COMPANY RESEARCH AND ANALYSIS REPORT

SUN-WA TECHNOS CORPORATION
8137
Tokyo Stock Exchange First Section

12-Jul.-2019
FISCO Ltd. Analyst

Hiroyuki Asakawa

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

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange First Section

12-Jul.-2019
http://www.sunwa.co.jp/ir/index.html■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Weaker sales and profits in FY3/19 with sharp slowdown in industrial machinery industry sales in Asia. ....

01

2. Announced new medium-term management plan NEXT 1800 with FY3/22 goalsof ¥180bn in net sales and ¥5bn in ordinary profit. ......................................................................................

01

3. Planned increases in sales and profits for FY3/20........................................................................................

01■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 02
1. Review of FY3/19 results ...................... ......................................................................................................

02

2. Detailed trends by regional segments and business divisions. ....................................................................

04■New medium-term management plan NEXT 1800--------------------------------------------------------------------- 07
1. Overview of the new medium-term management plan NEXT 1800. .............................................................

07

2. Management goals in the NEXT 180 plan. ...................................................................................................

08

3. Priority measures for “contribute to customer production activities by strengthening core businesses”. ....

09

4. Priority measures for “expand global business capabilities to support market demand”. ............................

12

5. Priority measures for “pursue new business fields to accelerate sustainable growth”. ................................

13

6. Priority measures for “initiatives to realize a sustainable society”. ...............................................................

13■Outlook-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 14• Overview of FY3/20 forecasts................ ......................................................................................................

14■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 17

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

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange First Section

12-Jul.-2019
http://www.sunwa.co.jp/ir/index.html██Summary
Formulated new medium-term plan NEXT 1800, aims for longerterm growth through expansion of core business and with global
initiatives and advances in new business fields
SUN-WA TECHNOS CORPORATION <8137> (hereinafter, “the Company”) is an independent trading company thatspecializes in technology products. The Company has steadily expanded its businesses by leveraging coverageof three major areas (electrical machinery, electronics, and general machinery) and two-way trade in which it sells
equipment and materials for manufacturers’ production lines and then procures the products made by thesemanufacturers. In recent years, it has been focusing on the engineering business and global SCM solutions.
1. Weaker sales and profits in FY3/19 with sharp slowdown in industrial machinery industry sales in Asia
The Company reported lower sales and profits in FY3/19 at ¥145,410mn in net sales (-0.9% YoY) and ¥3,410mn inoperating income (-17.5%). It reduced FY3/19 guidance at the 3Q announcement, and full-year results were on trackwith the adjusted view and no particular surprises. Sales to mainstay factory automation and industrial machineryindustries sharply declined in Asia (particularly China) with US-China trade friction and weakness in Chinese auto
sales as catalysts. While sales to the automobile-related industry increased on growing demand for safety equipment
such as automated brakes in Japan, this was not enough to fully offset the setback impact.
2. Announced new medium-term management plan NEXT 1800 with FY3/22 goals of ¥180bn in net sales and¥5bn in ordinary profit
The Company formulated NEXT 1800, a new three-year medium-term management plan covering FY3/20 to
FY3/2022, aimed at achieved longer-term growth through measures such as strengthening and expanding corebusiness, growing global business, and pursuing new business areas. As management goals, the plan targets¥180,000mn in net sales, ¥4,800mn in operating profit (2.7% operating margin), and ¥5,000mn in ordinary profit(2.8% ordinary margin) in FY3/22, the final fiscal year.
3. Planned increases in sales and profits for FY3/20
In FY3/20, the Company expects lower profits on increased sales with targets of ¥150,000mn in net sales (+3.2%
YoY) and ¥3,100mn in operating profit (-9.1%). It projects higher sales in the three main regional segments – Japan,
Asia, and Europe and the US.
However, it forecasts a decline in operating profit (YoY) because of pressure from higher personnel costs accompanying additions of people in Japan and an increase in logistics costs.
We believe it is reasonably possible to absorb these cost increases if engineering business, where the Company isfocusing efforts, steadily expands. However, we intend to monitor trends based on the Company’s outlook for thetime being because some impact from US tariffs on China are not reflected in the targets.

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

01 17

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange First Section

12-Jul.-2019
http://www.sunwa.co.jp/ir/index.html

Summary

Key Points
New medium-term management plan adds engineering and global SCM solutions to core business and aims toaccelerate reinforcement and expansion of these areas• Pursuing 15-20% gross margin in engineering business• Possible tailwind for global SCM solutions business from US-China trade friction•㻾㼑㼟㼡㼘㼠㼟㻌㼠㼞㼑㼚㼐㼟㻔¥㼙㼚㻕㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻔¥㼙㼚㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻕㻞㻜㻜㻘㻜㻜㻜

㻡㻘㻜㻜㻜
㻠㻘㻝㻟㻡

㻝㻢㻜㻘㻜㻜㻜

㻟㻘㻝㻜㻜

㻟㻘㻜㻝㻠
㻝㻞㻜㻘㻜㻜㻜

㻠㻘㻜㻜㻜

㻟㻘㻠㻝㻜

㻟㻘㻜㻜㻜

㻞㻘㻠㻠㻠

㻤㻜㻘㻜㻜㻜

㻝㻠㻢㻘㻣㻡㻥
㻝㻜㻡㻘㻣㻠㻤

㻝㻠㻡㻘㻠㻝㻜

㻝㻡㻜㻘㻜㻜㻜

㻞㻘㻜㻜㻜㻝㻝㻢㻘㻢㻝㻝

㻠㻜㻘㻜㻜㻜㻝㻘㻜㻜㻜㻜㻜㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣

㻲㼅㻟㻛㻝㻤

㻲㼅㻟㻛㻝㻥

㻲㼅㻟㻛㻞㻜㻌㻱

Source: Prepared by FISCO from the Company’s financial results██Results trends
Sales and profit declines on sudden slowdown in sales to mainstay
factory automation and industrial machinery industries
1. Review of FY3/19 results
The Company reported lower sales and profits in FY3/19 at ¥145,410mn in net sales (-0.9% YoY), ¥3,410mn inoperating income (-17.5%), ¥3,627mn in ordinary income (-16.6%), and ¥2,628mn in net income attributable toowners of the parent (-14.8%).
The Company lowered full-year guidance on January 30, 2019, and net sales and profits slightly exceeded therevised targets.

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

02 17

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

SUN-WA TECHNOS CORPORATION

12-Jul.-2019

8137 Tokyo Stock Exchange First Section

http://www.sunwa.co.jp/ir/index.html

Results trends

FY3/19 results(¥mn)
FY3/18

FY3/19Full year
Growthrates
versesforecast

1H

2H

Full year

1H

2H

Final
targetResults

Net sales

67,34879,411

146,759

72,16473,246142,000

145,410

-0.9%

2.4%

Operating income

1,773

2,362

4,135

2,129

1,281

2,700

3,410

-17.5%

26.3%

Growthrate (YoY)

2.6%

3.0%

2.8%

3.0%

1.7%

1.9%

2.3%

-

-

Ordinary income

1,951

2,398

4,349

2,312

1,315

3,000

3,627

-16.6%

20.9%

Net income attributable toowners of the parent

1,359

1,726

3,085

1,651

977

2,100

2,628

-14.8%

25.1%

Operating margin

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

The Company slightly adjusted the sales target from the period-start level of ¥157,500mn to ¥150,000mn at the 2Q
announcement. Orders were coming in smoothly at that point, and the outlook expected healthy sales in 2H too.
However, sharply lower orders in 3Q (Oct-Dec 2018) fueled concerns about results in 4Q when they show up insales. In light of this situation, the Company updated its full-year outlook again at the 3Q announcement on January
30, 2019, including a downward revision of the sales target to ¥142,000mn. Sales ultimately beat the final target
by 2.4% (¥3,410mn) with support from catch-up efforts in 4Q.

㻽㼡 㼍㼞㼠㼑㼞㼘㼥㻌㼞㼑㼟㼡㼘㼠㼟㻌㼠㼞㼑㼚㼐㼟㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻔¥㼙㼚㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻕㻔¥㼙㼚㻕㻠㻡㻘㻜㻜㻜

㻝㻘㻤㻜㻜㻠㻜㻘㻜㻜㻜

㻟㻣㻘㻞㻟㻝 㻝㻘㻢㻜㻜㻟㻡㻘㻜㻜㻜

㻝㻘㻠㻜㻜㻟㻜㻘㻜㻜㻜

㻝㻘㻞㻜㻜㻞㻡㻘㻜㻜㻜
㻞㻜㻘㻜㻜㻜㻣㻤㻝 㻝㻘㻜㻜㻜㻤㻜㻜㻝㻡㻘㻜㻜㻜

㻢㻜㻜㻝㻜㻘㻜㻜㻜

㻠㻜㻜

㻡㻘㻜㻜㻜

㻞㻜㻜

㻜

㻜
㻝㻽 㻞㻽 㻟㻽 㻠㻽 㻝㻽 㻞㻽 㻟㻽 㻠㻽 㻝㻽 㻞㻽 㻟㻽 㻠㻽 㻝㻽 㻞㻽 㻟㻽 㻠㻽 㻝㻽 㻞㻽 㻟㻽 㻠㻽㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣

㻲㼅㻟㻛㻝㻤

㻲㼅㻟㻛㻝㻥

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

Reduction of the sales outlook from the period-start plan mainly factors in weaker sales in Asia (particularly China)
at the regional level and in factory automation and industrial equipment industries, the Company’s core areas, as
customer industries. As background, US-China trade friction and decline in automobile sales in China triggered
rapid cooling off by capital investments and production activities in China. Japanese sales, meanwhile, rose YoY on
healthy electronics division sales to vehicle products for the automotive industry. Trends clearly differed by regions
and demand areas.

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

03 17

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange First Section

12-Jul.-2019
http://www.sunwa.co.jp/ir/index.html

Results trends

In profits, just as with sales, the Company lowered its operating profit target from ¥4,400mn to ¥2,700mn in theJanuary 2019 revisions. Full-year operating profit ultimately exceeded the revised outlook, similar to sales, at¥3,410mn and 2.3% operating margin.
Operating margin slipped significantly from 3.0% in 1H to 1.7% in 2H, primarily due to less favorable product mix.
Specifically, product mix weakened because of decline in sales to the factory automation and industrial equipment
industries in China versus healthy sales of electronic parts to vehicle products for the automotive industry in Japan,
as explained above. Recognition of sales on large projects with low profitability in the general machinery businessalso pushed the margin lower.
Engineering business, which the Company is promoting as a way to improve profit margin, posted ¥11,985mn
in sales (-5% YoY) in FY3/19. While sales fluctuate considerably each year depending on whether the businesshas major projects or not and other factors, they stayed above the ¥10bn level, despite an unstable businessenvironment, in FY3/19. Gross margin, the Company’s most important indicator in the engineering business, dropped
from 13.4% in the previous fiscal year to 12.6% in FY3/19, because of less favorable product mix that was also
seen at the company level.

㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼢㼍㼞㼕㼛㼡㼟㻌㼙㼍㼞㼓㼕㼚㼟㻳㼞㼛㼟㼟㻌㼙㼍㼞㼓㼕㼚

㻝㻠㻚㻜㻑

㻝㻟㻚㻝㻑

㻝㻞㻚㻠㻑

㻿㻳㻒㻭㻌㼑㼤㼜㼑㼚㼟㼑㼟㻌㼞㼍㼠㼕㼛

㻝㻞㻚㻡㻑

㻝㻞㻚㻢㻑

㻝㻞㻚㻡㻑

㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼙㼍㼞㼓㼕㼚
㻝㻞㻚㻞㻑

㻝㻞㻚㻜㻑

㻝㻝㻚㻡㻑

㻝㻝㻚㻞㻑

㻤㻚㻣㻑

㻤㻚㻥㻑

㻝㻜㻚㻜㻑
㻤㻚㻜㻑

㻥㻚㻡㻑

㻥㻚㻥㻑

㻥㻚㻟㻑

㻥㻚㻡㻑

㻟㻚㻞㻑

㻟㻚㻝㻑

㻝㻜㻚㻞㻑

㻥㻚㻢㻑

㻢㻚㻜㻑
㻠㻚㻜㻑

㻟㻚㻣㻑
㻞㻚㻢㻑

㻞㻚㻟㻑

㻞㻚㻢㻑

㻞㻚㻤㻑

㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣

㻲㼅㻟㻛㻝㻤

㻞㻚㻟㻑

㻞㻚㻜㻑
㻜㻚㻜㻑
㻲㼅㻟㻛㻝㻞

㻲㼅㻟㻛㻝㻟

㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻥

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

Clear differences between trends in Japan and Asia and automotive
and industrial machinery industries, respectively
2. Detailed trends by regional segments and business divisions
The Company manages the products it handles and discloses sales by business segment using three divisions –electrical machinery, electronics, and general machinery – and also provides disclosure by regional segments. Below
we review trends by divisions and regional segments.

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

04 17

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange First Section

12-Jul.-2019
http://www.sunwa.co.jp/ir/index.html

Results trends

List of trends by business divisions and regional segments
Japan
Electricalmachinery

Electronics◯◯

Industrial machinery industry

××

FPD industry

×

Automotive industry

Asia

Europe/US

Generalmachinery

Electricalmachinery

Electronics

Generalmachinery

◯

×

×

◯

Electricalmachinery

Electronics

Generalmachinery

Semiconductor industry
×◯×

Smartphone industry
Amusement industry◯

Source: Prepared by FISCO from the Company's financial results and results briefing materials(1) Trends by regional segmentsa) Japan
Profit fell on higher sales with ¥115,993mn in sales (+0.9% YoY) and ¥1,939mn in operating profit (-16.9%). The
Company booked stronger sales of electronic parts for automotive products. This reflects the rising usage ratioof collision prevention automated brakes and other safety devices. In industrial machinery industry, while salesof chip mounters and other equipment increased, sales of electronic parts used in industrial machines declined.
In flat panel display (FDP) industry, sales of OLED-related electric products and other equipment slipped. Overallsales still increased YoY thanks to the rise in sales to the automotive industry.
In earnings, operating profit fell mainly on decline in gross margin because of weaker product mix. The Company’s
core traditional products for the industrial machinery industry, such as control equipment, servo motors, androbots, generate relatively high profitability. Automotive industry business, meanwhile, is generally known to havelower (tighter) profitability. The Company is no exception. Gross margin weakened on the combined effect of
decline in sales to the industrial machinery industry and increase in sales to the automotive industry, and this led
to the drop in operating profit. Higher logistics costs weighed on profits too.
b) Asia
Both sales and profits declined with ¥37,188mn in sales (-5.8% YoY) and ¥1,208mn in operating profit (-18.8%).
In Asia, the Company operates local entities in Shanghai, Shenzhen, and Hong Kong, and China has a high shareof business. Sales of electric products and electronic parts to the industrial machinery industry fell in FY3/19, in
contrast to the rise in sales of production equipment to the same industry, partly due to the impact of US-China
trade friction. Operating profit shrunk as a result of lower profits from the decline in sales and a drop in profit
margin. Operating margin was down by 0.6ppt from 3.8% FY3/18 to 3.2% in FY3/19.
c) Europe/US
Both sales and profits declined to ¥8,084mn in sales (-8.8% YoY) and ¥254mn in operating profit (-18.3%). Sales
fell YoY, even with increases in sales of electronic products to the industrial machinery industry and electronicparts for amusement machines (casino-related equipment), because of a heavy impact from decline in sales of
OLED-related electrical products to the FPD industry. Operating profit fell on weaker sales.

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

05 17

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange First Section

12-Jul.-2019
http://www.sunwa.co.jp/ir/index.html

Results trends

Detailed trends by regional segments(¥mn)
FY3/18

Japan

Asia

1H

2H

Full year

1H

2H

Full year

Net sales

52,38562,617

115,00257,65358,340115,993

YoY

27.6%

22.4%

24.7%

10.1%

-6.8%

0.9%

935

1,398

2,333

1,065

874

1,939

YoY

24.5%

-1.1%

7.8%

13.9%

-37.5%-16.9%

Operating margin

1.8%

2.2%

2.0%

1.8%

1.5%

1.7%

Net sales

17,73421,75739,491

18,646

18,542

37,188

YoY

49.7%

20.5%

32.1%

5.1%

-14.8%

-5.8%

674

815

1,489

778

430

1,208

118.3%

60.4%

82.4%

15.4%

-47.2%-18.8%

Operating income

Operating income
YoY

3.8%

3.7%

3.8%

4.2%

2.3%

3.2%

Net sales

3,758

5,107

8,865

4,204

3,880

8,084

YoY

98.6%

15.3%

40.2%

11.9%

-24.0%

-8.8%

162

148

310

275

-21

254

868.1%

-

-

69.7%

-

-18.3%

4.3%

2.9%

3.5%

6.5%

-0.5%

3.1%

Operating margin

Europe/US

FY3/19Operating income
YoY
Operating margin

Source: Prepared by FISCO from the Company's financial results(2) Trends by businessElectrical machinery sales dropped 9.6% YoY to ¥24,569mn. This segment mainly handles servo motors, inverters,
and other equipment. In FY3/19, decline in sales of OLED-related products to the FPD industry stood out andspinning machine sales also dropped from the previous year. Increased sales of electrical products for equipmentused in the automotive industry, meanwhile, were not enough to offset setbacks in other areas and segment sales
were down by roughly 10%.
Electronics sales eased 1.0% YoY to ¥109,370mn. This segment handles a broad range of products that do not fit
into electrical machinery and general machinery segments. While the products are described as electronic parts,
they do not include low-voltage parts and mainly consist of power sources, connectors, semiconductors, various
types of sensors, and LCD panels. In FY3/19, while sales of electronic parts and electronic parts to the industrial
machinery industry dropped considerably in Japan and Asia, sales of electronic parts for vehicle equipment to theautomotive industry climbed in the Japanese market. Sales of electronic parts for amusement equipment rose as
well. Thanks to these upbeat areas, decline in segment sales was just 1.0% YoY.
General machinery sales rose 25.3% YoY to ¥11,470mn. This segment mainly handles manufacturer production
facilities and equipment, including SPE products, industrial robots, clean robots for FPD transport, and inspection
equipment. In FY3/19, even though sales of LCD panel-related equipment to the FPD industry declined, segment
sales rose significantly YoY due to booking sales for a major equipment deal for the industrial machinery industry(chip mounters) and higher sales of equipment to the metal products industry. Nevertheless, sales missed theperiod-start target as recognition of some major deal sales slipped to FY3/20.

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

06 17

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange First Section

12-Jul.-2019
http://www.sunwa.co.jp/ir/index.html

Results trends

Detailed trends by business segments(¥mn)
FY3/18

FY3/191H

2H

Full year

1H

2H

Full year

12,39014,77627,166

13,332

11,237

24,569

YoY

35.9%

27.1%

31.0%

7.6%

-24.0%-9.6%

Electronics

50,33960,097

110,436

53,55355,817

109,370

YoY

37.1%

22.4%

28.7%

6.4%

-7.1%

-1.0%

4,619

4,537

9,156

5,278

6,192

11,470Electrical machinery

General machinery
YoY
Total net sales
YoY

10.4%

-22.7%

-8.9%

14.3%

36.5%

25.3%

67,34879,411

146,759

72,16473,246

145,410

34.7%

19.2%

25.9%

7.2%

-7.8%

-0.9%

Source: Prepared by FISCO from the Company's financial results██New medium-term management planNEXT 1800

Announced the new three-year medium-term management planNEXT 1800
Aims to realize growth with four core policies (strengthening corebusinesses, etc.)
1. Overview of the new medium-term management plan NEXT 1800
The Company aims to realize longer-term growth by formulating medium-term management plans once every three
years and thoroughly implementing them. It announced NEXT 1800, the new three-year medium-term management
plan, in May 2019.
In its long-term management vision “Sun-Wa Vision 2025,” the Company calls for “strengthening core businesses tobuild operations that contribute to advances in industrial activity in local societies as a total coordinator of production
sites and distribution and help in attaining the goal of ¥250bn in consolidated sales in FY3/26.” It positions NEXT
1800, the new medium-term management plan, as an action plan for the next three years toward realization of thecorporate mission and Sun-Wa Vision 2025, similar to previous medium-term management plans.
NEXT 1800 presents four items as fundamental policies, including “contribute to customer production activities bystrengthening core businesses.” It also highlights priority measures for each of the policies. We review the details ofplan measures later in this report. In the core portion of income growth, the Company hopes to make improvements
and achieve further advances versus Challenge 1500, the previous medium-term management plan, and realize agrowth strategy with even higher certainty, while also carrying out initiatives for new business creation that lay thegroundwork for growth over a longer term as a new initiative. Additionally, it places more emphasis on themes withstrong social content, such as work style reforms that enhance productivity by utilizing ICT in a way that addresseschanges in society, achievement of a corporate culture that stimulates interest in work, and contributions to SDGs
(sustainable development goals), than previously.

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

07 17

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange First Section

12-Jul.-2019
http://www.sunwa.co.jp/ir/index.html

New medium-term management plan NEXT 1800

Fundamental policies in NEXT 1800
Contribute to customer production activities by strengthening core businesses★ Strengthen core businesses★ Promote collaboration with business partners to bolster solution proposals
Expand global business capabilities to support market demand★ Strengthen hiring of overseas local employees and organizational capabilities★ Consider establishment of new locations
Pursue new business fields to accelerate sustainable growth★ Strengthen investments in new business creation★ Cultivate managerial personnel by adopting an intrapreneurship program★ Create new value through SCM improvements
Initiatives to realize a sustainable society★ Foster a corporate culture that stimulates interest in work by boosting employee engagement★ Implement work style reforms that “enhance productivity” utilizing ICT★ Conduct initiatives that contribute to SDGs
★ Fulfill corporate social responsibility (promote CSR and compliance)
Source: Prepared by FISCO from the Company's results briefing materials

Management goals for final-year FY3/22 at ¥180bn in net sales and¥5bn in ordinary profit
2. Management goals in the NEXT 180 plan
Management goals in NEXT 1800, as suggested by the plan name, are ¥180,000mn in net sales, ¥4,800mn inoperating profit, and ¥5,000mn in ordinary profit in FY3/22, the final fiscal year.
The previous medium-term management plan targeted ¥137,000mn in FY3/19 net sales, and the Company achieved
this goal. In profits, however, sudden changes in the business environment, as mentioned earlier, kept it fromreaching ¥4,500mn in ordinary profit.
Since the new medium-term management plan starts at the low FY3/19 earnings level, the profit goal (particularly
profit margin), compared to sales, appears weaker than in the previous plan. Nevertheless, we attribute this aspect
to the plan being based on recent conditions and see a reasonable possibility of the Company attaining profit margin
that exceeds the plan in light of its reinforcement of efforts to expand engineering business and improve profitability
compared to the previous medium-term management plan.
Management goals of NEXT 1800(¥mn)
Medium-term management plan NEXT 1800

Net sales
Operating income
Operating margin
Ordinary income
Ordinary margin

FY3/19 results

FY3/20managementtargets

FY3/21
managementtargets

FY3/22
managementtargets

145,410150,000

165,000

180,000

3,410

3,100

3,800

4,800

2.3%

2.1%

2.3%

2.7%

3,627

3,300

4,000

5,000

2.5%

2.2%

2.4%

2.8%

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

Below we describe the detailed content of initiatives aimed at realizing management goals in the new medium-term
plan.

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

08 17

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange First Section

12-Jul.-2019
http://www.sunwa.co.jp/ir/index.html

New medium-term management plan NEXT 1800

Aims to accelerate improvement of profit margin and expansionof business opportunities by adding engineering and global SCM
solutions to core businesses
3. Priority measures for “contribute to customer production activities by strengthening core businesses”
We think this theme is most important out of the four fundamental policies because it addresses income growthmore directly.
The Company’s revision of “core business” content in the new medium-term management plan (versus the previousplan) deserves notice. Specifically, it adds engineering and global SMC solutions to core businesses. The Company
is a technology-oriented trading company and has operated as a leading distributor for major industrial equipment
manufacturers, such as Yaskawa Electric <6506>. While this distributor business remains the core business, theCompany has also worked to create added its unique value. These efforts contribute to higher margin and expand
business opportunities.
The Company promoted engineering and global SCM solutions businesses from this perspective. These are actual
sales methods for products handled by the three divisions as distributor business, rather than separate business
units. However, since increasing sales in engineering business and expanding the global SCM solutions businessare closely tied to expansion of the three divisions, we think the Company added them to core business content as
clarification of its intent to further strengthen related activities.
(1) Overview and progress of the engineering business
The Company’s traditional distributor business divides handled products into three areas – electrical machinery,electronics, and general machinery. Since usage aims (for example, production materials and facilities) anddemand drivers (such as consumption demand for final products and capital investment demand) differ for eacharea, the Company achieved growth by handling sales activities separately through organizations for the threedivisions.
With advances in functionality and shift to software for handled products accompanying technology developments
and increased sophistication of customer needs, however, the Company has been having difficulties in addressing
requirements and bolster momentum and opportunities just by selling products on a standalone basis. It hence
has been putting effort into combining products from the three areas for sale to customers as a system. This is
the engineering business. In other words, the engineering business is not a separate new business, but a sales
method for the various products handled in the distributor business.
Using a food example, while the Company had been selling meat, vegetables, and rice separately (distributor
business), its engineering business seeks to sell a “curry rice” meal that utilizes these ingredients. The Company
provides added value in the latter in procurement of curry powder spices, an essential ingredient for a curry rouxand creation of flavors for the curry mix.
Engineering business has been steadily expanding and continues to remain stably above the ¥10bn level, which
had been the primary goal at the business launch, in the past few years. We think this is a major reason for“upgrading” engineering business to a core business.

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

09 17

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange First Section

12-Jul.-2019
http://www.sunwa.co.jp/ir/index.html

New medium-term management plan NEXT 1800

A key point to recognize, meanwhile, is that engineering business is just a sales method for the Company’s
traditional distributor business and its sales overlap with sales from the three business divisions (in other words,
its sales are a reference value and not independent of these divisions). We think the engineering business isimportant because of its anticipated contributions to a higher profit margin for the entire Company. As explained
earlier, expansion of engineering business leads to larger added value (procuring spices and creating flavors). This
portion earns very high profitability because it utilizes accumulated knowhow and experience as raw materials.
Gross margin on engineering business sales still clearly exceeds the Company’s overall average. We expect
further expansion of engineering margin and significant contribution to higher overall profitability if the Company
can broaden its line-up of spices and flavors in the future.
Goals in the new medium-term management plan do not set values separately for engineering business. We think
one reason for this approach is that sales do not simply climb upward to the right depending on what happens withmajor projects each year. However, since profit margin was the original motivation in starting engineering business,
we expect the Company to earnestly pursue this area. In our dialogue with the Company, it has repeatedly talked
about gross margin in the 15-20% range for engineering business. We hence believe it is likely to aim for this levelin the new medium-term management plan too.

㼀㼞㼑㼚㼐㻌㼕 㼚㻌㼑㼚㼓㼕㼚㼑㼑㼞㼕㼚㼓㻌㼎㼡㼟㼕㼚㼑㼟㼟㻌㼟㼍㼘㼑㼟㻺㼑㼠㻌㼟㼍㼘㼑㼟㻳㼞㼛㼟㼟㻌㼙㼍㼞㼓㼕㼚㻯㼛㼙㼜㼍㼚㼥㼣㼕㼐㼑㻌㼓㼞㼛㼟㼟㻌㼙㼍㼞㼓㼕㼚

㻔¥㼎㼚㻕
㻝㻢
㻝㻠
㻝㻞

㻭㼎㼛㼡㼠㻌
¥㻝㻝㻚㻡㼎㼚

㻝㻡㻚㻜㻑㻭㼎㼛㼡㼠㻌
¥㻝㻟㻚㻡㼎㼚

㻭㼎㼛㼡㼠㻌
¥㻝㻞㻚㻢㼎㼚

㻭㼎㼛㼡㼠㻌
¥㻝㻝㻚㻥㼎㼚

㻝㻠㻚㻜㻑

㻝㻟㻚㻜㻑

㻝㻜

㻝㻞㻚㻜㻑

㻤
㻝㻝㻚㻜㻑

㻢

㻝㻜㻚㻜㻑

㻠

㻥㻚㻜㻑

㻞
㻜

㻤㻚㻜㻑
㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣

㻲㼅㻟㻛㻝㻤

㻲㼅㻟㻛㻝㻥

Source: Prepared by FISCO from the Company’s results briefing materials and interviews(2) Overview of the global SCM solutions business
The Company has also focused on expansion of global SCM solutions business over the past few years (similar toengineering business). It must be noted that the global SCM solutions business is a sales and marketing method
for the three existing business divisions (electrical machinery, electronics, and general machinery) too, and its
sales overlap with sales for the three segments, in the same way as engineering business.
Global SCM solutions business has roots in procurement agent, logistics agent, and delivery period management
services handled by the Company in past years. These services constitute an important function required of
trading companies, and the Company has naturally provided such functionality. Renewed emphasis on these
services as global SCM solutions business, meanwhile, reflects both circumstances on the customer side andthe Company’s own strategy.

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

10 17

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange First Section

12-Jul.-2019
http://www.sunwa.co.jp/ir/index.html

New medium-term management plan NEXT 1800

On the customer side, even large manufacturers face shortages in personnel to handle global logistics, inventory
management, and materials procurement, particularly because these areas have been targeted by cutbacks inbusiness structure reforms and restructuring processes. However, the reality is that larger companies are more
inclined to pursue efficient manufacturing operations and frequently implement business transfers and otherrevisions that extend across countries. Consequently, such activity creates outsourcing needs in these areas.
The Company aims to acquire this demand by leveraging its knowhow and overseas network accumulated overmany years as a technology-oriented trading company.
The Company’s strategy, meanwhile, aims to expand business opportunities with global SCM solutions businessas the catalyst and broad collaboration with engineering business. Global SCM solutions business shoulders someof the customer administrative load. While the Company charges fair fees that provide an income source since it
treats this activity as a business, profit margin is fundamentally low. With a focus on improving profitability as a top
management goal, expansion of global SCM solutions business seems to move in the opposite direction becauseof downward pressure on margin through erosion of product mix. Yet this is not what actually happens. Sinceorders often involve unloading of entire processes because of customer-side circumstances explained above,
global SCM solutions business typically leads to growth in other transactions and helps in obtaining opportunities
for engineering business.
Using the moving business as an example, conventional procurement agent and logistic agent services just moving
a person’s items from the former home to the new home. In global SCM solutions business, meanwhile, the service
also extends to setting up televisions and PCs for immediate use after the move and procuring and installing
antennas and Wi-Fi equipment. Engineering business corresponds to selection and procurement of antennas
and Wi-Fi equipment suited to the new area and wiring installation. The move might lead to more business too if
an order is received for landscaping work.
Progress by the global SCM solutions business is healthy as well. The Company prepared this business during the
medium-term plan that was two plans before the JUMP 1200 medium-term plan, and then focused on reaching¥10bn level in sales in Challenge 1500, the previous medium-term plan, and attained the goal in FY3/19. Given
this progress, it positions the global SCM solutions business as a core business and strengthens it further in NEXT
1800, the new medium-term management plan.
As an actual change, the Company formed the global SCM solutions division in April 2019 and switched frompassive sales operations to proactive sales operations.

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

11 17

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange First Section

12-Jul.-2019
http://www.sunwa.co.jp/ir/index.html

New medium-term management plan NEXT 1800

㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼓㼘㼛㼎㼍㼘㻌㻿㻯㻹㻌㼟㼛㼘㼡㼠㼕㼛㼚㼟㻌㼎㼡㼟㼕㼚㼑㼟㼟㻌㼟㼍㼘㼑㼟
㻔¥㼎㼚㻕
㻝㻠

㻭㼎㼛㼡㼠㻌¥㻝㻞㻚㻡㼎㼚㻝㻞㻭㼎㼛㼡㼠㻌¥㻝㻜㻚㻜㼎㼚㻝㻜㻭㼎㼛㼡㼠㻌¥㻣㻚㻞㼎㼚㻤㻢㻭㼎㼛㼡㼠㻌¥㻠㻚㻝㼎㼚㻠㻞㻜㻲㼅㻟㻛㻝㻣

㻲㼅㻟㻛㻝㻤

㻲㼅㻟㻛㻝㻥

㻲㼅㻟㻛㻞㻜㻌㻱

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

The Company has not disclosed numerical goals for the global SCM solutions business in the new medium-term
management plan, just as its stance with the engineering business. Since it moved past ¥10bn level in sales, which
had been the goal, in FY3/19 as previously mentioned, we think the next target for the time being is ¥20bn. We
see a possibility of accelerated efforts to revise production sites and transfer operations across countries amidchanges to the global free trade regime mainly driven by US-China trade friction and Brexit. If this happens, it could
create major business opportunities for the Company’s global SCM solutions business because of shortages inteams to carry out these revisions on the manufacturer side. We intend to closely monitor growth in global SC
solutions business, including awareness of collaboration with engineering business.

Promoting localization of overseas sites to expand transactions with
non-Japanese companies
4. Priority measures for “expand global business capabilities to support market demand”
The Company lists two detailed priority measures to address the theme of global business expansion – 1) strengthen
hiring of overseas local employees and organizational capabilities and 2) consider establishment of new locations.
We think the “strengthen hiring of overseas local employees and organizational capabilities” measure refers to
reduction of overseas operation costs and improved efficiency. The Company currently dispatches people fromJapan to work at overseas locations, and these Japanese employees primarily handle business activities while
utilizing local hires. While expansion and reinforcement of overseas operations is an unstoppable trend in terms of
the Company’s own situation and also global conditions, we believe the aim of this initiative is mainly strengthening
related personnel at overseas sites with emphasis on local employees. The next step is clearly expansion oftransactions with non-Japanese companies.

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

12 17

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange First Section

12-Jul.-2019
http://www.sunwa.co.jp/ir/index.html

New medium-term management plan NEXT 1800

For the second item, we think the Company has not made final decisions yet, though India seems to be a leading
candidate from the standpoint of recent global economic conditions and the Company’s current overseas initiative
situation. Nevertheless, the Company clarified a stance of dynamically responding as needed in light of global
economic trends.

Intends to steadily broaden to new business areas from theperiphery of current core businesses
5. Priority measures for “pursue new business fields to accelerate sustainable growth”
The Company lists the following three priority measures for this fundamental policy – 1) strengthen investments innew business creation, 2) cultivate managerial personnel by adopting an intrapreneurship program, and 3) create
new value through SCM improvements.
“New business areas” mentioned by the Company refer to gradual inclusion of peripheral work to existing distributor
business (such as logistics, production, SCM, and fabless processing) as its own businesses. It also envisions
cooperation with external partner companies and acquisitions through M&A in some cases.
While cultivation of managerial personnel by adopting an intrapreneurship program is primarily intended as a personnel development method, it could also lead to development and cultivation of new business areas as describedin the previous measure.
SCM improvement refers to deployment of warehouse management systems to precisely comprehend the cost
structure related to logistics. This is an important initiative to promote reinforcement of global SCM solutions businesseven more than previously. It might also be related to entry into new business areas cited above.

Improving corporate “quality” and becoming a “correct company”
with the aim of attracting selection by investors
6. Priority measures for “initiatives to realize a sustainable society”
This fundamental policy lists four priority measures. We think they are initiatives to realize a desirable corporate
image, rather than efforts to achieve income growth. In the current world of “ESG” occupying an increasingly largerrole in making investment choices, we believe these initiatives are very important in becoming a “selected company”
along with direct effects to expand profits.
The priority measures include “implement work style reforms that “enhance productivity” utilizing ICT.” We can say
this is an initiative that could expand profits by raising productivity.

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

13 17

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

SUN-WA TECHNOS CORPORATION
8137 Tokyo Stock Exchange First Section

12-Jul.-2019
http://www.sunwa.co.jp/ir/index.html██Outlook
Targeting higher sales in all three regions – Japan, Asia, and Europe/
US
Forecasts lower profits in Japan and Europe/US and profit decline
on higher sales on an overall basis in the period-start plan
• Overview of FY3/20 forecasts
The Company forecasts for higher sales and lower profits in FY3/20 at ¥150,000mn in net sales (+3.2% YoY),¥3,100mn in operating income (-9.1%), ¥3,300mn in ordinary income (-9.0%), and ¥2,400mn in net income attributable to owners of the parent (-8.7%). These results are in accordance with the management targets in the new
medium-term business plan.
Overview of FY3/20 forecast(¥mn)
FY3/19FY3/20
1H

2H

Full-year
forecast

1H

2H

Full year

Net sales

72,16473,246

145,41074,0002.5%

76,0003.8%

150,000

3.2%

Operating income

2,129

1,281

3,410

1,500

-29.5%

1,600

24.9%

3,100

-9.1%

Forecast

YoY

Forecast

YoY

YoY

3.0%

1.7%

2.3%

2.0%

-

2.1%

-

2.1%

-

Ordinary income

2,312

1,315

3,627

1,600

-30.8%

1,700

29.3%

3,300

-9.0%

Net income attributable toowners of the parent

1,651

977

2,628

1,150

-30.3%

1,250

27.9%

2,400

-8.7%

Operating margin

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

The Company announced FY3/19 results and FY3/20 guidance on May 10, 2019. On the same day, the US
government disclosed its application of additional tariffs on China (raising the tariff on imports worth $200bn from
10% to 25%). The impact of these tariffs hence is not reflected in guidance targets. We should not that consider
this as one of the risk factors that needs to be closely observed.
The Company expects higher sales in all regional segments – Japan, Asia, and Europe/US. In Japan, it anticipatescontinuation of healthy sales to the automotive industry, mainly in vehicle products, from the previous fiscal year as
the driver of sales increase. In Asia, it forecasts a recovery from 2H on a rebound and improved demand as one year
has passed from the shift in orders from the factory automation and industrial machinery industry to negative growth.
In earnings, the Company projects a 9.1% YoY decline in operating profit to ¥3,100mn, based on a ¥374mn rise in
Asian profit versus declines of ¥505mn in Japan and ¥143mn in Europe/US. The profit setback in Japan, despite
a boost from higher sales, reflects anticipated pressure from higher personnel costs related to employee additions
and increase in packaging and transport costs. Main projected drivers of profit changes are higher gross margin in
Asia and lower gross margin in Europe/US.

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

14 17

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

SUN-WA TECHNOS CORPORATION

12-Jul.-2019

8137 Tokyo Stock Exchange First Section

http://www.sunwa.co.jp/ir/index.html

Outlook

Breakdown of FY3/20 guidance by regional segments(¥mn)
FY3/19

Japan

Asia

1H

2H

Full year

FY3/20
Full year

Net sales

57,65358,340115,993122,000

YoY

10.1%

-6.7%

0.9%

5.2%

1,065

874

1,939

1,400

YoY

13.9%

-37.5%-16.9%-27.8%

Operating margin

1.8%

1.5%

1.7%

1.1%

Net sales

18,646

18,542

37,18841,600

YoY

5.1%-14.8%

-5.8%

11.9%

778

430

1,208

1,600

15.4%

-47.2%-18.8%

32.5%

Operating income

Operating income
YoY

4.2%

2.3%

3.2%

3.8%

Net sales

4,204

3,880

8,084

8,400

YoY

11.9%

-24.0%

-8.8%

3.9%

275

-21

254

100

YoY

69.8%

-

-18.3%-60.6%

Operating margin

6.5%

-0.5%

3.1%

1.2%

Operating margin

Europe/US

Operating income

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

We review detailed trends for business segment below. In overall terms, the Company expects higher electricalmachinery and general machinery sales, but a YoY decline in sales for the electronics segment, which holds thelargest percentage of sales. We think the outlook for lower electronics sales in FY3/20 is somewhat conservativein light of the FY3/19 result with a just a slight drop as increased sales to the automotive industry largely offset aslump in industrial machinery industry sales.
The Company targets ¥29,000mn in electrical machinery sales (+18.0% YoY). It mainly expects a rise in sales driven
by continued upbeat demand for equipment from the automotive industry (servo motors and other compact products
rather than large systems such as manufacturing plants).
The Company forecasts a decline in electronics segment sales to ¥107,000mn (-2.2% YoY). While automotive
business (mainly electronic parts used in vehicle products) remains upbeat in this outlook, management anticipates
decline in sales to control equipment manufacturers and a resulting drop in overall sales.
The Company projects sharply higher sales in the general machinery at ¥14,000mn (+22.1% YoY), including a large
boost from a major deal for the food industry that it previously planned to book in FY3/19 slipping into FY3/20.
It also expects support for increased sales from higher orders related to new demand, such as facilities used to
manufacture vehicle LCDs.
Breakdown of FY3/20 guidance by business segments(¥mn)
FY3/191H

2H

Full year

FY3/20
Full year

13,332

11,237

24,56929,000

YoY

7.6%-24.0%

-9.6%

18.0%

Electronics

53,55355,817

109,370

107,000

6.4%

-7.1%

-1.0%

-2.2%

5,278

6,192

11,47014,000Electrical machinery

YoY
General machinery
YoY
Total net sales
YoY

14.3%

36.5%

25.3%

22.1%

72,16473,246

145,410150,000

7.2%

-7.8%

-0.9%

3.2%

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

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

15 17

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

SUN-WA TECHNOS CORPORATION

12-Jul.-2019

8137 Tokyo Stock Exchange First Section

http://www.sunwa.co.jp/ir/index.html

Outlook

Summary income statement(¥mn)
FY3/20FY3/16

FY3/17

FY3/18

FY3/19

1H E

Full year E

Net sales

105,748

116,611

146,759

145,41074,000150,000

YoY

-5.0%

10.3%

25.9%

-0.9%

2.5%

3.2%

Gross profit

13,256

14,255

16,883

16,318--Gross margin

12.5%

12.2%

11.5%

11.2%

-

-

SG&A expenses

10,812

11,24012,747

12,908

-

-

YoY

2.8%

4.0%

13.4%

1.3%

-

-

SG&A expenses ratio

10.2%

9.6%

8.7%

8.9%

-

-

2,444

3,014

4,135

3,410

1,500

3,100

-29.6%

23.3%

37.2%

-17.5%-29.5%

-9.1%

2.3%

2.6%

2.8%

2.3%

2.0%

2.1%

2,645

3,215

4,349

3,627

1,600

3,300

-29.7%

21.6%

35.3%

-16.6%-30.8%

-9.0%

1,690

1,584

3,085

2,628

1,150

2,400

YoY

-31.5%

-6.3%

94.8%

-14.8%-30.3%-8.7%

EPS (¥)

117.76113.64222.65164.0871.68

149.60

Dividend (¥)

28.00

28.00

30.00

34.00

17.00

34.00

Operating income
YoY
Operating margin
Ordinary income
YoY
Net income attributable to owners of the parent

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

Summary balance sheet(¥mn)
FY3/15

FY3/16

FY3/17

FY3/18

FY3/1949,23946,85755,50765,85264,209Cash and deposits

7,584

6,359

6,759

8,596

10,005

Notes and accounts receivable

35,14534,554

41,16846,07742,256

9,509

8,581

9,309

11,401

9,905

3,879

3,788

3,056

3,005

2,861

243

240

222

168

143

5,386

4,553

6,030

8,227

6,900

Total assets

58,74855,43964,816

77,254

74,114Current liabilities

32,37028,691

36,596

43,077

37,199Notes and accounts payable – trade27,496

24,732

31,182

34,29831,427

Short-term loans payable, etc.

2,782

2,317

2,489

5,722

3,805

4,426

4,484

4,581

6,182

4,970

2,100

2,400

2,300

3,500

2,900

Shareholders’ equity

18,92920,217

21,03423,731

29,056

Capital stock

2,553

2,553

2,553

2,553

3,727

Capital surplus

1,958

1,958

1,958

1,958

3,548

Retained earnings

14,472

15,761

16,95019,647

21,781

Current assets

Non-current assets
Property, plant and equipment
Intangible assets
Investments and other assets

Non-current liabilities
Long-term loans payable

-54

-54

-427

-428

-0

Total accumulated other comprehensive income

3,022

2,045

2,603

4,262

2,888

Net assets

21,951

22,26323,63727,993

31,944

Total liabilities and net assets

58,74855,43964,816

77,254

74,114

Treasury shares

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

Cash flow statement(¥mn)
FY3/15

FY3/16

FY3/17

FY3/18

FY3/19Cash flow from operating activities

1,353

-60

1,679

-2,221

1,636

Cash flow from investing activities

-444

-384

-235

29

-153

Cash flow from financing activities

-470

-654

-818

3,962

28

Effect of exchange rate change on cash and cash equivalents

209

-125

-224

66

-103

647

-1,225

400

1,837

1,408

Cash and cash equivalents at beginning of period

6,453

7,100

5,875

6,275

8,112

Cash and cash equivalents at end of period

7,100

5,875

6,275

8,112

9,521

Net increase (decrease) in cash and cash equivalents

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

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

16 17

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

SUN-WA TECHNOS CORPORATION

12-Jul.-2019

8137 Tokyo Stock Exchange First Section

http://www.sunwa.co.jp/ir/index.html██Shareholder return policy
Plans to pay a ¥34 dividend (+¥4 YoY) in FY3/19
The Company’s basic policy is to provide returns to shareholders in the form of dividends. Management prioritizes
providing stable, continuous dividends, as demonstrated in its track record to date. While the Company does not
sharply raise dividends in response to temporary rapid profit expansion, it has steadily increased them in keepingwith earnings growth.
The Company decided to pay a ¥34 dividend (¥17 interim dividend, ¥17 period-end dividend) for FY3/19, an increaseof ¥4 YoY, on track with the period-start outlook. This works out to a 20.7% dividend payout ratio. Even though profit
fell in FY3/19, as explained above, we attribute the stance to emphasis on a stable dividend, particularly because
profit exceeded the revised outlook and the dividend payout ratio is not that high.
In FY3/20 guidance, the Company forecasts a ¥34 dividend (¥17 interim dividend, ¥17 period-end dividend), whichis flat YoY. This represents a 22.7% dividend payout ratio based on the ¥149.60 EPS outlook. While the Company
currently expects lower profit on increased sales in FY3/20, we think it opted for a flat dividend YoY in light of thedividend payout level and a fundamental policy of paying a stable dividend.

㻱㼍 㼞㼚㼕㼚㼓㼟㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻘㻌㼐㼕㼢㼕㼐㼑㼚㼐㻌㼍 㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻱㼍㼞㼚㼕㼚㼓㼟㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻌㻔㼘㼑㼒㼠㻕㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻌㻔㼞㼕㼓㼔㼠㻕㻔¥㻕㻞㻡㻜㻚㻜㻜
㻞㻟㻚㻤㻑

㻞㻠㻚㻢㻑

㻰㼕㼢㼕㼐㼑㼚㼐㻌㻔㼘㼑㼒㼠㻕㻟㻜㻚㻜㻑㻞㻞㻞㻚㻢㻡
㻞㻜㻚㻣㻑㻞㻜㻜㻚㻜㻜

㻝㻢㻠㻚㻜㻤

㻞㻞㻚㻣㻑㻝㻠㻥㻚㻢㻜

㻝㻡㻜㻚㻜㻜

㻝㻤㻚㻜㻑㻝㻝㻣㻚㻣㻢

㻝㻟㻚㻡㻑㻝㻝㻟㻚㻢㻠

㻝㻜㻜㻚㻜㻜
㻡㻜㻚㻜㻜

㻞㻠㻚㻜㻑

㻝㻞㻚㻜㻑

㻞㻤㻚㻜

㻞㻤㻚㻜

㻟㻜㻚㻜

㻟㻠㻚㻜

㻟㻠㻚㻜

㻜㻚㻜㻜

㻢㻚㻜㻑
㻜㻚㻜㻑

㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣

㻲㼅㻟㻛㻝㻤

㻲㼅㻟㻛㻝㻥

㻲㼅㻟㻛㻞㻜㻌㻱

Source: Prepared by FISCO from the Company's financial results

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

17 17

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.
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.
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mentioned in this report may increase or decrease in value or lose their value due to influence
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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.
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Please use the information in this report upon accepting the above points.

◾ For inquiry, please contact: ◾

FISCO Ltd.
5-11-9 Minami Aoyama, Minato-ku, Tokyo, Japan 107-0062
Phone: 03-5774-2443 (Financial information Dept.)
Email: support@fisco.co.jp