COMPANY RESEARCH AND ANALYSIS REPORT

SUN-WA TECHNOS CORPORATION
8137
Tokyo Stock Exchange Prime Market

13-Aug.-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

13-Aug.-2024
https://www.sunwa.co.jp/en/ir/index.html■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Decreased sales and profits in FY3/24 due to a slowdown in the recovery of market demand andinventory adjustments by customers...........................................................................................................

01

2. Decreases in sales and profits forecast for FY3/25 but shift to recovery anticipated in 2H. .........................

01

3. Steady progress toward growth targets in the 11th medium-term management plan,“SNS2024 (Sun-Wa New Stage 2024)” . . .....................................................................................................

02

4. Enhancing shareholder return and launching new shareholder benefits to quickly achieve a PBR ofover 1.0x.. .............................................. ......................................................................................................

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

03

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

05

3. FY3/25 consolidated results forecast..... ......................................................................................................

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

09

2. Progress of the 11th medium-term management plan “SNS2024 (Sun-Wa New Stage 2024)”....................

10

3. Efforts to practice management that is conscious of capital cost and share price.......................................

13■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 17

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

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

13-Aug.-2024
https://www.sunwa.co.jp/en/ir/index.html■ Summary
Forecast of a recovery in net sales from 2H onward and launch of
new shareholder benefits to 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 equipment,
and general machinery) and two-way trade in which it sells equipment and materials for manufacturers’ productionlines and then procures the products made by these manufacturers. It operates 30 business locations in Japan and34 overseas (as of May 31, 2024).
1. Decreased sales and profits in FY3/24 due to a slowdown in the recovery of market demand and inventory
adjustments by customers
In consolidated results for FY3/24, there was a decline in both sales and profits as net sales decreased 8.2% year
on year (YoY) to ¥166,138mn and operating profit fell 18.5% to ¥6,215mn. The fall in net sales was due to orders
received declining by 27.8% to ¥136,895mn as a repercussion of the accelerated procurement of parts in the period
up to the previous fiscal year, as well as the prolonging of inventory adjustments by customers as the pressure on
receivers of supplies seen in the previous fiscal year dissipated. Looking at results by industry, although demand
related to renewable energy and labor-saving robotics was firm, there was a decline in sales of general electronicparts and electronic devices for the factory automation and semiconductor production equipment industries, aswell as electrical machinery for the mounter industry.
2. Decreases in sales and profits forecast for FY3/25 but shift to recovery anticipated in 2H
For its FY3/25 consolidated results, the Company is forecasting a decline in both sales and profits with net sales
decreasing 6.7% YoY to ¥155,070mn and operating profit falling 50.4% to ¥3,080mn. This forecast factors in thecontinuation of inventory adjustments by customers, as well as a slowdown in the Chinese economy and uncertainty
in terms of geopolitical risk. Looking at sales on a half-year basis, the Company is forecasting net sales of ¥67,600mn
in 1H and then a recovery to ¥87,470mn in 2H. At present, there are signs that some customers are moving toward
resuming orders. The assumed exchange rate for the period is ¥137.90 to the U.S. dollar, anticipating that the yen
will appreciate compared to the FY3/24 rate of ¥140.56 to the U.S. dollar. If exchange rates remain around current
levels, it will have a positive impact on results*.
*	T he effects of a change of ¥1 to the U.S. dollar on business results translates to ¥510mn in net sales and ¥50mn inoperating profit (assuming other currencies move at the same rate as the U.S. dollar).

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

01 19

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

13-Aug.-2024
https://www.sunwa.co.jp/en/ir/index.html

Summary

3. Steady progress toward growth targets in the 11th medium-term management plan, “SNS2024 (Sun-Wa
New Stage 2024)”
Under its 11th 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) Contribute to the realization ofa sustainable society. In FY3/25, it plans to reinforce its sales capabilities by reorganizing its sales structure withthe aim of further enhancing profitability. In addition to steadily cultivating new customers among major global
companies, in May 2024 it established a second office in India as a countermeasure to risk associated with China.
It is also advancing development in partnership with MTEC CO., LTD., and it continues to receive steady enquiries
about the robotics solutions package launched in 2023 through this collaboration. It is expected to contribute toimproved profitability going forward. The results of these initiatives are expected to manifest from FY3/26 onward
and at FISCO, we expect to see a return to growth in business results.
4. Enhancing shareholder return and launching new shareholder benefits to quickly achieve a PBR of over
1.0x
One of the initiatives being implemented by the Company as part of its strategy to quickly achieve a PBR of over1.0x is to enhance shareholder returns. Its dividend policy includes a target payout ratio of 25-35% and in FY3/25 itplans to pay an annual dividend of ¥110.0 per share, comprising a regular dividend of ¥100.0 and a 75th anniversarycommemorative dividend of ¥10.0 (payout ratio of 69.0%). This marks an increase of ¥15.0 compared to theprevious fiscal year. It also plans to introduce a new shareholder benefits scheme. At the end of March each year,
shareholders possessing 100 or more shares will receive a QUO card. The value of the card will be in accordancewith the number of shares and the period for which they have been held (shareholders who have held between 100
and 499 shares for a period of less than two years will receive a ¥1,000 card, shareholders who have held 500 or
more shares for a period of less than two years will receive a ¥2,000 card, while shareholders who have held thesame number for two or more years will receive a ¥3,000 card).
Key Points
Decreases in sales and profits in FY3/24, but still the second best in the Company’s history following theprevious fiscal year
• Decreases in sales and profits forecast for FY3/25 but this will bottom out in 1H and shift to recovery in 2H• Aims to maintain high levels of ROE by maximizing consolidated operating profit and quickly achieve a PBR ofover 1.0x•

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

02 19

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

SUN-WA TECHNOS CORPORATION

13-Aug.-2024

8137 Tokyo Stock Exchange Prime Market

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

Summary

Results trends
Net sales (left)(\mn)
200,000

Operating profit (right)

134,7690

155,070
6,000

6,215
4,804

100,000

50,000166,138

7,630

154,414150,000

(\mn)
8,000

181,013

4,000
3,080

2,152

FY3/21

FY3/22

FY3/23

FY3/24

FY3/25 (E)

2,000

0

Source: Prepared by FISCO from the Company’s financial results■ Results trends
Decreases in sales and profits in FY3/24, but still the second-best in
the Company’s history following the previous fiscal year
1. FY3/24 results overview
In FY3/24, the Company posted lower sales and profits however, each item exceeded its revised forecast (announced
in January 2024) with net sales of ¥166,138mn (down 8.2% YoY), operating profit of ¥6,215mn (down 18.5%),
ordinary profit of ¥6,631mn (down 13.6%) and profit attributable to owners of parent of ¥5,007mn (down 8.9%),
which were the second-best results ever, following the previous fiscal year.
FY3/24 results (consolidated)(¥mn)
FY3/23Results

FY3/24% of sales

Company’s
forecast

Results% of sales

YoY

vs. forecast

Net sales

181,013-

165,000

166,138

-

-8.2%

0.7%

Gross profit

23,03912.7%-

21,778

13.1%

-5.5%

-

SG&A expenses

15,408

8.5%-

15,562

9.4%

1.0%

-

Operating profit

7,630

4.2%

5,700

6,215

3.7%

-18.5%

9.0%

Ordinary profit

7,675

4.2%

6,000

6,631

4.0%

-13.6%

10.5%

34

-

-

710

-

-

-

5,493

3.0%

4,800

5,007

3.0%

-8.9%

4.3%

Orders received

189,540

104.7%-

136,895

82.4%-27.8%-

Orders backlog

81,60845.1%-

52,36431.5%-35.8%-

Exchange rate (¥/U.S. dollar)

131.43140.56140.56Extraordinary profit and loss
Profit attributable to owners of parent

Note: The Company’s forecasts refer to the revised forecasts announced in January 2024.
Source: Prepared by FISCO from the Company’s financial results

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

03 19

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

SUN-WA TECHNOS CORPORATION

13-Aug.-2024

8137 Tokyo Stock Exchange Prime Market

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

Results trends

In the overall manufacturing sector, major factors in results included the accelerated procurement of parts that had
continued up to FY3/23 coming to an end, a cool down in appetite for investment in facilities driven by the slowingof the economy, and the prolonging of inventory adjustments by customers. As a result, orders received returned
to roughly the same level as three years ago, declining by 27.8% YoY to ¥136,895mn, while the year-end orders
backlog decreased 35.8% compared to the end of FY3/23 to ¥52,364mn. Looking at quarterly trends, orders peakedat ¥55,127mn in 1Q FY3/23 and then declined to ¥30,102mn in 4Q FY3/24. However, this was a relatively small
decrease of 2.6% compared to the previous quarter, and the Company seems to be of the opinion that it has justabout stopped the decline. The orders backlog peaked at the end of 3Q FY3/23 at ¥92,440mn and by the end of
FY3/24, it had decreased to just under 60% of this level at ¥52,364mn. However, this is still about 1.9 times higher
than levels recorded three years ago. Prior to the COVID-19 pandemic, the orders backlog had been equivalent toaround two months’ worth of net sales, while recently it has remained equivalent to about four months’ worth, so it
is anticipated that the backlog will continue to decrease for the time being. However, since the pandemic, customers
have been working to maintain appropriate inventory levels and reviewing ordering policies, so it is possible that theorders backlog will come to rest at a level equivalent to a little more than two months’ worth of net sales.

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

89,10090,967

Net sales

Orders backlog

92,44081,60881,32680,00068,618

39,10860,000 55,127

46,77345,24848,245
47,11560,26949,88339,05140,00042,262
41,981

46,60533,89652,36439,26338,00730,91430,10220,000
0

1Q

2Q

3Q

4Q

1Q

2Q

FY3/23

3Q

4Q

FY3/24

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

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

04 19

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

SUN-WA TECHNOS CORPORATION

13-Aug.-2024

8137 Tokyo Stock Exchange Prime Market

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

Results trends

Orders backlog trends
Orders backlog (left)

Backlog divided by average monthly sales (right)(months)
7.5
6.5

(\mn)
100,000
80,000

5.3
4.4

60,00040,000

5.1

2.3

2.1

2.1

6.0
4.6

4.1

3.0

2.3

20,000
0

4.5

1.5

1H

2H

FY3/201H

2H

FY3/21

1H

2H

FY3/221H

2H

1H

FY3/232H

0.0

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

Looking at the reasons behind the increase and decrease factors in operating profit in FY3/24, despite positive
contributions of ¥176mn from an improved operating profit margin, ¥177mn from exchange rate fluctuations*,and ¥48mn from a decrease in SG&A expenses, the ¥1,816mn decline in net sales exerted downward pressure,
resulting in an overall decrease of ¥1,415mn YoY. Non-operating income increased ¥371mn YoY, mainly due toforeign exchange gain (¥362mn). The Company also recorded extraordinary income of ¥701mn in gain on sale ofinvestment securities. In FY3/24, the Company introduced a policy of incrementally selling its cross-shareholdings
portfolio as a measure to practice management that is conscious of capital cost and share price, and this gain ispart of these efforts. Funds from these sales will be allocated to growth investments and shareholder return, andthe Company intends to sell more of its investment securities in FY3/25 and beyond.
*	The average exchange rate was ¥140.56 to the U.S. dollar. The yen has accordingly weakened by about ¥9 to the U.S.
dollar compared to the previous fiscal year, when it stood at ¥131.43. This has resulted in a ¥208mn increase in profits
for the Company’s Japanese business companies. Furthermore, although this has caused a ¥121mn decrease in profits
at overseas business companies through stocking and selling transactions, as the year-end exchange rate had a cheaper
yen price than the previous fiscal year’s year-end rates, this difference boosted profit by ¥90mn.

Double figure sales increase in the general machinery segment due
to growth in sales to the automotive-related industry, but by region,
sales and profits decreased in Japan and Asia
2. Segment and regional trends
The Company discloses net sales after breaking them down into the three business segments of electrical machinery,electronics equipment, and general machinery, according to the products handled. In addition, the Company
discloses net sales and operating profit as segment information by region.

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

05 19

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

13-Aug.-2024
https://www.sunwa.co.jp/en/ir/index.html

Results trends(1) Trends in net sales by business segment
Main products in the electrical machinery segment are servo motors, motion controllers, inverters, machine
controllers and power conditioners. The Company primarily handles products from YASKAWA Electric Corporation<6506>. Main customers include SCREEN Holdings Co., Ltd. <7735>, KOKUSAI ELECTRIC CORPORATION<6525>, Panasonic Holdings Corporation <6752>, NIKON CORPORATION <7731>, and Daifuku Co., Ltd.
<6383>. Net sales decreased 1.3% YoY to ¥33,350mn due to a decline in sales of electrical machinery (servo
motors, etc.) to the semiconductor production equipment industry, electrical machinery (linear motors, etc.) to
the mounter industry, and control equipment (power conditioners, etc.) to the solar power-related industry. Sales
dropped particularly sharply in 4Q, declining 25.8% YoY to ¥5,832mn, thereby returning to levels recorded three
years ago.
The main products in the electronics equipment 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
supply equipment. Main customers include DENSO CORPORATION <6902>, YASKAWA Electric Corporation,
Mitsubishi Electric Corporation <6503>, OMRON Corporation <6645>, and FUJI ELECTRIC CO., LTD. <6504>.
Net sales decreased by 13.4% YoY to ¥117,449mn, the first decline in three years, due to a fall in sales ofelectronic parts (connectors, terminal blocks, etc.) and electronic devices (industrial-use circuit boards, etc.) to
the factory automation industry, as well as electronic parts (connectors, etc.) and electronic devices (industrial-use
PCs, etc.) to the semiconductor production equipment industry, and electronic parts (onboard cameras, etc.) to
the automotive-related industry.
The main products in the general machinery segment include robots from YASKAWA Electric Corporation, as wellas transfer devices and reduction gears. Main customers include DENSO CORPORATION, Subaru Corporation<7270>, FUJIFILM Holdings Corporation <4901>, AGC Inc. <5201>, and SUMCO CORPORATION <3436>.
Net sales increased 31.7% YoY to ¥15,338mn due to an increase in sales of facilities equipment (assembly
equipment) to the automotive-related industry despite a decrease in sales of transfer devices (wafer sorters,etc.) to the semiconductor production equipment industry. This represents a record high sales total for a second
consecutive year.

Net sales by business segment(\mn)
200,000

Electrical machinery

Electronics equipment

181,013

180,000
160,000
140,000
120,000

154,414137,943
10,404

134,769

60,00011,646

166,138
15,338

8,560

8,955

100,000
80,000General machinery

114,655

135,590

117,449

106,400

102,657

21,13723,15731,19833,77733,350FY3/20FY3/21

FY3/22

FY3/23

FY3/2440,00020,0000

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

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

06 19

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

13-Aug.-2024
https://www.sunwa.co.jp/en/ir/index.html

Results trends(2) Trends in sales and profits by segment
In the Japanese business, net sales decreased 14.3% to ¥114,550mn and operating profit declined 32.0% to¥3,638mn. This decrease in both sales and profits was primarily due to a decline in sales of electronic parts(connectors, terminal blocks, etc.) and electronic devices (industrial-use circuit boards, etc.) to the factory automation industry, electrical machinery (servo motors, etc.) to the semiconductor production equipment industry,and electrical machinery (linear motors, etc.) to the mounter industry.
In the Asian business, net sales decreased 4.9% to ¥61,194mn and operating profit decreased 9.2% to ¥2,344mn.
In China, despite an increase in sales of electrical machinery (servo motors, etc.) to the solar power-related industry, there was a decline in sales of electronic parts (connectors, LCDs, etc.) and electronic devices (industrial-use
circuit boards, etc.) to the factory automation industry, as well as electronic devices (industrial-use PCs, etc.) to
the factory automation and semiconductor production equipment industries. China accounted for almost 80%of the Company’s sales in Asia, with a slight increase in sales YoY, driven by the solar power-related industry, butthere was a decrease in sales to the rest of Asia, which accounts for a little over 20%. Additionally, trade friction
between the U.S. and China sparked movement by non-Chinese companies to move production facilities toSoutheast Asia and India. In order to respond to this, in September 2023 the Company established a local officein India (Bengaluru) and started business operations. The Indian government has clear policies supporting not
only the local automotive industry, but also the semiconductor and electronics industries. Therefore, the Company
intends to capture the resulting demand for electrical machinery, electronic parts, and facilities equipment, among
other products.
In Europe and the U.S., net sales decreased by 2.0% YoY to ¥6,970mn, and operating profit was ¥147mn (compared to a loss of ¥48mn in the previous year). There was a decrease in sales of electronic parts (power supplies,etc.) to the amusement-related industry and facilities equipment (robotics, etc.) to the automotive-related industry.
Net sales and operating profit by segment(¥mn)(Net sales)

FY3/21

FY3/22

FY3/23

FY3/4

YoY

Japan

108,252

115,811

133,712

114,550-14.3%

Asia

35,492

52,21664,364

61,194-4.9%

Europe/ U.S.

4,711

6,214

7,112

6,970

-2.0%

931

748

846

773

-8.7%

Adjustment-14,617-20,575-25,022-17,350-

Total

134,769

154,414

181,013

166,138-8.2%(Operating profit)

FY3/4

Other

FY3/21

FY3/22

FY3/23

Japan

1,197

3,049

5,354

3,638

-32.0%

YoY

Asia

917

1,924

2,581

2,344

-9.2%

Europe/ U.S.

-1

-108

-48

147

-

Other

16

-16

-3

-10

-

Adjustment

23

-44

-253

95

-

2,152

4,804

7,630

6,215

-18.5%

Total

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

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

07 19

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

SUN-WA TECHNOS CORPORATION

13-Aug.-2024

8137 Tokyo Stock Exchange Prime Market

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

Results trends

Decreases in sales and profits forecast for FY3/25 but this willbottom out in 1H and shift to recovery in 2H
3. FY3/25 consolidated results forecast
In terms of the outlook for FY3/25 consolidated results, the Company forecasts decreased sales and profits, with
net sales of ¥155,070mn (down 6.7% YoY), operating profit of ¥3,080mn (down 50.4%), ordinary profit of ¥3,220mn(down 51.4%), and profit attributable to owners of parent of ¥2,410mn (down 51.9%). This forecast factors in thecontinuation of inventory adjustments by customers, as well as a slowdown in the Chinese economy and uncertainty
in terms of geopolitical risk. Although the operating profit margin is expected to fall from 3.7% in FY3/24 to 2.0%,
this is largely because the proportion of fixed costs such as personnel expenses will rise as sales fall. The assumed
exchange rate for the period is ¥137.90 to the U.S. dollar, anticipating that the yen will appreciate compared to the
FY3/24 rate of ¥140.56. If the yen depreciates by ¥1 to the U.S. dollar, the estimated effect on earnings translates
to ¥510mn in net sales and ¥50mn in operating profit, so if exchange rates remain around current levels, it will havea positive impact on results.
FY3/25 consolidated results forecast(¥mn)
FY3/24
Full year
results

FY3/25

% of
sales

1H
forecast

YoY

2H
forecast

YoY

Full year
forecast

% of
sales

YoY

166,138-

67,600-23.9%

87,47013.2%

155,070--6.7%

Operating profit

6,215

3.7%

780

-77.3%

2,300-17.1%

3,080

2.0%

-50.4%

Ordinary profit

6,631

4.0%

840

-77.3%

2,380-18.8%

3,220

2.1%

-51.4%

Profit attributable to owners of parent

5,007

3.0%

760

-75.3%

1,650-14.6%

2,410

1.6%

-51.9%

Earnings per share (¥)

329.8750.29

109.19159.48Exchange rate (¥/U.S. dollar)

140.56--137.90Net sales

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

Currently, movement regarding orders varies depending on the customer, but orders for onboard electrical products
for the automotive sector are expected to remain firm, while movement is anticipated in the robotics industry andother industries with deeply rooted needs for labor saving. Therefore, on an orders basis, 2H FY3/24 was most
likely the low point and orders will recover slightly in 1H FY3/25. In 2H, orders are expected to return to normal
levels as inventory adjustments come to an end. Looking at results for each half, the forecast for 1H is for net salesof ¥67,600mn and operating profit of ¥780mn, which represents a further decrease on the results for 2H FY3/24(net sales of ¥77,271mn and operating profit of ¥2,773mn). However, a rebound is forecast for 2H, with net salesof ¥87,470mn and operating profit of ¥2,300mn, both of which will be an increase compared to 1H.

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

08 19

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

13-Aug.-2024
https://www.sunwa.co.jp/en/ir/index.html

Results trends

Results trends by half
Operating profit (left)
(\mn)
5,000

Net sales (right)
96,657

83,43684,356(\mn)
88,867

72,956 70,978

4,000

87,47077,27180,00067,60061,813100,000

3,000

60,000
4,331

2,000
2,108

1,000
900
0

1H

2,696

3,442

3,299

40,000
2,773

1,252
2H

FY3/21

2,300
780

1H

2H

1H

FY3/222H

FY3/23

1H

2H

FY3/24

1H

2H

20,0000FY3/25 (E)Source: Prepared by FISCO from the Company’s financial results and results briefing materials■ Long-term vision and medium-term

management plan
Turns “what customers want to accomplish” into “what they canaccomplish.” Aiming to be the best partner in manufacturing
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, 11th 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.”

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

09 19

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

13-Aug.-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.

Expected to fall short of FY3/25 operating profit target of ¥7.0bn, butmore growth expected from FY3/26 onward due to implementing
growth strategies
2. Progress of the 11th medium-term management plan “SNS2024 (Sun-Wa New Stage 2024)”(1) Management goals and progress
In its three-year medium-term management plan started in FY3/23, the Company changed its KPI from net sales
to operating profit. In FY3/25, the final year of the plan, it is targeting an operating profit of ¥7.0bn while also
advancing initiatives to enhance corporate value aimed at achieving a PBR of over 1.0x as quickly as possible.
Looking at progress up to FY3/24, in FY3/23 it achieved an operating profit of ¥7.6bn, hitting its final year target
two years ahead of schedule, while in FY3/24, operating profit still exceeded the initial target of ¥6.0bn. However,the forecast for FY3/25 is an operating profit of ¥3.0bn, which would fall short of the ¥7.0bn target. While this ispartly due to the slowdown in the Chinese economy and downturn in the market environment, another factor isthat, as mentioned earlier, in the two years from FY3/22, supply shortages for parts led to a boom in customers
procuring these parts in advance. This has eaten into future demand, so one of the reasons for the decline inprofit in FY3/25 is a repercussion of this movement.
However, the cumulative total of operating profit for these three years is ¥16.8bn, which is not far removed
from the target total of ¥18.0bn. Additionally, it is also 1.9 times higher than the cumulative total of operating
profit for the three years from FY3/20 to FY3/22, and the operating profit margin has risen from 2.1% to 3.4%.
This demonstrates growth in both profit size and profitability, so it can be argued that the growth strategies theCompany has been implementing since FY3/23 are showing a certain degree of effectivenessManagement goals in the 11th medium-term management plan “SNS2024 (Sun-Wa New Stage 2024)”(¥bn)
Initial target

Results

Operatingprofit ratio

FY3/23

5.0

7.6

4.2%

181.0

FY3/24

6.0

6.2

3.7%

166.1

FY3/25 (E)

7.0

3.0

2.0%

155.0

Cumulative 3-year total (reference)

18.0

16.8

3.4%

502.1

-

8.8

2.1%

427.1

Consolidated operating profit

FY3/20-FY3/22

Net sales

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

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

10 19

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

13-Aug.-2024
https://www.sunwa.co.jp/en/ir/index.html

Long-term vision and medium-term management plan(2) Strategic policy and 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) Contribute to the realization of a sustainable society. In
regard to “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 automation equipment, automotive components, and facilities), andother fields. By formulating and executing business strategies tailored to the Company plans to allocate resources
into each customer segment, the Company seeks to increase gross profit and strengthen profitability.
Looking at the composition of gross profit (non-consolidated, domestic business) by field in FY3/24, the factory
automation equipment field accounted for the highest proportion at 36%, followed by the semiconductor and LCD
production equip­ment field at 12%, the automotive components field at 8%, the facilities field at 7%, the robots
and mounters field at 6%, and the machine tools field at 4%. The Company is aiming for a three-year averageannual growth rate for gross profit of at least 10% in each of these fields (and at least 15% for semiconductor
production equipment) and has been working to achieve these targets. Looking at results up to FY3/24, it achieved
27.6% in the automotive components field and 11.7% in the factory automation equipment field, both of which
exceeded targets, but results in other fields all fell short. A cool down in appetite for investment in facilities andthe prolonging of inventory adjustments by customers have been negative factors, but for FY3/25, there areindications of improvement in all fields except for machine tools.
FY3/24 profit growth rate by customer segment

Automotive
components

Source: The Company’s results briefing materials

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

11 19

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

13-Aug.-2024
https://www.sunwa.co.jp/en/ir/index.html

Long-term vision and medium-term management plan

Looking at the achievements of initiatives implemented in each customer segment in FY3/24, in the semiconductor
production equipment field, which is one of the fields where resources are actively allocated, the Company has
been getting a better understanding of customer needs and using “ultra-leading-edge product” proposals todevelop accounts with major global companies. Transactions resulting from this initiative have already started,
although volumes are still low. “Ultra-leading-edge product” refers to innovative, extremely new products developed by venture and foreign-owned companies among others. The Japanese government is also showing intent
to pursue policies that nurture the semiconductor industry and to support the enhancement of the competitivenessof semiconductor production equipment, which holds the key to the national policy, the Company will provide
cutting-edge technology and critical component units while expanding its market share.
In the robots and mounters field, the Company has opened sales talks with new customers through intraorganizational development and the provision of cutting-edge early-stage technologies. Demand for PCs and smartphones
has stagnated over the last year or two, leading to a considerable drop in sales to the chip mounter manufacturersthat are its main customers. However, production of these electronic devices is expected to recover in FY3/25,
resulting in an upturn in orders from chip mounter manufacturers. The Company has also successfully establishedan account with a major robotics manufacturer, so it is anticipating growth in this field from FY3/26 onward. In
the machine tools field, the Company managed to open sales talks through proposals for process integration,
automation, and energy-saving equipment, as well as for PCs for use in factory automation, where importance is
growing with the shift to IoT. It also managed to initiate sales talks through supply chain proposals for customers
engaged in global production.
Looking at fields for selective investment of resources, in the factory automation equipment field, the Company
successfully cultivated major global customers and it also initiated sales talks through proposals suggestinguses for new early-stage technologies from suppliers and theoretical proposals that have a finger on the pulseof industry trends and customer needs. In the automotive components field, it has deepened transactions withmain Tier 1 customers and cultivated new Tier 1 customers by strengthening its sales structure through personnel
reinforcements, enhancing quality control systems, and making proposals that offer added value. Many of thesesales talks have been related to autonomous driving, vehicle electrification, and connected vehicles, and theCompany is anticipating stable growth in this field in the future. In the facilities field, the Company started salesof the 3D Connect Series, robotics solution packages developed in collaboration with MTEC CO., LTD. based ona business partnership started in 2023, and it has opened sales talks and received orders for these packages. It
also engaged in sales talks regarding laser welding for the manufacture of EV secondary batteries.

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

12 19

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

13-Aug.-2024
https://www.sunwa.co.jp/en/ir/index.html

Long-term vision and medium-term management plan

Strategy in each customer segment and main achievements
Segment

Company’s mission and value provided (1-3)

FY3/24 results

Semiconductor
production
equipment

Support the enhancement of the competitiveness of semiconductor
production equipment manufacturers who provide the technicalfoundation for Japan’s national strategy of strengthening thesemiconductor industry
1) Provides cutting-edge technology, 2) supplies critical component
units, 3) solves customer production issues

Gained a better understanding of customer needs and initiated sales
talks through ultra-leading-edge product proposals
1) Coordinated with surface processing technology and measuring
technology manufacturers, 2) agreed contracts for controllers, 3)
acquired joint development themes

Robots andmounters

Amid rising demand driven by global labor shortages, match
technological needs to early-stage technologies to provide robotic
solutions
1) Proposes solutions and components, 2) coordinates withapplication needs sales, 3) provides proposals that strengthen the
supply chains of global customers

Initiated sales talks through intraorganizational development and theprovision of cutting-edge early-stage technologies
1) Aggregated needs to plan products catered specifically for theindustry, 2) acquired new parts for collaborations with manufacturers
and negotiated onboard products, 3) launched a robotics solution
package (3D Connect Series)

Machine tools

Contribute to the growth of the machine tools industry by automating,digitalizing, and enhancing the performance of the mother machinesthat support global manufacturing
1) Proposes solutions and components, 2) coordinates withapplication needs sales, 3) provides proposals that strengthen the
supply chains of global customers

Initiated sales talks pertaining to the diversification and global
production of customers’ products1) Initiated sales talks through proposals for process integration,
automation, and energy-saving equipment, 2) opened sales talks for
PCs for use in factory automation, where the importance is growing
with the shift to IoT, 3) engaged in sales talks for supply chain
proposals that cater for customers’ global production structures

Factory
automationequipment

Supply devices and components used as parts by the equipment
manufacturers who are supporting the automation of manufacturing
production lines in a way that leaves customers highly satisfied interms of quality, cost, and delivery
1) Delivers through global supply chains, 2) connects to newtechnologies through products, 3) captures changes and trends in thefactory automation market

Initiated sales talks for proposals pertaining to the strategies of global
factory automation device manufacturers and early-stage technologies
from suppliers
1) Cultivated global factory automation device manufacturers, 2)
initiated sales talks through proposals suggesting uses for new
early-stage technologies from suppliers, 3) opened sales talks throughtheoretical proposals that have a finger on the pulse of industry trends
and customer needs

Automotive
components

As the industry enters a once-in-a-century period of transformation,
provide value and raise customer satisfaction by meeting the newneeds of customers through innovation
1) Identifies customer needs and challenges and proposes solutions,2) proposes products corresponding to new technological themes, 3)
raises customer satisfaction by strengthening customer service

Enhanced quality control systems and grew transactions with main
Tier 1 customers
1) Grew transactions by cultivating new customers and strengthening
relationships with main Tier 1 customers, 2) initiated sales talks related
to autonomous driving, vehicle electrification, and connected vehicles,3) raised customer satisfaction by strengthening its sales structure
through personnel reinforcements, enhancing quality control systems,
and making proposals that offer added value

Facilities

Be the best partner in manufacturing by enhancing productivity at
customers’ factories through the provision of innovative and optimized
facilities solution packages
1) Provides solution packages, 2) proposes production facilities thatsolve customer challenges, 3) proposes facility upgrades that enhance
productivity at customers’ factories

Opened sales talks by developing a package product for industrial
robots inhouse and launching it to market, and by enhancing its
aftercare structure1) Expanded sales and opened sales talks concerning the 3D
Connect Series developed in collaboration with MTEC, 2) engaged
in sales talks regarding laser welding for the manufacture of EV
secondary batteries, 3) enhanced its aftercare structure, contributed
to the upgrading of dilapidated facilities, and captured demand for the
renewal of robots, programmable logic controllers, and mechanicalparts related to processing and electrical equipment

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

Aims to maintain high levels of ROE by maximizing consolidated
operating profit and quickly achieve a PBR of over 1.0x
3. Efforts to practice management that is conscious of capital cost and share price
Although the Company’s ROE is above 10% at 10.8% for FY3/24, the share price remains below 1.0x PBR at 0.75x.
The Company believes this is because investors do not fully understand its business and growth strategies forsustainable growth, and because the Company’s shares have little fluidity and its market capitalization is only in the¥3.0bn range, which is not large, it is difficult for major institutional investors to target the Company’s shares. Taking
this into account, the Company intends to improve profitability through steady implementation of its medium-term
management plan in addition to enhancing shareholder returns, carrying out investor and shareholder relations
activities and achieving its target of a PBR of over 1.0x as soon as possible.

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

13 19

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

13-Aug.-2024
https://www.sunwa.co.jp/en/ir/index.html

Long-term vision and medium-term management plan

Share price indicators
FY3/20FY3/21

FY3/22

FY3/23

FY3/24

ROE

4.2%

5.4%

9.8%

13.3%

10.8%

PBR

0.41x

0.49x

0.55x

0.68x

0.75x

Year-end share price¥815¥1,081¥1,348¥1,943¥2,390

Dividend payout ratio

40.4%

30.0%

16.2%

25.3%

28.8%

Source: Prepared by FISCO from the Company’s results briefing materials(1) Strategy for enhancing profitabilitya) Sales strategy
In April 2024, the Company reorganized its sales organizations with the aim of further raising profitability.
Specifically, in Japan, it shifted from a three-branch structure (Kanto, Nagoya, Kansai) to a five-branch structure(split the Kanto Branch into North Kanto and South Kanto and established a new Kyushu Branch). Overseas,
it worked with the three regional control organizations (China region, Asia Pacific region, and Europe and U.S.
region) to strengthen customer-centric sales in each region to an even greater degree. Additionally, it is realizing
coordination between each branch and customer segment team while strengthening sales based on technology
proposals with the aim of maintaining and improving profitability.
b) Product strategy
As movement toward green transformation (GX) aimed at realizing a decarbonized society gains pace in Japan andoverseas, the Company has also established a project that will work to expand sales of environmentally friendly
products on a Company-wide basis. Demand related to areas such as solar panels, electricity storage systems,
and energy-saving devices is forecast to grow in the medium- to long-term and the Company anticipates it cansustainably grow net sales by expanding domestic and overseas sales of a wide-range of products it handles,
including relevant products, electronic parts, and facilities equipment.
Promotion of green transformation (GX)

Green electricity
generation

Energy Creation
Solar power business

1) Solar panels
2) Power conditioners3) Distribution boards, junction boxes4) Other ancillary equipment

Green electricity
storage

Energy Storage
Secondary battery business

1) Mobility-related industrial equipment
2) Solar power-linked storage

Efficient electricity
consumption

Energy Saving

LED lighting business

1) Factory and warehouse lighting2) Lighting for offices, etc.
3) Lights for equipment and machinery

Energy-saving
device business

Energy management system (EMS) business

1) Energy management through device coordination and control
2) Communications network devices
3) PC systems such as servers

1) High-efficiency transformers
2) High-efficiency motors
3) Energy-saving inverters
4) High-efficiency power supply
equipment5) EV charging devices

Facility automation business
1) Robot automated facilities

Sale of parts for environmentally friendly devices and products business
1) Sales of parts for environmentally friendly devices including power conditioners and inverters
2) Sales of devices and parts to secondary battery and inspection equipment manufacturers

Source: Reprinted from the Company’s results briefing materials

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

14 19

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

13-Aug.-2024
https://www.sunwa.co.jp/en/ir/index.html

Long-term vision and medium-term management planc) Technological strategy
As one of the Company’s measures to enhance profitability, its Innovation Division works to develop and expand
sales of new high-added-value products through alliances with companies that own proprietary technologies
among other methods. Specific products include the 3D Connect Series of robotics solution packages and in
2023, it launched AR^2 System, which uses AR markers*, as the first product in the series.
*	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 3D Connect Series is a solutions package that combines modules for various functions, from design throughto operation, using Planning Simulator, a process simulator that enables motion controllers for applications suchas 3D CAD software and robots to be operated simultaneously in real time. This corrects any inconsistencies in
the coordination 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 canread AR markers attached to a target and automatically orient itself, enabling the relative positioning of the robot
to be corrected with high precision. The other is that operating conditions (recipes for behavior) can be plantedin AR markers, enabling operational instructions that let the robot make decisions. Usually, the operation ofrobots requires teaching data for a specific operation to be created and applied, but adding AR^2 System to thisprocess offers a more efficient solution. Another advantage is that it is relatively easy to introduce and use, evenfor companies that do not have robot operational know-how, and since the product launched, it has received alarge number of enquiries, and an order from an automotive equipment manufacturer has already been finalized.
AR^2 has been well received as it lowers the barriers to the introduction of robots by enabling the addition of
manufacturers’ standards to packaged products, and the Company is targeting ¥5.0bn in sales over the three
years from FY3/25. It is also more profitable than the introduction of robots alone, so it is expected to contributeto efforts to enhance profitability and to net sales growth in the general machinery segment.
d) Overseas strategy
In its overseas strategy, the Company is establishing a support structure for customers that are moving to minimize
the impact of risk associated with China by moving production to India and other Asian countries. It is doing this byestablishing a sales platform through local sales agents in order to expand the scope of sales. The overseas sales
ratio* is projected to increase from 34% in FY3/22 to 38% in FY3/25. Looking at approximate regional shares ofsales, the share of China is forecast to rise from 24% in FY3/22 to 25% in FY3/25, while the share of the rest of
Asia will rise from 6% to 9% over the same period. It is thought that the share of China will trend downward after
peaking at 27% in the previous fiscal year. Regarding the rest of Asia, in May 2024, the Company establisheda second office in Bengaluru, India, to engage the growing Indian market. It will target the local subsidiaries ofJapanese companies expanding into the country.
*	Overseas sales ratio is net sales from overseas business (overseas affiliates) divided by consolidated net sales (before
consolidation eliminations)

Sales composition by region
FY3/22

FY3/23

FY3/24

FY2/25 (E)

Japan

66%

65%

62%

62%

China

24%

24%

27%

25%

Asia

6%

8%

7%

9%

Europe/U.S.

4%

3%

4%

4%

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

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

15 19

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

13-Aug.-2024
https://www.sunwa.co.jp/en/ir/index.html

Long-term vision and medium-term management plane) DX strategy
The Company has established Sun-Wa DX (SDX) as a DX promotion project which aims to use DX to improve
operational efficiency and build a framework for enhancing profitability. The five main themes of initiatives are
outlined below.
• Enhance customer value by making data usage more sophisticated: Visualize customer segment strategy KPI,
make utilization of sales support tools more sophisticated, build a technical information database• Improve operational efficiency: Digitalize document output from core systems, enhance application and approval
workflows, automate operations using RPA, centralize information, standardize and aggregate concentrate work
processes, introduce warehouse management and export control systems• Train and recruit DX personnel: Implement training to enhance the IT literacy of all employees, cultivate DX
personnel through reskilling, recruit appropriate personnel• Realize the swift visualization of key management indicators: Realize the efficient aggregation of global data,enhance the management dashboard, review sales support tools• Renew the Company website: Renew the website based on the concept of “connecting technology around theworld” (planned for implementation in November 2024)(2) Strengthening the shareholder return policy
In order to strengthen its shareholder return policy, the Company is targeting a consolidated payout ratio of
25-35% as its indicator of performance-linked profit distribution. Following on from a series of considerable dividend increases from FY3/23 onward, it has introduced a shareholder benefits scheme with the aim of increasing
the number of stable individual shareholders from FY3/25 onward.
(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 plans to continue
carrying out IR activities, including holding briefings for institutional and individual investors given by directors
and the officer in charge 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 beincorporated when reviewing management strategy. It is also working to raise name recognition by exhibiting at
various trade shows and the regular hosting of Sun-Wa Technical Seminar ’21, a seminar for engineers working
at business partners.
(4) SDGs initiatives
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 seeking to foster an awarenesswithin 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.

16 19

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange Prime Market

13-Aug.-2024
https://www.sunwa.co.jp/en/ir/index.html■ Shareholder return policy
Paying dividends with a target consolidated payout ratio of 25-35%
and introducing a new shareholder benefits scheme
The Company is working on strengthening its shareholder return policy, which is one of the measures it is taking
to quickly achieve a PBR of over 1.0x. In regard to dividends, after considering how to balance investment needed
to realize sustainable growth and raise corporate value with the maintenance of financial soundness needed todeal with risks, it has decided to maintain a stable dividend (since listing, it has never lowered its dividend) while
conducting shareholder returns based on consolidated results from a medium- to long-term perspective, and istherefore targeting a consolidated payout ratio of 25-35%. Based on this policy, the Company’s per-share dividendfor FY3/24 was increased by ¥5.0 to ¥95.0 (for a payout ratio of 28.8%). In FY3/25, under its policy of strengthening
shareholder returns, the Company plans to raise the regular dividend by ¥5.0 to ¥100.0 despite the forecast of a fallin profit. In addition to this, it will pay a 75th anniversary commemorative dividend of ¥10.0 to give a total dividendof ¥110.0 (payout ratio of 69.0%). This represents the fourth consecutive year of dividend increases.
Also, it has introduced a shareholder benefits scheme with the aim of increasing the number of stable individual
shareholders. At the end of March each year, shareholders possessing 100 or more shares will receive a QUO card.
The value of the card will be in accordance with the number of shares and the period for which they have been held.
Shareholders who have held between 100 and 499 shares for a period of less than two years will receive a ¥1,000
card, while shareholders who have held the same number for two or more years will be given a special long-termholding benefit* (equivalent to ¥1,000) on top of this, receiving a ¥2,000 card. (Shareholders with 500 or more shares
will receive a ¥2,000 or ¥3,000 card, respectively). A rough calculation of the investment yield of the dividend andshareholder benefits combined, based on the share price for May 14 (¥2,232) results in a 5% yield for investors
holding 100 shares, which could be considered to be an attractive return for investors looking to make income gains.
*	On condition that the shareholder has been recorded in the shareholder registry as having held the same numbered sharesfor at least five consecutive record dates, with the record dates being March 31 and September 30 each year. Shareholders
who have held shares consecutively since March 31, 2023, will be the first to earn the right to a special long-term holding
benefit.

Although the Company is working to quickly achieve a PBR of over 1.0x, net assets per share at the end of FY3/24
was ¥3,174 for a PBR of just 0.7x. PBR at the end of FY3/20 was 0.4x and since then, the Company has graduallyraised the level by enhancing ROE and strengthening shareholder returns. Going forward, we at FISCO expectthat if the Company continues to maintain and enhance ROE, actively engage in shareholder return, and carry out
investor and shareholder relations activities aimed at raising name recognition, then it can achieve its target of a
PBR of over 1.0x.

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

17 19

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

SUN-WA TECHNOS CORPORATION

13-Aug.-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)

（\）
120.0

Commemorative dividend (left)
（%）
90.0%
10.0

100.0

75.0%

69.0%

80.0

60.0%

60.0

45.0%
30.0%

40.0

90.0

37.0

20.0

34.0

0.0

FY3/21

25.3%

100.0

95.0

30.0%

28.8%

15.0%

16.2%
FY3/22

FY3/230.0%

FY3/24

FY3/25（E）

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

Simplified income statement and main indicators(¥mn)
FY3/21

FY3/22

FY3/23

FY3/24

FY3/25 (E)Net sales

134,769

154,414

181,013

166,138

155,070

YoY

-2.3%

14.6%

17.2%

-8.2%

-6.7%

Gross profit

14,224

18,772

23,03921,778-% of sales

10.6%

12.2%

12.7%

13.1%

-

SG&A expenses

12,071

13,967

15,40815,562-% of sales

9.0%

9.0%

8.5%

9.4%

-

Operating profit

2,152

4,804

7,630

6,215

3,080

YoY

16.5%

123.2%

58.8%-18.5%-50.4%% of sales

1.6%

3.1%

4.2%

3.7%

2.0%

Ordinary profit

2,567

5,195

7,675

6,631

3,220

19.7%

102.4%

47.7%-13.6%-51.4%

1,786

3,577

5,493

5,007

2,410

YoY

33.2%

100.3%

53.6%

-8.9%

-51.9%EPS (¥)

113.23228.33355.08329.87159.48

34.0

37.0

90.0

95.0

110.0

YoY
Profit attributable toowners of parent

Dividend (¥)

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

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

18 19

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

SUN-WA TECHNOS CORPORATION

13-Aug.-2024

8137 Tokyo Stock Exchange Prime Market

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

Shareholder return policy

Simplified balance sheet(¥mn)
FY3/21

FY3/22

FY3/23

FY3/24

Changeamount-7,91364,43082,20994,26386,350Cash and deposits

13,113

14,04914,14519,0814,936

Trade receivables and contract assets

42,45351,99758,92247,417-11,505

11,951

10,86812,31812,356

38

2,590

2,230

2,272

2,256

-16

Current assets

Non-current assets
Total property, plant and equipment

170

226

221

166

-55

9,190

8,411

9,824

9,933

109

Total assets

76,381

93,078106,581

98,707-7,874Current liabilities

36,372

52,79759,87045,124-14,746-12,746

Intangible assets
Total investments and other assets

29,45540,67645,33532,589Non-current liabilities

4,978

2,257

2,227

5,615

3,388

Total liabilities

41,35055,05462,09750,740-11,357

Payment obligations

7,048

7,805

9,557

12,007

2,450

Shareholders’ equity

30,80233,277

38,202

40,6202,418

Accumulated other comprehensive income

4,228

4,746

6,282

7,346

1,064

Total net assets

35,03038,02344,48447,9663,482Interest-bearing debt

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

Status of Cash Flows(¥mn)
FY3/21

FY3/22

FY3/23

FY3/24

Cash flows from operating activities

1,589

792

-545

4,226

Cash flows from investing activities

-141

244

-731

883

Cash flows from financing activities

-309

-580

906

-608

12,62913,565

13,661

18,597

Cash and cash equivalents at end of period

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

Management indicators(¥mn)
FY3/21

FY3/22

FY3/23

FY3/24Equity ratio

45.9%

40.9%

41.7%

48.6%

Interest-bearing debt ratio

20.1%

20.5%

21.5%

25.0%

ROE

5.4%

9.8%

13.3%

10.8%

Net cash (¥mn)

6,065

6,244

4,588

7,074

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

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

19 19

Disclaimer
FISCO Ltd. (“FISCO”) offers stock price and index information for use under the approval of
the Tokyo Stock Exchange, the Osaka Stock Exchange and Nikkei Inc.
This report is provided solely for the purpose of offering information, and is not a solicitationof investment nor any other act or action.
FISCO prepared and published this report based on information which it considered reliable;
however, FISCO does not warrant the accuracy, completeness, fitness nor reliability of thecontents of this report or the said information.
The issuers’ securities, currencies, commodities, securities and other financial instruments
mentioned in this report may increase or decrease in value or lose their value due to influence
from corporate activities, economic policies, world affairs and other factors. This report does
not make any promises regarding any future outcomes. If you use this report or any information
mentioned herein, regardless of the purpose therefor, such use shall be made based on yourjudgment and responsibility, and FISCO shall not be liable for any damage incurred by you asa result of such use, irrespective of the reason.
This report has been prepared at the request of the company subject hereto based on theprovision of information by such company through telephone interviews and the like. However,
the hypotheses, conclusions and all other contents contained herein are based on analysis
by FISCO. The contents of this report are as of the time of the preparation hereof, and are
subject to change without notice. FISCO is not obligated to update this report.
The intellectual property rights, including the copyrights to the main text hereof, the data
and the like, belong to FISCO, and any revision, reprocessing, reproduction, transmission,
distribution or the like of this report and any duplicate hereof without the permission of FISCO
is strictly prohibited.
FISCO and its affiliated companies, as well as the directors, officers and employees thereof,
may currently or in the future trade or hold the financial instruments or the securities of issuersthat are mentioned in this report.
Please use the information in this report upon accepting the above points.

◾ For inquiries, 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