COMPANY RESEARCH AND ANALYSIS REPORTCHINO CORPORATION
6850
Tokyo Stock Exchange First Section

27-Jan.-2022
FISCO Ltd. Analyst

Daiki Ishizu

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

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

CHINO CORPORATION
6850 Tokyo Stock Exchange First Section

27-Jan.-2022
https://www.chino.co.jp/english/financial/■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Summary of 1H FY3/22 results.............. ......................................................................................................

01

2. FY3/22 results forecasts..............................................................................................................................

02

3. Growth strategy, medium-term management plan, and their current status................................................

02■Company profile---------------------------------------------------------------------------------------------------------------------------------------------------------- 03
1. Company overview......................................................................................................................................

03

2. History................................................... ......................................................................................................

04

3. Business summary. . ............................... ......................................................................................................

05

4. Segment overview.......................................................................................................................................

08■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 09
1. Summary of 1H FY3/22 results.............. ......................................................................................................

09

2. Main segment results...................................................................................................................................

09

3. Financial position and financial indicators....................................................................................................

10■Outlook-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 11
1. FY3/22 outlook...................................... ......................................................................................................

11

2. Summary of Medium-Term Management Plan 2026. ...................................................................................

12

3. Growth strategy...........................................................................................................................................

12■CSR initiatives--------------------------------------------------------------------------------------------------------------------------------------------------------------- 14■Policy on shareholder returns------------------------------------------------------------------------------------------------------------------------ 15

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

CHINO CORPORATION
6850 Tokyo Stock Exchange First Section

27-Jan.-2022
https://www.chino.co.jp/english/financial/█ Summary
Increased sales and profits from expanded capital investment on
a recovery in production activity in the automobile and electronic
component sectors
Going forward, will actively accommodate increasing demand ingrowth areas like semiconductors and hydrogen applications andwill strengthen its management base, so rising expectations forfurther performance growth
CHINO COROPORATION <6850> (hereinafter, also “the Company”) is a company that contributes to the development of various industries on the theme of temperature through measurement, control and monitoring. Through its
12 subsidiaries, the Company’s business is divided into three main segments: measurement and control instruments,
instrumentation systems, and sensors. It is distinct for offering “loop solutions” consisting of measurement, control
and monitoring, and in this regard the Company has no competitors, which is one of its strengths. Its top-ranking
customers in terms of sales are in sectors such as electronic components, semiconductors, automobiles andaviation, but temperature is managed in industries like steel and metals, energy, medicine and pharmaceuticals, foodproducts, and agriculture, so the Company’s temperature management solutions are used by customers in theseindustries as well. The Company is involved in the medical and pharmaceutical sectors, which require particularly
strict temperature management, and its systems are used in the transport and storage of vaccines, blood andblood products. It is also involved in hydrogen-related projects for decarbonization, which is attracting international
attention, and its product lineup includes fuel cell testing systems and water electrolysis (for manufacturing hydrogen)testing systems. It may be said that the Company’s involvement in such current areas of strong demand is anotherof its strengths.
1. Summary of 1H FY3/22 results
In 1H FY3/22, orders received increased by 13.0% year on year (YoY) to ¥11,712mn, primarily as a result of increased
capital investment on a recovery in production activity in the automobile and electronic component sectors. Net sales
increased by 4.3% to ¥9,711mn. Regarding profits, operating profit increased by 290.3% to ¥387mn. The increase
was mainly attributable to increased net sales from a recovery in demand for measurement and control instruments
and sensors and to improvement in the cost of sales ratio for instrumentation systems. Profit attributable to ownersof parent was ¥249mn, a decrease of 53.4% YoY. This was the result of a reactive decline from the same periodof the previous fiscal year when gain on bargain purchase of ¥557mn was recorded under extraordinary income inconnection with making MEIYO ELECTRIC Co., Ltd. a consolidated subsidiary, so it can be said that the Company’s
performance has been stable.
Looking at results by segment, in measurement and control instruments, overseas demand, primarily recorders,
grew in Asia, particularly in China, and demand from major customers for controllers and thyristor regulators also
recovered. The Company’s enhancements to its product lineups for thermo-hygrometers and loggers in support of
HACCP-compliant food safety management was also fruitful.

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01 16

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

CHINO CORPORATION
6850 Tokyo Stock Exchange First Section

27-Jan.-2022
https://www.chino.co.jp/english/financial/

Summary

2. FY3/22 results forecasts
The Company’s FY3/22 results forecasts are as follows. Net sales are forecast to increase by 5.8% YoY to¥22,300mn; operating profit to increase 14.4% to ¥1,300mn; ordinary profit to increase 9.0% to ¥1,400mn, andprofit attributable to owners of parent to decrease 34.1% to ¥850mn. EPS is expected to be ¥100.36. These
forecasts were upwardly revised on November 10, 2021. While the outlook remains uncertain because of the
global semiconductor shortage, surging raw material prices and other factors, as of the end of 1H FY3/22 net
sales increased from a recovery in demand for measurement and control instruments and sensors and cost of
sales ratio was improved in instrumentation systems. Research and development related to decarbonization andcapital investment at operating facilities working to integrate IoT into their processes are also expected, which is the
background to projections of steady demand in 3Q FY3/22 and beyond. Regarding the revised forecasts as well,
FISCO believes it is highly likely the Company will achieve its targets, in light of its initiatives beginning in 3Q and thevalidity of its medium-term management plan.
3. Growth strategy, medium-term management plan, and their current status
The Company’s medium-term management plan, covering the period to FY3/27 targets net sales of ¥30,000mn,
operating profit of ¥2,700mn, ROE of 10%, and ROA of 8%. There is a rising expectation that these targets will
be achieved because of the Company’s initiatives from 3Q FY3/22, its active investment in growth areas likesemiconductors and hydrogen applications, and its efforts to strengthen its management base.
Key Points
Global expert in management of temperature over a wide range—from -270ºC to 3,500ºC or higher—using
advanced measuring, control and monitoring technologies• Increased sales and profits from increasing capital investment on a recovery in production activity in automobilesand electronic components and from growth in overseas demand for measurement and control equipment• Rising expectations for further performance growth from active investment in growth areas like semiconductors
and hydrogen and strengthening its management base•

Results trends
Net sales (left)(¥mn)
24,00020,74521,999Operating profit (right)

20,582

21,080(¥mn)
22,3003,600

20,0003,000

16,000

2,400
1,718

12,000

1,303
1,026

8,000

1,136

1,300

1,800
1,200

4,000

600

0

0
FY3/18

FY3/19FY3/20FY3/21

FY3/22 E

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

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02 16

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

CHINO CORPORATION
6850 Tokyo Stock Exchange First Section

27-Jan.-2022
https://www.chino.co.jp/english/financial/█ Company profile
Global expert in temperature management, for temperatures from-270ºC to 3,500ºC or higher, which is essential to the development of
every industry
1. Company overview
The Company was founded by Kazuo Chino in Shitaya, Tokyo in 1913. It was incorporated as CHINO Works, Ltd.
in 1936 and changed its name to CHINO CORPORATION in 1986 on the 50th anniversary of its establishment.
Based on its corporate philosophy, “The Chino Group pushes the limits of measurement, control and monitoring
technologies and contributes to industrial development and the realization of a brighter tomorrow,” the Company
has contributed to the development of a range of industries through measurement, control and monitoring, primarilyof temperature. The Company has established a three-part vision for its 90th anniversary in 2026. It consistsof: “Collaborative Creation: Creating new value with stakeholders based on an understanding of changes in theenvironment,” “Uniqueness: Impressing customers with superior technology solutions,” and “Trust: Strengthening
the ‘bond’ of trust to continue growing into the future through passion and teamwork.” Based on this vision, theCompany is working to put the entire Chino Group on track for sustainable growth and to enhance its corporate
value in the medium to long term.
Including its 12 subsidiaries, the Company’s business is primarily related to temperature and is divided into threesegments, 1) measurement and control instruments, 2) instrumentation systems, and 3) sensors. By helping solve
social issues through these products and services, contributing to local communities, and earning the trust of
stakeholders through compliance, the Company is helping build a more sustainable society.
Business system diagram

Source: From the Company’s securities report

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03 16

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

CHINO CORPORATION
6850 Tokyo Stock Exchange First Section

27-Jan.-2022
https://www.chino.co.jp/english/financial/Company profile

2. History
Based on its corporate philosophy, “The Chino Group pushes the limits of measurement, control and monitoring
technologies and contributes to industrial development and the realization of a brighter tomorrow,” the Company
has contributed since its establishment to the development of a range of industries through measurement, control
and monitoring, primarily of temperature. It has actively developed its business not only in Japan but overseas aswell, starting with the U.S. in 1983 and subsequently in China, India, Thailand and South Korea. Most recently, theCompany has actively expanded its business in Japan, including by making MEIYO ELECTRIC Co., Ltd. a subsidiary.
History
Date

History

March 1913

CHINO Works established by Kazuo Chino in Shitaya, Tokyo for the manufacture and sale of laboratory instruments and electricalequipment

August 1936

CHINO Works made a stock corporation, its name changed to CHINO Works, Ltd., and its head office established in
Itabashimachi (now Kumanocho), Itabashi Ward, Tokyo

April 1962

Listed on Second Section of the Tokyo Stock Exchange

May 1977

Manufacturing subsidiary Senko Corporation established (now CHINO SOFTEX CORPORATION, a consolidated subsidiary)

September 1979

Listed on First Section of the Tokyo Stock Exchange

January 1983

Sales subsidiary CHINO Works America Inc. established in Los Angeles, California, U.S. (now a consolidated subsidiary)

October 1986

Name changed from CHINO Works, Ltd. to CHINO CORPORATION|

June 1989
February 1992
March 1993
December 1993
July 1996
November 1998
August 2003
September 2006

Joint venture KOREA CHINO CORPORATION established in Uiwang, South Korea (now a consolidated subsidiary)
YAMAGATA CHINO Corporation establishedService subsidiary CHINO Service Corporation established
Joint venture SHANGHAI DAHUA-CHINO INSTRUMENT CO., LTD. established (now a consolidated subsidiary) in Shanghai,
China
Joint venture CHINO-LAXSONS (India) Private Limited established in Daman, India (now CHINO Corporation India Private Limited,a consolidated subsidiary)
Acquired 100% stake in SANKI KEISO Co., Ltd. and made it a subsidiary (now a consolidated subsidiary)
Joint venture CHINO INSTRUMENTATION (KUNSHAN) CO., LTD. established in Kunshan, Jiangsu Province, China (now aconsolidated subsidiary)
Acquired 100% stakes in Tokyo Seiko Co., Ltd. and ASAKAWA LENS WORKS CO., LTD. and made them subsidiaries (the latter
now a consolidated subsidiary)

January 2009

Acquired additional stake in CHINO-LAXSONS (India) Private Limited and made it a wholly owned subsidiary

February 2010

Acquired stake in AR’S CO., LTD. and made it a subsidiary (now a consolidated subsidiary)

October 2011

Absorbed consolidated subsidiary Tokyo Seiko Co., Ltd.

April 2012
October 2012
December 2014
January 2015

Absorbed consolidated subsidiary Yamagata CHINO Corporation
Sales subsidiary CHINO Corporation (Thailand) Limited established in Bangkok, Thailand (now a consolidated subsidiary)
Acquired 100% stake in ADVANCE RIKO, Inc. and made it a subsidiary (now a consolidated subsidiary)
Absorbed consolidated subsidiary CHINO SERVICE CORPORATION

July 2019

Acquired additional stake in MEIYO ELECTRIC Co., Ltd. and made it an equity-method affiliate

April 2020

Acquired an additional stake in MEIYO ELECTRIC Co., Ltd. and made it a subsidiary (now a consolidated subsidiary)

Source: Prepared by FISCO from the Company’s securities report

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04 16

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

CHINO CORPORATION
6850 Tokyo Stock Exchange First Section

27-Jan.-2022
https://www.chino.co.jp/english/financial/Company profile

The Company’s temperature loop solutions with measurement,
control and monitoring are used across industries in need ofabsolute temperature accuracy; they are a major strength of theCompany.
3. Business summary(1) Temperature loop solutions
Temperature is an indicator that requires absolute accuracy in many industries, including steel, energy, aviation,
automobiles, electronic components, semiconductors, medicine and pharmaceuticals, and agriculture. With regard
to temperature management, the Company is a top company in its niche globally, being referred to as “Chino,
the temperature company.” The Company’s advanced technical prowess is embodied in its temperature loop
solutions, which are made possible by its high-level technologies in measurement, control and monitoring and thesynergies among them. A temperature loop solution is an optimal set of proposals for all the temperature-related
issues faced by a customer and is made by drawing on the Company’s resources in development, production,
management, quality control, sales, and service. Temperature loop solutions provided at such high levels is theCompany’s strength, and FISCO sees this as distinguishing it from other companies.
In other words, the Company’s business is such that it allows it to fully demonstrate this strength in many industries
and sectors involved in temperature in some form, so the Company is expected to continue to enter various
industries going forward. In connection with this, demand growth is projected in hydrogen-related applications,for example, and on this point, based on its analysis, FISCO believes high expectations are warranted for theCompany’s future growth potential.
Diagram of temperature loop solution

Source: Prepared by FISCO from the Company’s published documents

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05 16

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

CHINO CORPORATION
6850 Tokyo Stock Exchange First Section

27-Jan.-2022
https://www.chino.co.jp/english/financial/Company profile

The following discusses the elements (technologies) that make up a temperature loop solution.
1) Measurement
Temperature is measured by heat being conveyed from an object to a sensor. There are three ways heat isconveyed to a sensor: conduction, radiation, and convection. For example, when measuring body temperature,body heat is conveyed directly to the thermometer’s sensor by way of conduction. The sensor touches theheat directly, so heat is measured using a contact method. But when something very hot, like melted iron, or
something out of reach is measured, a contact-type thermometer is unable to get near the object. In such cases,
a non-contact thermometer is used that can measure the temperature without directly touching the object.
The Company manufactures both contact-type temperature sensors that use conductive heat and non-contact
radiation thermometers that use thermal radiation. A very wide range of temperatures can be measured, from-270ºC to 3,500ºC, which is a very high temperature. The Company is Japan’s top manufacturer of the radiation
thermometers capable of this. Moreover, the Company provides thermometers that serve as the standard for
all thermometers because of their use of standard platinum resistance thermometers based on the International
Temperature Scale of 1990 (ITS-90) to ensure temperature is measured accurately. These thermometers are theCompany’s measurement technology, and with its extensive lineup of measuring instruments, the Company meetsthe wide variety of potential customer needs related to temperature measurement.
Examples of measuring instruments: high-temperature thermocouple (left), solidpak thermocouple (right)

Source: From the Company’s published documents

2) Control
The objective of control is maintaining a temperature that would otherwise change from moment to moment
at an ideal value. An everyday example is how a gas flame is ignited when heating the water in a bathtub andthen turned off when the water reaches the appropriate temperature. However, in winter, for example, when theoutdoor air temperature is low, water that has been heated cools off immediately. In order to prevent hot waterfrom cooling off, the temperature has to be adjusted while the situation is monitored—such adjustments are what
is called “control.” In this case, the hot water temperature is first measured and then the flame is automaticallyincreased or decreased if there is a difference with the ideal temperature in order to maintain the water at the ideal
temperature. This is known as automatic temperature control.
With a bathtub, it is relatively easy to control the temperature, but it is under difficult conditions that outstanding
control technologies like the Company’s demonstrate their strength. For example, take the case of an open-air
bath. When the outdoor air temperature changes between day and night, when it is raining hard, or when
one person is already in the bath and five other cold people enter it, in all sorts of conditions, the ideal watertemperature must be constantly maintained. There are also cases requiring fine tuning. Many industrial products
and pharmaceuticals are rendered unusable if a temperature difference of 0.1ºC persists for several seconds
during their production. For this issue, the Company provides ideal temperature control technologies for quickly
and efficiently maintaining an ideal temperature in 0.1ºC increments.

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

CHINO CORPORATION
6850 Tokyo Stock Exchange First Section

27-Jan.-2022
https://www.chino.co.jp/english/financial/Company profile

With control subject to such requirements, in order to achieve even more ideal control with an awareness ofenergy savings, the Company developed a technology that fulfilled the three requirements for control unaffectedby the environment, smooth achievement of the set temperature, and increased thermal energy efficiency. That
technology is “Z control,” and it uses Symplocarpus renifolius, a perennial plant in the Araceae family. This plant
has the ability to convert nutrients stored from spring to summer into energy in early spring and maintain its
temperature at 20ºC. By integrating Z control into its control technologies, the Company improved their robustness
with respect to energy savings and load fluctuations compared to conventional control methods. In addition, whentemperature control is used in the manufacturing process for industrial products, the Company has succeededin minimizing the impact caused by the temperature being raised too much or from changes in the surrounding
environment and in shortening the time required to reach the ideal temperature. In this way, the Company provides
assured control with advanced technologies and an extensive lineup of products for various applications.
DB Series Program Controllers/Setters using Z control
Graphic Program Controller/Setter DP-G Series (left)

Source: From the Company’s published documents

3) Monitoring
Monitoring is to keep watch and leave a record of that watch. For example, in the case of the production process
for industrial products, in order to prevent non-conforming products, it is necessary to check that the temperature
is being accurately maintained, to keep a record of the measured values, and to issue an alert if the temperature
differs from the ideal. This keeping watch of the situation and leaving a record of it is what is known as monitoring.
Through monitoring, if trouble occurs, it is possible to confirm with the recorded data whether there was acause-and-effect relationship in it. Also, compiling records from several days to several years in the past can makeit possible to get nearer to the ideal temperature while reducing errors in the future. The Company’s monitoring
technology is excellent in detecting errors as quickly as possible in temperature management for production
processes, in which one small error has the potential to produce a very large one.
The Company provides devices and systems in line with customer requirements, from analog recorders thatrecord on paper and are appropriate for scale monitoring to recorders for small-scale monitoring like paperlessrecorders that leave a digital record to large-scale monitoring systems that use a data logger and enable data to
be monitored on a computer. The Company’s monitoring systems for various temperature ranges make it possible
to maintain a stable temperature environment.

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

CHINO CORPORATION
6850 Tokyo Stock Exchange First Section

27-Jan.-2022
https://www.chino.co.jp/english/financial/Company profile

4) Calibration and maintenance
Along with the three areas discussed above, the Company also provides instrument calibration for ensuring thereliability of measured values. Its calibration technologies are assured through its registration with the Japan
Calibration Service System (JCSS) for temperature and humidity. The Company leverages its many years ofmeasurement expertise to provide reliable calibration of thermometers and hygrometers. In addition, it has asystem by which it can provide maintenance services, so when troubleshooting or repairs become necessary, it
can quickly respond, even to sudden incidents, through its network of maintenance sites in Japan and overseas.
4. Segment overview
The Company is divided into the following four segments based on the technologies discussed above and theirrespective devices and services.
(1) Measurement and control instruments
This segment handles instruments related to measurement, control and monitoring. Measurement and control
instruments are manufactured and sold in Japan by the Company. Overseas, they are manufactured in-house,or purchased from the Company, and sold by CHINO Works America Inc. in the U.S., by SHANGHAI DAHUACHINO INSTRUMENT CO., LTD. in China, by CHINO Corporation (Thailand) Limited in Thailand, by KOREA
CHINO CORPORATION in South Korea, and by CHINO Corporation India Private Limited in India, all of which areconsolidated subsidiaries. Also, in China, CHINO INSTRUMENTATION (KUNSHAN) CO., LTD., a consolidated
subsidiary, manufactures products in-house and sells them to the Company and SHANGHAI DAHUA-CHINO
INSTRUMENT.
(2) Instrumentation systems
This segment handles devices related to instrumentation systems. Instrumentation systems are manufactured andsold in Japan by the Company and two of its consolidated subsidiaries, SANKI KEISO Co., Ltd. and ADVANCE
RIKO, Inc. Overseas, they are manufactured and sold by KOREA CHINO CORPORATION in South Korea and
CHINO INSTRUMENTATION (KUNSHAN) CO., LTD. in China.
(3) Sensors
This segment handles devices related to sensors. Sensors are manufactured and sold by the Company in Japan. In
addition, ASAKAWA LENS WORKS CO., LTD., a consolidated subsidiary, manufactures optical components, sells
optical components for sensors to the Company, and conducts direct sales. Also, MEIYO ELECTRIC Co., Ltd.,a consolidated subsidiary, sells products that it manufacturers itself. Overseas, KOREA CHINO CORPORATION
sells products in South Korea that it has purchased from the Company.
(4) Other
The Company provides repair and maintenance services and sells supplies for measurement and control instruments, sensors and other products. Consolidated subsidiary CHINO SOFTEX CORPORATION produces software
for the Company’s products and sells it to the Company. Also, AR’S CO., LTD. provides contract development
services using wireless technologies as well as consulting.

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

CHINO CORPORATION

27-Jan.-2022

6850 Tokyo Stock Exchange First Section

https://www.chino.co.jp/english/financial/█ Results trends
Sales and profits increased YoY owing to increased capital
investment in the automobile and electronic component sectors
in Japan and growth in demand for measurement and control
instruments overseas
1. Summary of 1H FY3/22 results
In 1H FY3/22, orders received increased by 13.0%YoY to ¥11,712mn, primarily as a result of increased capital
investment on a recovery in production activity in the automobile and electronic component sectors. Net sales
increased by 4.3% to ¥9,711mn. Regarding profits, operating profit increased by 290.3%, to ¥387mn. This increase
was mainly attributable to increased net sales from a recovery in demand for measurement and control instruments
and sensors and to improvement in the cost of sales ratio for instrumentation systems. Profit attributable to ownersof parent was ¥249mn, a decrease of 53.4%. This was the result of a reactive decline from the same period of theprevious fiscal year when gain on bargain purchase of ¥557mn was stated under extraordinary income in connection
with making MEIYO ELECTRIC a consolidated subsidiary, so it can be said that the Company’s performance has
been stable.
1H FY3/22 consolidated results(¥mn)
1H FY3/21

1H FY3/22

Results% of sales

Results% of sales

Net sales

9,314

-

9,711

-

4.3%

Gross profit

2,625

28.2%

3,057

31.5%

16.5%

SG&A expenses

2,525

27.1%

2,669

27.5%

5.7%

Operating profit

99

1.1%

387

4.0%

290.3%

Ordinary profit

160

1.7%

522

5.4%

224.9%

536

5.8%

249

2.6%

-53.4%

63.31

-

29.48

-

‐

Profit attributable toowners of parent
EPS (yen)

ChangeSource: Prepared by FISCO from the Company’s financial results.

2. Main segment results
1) Measurement and control instruments
Net sales of measurement and control instruments were ¥3,725mn, an increase of 15.8% YoY, and segment profit(operating profit) totaled ¥411mn, an increase of 10.0%. In FY3/21, the segment was impacted substantially bycustomers suspending production activities and postponing capital investment due to the COVID-19 pandemic.
However, in 1H FY3/22, overseas demand grew, primarily for recorders in Asia, China in particular, and demand
from major customers for controllers and thyristor regulators recovered. In addition, the Company enhanced its
product lineups for thermo-hygrometers and loggers in support of HACCP-compliant food safety management
and conducted sales activities to acquire orders.

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09 16

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

CHINO CORPORATION
6850 Tokyo Stock Exchange First Section

27-Jan.-2022
https://www.chino.co.jp/english/financial/

Results trends

2) Instrumentation systems
Nets sales of instrumentation systems were ¥2,499mn, a YoY decline of 5.0%. Segment profit (operating profit)
was ¥149mn, an increase of 481.3% that was achieved through rigorous process and cost management for individual projects. Sales for manufacturing equipment applications related to electronic components, an area where
demand has been recovering since 2H FY3/21, continued to be steady. With regard to decarbonization-related
applications, demand increased for fuel cell testing systems for automotive applications and water electrolysis
testing systems for research and development related to hydrogen energy use.
3) Sensors
Net sales of sensors were ¥3,107mn, an increase of 1.3% YoY, and segment profit (operating profit) was ¥572mn,
an increase of 45.6%. In the sensor business, there was strong demand overseas for both radiation thermometers and temperature sensors used in semiconductor and electronic component manufacturing equipment,
and domestic demand is expected to recover going forward. In addition, there was firm demand for radiation
thermometers associated with steel-related facility upgrades and for temperature sensors for biomass applications.

Overseas sales by region
Europe¥77mn（¥36mn）

0.9%
4.3%

5.5%

Other
¥16mn
（¥9mn）
Asia

North America¥97mn（¥111mn）

North America

1H FY3/22
Overseas sales¥1,787mn（¥1,499mn）

89.3%

EuropeOther

Asia¥1,595mn（¥1,342mn）

Parentheses indicate 1H FY3/21 figures.
Source: Prepared by FISCO from the Company’s results briefing materials

The Company’s financial position remains good, and there are no
short-term financial concerns
3. Financial position and financial indicators
In 1H FY3/22, total assets declined by ¥292mn from the end of FY3/21 to ¥30,106mn. Current assets declinedby ¥239mn to ¥20,059mn. The major changes were an increase in cash and deposits of ¥512mn, an increase ininventories of ¥556mn, and a decrease in trade receivables of ¥1,354mn. Non-current assets declined by ¥52mn
to ¥10,047mn.
Total liabilities were ¥10,489mn, a decline of ¥406mn from the end of FY3/21. Current liabilities decreased ¥109mn
to ¥7,165mn. The main factor was a decrease in income taxes payable of ¥59mn. Non-current liabilities decreased¥297mn to ¥3,324mn. Net assets were ¥19,617mn, an increase of ¥114mn.

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

CHINO CORPORATION
6850 Tokyo Stock Exchange First Section

27-Jan.-2022
https://www.chino.co.jp/english/financial/

Results trends

Regarding the main management indicators, the current ratio was 279.9%, increasing 0.9 percentage points fromthe end of FY3/21, so in FISCO’s analysis, the Company has no short-term financial concerns. Also, its equity ratio
increased by 0.7 percentage points from the end of FY3/21. From these indicators, it can be concluded that there
are no particular problems with the Company’s financial condition.
1H FY3/22 consolidated balance sheets and management indicators(¥mn)
End-1H FY3/22
ChangeEnd-FY3/21

End-1H FY3/22

20,29920,059

-239

6,991

7,504

512

Non-current assets

10,09910,047-52

Total assets

30,39830,106-292

Current liabilities

7,274

7,165

-109

Non-current liabilities

3,621

3,324

-297

Total liabilities

10,896

10,489-406

Total net assets

19,502

19,617114

Current assets(Cash and deposits)

Management indicators
Equity ratio

54.7%

55.4%

0.7pt

Current ratio

279.0%

279.9%

0.9pt

Source: Prepared by FISCO from the Company’s financial results█ Outlook
Rising expectations for further performance growth andachievement of its medium-term management plan through actively
meeting increasing demand in growth areas like semiconductors
and hydrogen applications and strengthening its management base
1. FY3/22 outlook
The Company’s FY3/22 results forecasts are as follows. Net sales are forecast to increase by 5.8% YoY to¥22,300mn, operating profit to increase 14.4% to ¥1,300mn, ordinary profit to increase 9.0% to ¥1,400mn, andprofit attributable to owners of parent to decrease 34.1% to ¥850mn. EPS is expected to be 100.36 yen. These
forecasts were upwardly revised on November 10, 2021. While the outlook remains uncertain because of the global
semiconductor shortage, surging raw material prices and other factors, as of the end of 1H FY3/22 the Company’s
net sales increased and its cost of sales ratio for instrumentation systems improved thanks to a recovery in demand
for measurement and control instruments and sensors. Research and development related to decarbonization andcapital investment at operating facilities working to integrate IoT into their processes are also expected, which is the
background to projections of steady demand in 3Q FY3/22 and beyond. Regarding the revised forecasts as well,
FISCO believes it is highly likely the Company’s achieves its targets, in light of its future initiatives and the validity ofits medium-term business plan.

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11 16

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

CHINO CORPORATION
6850 Tokyo Stock Exchange First Section

27-Jan.-2022
https://www.chino.co.jp/english/financial/

Outlook

2. Summary of Medium-Term Management Plan 2026
The Company has created a plan that covers from FY3/22 to FY3/27. Under the plan, the entire Chino Group will
work to build a sustainable growth trajectory and raise corporate value over the medium to long term. The businessenvironment surrounding the Company is marked by accelerating VUCA, including increasing uncertainty in global
politics and economics, innovations in digital technologies, global warming and the deepening problem of climatechange, a declining birthrate and aging population in Japan, and increasing global population. Operating in thisenvironment, the Company has established a three-part management vision for its 90th anniversary in 2026. It
consists of: “Collaborative Creation: Creating new value with stakeholders based on an understanding of changes inthe environment,” “Uniqueness: Impressing customers with superior technology solutions,” and “Trust: Strengthening
the ‘bond’ of trust to continue growing into the future through passion and teamwork.”
Key goal indicators (KGI) of Medium-Term Management Plan 2026(¥mn)
FY3/21
Net sales(Overseas sales)
Operating profit

FY3/27
Goal

Change21,08030,000

8,920

3,518

7,000

3,482

1,136

2,700

1,564

Management indicators
Operating profit margin

5.4%

9.0%

3.6pt

ROE

8.1%

10.0%

1.9pt

ROA

4.0%

8.0%

4.0pt

Note: ROA is calculated using operating profit as numerator
Source: Prepared by FISCO from the Company’s published documents

3. Growth strategy
In order to achieve the key goal indicators (KGI) of its Medium-Term Management Plan 2026 discussed above, theCompany has defined four basic strategies: 1) Further development and expansion of growth areas (generate groupsynergies and accelerate the development and provision of unique solutions for new growth areas); 2) Enhancementof core businesses and value creation (enhance core businesses through the integration of original technologies andservices and create new value with customers); 3) Strengthening of foundations and expansion of business overseas(increase group earning potential by strengthening the relationship between domestic and overseas business anddeploying regional strategies); 4) Establishment of resilient management base (enhance the resilience of humanresources, organizations, ICT, governance and finances to support the creation of corporate value, innovation, andagile management). Based on these four strategies, the Company seeks to build a sustainable growth trajectory,raise medium- to long-term corporate value, and contribute to a decarbonized society.
(1) Further development and expansion of growth areas
This strategy involves capturing opportunities for growth and expansion against a backdrop of structural changes
in energy demand, increasingly strict environmental regulations, breakthroughs in information and communications
technologies, and increasing needs related to health and longevity. Specifically, the Company plans to generategroup synergies and accelerate the development and provision of unique solutions for new growth areas such ashydrogen use for a sustainable society, semiconductors and electronic components, next-generation batteries,
new materials, medicine, pharmaceuticals, food product management, and logistics.

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12 16

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

CHINO CORPORATION
6850 Tokyo Stock Exchange First Section

27-Jan.-2022
https://www.chino.co.jp/english/financial/

Outlook(2) Enhancement of core businesses and value creation
The Company will further leverage its temperature loop solutions consisting of measurement, control andmonitoring by reinforcing its reputation for reliability as “Chino, the temperature company” and strengthening
customer-oriented services for its original, distinctive technologies, which include temperature standard andmeasurement technologies, infrared measurement technologies, humidity and gas measurement technologies,
loop solutions, and instrumentation systems. Through this, the Company wants to “engineer customer excitement”(maximize customer satisfaction) by bringing its services to the next stage.
(3) Strengthening of foundations and expansion of business overseas
Against the backdrop of global economic stagnation during the COVID-19 pandemic, U.S.-China friction andnationalism, and growth in China, India and ASEAN countries, the Company intends to develop segment strategies
differentiated by country and region, strengthen its systems and develop human resources, bolster its global
infrastructure using ICT technologies, and further raise its presence in Asian markets in order to pioneer global
niches through coordination between domestic and overseas business and between production, sales anddevelopment.
(4) Establishment of resilient management baseWith regard to the establishment of a resilient management base, the Company believes that its managementbase must be highly flexible and durable to allow it to accurately identify and quickly respond to the needs andissues of society against a backdrop of fundamental changes in socioeconomic systems. Such changes include
acceleration in declining birthrates and aging, diversification of value systems and work styles, the full-fledged
arrival of the digital society, the rise of the multistakeholder approach, and the outbreak of COVID-19 and resulting
global pandemic. Amid these conditions, the Company will work in line with its vision and business strategies todevelop and enhance approaches, functions, and systems pivoting on the establishment of human resourcesmanagement to raise engagement, ensuring flexibility and efficiency in business execution by promoting digitaltransformation (DX), further enhancing corporate governance, and carrying out a financial strategy with further
emphasis on increasing capital efficiency. It will sensitively and flexibly adapt to VUCA by continuing to create
new value while meeting the expectations of stakeholders and will boldly execute a management strategy basedon creating shared value (CSV). Through this, the Company plans to establish resiliency in its human resources,
organization, ICT, governance, and financial structure in support of corporate value creation, innovation and agile
management.
Regarding its financial management policy, the Company strives to maintain financial health through the pursuit ofan optimal capital structure, actively invest in growth with an awareness of investment efficiency, and maintain astable dividend while targeting a payout ratio of 30% or more. By doing so, the Company will carry out a financial
strategy that is based on financial soundness and emphasizes growth potential and capital efficiency.

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13 16

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

CHINO CORPORATION
6850 Tokyo Stock Exchange First Section

27-Jan.-2022
https://www.chino.co.jp/english/financial/

Outlook

Basic policy on financial management

Source: From the Company’s Medium-Term Management Plan 2026

█ CSR initiatives
Helping build a hydrogen supply chain utilizing hydrogen energy toachieve a decarbonized society
Because hydrogen is a source of energy that does not give off greenhouse gases, hydrogen supply chains are
currently being developed throughout the world. The Company’s temperature loop solutions with measurement,
control and monitoring also demonstrate their strength in hydrogen-related applications. The Company has supplied
fuel cell testing systems for around 30 years since the 1990’s, when fuel cell vehicles first started being developed, so
it has an extensive track record. It is particularly proficient in fuel gas temperature and humidity control, which has alarge impact on the generating properties of fuel cells, and it is capable of providing products with specifications thatmatch customer requirements. Among the products provided by the Company is a sensing process control technology platform. This product has strength in four areas: 1) Process control technology for achieving high-precisioncontrol of temperature, humidity, pressure, flow rate, dew point, etc.; 2) Fuel cell testing expertise cultivated overmany years and testing system construction technology; 3) Dedicated software technology for integrated control ofmeasurement, control and monitoring; and 4) Sensing technology for a broad range of temperatures, from ultracold
to ultrahot temperatures. Installations of the platform can be expected to increase going forward.
The Company is also involved in the development of measurement technologies related to hydrogen. Its MEMS
hydrogen sensor jointly developed with Professor Mitsuteru Kimura of Tohoku Gakuin University looks to the futureof the hydrogen society when the infrastructure is in place and it becomes a reality and is regarded as one meansby which the Company, as “Chino, the sensor company,” will help realize a safe, secure and comfortable society.

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14 16

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

CHINO CORPORATION
6850 Tokyo Stock Exchange First Section

27-Jan.-2022
https://www.chino.co.jp/english/financial/

CSR initiatives

Chino initiatives for a hydrogen society

Source: From the Company’s website

In addition, for its measurement, control and monitoring technologies to be utilized for the sake of the future, theCompany actively carries out CSR initiatives with consideration for protection of the biological environment. Its
projects include the Chino Biotope Forest, which maintains a biotope for the restoration of nature and healthy local
woodlands in areas where nature is being lost; a solar power project involving the installation, management andoperation of solar power facilities at the Company’s Yamagata works in order to generate new business, and a plantcultivation testing house that utilizes measurement technology in agriculture to develop sensors and environmental
control systems suited to greenhouse cultivation.

█ Policy on shareholder returns
The Company views shareholder returns as the most important
policy of management and actively provides returns to investors,
which includes starting a shareholder benefits program
The Company positions shareholder returns as the most important policy of management. It is the Company’s
basic policy to pay a dividend twice each fiscal year, an interim dividend and a year-end dividend, and with respect
to execution of this policy, it determines the matter on each occasion upon consideration of its earnings situationand improvement of the payout ratio. It effectively utilizes internal reserves as investment capital for raising future
corporate value, including for development activities, investment in new technologies and products, and new
businesses. The Company has announced a policy of flexibly conducting share buybacks in order to raise per-shareprofit and return on equity.
The Company has made the decision to introduce shareholder benefits program to thank shareholders and toencourage medium- to long-term shareholding and increase the number of shareholders by further enhancing theappeal of investing in the Company’s stock. To summarize the program, it applies to shareholders with at least threestock units (300 shares) as of the end of March 2022 (thereafter, as of the end of March each year) and rewards
benefit points to shareholders based on the number of shares held. Shareholders can exchange the points for over
4,000 types of products, including food and electronic products, on the website Chino Premium Yutai Club.

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15 16

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

CHINO CORPORATION

27-Jan.-2022

6850 Tokyo Stock Exchange First Section

https://www.chino.co.jp/english/financial/

Policy on shareholder returns

Dividends per share and payout ratio
Annual dividend (left)(¥)

Payout ratio (consolidated)

50.0

44.8%

50.0%

40.7%
40.0

34.2%

40.0%
31.3%

29.6%

30.0
20.0

30.0%
40.0

45.0

45.0

45.0

45.0

10.0

20.0%
10.0%

0.0

0.0%
FY3/18

FY3/19FY3/20FY3/21

FY3/22 E

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

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

16 16

Disclaimer
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◾ For inquiry, please contact: ◾

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