the previous fiscal year to ¥68,618mn, but thisis equivalent to four to five months’ worth of sales and is still relatively high compared to pre-pandemic levels (twoto three months’ worth).
2. In the FY3/24 full-year forecast, only net sales have been revised downward while ordinary profit has beenrevised upward because of factors including the recording of a foreign exchange gain due to effects of yen
depreciation
For FY3/24 consolidated results, the Company is forecasting net sales to decrease by 8.0% YoY to ¥166,500mn andoperating profit to decrease by 27.8% to ¥5,510mn. In consideration of factors such as the slowdown in the Chinese
economy and the effects of prolonged inventory adjustments, the forecast for net sales has been revised downwardby ¥9,300mn compared to the initial forecast. However, the forecast for operating profit remains unchanged as the
progress made in 1H exceeded the initial forecast. There are no indications yet that the current situation regardingorders received will bottom out, as net sales in the full-year forecast for FY3/24 have been revised downward while
ordinary profit has been revised upward because of factors including the recording of a foreign exchange gain due
to effects of yen depreciation. As inventory levels for parts differ for each customer, ordering levels also vary, evenfor customers within the same industry. This makes it extremely difficult to forecast when the orders situation will
begin to recover. In 2H, it looks likely that the Company will secure sales by working through its backlog. The only
area expected to perform strongly in 2H is on-board electrical parts for the automotive industry due to an increasein auto production. The average assumed exchange rate for the period is ¥137.9 to the U.S. dollar. It was ¥134.85
in FY3/23. Yen depreciation of ¥1 to the U.S. dollar positively affects profit by around ¥60mn, and given that the rate
is currently trending around ¥150 to the U.S. dollar, the assumption allows some room for increases.

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01 20

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

26-Jan.-2024
https://www.sunwa.co.jp/en/ir/index.html

Summary

3. Focus on improving profitability and enhancing shareholder returns to quickly achieve a PBR of over 1.0x
Under its three-year medium-term management plan, “SNS2024 (Sun-Wa New Stage 2024),” which began in
FY3/23, the Company is implementing the following as basic policies: 1) Focus on growth fields that requireinnovation, 2) Provide even higher value-added products and new solutions, and 3) Help to realize a sustainable
society through sustainability management. For FY3/25, the plan’s final year, it set the goal of operating profit of¥7.0bn. It will allocate resources to areas that are forecast to grow, including semiconductor production equipment,
robots and mounters, machine tools, factory automation equipment, on-board products, and facilities, and it will
work to increase the share of sales of its products to existing customers through new products and technology
proposals, while at the same time cultivating new customers. It is also engaging the new market of India throughthe establishment of a local affiliate, which began operation on September 1, 2023, and it plans to provide support
to Japanese-owned companies developing business in the country. As a favorable market environment is forecast
for FY3/25, we at FISCO see the Company’s targets as achievable. Furthermore, the Company is undertaking three
initiatives as part of its strategy to quickly achieve a PBR of over 1.0x. These include: 1) Enhancing profitability
through the steady execution of the medium-term management plan, promoting “SNS2024 (Sun-Wa New Stage2024),” 2) Enhancing shareholder returns, and 3) Expanding investor and shareholder relations activities. The
Company is also establishing alliances and other partnerships as one of the measures under its growth strategy. On
October 30, 2023, it formed a business partnership with MTEC CO.,LTD., which develops robotics systems among
other operations, through which the companies will develop solutions packages aimed at enhancing the convenienceof industrial robots and then use the Company’s sales network to make industrial robot proposals that include thesepackages to companies considering introducing industrial robots. The Company is focusing on expanding salesof industrial robots, which it sees as a growth area, and it is aiming to capture new orders by offering added value.
With regard to its policy on shareholder returns, the Company intends to pay a dividend based on a target payout
ratio of 25-35% and will also buy back shares on a flexible basis depending on the timing and financial conditions.
Net assets per share at the end of 1H FY3/24 was ¥3,056, which is a PBR of just 0.7x. The Company intends towork to rectify this.
Key Points
In 1H FY3/24, new record-high sales and profits achieved as results exceeded targets, backed by an ample
orders backlog• In the FY3/24 full-year forecast, only net sales have been revised downward while ordinary profit has beenrevised upward because of factors including the recording of a foreign exchange gain due to effects of yen
depreciation• The Company is engaging in alliances and other partnerships to achieve its goal of operating profit of ¥7.0bn in
FY3/25•

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02 20

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

SUN-WA TECHNOS CORPORATION

26-Jan.-2024

8137 Tokyo Stock Exchange Prime Market

https://www.sunwa.co.jp/en/ir/index.html

Summary

Results trends
Net sales (left)

Operating profit (right)

(¥mn)

(¥mn)
181,013200,000

7,630

154,414150,000

137,943

8,000
166,500
6,000

134,769
5,510
4,804

100,000

50,000
1,846

4,000

2,000

2,152

0

0
FY3/20FY3/21

FY3/22

FY3/23

FY3/24 (E)Source: Prepared by FISCO from the Company’s financial results■ Results trends
In 1H FY3/24, new record-high sales and profits achieved as results
exceeded targets, backed by an ample orders backlog
1. 1H FY3/24 results overview
In 1H FY3/24, the Company achieved consolidated results that exceeded its forecast, with net sales of ¥88,867mn(up 5.3% YoY), operating profit of ¥3,442mn (up 4.3%), ordinary profit of ¥3,700mn (up 3.5%) and profit attributableto owners of parent of ¥3,075mn (up 21.7%), which set new record highs for consecutive 1H.
1H FY3/24 results (consolidated)(¥mn)
1H FY3/23
Results

1H FY3/24% of sales

Company’s
forecast

Results% of sales

YoY

vs. forecast

Net sales

84,356-85,30088,867

-

5.3%

4.2%

Gross profit

10,733

12.7%-

11,179

12.6%

4.2%

-

SG&A expenses

7,433

8.8%

-

7,736

8.7%

4.1%

-

Operating profit

3,299

3.9%

2,600

3,442

3.9%

4.3%

32.4%

Ordinary profit

3,575

4.2%

2,700

3,700

4.2%

3.5%

37.0%

34

-

-

566

-

-

-

2,528

3.0%

1,870

3,075

3.5%

21.7%

64.4%

Orders received

102,242--

75,877--25.8%-

Orders backlog

90,967--

68,618--24.6%-

Extraordinary profit and loss
Profit attributable to owners of parent

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

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03 20

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

SUN-WA TECHNOS CORPORATION

26-Jan.-2024

8137 Tokyo Stock Exchange Prime Market

https://www.sunwa.co.jp/en/ir/index.html

Results trends

In the overall manufacturing sector, orders received declined by 25.8% to ¥75,877mn due to the continuation of
inventory adjustments as a repercussion of the accelerated procurement of parts. Despite this, sales and profitsrose due to the capture of demand from China for products for the solar power-related industry, as well as sales
recorded from previous fiscal years’ backlog orders. Looking at order trends on a quarterly basis, there has beena downward trend since orders peaked in 1Q FY3/23 at ¥55,127mn, and as of 2Q FY3/24, orders had returned
to roughly the same level as three years ago at ¥33,896mn. Although this was still a fine performance, it showsthat the demand created by accelerated procurement has disappeared. From the start of the COVID-19 pandemic
onward, the effects of semiconductor shortages and mounting supply chain risks led to accelerated procurementby companies in order to secure parts and up to the first half of 2022, the Company rapidly accumulated orders. At
the end of 2Q FY3/23, the orders backlog was equivalent to about six months’ worth of sales. As of the end of 2Q
FY3/24, the Company has been working through its backlog and it is now equivalent to over four months’ worth ofsales. Considering that pre-pandemic levels were at a level equivalent to just over two months’ worth of sales, forthe time being, even if orders received continues to decline, the Company can still secure sales by working throughthe orders backlog.

Orders received, net sales, and orders backlog by quarter
Orders received(¥mn)
100,000

Orders backlog

92,44090,967

89,100Net sales

81,60881,32680,00068,618

39,10860,000 55,127

46,77345,24847,11548,24549,88339,05140,00046,60542,262
41,98133,89620,000
0
1Q

2Q

3Q

4Q

FY3/23

1Q

2Q
FY3/24

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

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04 20

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

SUN-WA TECHNOS CORPORATION

26-Jan.-2024

8137 Tokyo Stock Exchange Prime Market

https://www.sunwa.co.jp/en/ir/index.html

Results trends

Orders backlog trends
Orders backlog (left)(¥mn)

Backlog divided by average monthly sales (right)

100,000

7.5

6.5

80,000

5.3

5.1

4.4

6.0
4.6

60,00040,000

4.5
2.4

2.1

2.3

2.1

2.1

3.0

2.3

20,000

1.5

0

0.0
1H

2H

FY3/191H

2H

FY3/201H

2H

FY3/21

1H

2H

FY3/22

1H

2H

FY3/23

1H
FY3/24

Note: Average monthly sales = Total sales for the six-month period divided by 6
Source: Prepared by FISCO from the Company’s supplementary material on financial results

Operating profit increased by around ¥143mn YoY. Looking at the main factors behind changes, the worsening of
the gross profit margin (down 0.1ppt YoY) to ¥272mn was the result of an increase in SG&A expenses to ¥186mn
as a factor decreasing profit, while factors increasing profit were the effects of a ¥510mn increase in sales and¥91mn increase due to the depreciation of the yen. The average exchange rate was ¥134.8 to the U.S. dollar. The
yen has accordingly weakened by ¥12 to the U.S. dollar compared to the previous fiscal year, when it stood at¥122.8 to the U.S. dollar, which has resulted in a ¥127mn increase in profits for the Company’s Japanese businesscompanies. Furthermore, although its overseas business companies have seen a ¥100mn decrease in profits throughstocking and selling transactions, as the year-end exchanges rate had a cheaper yen price than the previous fiscal
year’s year-end rates, this difference boosted profit by ¥64mn. This exceeds the Company’s forecast by ¥842mn.
In addition to an increase in gross profit driven by an upswing in sales, another factor was the curbing of SG&A
expenses through measures to enhance profitability, such as the use of online meetings and the streamlining ofoperations through the introduction of RPA.
Also, the Company has been actively revising its cross-shareholdings portfolio as a means of increasing corporate
value and in 1H FY3/24, it recorded an extraordinary income of ¥557mn in gain on sale of investment securities.
Funds from these sales will be allocated to growth investments and shareholder return and the Company intends
to continue selling its cross-shareholdings going forward.

Sales increased in all three business segments of electricalmachinery, electronics, and general machinery, and by region, sales
and profits both grew by double figures in Asia
2. Segment and regional trends
The Company discloses net sales after breaking them down into the three business segments of electrical machinery,electronics, and general machinery, according to the products handled. In addition, the Company discloses net
sales and operating profit as segment information by region.

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05 20

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

26-Jan.-2024
https://www.sunwa.co.jp/en/ir/index.html

Results trends(1) Trends in net sales by business segment
Main products handled by the electrical machinery segment are servo motors, motion controllers, inverters,machine controllers and power conditioners. The Company primarily handles products from YASKAWA Electric
Corporation. Despite decreases in sales by electrical machinery for the semiconductor production equipment
industry as well as factory automation industry and control equipment for the solar power-related industry, net
sales expanded by 11.7% YoY to ¥18,807mn, a record high, due to an increase in sales by electrical machinery
for the solar power-related industry in China.
The main products in the electronics segment are wide ranging, including general electronic parts such as
capacitors, connectors, relays and switches, as well as fan motors, stepping motors, LEDs, and power supplies.
Net sales in this segment increased slightly by 1.0% YoY to ¥63,103mn. Decreases in sales of electronic parts
for the home electrical appliance-related industry and the amusement-related industry, connectors and electronic
devices for the semiconductor production equipment industry and the factory automation industry were offset byincreases in sales of electronic parts for the factory automation industry, precision equipment-related industry andautomotive on-board product industry, and connectors for the office machinery industry. However, there was a
decline of 13.7% compared to 2H FY3/23 due to inventory adjustments by customers becoming more widespread.
The main products in the general machinery segment include robots from YASKAWA Electric Corporation, as
well as transfer device and reduction gears. Net sales rose 38.1% YoY to ¥6,957mn, setting a record high. This
was thanks to increased sales of facilities equipment to the automotive-related industry, and transfer device tothe semiconductor production equipment industry.

Net sales by business segment
Electrical machinery(¥mn)

Electronics

General machinery
96,657100,000
90,00080,00070,97870,0004,284

83,43684,356

4,276

5,036

62,35462,48816,806

16,831

2H

1H

6,610

88,867

6,957

60,00050,00040,00073,102

63,10352,301

30,00020,00010,00014,392

16,94618,80701H
FY3/222H
FY3/23

1H
FY3/24

Source: Prepared by FISCO from the Company’s results briefing materials(2) Trends in net sales and profits by segment
In Japanese business, net sales decreased 6.8% to ¥60,577mn and operating profit declined 8.5% to ¥2,087mn.
Although sales of electronic parts to the automotive-related and precision equipment-related industry, facilities
equipment to the automotive-related industry, and conveyers to the semiconductor production equipment industry
all increased, sales of electrical machinery and electronic parts to the factory automation industry, electricalmachinery and connectors to the semiconductor production equipment industry, and control equipment to thesolar power-related industry decreased.

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06 20

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

26-Jan.-2024
https://www.sunwa.co.jp/en/ir/index.html

Results trends

In the Asian business, net sales increased 19.8% to ¥34,136mn and operating profit rose 14.7% to ¥1,305mn.
Sales of electrical machinery to the solar power-related industry, electronic parts to the factory automationindustry, and connectors to the office machinery industry increased, covering a decrease in sales of electronicparts to the home electrical appliance-related industry and electrical machinery to the semiconductor production
equipment industry. In China, which accounts for more than 70% of the Company’s sales in Asia, although thesales for local Japanese companies was sluggish, the Company captured demand for facilities investment fromsolar panel manufacturers, which made a significant contribution to the increases in sales and profits. In the
global SCM solutions business*, which had experienced booming demand in the same period of the previous
fiscal year driven by semiconductor shortages and mounting supply chain risks, net sales decreased as efforts
by customers to secure parts came to an end. Additionally, the Company has established a local affiliate in India(Bengaluru), which began operations with a staff of four in September 2023. The plan is to develop business withJapanese companies expanding into the area and the Company is considering establishing more locations going
forward. The Indian government is supporting the cultivation of not only auto manufacturers, but also electronics
manufacturers, so demand for products such as electrical machinery, electronic parts, and facilities equipment is
expected to grow, presenting a considerable business opportunity.
*	The global SCM solutions business is a contract service that handles materials procurement and distribution for customers
using the Company’s global network. More companies are using the service in part because supply chain risk materialized
during the COVID-19 pandemic, meaning it was difficult for them to procure parts and materials. There are also increasingcases of the service being utilized by companies when relocating their production sites because of the complexity of
coordinating with suppliers. Customers also benefit from the service because it lowers procurement costs and shortens
lead times.

In Europe and the U.S., net sales increased by 0.8% YoY to ¥3,341mn, and operating profit turned positive at¥133mn (compared to a loss of ¥40mn in the same period last year). Net sales increased slightly as increases
in sales of electronic parts for the factory automation and automotive-related industries covered decreases insales of electronic parts for the amusement-related industry and facilities equipment for the automotive-relatedindustry. Factors behind the profit increase include the effects of lower logistics costs accompanying a fall inocean freight rates.
Net sales and operating profit by segment(¥mn)
FY3/22

FY3/23

1H

2H

1H

2H

FY3/24
1HJapan

54,222

61,58964,99468,71860,577

-6.8%

Asia

22,81029,40628,49835,86634,13619.8%

Europe/ U.S.

3,010

3,204

3,313

3,799

3,341

0.8%

375

373

335

511

273

-18.5%

Adjustment-9,440-11,135-12,784-12,238-9,460-Total

70,97883,43684,35696,65788,867

5.3%

1H

2H

1H

2H

FY3/24
1H

Japan

1,187

1,862

2,280

3,074

2,087

-8.5%

Asia

892

1,032

1,138

1,443

1,305

14.7%

Europe/ U.S.

13

-121

-40

-8

133

-

Other

9

-25

-10

7

-19

-

Adjustment

5

-49

-68

-185

-64

-

2,108

2,696

3,299

4,331

3,442

4.3%

(Net sales)

Other(Operating profit)

Total

FY3/22

FY3/23

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

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07 20

YoY

YoY

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

26-Jan.-2024
https://www.sunwa.co.jp/en/ir/index.html

Results trends

Net sales in 1H FY3/24 (• = positive YoY change, • = negative YoY change)
Japan

Asia

Europe/ U.S.

Electrical
GeneralElectronics
machinerymachinery

Electrical
GeneralElectronics
machinerymachinery

Electrical
GeneralElectronics
machinerymachinery

Semiconductor-related industry•

Solar power-related industry•

Factory automation industry

•

•

•

•
•
•

•

Automotive-related industry(on-board products)

•

•

•

Automotive-related industry(equipment)

•

•

•

Precision equipment-related industry
Office machinery industry•

Home electrical appliance-relatedindustry•

Amusement-related industry•

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

In the FY3/24 full-year forecast, only net sales have been revised
downward while ordinary profit has been revised upward becauseof factors including the recording of a foreign exchange gain due toeffects of yen depreciation
3. Outlook for FY3/24 results
In terms of the outlook for FY3/24 consolidated results, the Company forecasts decreased net sales and profits,with net sales of ¥166,500mn (down 8.0% YoY), operating profit of ¥5,510mn (down 27.8%), ordinary profit of¥5,860mn (down 23.6%), and profit attributable to owners of parent of ¥4,570mn (down 16.8%). In considerationof factors such as the slowdown in the Chinese economy and the effects of prolonged inventory adjustments by
manufacturing companies, the forecast for net sales has been revised downward by ¥9,300mn compared to theinitial forecast. However, the forecast for operating profit remains unchanged as the progress made in 1H exceeded
the initial forecast. The forecast for ordinary profit has been revised upward by ¥170mn the recording of a foreignexchange gain resulting from yen depreciation, while profit attributable to owners of parent has been revised upwardby ¥620mn due to the recording of gain on sale of investment securities.
FY3/24 consolidated results forecast(¥mn)
FY3/23Results

FY3/24% of sales

Initialforecast

Revisedforecast% of sales

YoY

Revisedvalue

Progress asof 2Q (%)

181,013-

175,800

166,500--8.0%-9,30053.4%

Operating profit

7,630

4.2%

5,510

5,510

3.3%

-27.8%-

62.5%

Ordinary profit

7,675

4.2%

5,690

5,860

3.5%

-23.6%

170

63.1%

Profit attributable toowners of parent

5,493

3.0%

3,950

4,570

2.7%

-16.8%

620

67.3%

Earnings per share (¥)

355.08255.14299.74

Net sales

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

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08 20

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

26-Jan.-2024
https://www.sunwa.co.jp/en/ir/index.html

Results trends

Currently, the level of orders received is about 30% lower than 1H FY3/23 and shows no sign of bottoming out.
As inventory levels for parts differ for each customer, ordering levels also vary, even for customers within the same
industry. This makes it extremely difficult to forecast when the order situation will begin to recover. However, evenif customers continue to adjust their ordering situations going forward, at FISCO, we think that the Company canstill achieve its sales targets by working through its ample orders backlog. Although profits have declined by double
digits year on year, the growth experienced in FY3/23 was the result of special demand created by an industry-wide
accelerated procurement of parts, so the results for FY3/24 can be seen as a rebound from this. In its three-year
medium-term plan starting in FY3/23, the Company set operating profit targets of ¥5.0bn in FY3/23, ¥6.0bn in
FY3/24, and ¥7.0bn in FY3/25. Combining the results for operating profit in FY3/23 and FY3/24 gives ¥13.1bn,
more than 20% higher than the ¥11.0bn that results from combining the plan’s targets, so from a medium-term
perspective, performance is on track.
The assumed exchange rate for FY3/24 has been revised from ¥129 to the U.S. dollar in the initial plan to ¥137.9
to the U.S. dollar, and given that the rate is currently trending around ¥150 to the U.S. dollar, the assumption allows
some room for increases*1. Additionally, the Company is planning to continue selling its cross-shareholdings, andthis trend means that it is possible that it will exceed its target for profit attributable to owners of parent*2.
*1	The average exchange rate for FY3/23 was ¥131.4 to the U.S. dollar. Assuming that rates for other currencies change
in line with the dollar rate, depreciation of ¥1 to the U.S. dollar will increase annual revenue by ¥550mn, increasing profit
by ¥60mn.
*2	As of September 30, 2023, valuation difference on available-for-sale securities was ¥3,874mn.

■ Long-term vision and medium-term

management plan
Aiming to be the best manufacturing partner to make possible ourcustomers’ wants and needs
1. Long-term vision
The Group’s Corporate Creed is “Develop Talents, Build Business, Contribute to Society.” Guided by this creed,
the Group utilizes its global network to provide its customers with the most up-to-date information, needs-oriented
solutions, and the most reliable services, along with collaborating with partner companies. Through these efforts,
the Group has helped to promote industrial development and to realize a sustainable society. In the past few years,
there have been significant changes in global social conditions, and the market environment has been changing
drastically. In this environment, to set an even clearer direction for the Group, it formulated “Sun-Wa Vision 2030”
as its long-term vision for FY3/31 and “SNS2024 (Sun-Wa New Stage 2024)” as its three-year medium-term
management plan beginning in FY3/23 (announced in May 2022). The Group’s Mission (Mission and Purpose),
Vision (the Group’s Ideals), Values (Values for Fulfilling the Mission and Realizing the Vision) are described below.
The Group has defined its Mission as follows: “We connect technologies in the world to create new value and support
the development of a prosperous society.” Leveraging its global network, the Group intends to contribute to thedevelopment of a sustainable society by offering the latest technology proposals and optimal products. Moreover, theGroup has embraced the following as its Vision: “We are the best partner in manufacturing to make our customers’
wants and needs possible, and connect businesses around the world with relationships of trust.”

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09 20

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

26-Jan.-2024
https://www.sunwa.co.jp/en/ir/index.html

Long-term vision and medium-term management plan

The Group has identified the following three concepts as its Values to carry out its mission and achieve its Vision:“Customer First” “Spirit of Challenge” and “Teamwork and Communication.” With “Customer First” the Group makes
every effort to serve as a partner who has the best understanding of the customer – a partner who identifies true
customer needs by always considering things from the customer’s perspective and sharing values with customers.
With “Spirit of Challenge,” the Group sets high goals to drive its own growth, enhances its creativity and professionalism by tackling challenges positively without fearing change, and strives to boost the enterprise’s energy and vitality.
Finally, with “Teamwork and Communication,” the Group creates new value by respecting others, understanding
differences, and recognizing their value. In addition, the Group attaches importance to partner companies as it aims
to improve its collective capabilities.

Started initiatives through the implementation of alliances, etc. toachieve operating profit of ¥7.0bn in FY3/25
2. Progress of Medium-term plan, “SNS2024 (Sun-Wa New Stage 2024)”(1) Management goals
In its three-year medium-term plan starting in FY3/23, the Company changed its KGI from net sales to operating
profit. In addition, it announced additional measures in May 2023 aimed at achieving a PBR of over 1.0x as
quickly as possible.
The Company has not changed its performance targets for FY3/25, the final year of the plan. They are net salesof ¥195.0bn and operating profit of ¥7.0bn. The target for operating profit was surpassed in FY3/23 thanks toearly orders and yen deprecation, as was explained above, but profit is expected to decline in the absence of
these factors in FY3/24, so the final year’s targets were not changed. As long as macroeconomic factors do not
deteriorate further in FY3/25, the Company appears to be in a position to achieve its targets.
The Company is forecasting the operating profit margin to rise from 3.1% in FY3/22 to 3.6% in FY3/25, primarily
from an increase in the gross profit margin. In Japan, there are concerns that the introduction of regulations
governing total working hours from fiscal 2024 will raise logistics costs, but the Company plans to introduce awarehouse management system (WMS)* that has been brought in at its Nagoya Service Center, and in stages
at other facilities. The aim is to mitigate rising logistics costs by visualizing logistics operations and making themmore efficient.
*	A system that enables the real-time centralized management and visualization of all processes within a logistics facility(receipt of goods, storage, distributive processing, issuance of slips, shipping, inventory taking, etc.), thereby supporting
efforts to reduce working hours and improve productivity.

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

10 20

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

SUN-WA TECHNOS CORPORATION

26-Jan.-2024

8137 Tokyo Stock Exchange Prime Market

https://www.sunwa.co.jp/en/ir/index.html

Long-term vision and medium-term management plan

The overseas sales ratio* is projected to increase from 33.7% in FY3/22 to 40% in FY3/25. On a real basis,
annual growth of 13% is being projected. Approximate regional shares in FY3/22 were China around 70%,
other Asian countries around 19% and the Europe and the U.S. around 11%. For FY3/25, these are projected
to be China around 65%, other Asian countries around 25% and Europe and the U.S. around 10%, so themost growth is expected from other Asian countries. Over the last few years, risk associated with China has
been rising and customer companies have been responding by reviewing their production frameworks. Growthis particularly anticipated in the Indian market, where the Company established a local affiliate in September
2023. The Company plans to continue its business activities while carefully monitoring the situation in China,
and it will further strengthen efforts to gather market information so that it can respond flexibly to various risks.
If the Company is able to achieve its performance targets for FY3/25, for its next step, it will aim for net sales of¥250.0bn and operating profit of ¥10.0bn by FY3/28.
*	Overseas sales ratio is net sales from overseas business (overseas affiliates) divided by consolidated net sales (before
consolidation eliminations)Management goals in the “SNS2024(Sun-Wa New Stage 2024)”(¥mn)
FY3/24

FY3/22
Results

FY3/23Results

Initial forecast

Revisedforecast

FY3/25
TargetAverageannualgrowth rates

FY3/28Target154,414

181,013

175,800

166,500

195,000

8.1%

250,000

Operating profit

4,804

7,630

5,510

5,510

7,000

13.4%

10,000(profit margin)

3.1%

4.2%

3.1%

3.3%

3.6%

Overseas sales ratio*

33.7%

35.9%

38.0%

-

40.0%

Net sales

4.0%

Source: Prepared by FISCO from the Company’s financial results and results briefing materials(2) The strategic policy as well as progress
In terms of the basic policies that the Company will implement in “SNS2024 (Sun-Wa New Stage 2024),” theCompany has set forth three basic policies: a) Focus on growth fields that require innovation, b) Provide evenhigher value-added products and new solutions, and c) Help to realize a sustainable society through sustainability
management. By implementing these policies, the Company intends to reach its performance targets. Progress
made thus far on the policies is described below.
a) Focus on growth fields that require innovation
The Company has classified the customer segments where it will allocate resources based on the dual axes of its
strengths and market appeal (market size, growth rate, and profitability). These customer segments are classified
into the following three fields: fields where resources are actively allocated (semiconductor production equipment, robots and mounters, machine tools), fields where resources are selectively allocated (factory automationequipment, on-board products, and facilities), and other fields. By formulating and executing business strategies
tailored to each customer segment, the Company seeks to increase gross profit and strengthen profitability. Also,in additions to creating new businesses that leverage its strengths and investing in growth areas, it is working toenhance its brand power through PR, IR, and SR activities.

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

11 20

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

26-Jan.-2024
https://www.sunwa.co.jp/en/ir/index.html

Long-term vision and medium-term management plan

Looking at the compositions of sales by field for 1H FY3/24, factory automation equipment field accounted for thebiggest portion at about 30%, followed by semiconductor production equipment field and automotive on-board
products field at just over 10% each, while robots and mounters, facilities, and machine tools field each accounted
for less than 10% of sales. The Company is aiming for a three-year average annual growth rate for gross profit of atleast 10% (and at least 15% for semiconductor production equipment) but looking at the two-year average annual
growth rates up to FY3/24, only factory automation equipment field is on track to achieve 14.0%, while otherfields are expected to fall short of growth rate targets due to the rebound from the excessive growth experienced
in FY3/23. However, with the market environment moving toward a recovery in FY3/25, at FISCO we think there
is a sufficient possibility that the Company will catch up to its growth targets.
Progress and results of strategic policies by customer segment

1 H F Y2 0 2 3 P ro g re s s

S e g m e n t s f o r ac t i ve i n ve s t m e n t o f r e s o u r c e s

Semiconductor
production
equipment

An important segment in this era when semiconductors bolster anation’s strength, where further growth can be expected from thestandpoint of economic security, and which allows the Company todemonstrate its strengths⚫ Strengthened relationships with customers by holding interviews with executives
from customer companies and exploring joint development themes⚫ Advanced unit assembly proposals, received concrete inquiries about these, and⚫ Develop joint themes with customers to raise performanceturned them into orders⚫ P r o p o s e u n i t a s s e m bl y

⚫ Made proposals using products from new supplier and captured theme orders from

⚫ A c q u i re n e w s u p p l i e rs

customers

A segment where the Company can easily demonstrate its superiority ina high growth field with substantial technological innovation

Robotsandmounters⚫ Increased in-house share for each product by capturing orders under focus themes

and identifying technical issues⚫ Increase product-specific in-house share for each customer⚫ Develop new peripheral equipment⚫ Held sales talks for PCs and network devices and explored new proposal products⚫ Consolidate needs and plan products specialized for specific⚫ Shared customer issues and held meetings to exchange information with
manufacturers to understand industry needs

industries

Machinet o o ls

A segment of focus where growth is expected from the higher
performance, automation and digitalization of “mother machines” that
support global manufacturing⚫ Proposed solutions and components for process integration, automation, and⚫ Develop new peripheral equipment⚫ Carried out activities for understanding application needs and coordinating withenergy-saving equipment⚫ Propose FAPCs, which are increasing in importance with the advanceo f Io Tr e g i on a l s a l e s t e a m s⚫ Strengthened marketing efforts aimed at the local affiliates of global production⚫ Propose global SCM as a BCP measurecompany customers

1 H F Y2 0 2 3 P ro g re s s

S e g m e n t s f o r s e l e c t i ve i n ve s t m e n t o f r e s o u r c e s

Factorya u to m a ti on
equipment

A foundational segment with an expansive customer base and a⚫ Made pAll
roprights
osalsreserved.
to expand sales to the next generation of big global
Copyright: 2023 SUN-WA TECHNOS CORPORATION.
wide range of product models⚫ Focus on the factory automation component industry on acustomersg l o b al s c ale⚫ Effectively carried out sales activities for electronic devices⚫ Create strategic products based on mass production
applications⚫ Monitored changes and trends in the factory automation market to⚫ Strengthen the supply of information by actively harnessing
create strategic products
digital tools

On-board
products

A segment entering a once-in-a-century period of transformation
with growing needs for automotive electrical systems driven byfactors such as the shift to CASE
⚫ Develop new customers through cross-field expansion ofexisting products⚫ Develop new strategic products globally⚫ Build an organization geared to developing new customers

Facilities

A segment that covers a wide range of industries and one withheightened engineering needs to address automation andsustainability⚫ Make added-value proposals to customers through unified
sales and engineering⚫ Expand projects by collaborating with system integrators in thefood industry⚫ Improve profitability through facility packaging and cross -field
expansion0⚫ Worked to develop deeper relationships with main Tier 1 customers⚫ Cultivated new Tier 1 customers⚫ Carried out PR showcasing the strengths of the on -board products
organization and increased personnel⚫ Developed and launched facilities packages that offer added value⚫ Advanced activities to capture facilities orders related to efforts bysmall retailers to automate and reduce staff numbers⚫ Advanced activities to win orders from untapped divisions at existingcustomer companies

Source: The Company’s results briefing materials
Copyright: 2023 SUN-WA TECHNOS CORPORATION. All rights reserved.

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

12 20

1

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

26-Jan.-2024
https://www.sunwa.co.jp/en/ir/index.html

Long-term vision and medium-term management plan

Looking at the status of initiatives carried out in each field in 1H FY3/24, in the fields for active investment of
resources, the semiconductor production equipment field strengthened relationships with customers by holding
interviews with executives from customer companies and exploring joint development themes, and also advanced
unit assembly proposals, received concrete inquiries about these, and turned them into orders. Also, in its efforts
to cultivate business with major global companies, it is using pinpoint-targeted product proposals and seems to
be on the verge of establishing accounts. In regards to pinpoint-targeted products, it is aiming for highly novel
and innovative products developed by venture companies and companies based overseas. The forecast two-year
average annual gross profit growth rate up to FY3/24 for this segment is growth of 6.4%, which is fairly behindschedule. However, considering that the Japanese government is committed to supporting the semiconductor
industry as a national priority and that Japanese companies have a large share of the global market, there isplenty of room for further growth and it will continue to be one of the Company’s main focuses going forward.
In the robots and mounters field, the Company worked to increase the in-house share for each product by capturing orders under focus themes and identifying technical issues, and it also held sales talks for PCs and network
devices and explored new proposal products. In addition to this, it shared customer issues and held meetings to
exchange information with manufacturers in order to understand industry needs. The forecast two-year averageannual gross profit growth rate up to FY3/24 for this segment is considerably lower than anticipated, as it declinedby 19.7% due to the effects of the poor business performance of the chip mounter manufacturers that are its
main customers. However, production of PCs and smartphones is set to recover in FY3/25 which will also leadto a recovery in orders from chip mounter manufacturers and the Company has also successfully establishedan account with a major robotics manufacturer, so the gross profit growth rate is expected to recover sharply.
In the machine tools field, the Company proposed solutions and components for process integration, automation,and energy-saving equipment and carried out activities for understanding application needs and coordinatingwith regional sales teams. It also strengthened marketing efforts aimed at the local affiliates of global production
company customers. The forecast two-year average annual gross profit growth rate up to FY3/24 for this segment
is a decline of 0.7% due to the effects of a cool down in investment in facilities.
In the fields for selective investment of resources, in regards to initiatives in the factory automation equipment field,
the Company made proposals to expand sales to the next generation of major global customers and effectively
carried out sales activities for electronic devices. It also monitored changes and trends in the factory automation
market to create strategic products. The forecast two-year average annual gross profit growth rate up to FY3/24
for this segment is growth of 14.0%, roughly in line with plans.
In the on-board products field, the Company worked to develop deeper relationships with main Tier 1 customers
and cultivated new Tier 1 customers. It also strengthened PR activities in the on-board products field andincreased the number of sales personnel. The forecast two-year average annual gross profit growth rate up to
FY3/24 for this segment is growth of 3.7%, which is fairly behind schedule. However, it is expected to catch up
in FY3/25 as the inclusion of advanced driver-assistance systems (ADAS) in vehicles becomes more widespread.
The facilities field is positioned as a segment that covers a wide range of industries and one with heightened
engineering needs to address automation and sustainability. The Company’s main initiatives were to develop andlaunch facilities packages that offer added value, advance activities to capture facilities orders related to efforts
by small retailers to automate and reduce staff numbers, and advance activities to win orders from untapped
divisions at existing customer companies. The forecast two-year average annual gross profit growth rate up to
FY3/24 for this segment is behind schedule, as there was a decline of 6.1%. However, it is forecast to catch up
through initiatives such as investing in new package products.

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13 20

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

26-Jan.-2024
https://www.sunwa.co.jp/en/ir/index.html

Long-term vision and medium-term management planb) Provide even higher value-added products and new solutions
With regard to providing even higher value-added products and new solutions, the Company intends to identify
fields of focus and secure resources through development of a technology strategy, raise business efficiency andprovide value by formulating and promoting Sun-Wa DX (SDX), and raise the overseas sales ratio by providing
solutions for bolstering the resilience of global supply chains.
In particular, the Company’s approach to the development of new solutions using high-added-value products is toadvance development while making active use of external resources through alliances and the like. Accordingly,
on October 30, 2023, it formed a business partnership with MTEC. MTEC is headquartered in Kitakyushu and its
strength is its ability to develop systems that combine robotic systems technologies, including technologies related
to motion, control, processing, image processing, software customizing technologies, as well as custom-built
technologies, in a highly sophisticated manner. This business partnership will create synergies between MTEC’s
technological development capabilities and the Company’s marketing capabilities to cultivate new customers andmarkets through package-based products that combine technological solutions tailored to customers’ needs inthe robotics field.
Specifically, the Company is developing the 3D Connect Series of digital manufacturing products that use virtual
space and it has launched its first product, AR^2 System, a robotics solution package that uses AR markers*. The
3D Connect Series is a solutions package that combines modules for various functions, from design through tooperation, using Planning Simulator, a process simulator that enables motion controllers for applications such as
3D CAD software and robots to be operated simultaneously in real time. This corrects any inconsistencies in thecoordination between reality and virtual spaces when operating robots, encouraging digital manufacturing. The
newly launched AR^2 System has two distinctive features. One is that a camera mounted onto a robot can readAR markers and automatically orient itself, enabling the relative positioning of the robot to be corrected with highprecision. The other is that operating conditions (recipes for behavior) can be planted in AR markers, enabling
operational instructions that let the robot make decisions. Usually, the operation of robots requires teaching data
for a specific operation to be created and applied, but this solution enables this process to be carried out efficiently
using 3D CAD software and AR technology. Its advantage is that it is relatively easy to use, even for companies
that do not have robot operational know-how.
*	AR markers are markers that display information in augmented reality (AR) by showing digital content in a virtual space.
Various things, including images, faces, and buildings, can be used as AR markers.

The targets for this product are companies with automation and labor-saving needs in industries in fields theCompany is focusing on, including semiconductor production equipment, robots and mounters, machine tools,
on-board products, and facilities. The Company is handling marketing while MTEC is responsible for development
and technical support. Plans are in place to develop a second and third product in the 3D Connect Series and theCompany’s strategy is to differentiate itself by incorporating these products into robot sales proposals, enabling
it to win orders for industrial robots.

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

14 20

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

26-Jan.-2024
https://www.sunwa.co.jp/en/ir/index.html

Long-term vision and medium-term management plan

Development of the 3D Connect Series of Robotics Solutions
Planning Simulator

3 D Co n n e c t S e ri e s P ro d u c t Co n c e p t
A solutions package that combines modules for various
functions, from design through to operation, using
Planning Simulator, a process simulator that enables
motion controllers for applications such as 3D CAD
software and robots to be operated simultaneously inreal time.

*Trademark pending

Package of modules

This corrects any inconsistencies in the coordination
between reality and virtual spaces when operating
robots, encouraging digital manufacturing.

第二弾

First product: AR^2 System

第三弾

・・・

3D Connect Series

Source: The Company’s results briefing materials

Copyright: 2023 SUN-WA TECHNOS CORPORATION. All rights reserved.

c) Help to realize a sustainable society through sustainability management
The Company continues to view measures to realize a sustainable society as one of management’s most important
issues. Therefore, it will promote these measures through its business activities while working to foster theeducation and development of its employees. Notably, the Company carries an extensive range of electricalmachinery, electronic parts, and facilities and machinery that can achieve energy and labor savings as measures
to combat global warming. We at FISCO believe that the Company has substantial growth opportunities as anenterprise that will contribute to a decarbonized society through its business activities. In April 2023, it started a
new sales project dedicated to growing sales of energy management systems (EMS). Specifically, it is cooperatingwith manufacturers to propose unique EMS, holding sales talks regarding production lines for lithium-ion batteries,
growing sales of products that contribute to the achievement of carbon neutrality, and holding sales talks related
to energy (energy creation, energy storage, and energy saving).
With regard to its approach to a decarbonized society, through sales of environmentally friendly products, theCompany intends to create emission reduction effects that are over 100 times more than its greenhouse gas
emissions (Scopes 1, 2 and 3) by fiscal 2050 (compared to fiscal 2020) and it is also targeting a 20% reductionin its own greenhouse gas emissions (Scopes 1 and 2) by fiscal 2030 (compared to fiscal 2020) by continuing
initiatives to reduce its environmental impact.
With regard to diversity and inclusion, the Company has set a goal of having at least 10% female managers
by FY3/30 (8.3% in FY3/23) and will work to increase employee engagement by further promoting work stylereforms started by its DX promotion project and seeking to foster an awareness within each employee of improving business performance and taking part in management by encouraging their participation in the employee
shareholding association.

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

15 20

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

26-Jan.-2024
https://www.sunwa.co.jp/en/ir/index.html

Long-term vision and medium-term management plan

Engaged in improving profitability, enhancing shareholder return,and enhancing investor and shareholder relations activities toquickly achieve a PBR of over 1.0x
3. Measures to raise corporate value
On October 30, 2023, the Company announced a policy for realizing management that is conscious of capital costand share price. Currently, its share price is in the ¥2,000-2,500 range, which means it has doubled since 2020 when
it was in the ¥1,000-1,500 range, but PBR is less than 1.0x and is appraised to be lower than its net asset value.
The Company thinks its share price has been stuck at comparatively low levels compared to its strong profitability
for some time, so it has once again announced measures to raise its corporate value (and therefore share price).
The Company sees the reasons for its share price being stuck at comparatively low levels as being that its businessand growth strategies aimed at sustainable growth are not sufficiently understood by investors, that the liquidityof its shares are low (FY2022 average: 40,308 shares/day), and that its market capitalization is at levels just over
¥30bn which makes it a difficult prospect for major institutional investors. Therefore, first of all, it will work to raise
profitability by steadily implementing the measures in its medium-term plan so it can maximize consolidated operating
profit in order to maintain high levels of ROE, while at the same time enhancing shareholder return and investor andshareholder relations activities with the aim of quickly achieving a PBR of over 1.0x. At FISCO, we basically share thesame opinion as the Company and in particular, we think that one of the factors making it a difficult investment target
is that individual investors are generally unfamiliar with trading companies that specialize in industrial electronics andmechatronics. In fact, many other companies in the same industry are appraised as having a PBR below 1.0x. If, forexample, its collaboration with MTEC can establish expectations of considerable growth in robotics-related business,
we think that this will raise awareness of the Company within the stock market, leading to a rise in corporate value.
Consolidated operating profit targets
120

14.0

13.3

12.0

100

9.8

10.0

80

8.0
60

5.4

10.0

40

7.6
5.5

4.8

20

7.0

6.0
4.0
2.0

2.2
0

0.0

FY3/22 2023年3月期
FY3/23 2024年3月期
FY3/24 2025年3月期
FY3/25 2026年3月期
FY3/26 2027年3月期
FY3/27 2028年3月期
2021年3月期
FY3/21 2022年3月期
FY3/28Operating profit (¥bn)
営業利益（億円）

ROE（%）ROE (%)

Source: The Company’s results briefing materials
Copyright: 2023 SUN-WA TECHNOS CORPORATION. All rights reserved.

4(1) Raise profitability by steadily advancing the “SNS2024 (Sun-Wa New Stage 2024)” medium-term plan
The Company will raise profitability by implementing the following five priority measures of its medium-term plan.

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

16 20

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

26-Jan.-2024
https://www.sunwa.co.jp/en/ir/index.html

Long-term vision and medium-term management plana) Raise profitability by merging customer segment strategies with regional sales strategies
As mentioned previously, the Company has divided customer segments into fields for active investment of
resources and fields for selective investment of resources, and the strategic investment of resources into measures
is decided by a specialized cross-regional team, which collaborates with each sales location to cultivate priority
customers and deepen business with existing customers.
b) Advance initiatives through the establishment of the Innovation Div.
The Company established the new Innovation Div. in April 2023 through which it is advancing initiatives such as
investment in the development of unique technical support and solutions aimed at solving customers issues, theestablishment of business models and creation of new businesses in growth areas, and formation of alliances asa means of growth that utilizes external resources. The business partnership with MTEC mentioned previously is
being led by the Innovation Div.
Initiatives to solve customer issues by the Innovation Div.

Cu st o m e r
S e g m e n t Te am
I n d u st ry n e e d s

Technical support
SolutionsP r o d u c t i d e as

Cu st o m e r n e e d s

Regionals a l esstrategy

Cu st o m e rs

I n n o va t i o n D i v.

Techno-logicals t r a t eg y

Custome r
strategy

Products t r a t eg y

E l e c t r i c al M ac h i n e r y D p t .
El e c t ro n i c s Eq u i p m e n t Dp t .

Softwarep ac k ag e

Source: The Company’s results briefing
materials
Copyright:
2023 SUN-WA TECHNOS CORPORATION. All rights reserved.

c) Strengthen robotics sales by capturing automation and labor-saving needs
The adoption of industrial robots is expected to grow as the working age population shrinks, so the Company
plans to strengthen its sales structures to increase sales of industrial robots (cobots, automated transport robots,etc.). Specifically, it will allocate specialist robot sales personnel to each region to increase the success rate of sales
talks and grow profits. In addition to growth areas such as electric vehicles and lithium-ion batteries, it plans tostrengthen sales promotion activities targeting food and logistics-related industries, where there is strong demand
for automation and labor savings. Also, the Innovation Div. is leading an initiative in collaboration with the Robot
Solution Team to sell products jointly developed with MTEC.
d) Capture environmental investment opportunities oriented toward decarbonization
As mentioned previously, the Company is advancing a project to enhance sales focused on EMS and proposing
solutions that contribute to decarbonization.

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

17 20

2

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

26-Jan.-2024
https://www.sunwa.co.jp/en/ir/index.html

Long-term vision and medium-term management plane) Respond to efforts to move supply chains out of China amid the decoupling of the US and China
As risk related to China rises, the Company is responding to efforts to move production bases out of Chinaor return them to Japan by proposing global SCM solutions and strengthening its organizations in India andSoutheast Asia. In addition to this, it will continue to do business in China while at the same time, strengthening
information gathering activities and building a framework that can respond flexibly to various risks.
(2) Enhance shareholder returns
The Company targets a consolidated payout ratio of 25-35%, its indicator of performance-linked profit distribution,
and also buys back its own shares on a flexible basis depending on the timing and financial conditions (details
provided below).
(3) Enhance investor and shareholder relations
In order for its stock price to appropriately reflect its corporate value, the Company believes it is necessary to
not only improve its business performance but also further enhance the information it discloses to investors andshareholders. In April 2023, it established the PR/IR Office as a specialist IR organization. It is carrying out IR
activities, including holding briefings for institutional and individual investors given by directors and the officer incharge of IR, and regularly sharing information with the media (radio, specialist publications). In addition to this,the opinions shared by investors and shareholders during investor and shareholder relations activities are being
shared at Board of Directors meetings and other high-level meetings so that they can be incorporated whenreviewing management strategy.

■ Shareholder return policy
Paying dividends targeting a consolidated payout ratio of 25-35%
and considering share buybacks as necessary
The Company is working on strengthening its shareholder return policy, which is one of the measures it is taking toquickly achieve a PBR of over 1.0x. In regard to dividends, after considering how to balance investment needed torealize sustainable growth and raise corporate value with the maintaining of financial soundness needed to deal withrisks, it has decided to maintain a stable dividend (since OTC, it has never lowered its dividend) while conducting
shareholder returns based on consolidated results from a medium- to long-term perspective, and is therefore
targeting a consolidated payout ratio of 25-35%. Based on this policy, the Company’s planned per-share dividendfor FY3/24 is level with the previous fiscal year at ¥90.0 (for a payout ratio of 30.0%). Going forward, the Company
can be expected to increase its dividend if the consolidated payout ratio falls below 25.0%.
In addition, with regard to share buybacks, the Company has clarified its policy of flexible purchases dependingon timing and financial conditions. It announced a share buyback in May 2023 and acquired 445,000 shares for¥999mn. The total payout ratio including dividends and share buybacks is expected to be 52%. Net assets per
share at the end of 1H FY3/24 was ¥3,056, for a PBR of just 0.7x, so active shareholder returns aimed at achieving
a PBR of over 1.0x are expected going forward.

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

18 20

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

SUN-WA TECHNOS CORPORATION

26-Jan.-2024

8137 Tokyo Stock Exchange Prime Market

https://www.sunwa.co.jp/en/ir/index.html

Shareholder return policy

Dividend per share and dividend payout ratio
Dividend per share (left)(¥)

Dividend payout ratio (right)

100.0

90.0

50.0%

90.0

40.4%
80.0

40.0%
30.0%

30.0%

60.0

30.0%

25.3%
37.0

40.0

34.0

34.0

20.0%
16.2%

20.0

10.0%

0.0

0.0%
FY3/20FY3/21

FY3/22

FY3/23

FY3/24 (E)Source: Prepared by FISCO from the Company’s financial results

Simplified income statement and main indicators(¥mn)
FY3/24

FY3/20FY3/21

FY3/22

FY3/23

1H

Full-year (E)Net sales

137,943

134,769

154,414

181,01388,867

166,500

YoY

-5.1%

-2.3%

14.6%

17.2%

5.3%

-8.0%

Gross profit

14,421

14,224

18,772

23,039

11,179-% of sales

10.5%

10.6%

12.2%

12.7%

12.6%

-

SG&A expenses

12,574

12,071

13,967

15,408

7,736-% of sales

9.1%

9.0%

9.0%

8.5%

8.7%

-

Operating profit

1,846

2,152

4,804

7,630

3,442

5,510
-27.8%-45.8%

16.5%

123.2%

58.8%

4.3%

% of sales

1.3%

1.6%

3.1%

4.2%

3.9%

3.3%

Ordinary profit

2,144

2,567

5,195

7,675

3,700

5,860

-40.9%

19.7%

102.4%

47.7%

3.5%

-23.6%

1,341

1,786

3,577

5,493

3,075

4,570

YoY

-49.0%

33.2%

100.3%

53.6%

21.7%

-16.8%EPS (¥)

84.11

113.23228.33355.08201.75299.74

Dividend (¥)

34.00

34.00

37.00

90.00

45.00

90.00

YoY

YoY
Profit attributable to owners of parent

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

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

19 20

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

SUN-WA TECHNOS CORPORATION

26-Jan.-2024

8137 Tokyo Stock Exchange Prime Market

https://www.sunwa.co.jp/en/ir/index.html

Shareholder return policy

Simplified balance sheet(¥mn)
End-FY3/20

End-FY3/21

End-FY3/22

End-FY3/23

End-1HFY3/24

Changeamount62,71364,43082,20994,263

94,239-24

Cash and deposits

12,052

13,113

14,04914,14515,040895

Trade receivables and contract assets

39,83842,45351,99758,922

57,074-1,848

9,024

11,951

10,86812,318

11,432

-886

2,759

2,590

2,230

2,272

2,170

-102

193

170

226

221

196

-25

6,072

9,190

8,411

9,824

9,066

-758

Total assets

71,73876,381

93,078106,581

105,671-910

Current liabilities

35,40236,372

52,79759,87054,481-5,389-4,472Current assets

Non-current assets
Total property, plant and equipment
Intangible assets
Total investments and other assets

29,10829,45540,67645,33540,863

Non-current liabilities

4,608

4,978

2,257

2,227

5,001

2,774

Total liabilities

40,011

41,35055,05462,09759,483-2,614

Payment obligations

6,709

7,048

7,805

9,557

12,3682,811

Shareholders’ equity

29,55230,80233,277

38,20239,3691,167

Accumulated other comprehensive income

2,174

4,228

4,746

6,282

6,819

537

Total net assets

31,72635,03038,02344,484

46,188

1,704Interest-bearing debt

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

Status of Cash Flows(¥mn)
FY3/20FY3/21

FY3/22

FY3/23

1H FY3/24

Cash flows from operating activities

3,238

1,589

792

-545

-868

Cash flows from investing activities

-200

-141

244

-731

749

Cash flows from financing activities

-945

-309

-580

906

527

11,568

12,62913,565

13,661

14,556

Cash and cash equivalents at end of period

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

Management indicators
FY3/20FY3/21

FY3/22

FY3/23

1H FY3/24

Equity ratio

44.2%

45.9%

40.9%

41.7%

43.7%

Interest-bearing debt ratio

21.1%

20.1%

20.5%

21.5%

26.8%

ROE

4.2%

5.4%

9.8%

13.3%

-

Net cash (¥mn)

5,343

6,065

6,244

4,588

2,672

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

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

20 20

Disclaimer
FISCO Ltd. (“FISCO”) offer stock price and index information for use under the approval of theTokyo Stock Exchange, the Osaka Stock Exchange and Nikkei Inc.
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◾ For inquiry, please contact: ◾

FISCO Ltd.
5-13-3 Minami Aoyama, Minato-ku, Tokyo, Japan 107-0062
Phone: 03-5774-2443 (IR Consulting Business Division)
Email: support@fisco.co.jp