Optorun Co., Ltd.
～ Creating the Future with Semiconductor-Optical Fusion ～Fiscal Year 2023 Earnings Report and Supplementary Materials
February 13, 2024

Optical thin film equipment

Semiconductor-optical fusion

Electronic device equipment

equipment

Investor Relations / Feb.13 2024

Copyright © OPTORUN Co. Ltd. 2024, All rights reserved.(6235)

1

Forward-looking statements

 Future Prospects
This material contains forward-looking statements. This includes forward-looking statements about the expected growth and trends in ourbusinesses and markets, industry prospects and demand drivers, our investment and growth strategies, the development of new products andtechnologies, and current and future business prospects. In the future, due to changes in various external and internal factors, there is apossibility that the forecast may differ materially from the forecast or forecast, but we are not obligated to update or revise.

 Foreign exchange risk
Export sales of our mainstay manufacturing equipment are affected by exchange rate fluctuations in the U.S. dollar (USD) due to our highdependency in U.S. dollar terms. Manufacturing costs are affected by fluctuations in Chinese yuan (RMB) due to the high dependence on
Chinese production. The exchange rate assumptions under the financial forecasts are based on historical results and aim to mitigate the impact
of exchange rate fluctuations. Although large part of our direct export destinations are the Greater China region, the demand of end-products
using our technologies has large dependency on U.S. region.

 Actions to implement management conscious of cost of capital and stock priceWe have set goals for operating profit margin and ROE in our medium-term management plan to implement management that is conscious of
cost of capital and stock prices. To improve shareholder value, we plan to pay out stable dividends and consider a flexible and strategic
repurchase of treasury stock. We are also planning strategic business alliances, including R&D, capital investment, and M&A, with a view toachieving sustained growth. Contact e-mail: ir-info@optorun.co.jp

Investor Relations / Feb.13 2024

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2

Topics
 Consolidated Orders Received and Results for FY2023
Orders received slowed to 24 billion yen (¥), down 44% from the previous year, due to a decline in smartphone-related investment. Despite adecline in orders, we have begun to win orders for optical thin film equipment for AI smartphones. Net sales increased 7% to ¥36.8 billion andoperating income increased 31% to ¥9.7 billion thanks to contributions from Atomic Layer Deposition (ALD) equipment. Ordinary income
declined 30% y-o-y to ¥6.0 billion due to a ¥4.0 billion foreign exchange-related loss. Exchange rate were USD@¥140.67 and RMB@¥19.82.

 Business Forecast for FY2024 and Business Environment
Orders are expected to recover on a quarterly basis as AI smartphone-related investments expand. Net sales are forecast to increase 1% yearon-year to ¥37.0 billion, thanks in part to the growth of the Electronic Devices Business. Operating profit is expected to decline 23% y-o-y to
7.6 billion yen due to the yen‘s appreciation and intensifying price competition, but recurring profit is forecast to rise 25% y-o-y to 7.6 billion
yen. The foreign exchange assumption is USD@¥130 and RMB@¥20.5. Operating profit sensitivity is estimated to be positive ¥150 million
for ¥1 appreciation of a USD and negative ¥100 million for a ¥0.1 appreciation of an RMB.

 Medium-Term Management Plan and Business Strategy
We envisage operating profit margin of above 20% and return on equity (ROE) of above 10% as part of our Medium-term Management Plan.
To improve shareholders’ value, we plan a stable dividend payout ratio of at least 30% and a flexible and strategic stock repurchase. The
annual dividend per share for FY2024 is forecast to be 52 yen (including interim dividend of 26 yen). Our business plan focuses on growing
three business segments regarded as the pillars of our future business; optical, semiconductor optical convergence, and electronic devices.

Investor Relations / Feb.13 2024

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3

Financial performance
Chart 1: Orders Received, Business Performance, and per-share Indicators (Unit: ¥ million, Yen, %)

FY

18/12

19/12

20/12

21/12

22/12

23/12

24/12E

Orders received

39,821

36,06228,60635,435

43,12424,080Order Backlog

39,22832,46823,58328,12636,947

Net sales

44,76342,82237,49130,892

Operating profit

10,69010,8798,628

Ordinary profit

10,993

11,031

Profit attributable toowners of parent

7,746

Earnings per share

前年比％
23/12

24/12E

-

-44.2

-

24,219

-

-34.4

-

34,30436,80737,000

7.3

0.5

7,025

7,449

9,752

7,500

30.9

-23.1

8,610

7,901

8,763

6,051

7,600

-30.9

25.6

9,102

6,797

6,330

6,890

4,632

5,400

-32.8

16.6

187.6

216.7

159.1

146.8

159.0

106.1

123.2

-33.2

16.1

Dividend Per Share

55.0

60.0

50.0

50.0

50.0

50.0

52.0

0.0

4.0

Net assets per share

676.2

821.1

919.0

1,066.0

1,199.1

1,285.3-

7.2-

Gross profit/net sales

39.0

41.3

39.2

43.3

43.6

50.1

-

6.6

-

Operating profit/net sales
Profit attributable toowners of parent/equity

23.9

25.4

23.0

22.7

21.7

26.5

20.3

4.8

-6.2

30.6

29.0

18.3

14.8

14.0

8.5

-

-5.5

-

NOTE :Accounting is based on Japanese GAAP. E indicates our forecast. Figures are rounded to the nearest million yen. Figures in the percentage of profit are changes from the previous year.
As of February 13, 2023, our forecasts for FY2023 were ¥35.5 billion revenue, ¥8.6 billion operating income, ¥8.6 billion ordinary income, ¥6.2 billion net income, and net income per share of ¥142.6

Investor Relations / Feb.13 2024

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4

Balance Sheet and Cash Flow Statement
Chart 2: Summary of Consolidated Balance Sheet and Cash Flow Statement (in millions of yen)
FY

18/12

19/12

20/12

21/12

22/12

23/12

Cash and deposits

15,741

26,97022,72332,27434,92333,054

Notes and accounts
receivable-trade

6,417

3,902

9,426

5,627

7,423

4,882

Inventories

24,487

15,173

11,147

12,85520,43017,989Current assets

48,14247,19444,57253,14565,401

57,632

Non-current assets

7,502

9,315

9,755

11,52917,51520,859Total assets

55,64456,50954,32764,67582,91678,491

Notes and accounts
payable - trade

1,653

2,735

1,703

3,246

4,785

1,284

Short-term favorable s

757

510

489

472

414

403

20,10913,989

8,922

9,831

19,06014,743Current liabilities

25,923

19,826

13,655

17,05728,40019,097

Non-current liabilities

1,659

1,864

1,157

1,535

2,357

2,478

Net assets

28,06334,81939,51546,08452,15956,916

Cash flows fromoperating activities
Cash flows frominvesting activities

9,572

16,233-535

10,686

8,561

3,180

-2,964-2,432-1,048376-4,396-3,5996,608

13,801-1,583

11,061

4,165

-419

-10,054-2,359-2,467-2,735-2,172-2,207

Contract liabilities

Free cash flow
Cash flows fromfinancing activities

NOTE :Figures are rounded to the nearest million yen. Notes and accounts receivable are calculated taking into account allowance for doubtful accounts. Short-term interest-bearing debt is the total of shortterm borrowings and lease obligations.

Investor Relations / Feb.13 2024

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5

FY2023 Results and FY2024 Forecast Outline
 FY2023 Consolidated Results
Orders received slowed due to a decline in smartphone-related investment, but orders for optical thin film equipment for AI smartphones havebegun to flow in. Sales of ALD systems contributed to the increase of net sales and operating income. Ordinary income declined due to foreignexchange-related losses. Exchange rate was USD@¥140.67 and RMB@¥19.82.
In the smartphone market, the replacement cycle has been prolonged due to the maturing of demand, but since around the 4th Quarter(October to December 2023), the emergence of AI smartphones have resulted in an increase in inquiries from customers for new types ofequipment. We received orders for AR/VR etching equipment in the semiconductor optical field and equipment for the green energy
application in the electronic devices field. In sales, the percentage of new equipment increased to 44% (35% in the FY2022) due tocontributions from ALD equipment sales.

 FY2024 Forecast and Business Environment
Orders are expected to recover on a quarterly basis as AI smartphone-related investment expands. Net sales are expected to increase slightly
due to the growth of the electronic devices business. Operating profit is forecast to decline due to the appreciation of the yen and intensifying
price competition, but recurring profit is forecast to increase. The assumption of exchange rate is USD@¥130 and RMB@¥20.5, which isbased on the current exchange rate. The sensitivity of the foreign exchange on operating profit is a positive ¥150 million for a ¥1 appreciationof a USD and a negative ¥100 million for a ¥0.1 appreciation of an RMB.
The Generative AI revolution is expected to expand demand for thin-film deposition across our business segments, including optical,
semiconductor optical fusion, and electronic devices. The creation of high-end smartphones with AI functions and the development of highperformance cameras with multiple camera lenses and lenses in larger sizes will stimulate demand for new-type equipment. Semiconductor
optical fusion segment is positioned as an important focus area in which we plan to aggressively conduct R&D, invest in IP, and engage in
M&A. In the EV/automotive area, we anticipate new demand coming from the improvement of automated operation technology.
Investor Relations / Feb.13 2024

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Orders received, net sales, profitability, and profitability indicators
Chart 3: Orders Received, Net Sales, Profitability and Profitability Indicatorsⅱ．事業別売上高

billion Yen
100.0

Net sales
Gross profit/net sales
ROE

90.0
42.4
80.0

39.0
33.7
29.0

70.0

21.9
60.0

16.0

50.0

14.4

40.0

30.6
23.9

41.3

Orders received
Operating profit/net sales
43.3

60
50.1
50

43.6

39.2
40

29.0
25.4

26.5
23.0

22.7

21.7

18.3

14.8

14.0

52.5

30
20.3
20

8.5
44.8
39.8

36.6

36.1

10

43.1

42.8
37.5

35.4

28.6

30.9

33.4

30.0
20.0

％

34.3

36.8

37.0

0
-10

24.1

-20

14.9

10.0

-30

0.0

-40
2016

2017

2018

2019

2020

2021

2022

2023

2024E
FY

NOTE :Accounting is based on Japanese standards, E is our forecast
The assumption of the exchange rate for FY12/12 is USD@¥130 yen and RMB@¥20.5. Sensitivity to operating profit is positive ¥150 million in one yen appreciation of a USD, and negative ¥100
million in yen in 0.1yen appreciation of an RMB.
Investor Relations / Feb.13 2024

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7

Quarterly Orders by Application
billion Yen
Chart 4: Quarterly Orders by Applicationⅱ．事業別売上高

billion Yen

18.8

20.0

3.0

15.0

13.8

13.2

1.5

10.0
3.4

1.6
1.0

1.6
2.3

2.4

0.1

9.6

0.3

1.4
0.7
0.9

9.2

0.9
1.6
0.3
1.5

6.4
10.2

5.0
6.93.8

7.6

1.2
-0.8

0.0

15.0

10.0

6.1
4.3
2.2

0.8
1.52.5

20.0

Exchange impact
Other
LED
IoT
CameraSmart phone
New type equipment

4.9

0.9

4.1

5.0

0.8
1.2
0.7
0.4
0.9
0.8 0.6

1.6
1.10.1
1.0 0.2
0.5

2.1

1.9
1.8
-0.7

0.0

-5.3

-5.0

-5.0
-2.8

-10.0

-10.0
2022 1Q

2022 2Q

2022 3Q

2022 4Q

2023 1Q

2023 2Q

2023 3Q

2023 4Q

FY/Quater

NOTE :Smartphone applications include color decoration and antireflection coatings; camera lenses include antireflection coatings; IoT includes DWDM (high-density wavelength division multiplexing),
bio-authentication, and antireflection coatings for on-board cameras, AR/VR IR-cut filters. LEDs include ITO films. New equipment includes ALD equipment

Investor Relations / Feb.13 2024

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8

Quarterly Sales by Application
Chart 5: Quarterly Sales by Application

billion Yen
14.0

ⅱ．事業別売上高

12.0

11.3

10.0

1.8

8.4
8.0

6.0

4.0

0.5
0.4

5.1

0.1

12.0

1.2
0.7

2.0

1.3

10.0

0.2

0.9

0.2

8.0
1.4

1.6

3.0
1.2
0.2

3.5

0.1

5.8

2.2

1.7

6.0

1.2

0.2

5.2

0.7
0.6

6.3

8.3

1.5

7.9
8.0

1.9

0.3

0.5
0.4

2.0

11.9

1.4

2.9

1.9

Other
LED
IoT
CameraSmart phone
new type equipment
9.5
9.1

billion Yen
14.0

0.1 4.1

4.0

3.3

5.0

2.0

0.1

3.9

3.5

4.4

2.5
2.0

2.5

0.0
2022 1Q

2022 2Q

2022 3Q

2022 4Q

2023 1Q

2023 2Q

2023 3Q

0.0
2023 4Q
FY/Quater

NOTE :Smartphone applications include color decoration and antireflection coatings; camera lenses include antireflection coatings; IoT includes DWDM (high-density wavelength division multiplexing),
bio-authentication, and antireflection coatings for on-board cameras, AR/VR IR-cut filters. LEDs include ITO films. New equipment includes ALD equipment

Investor Relations / Feb.13 2024

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9

Mid-term Management Plan

Investor Relations / Feb.13 2024

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1010Development of business domains (three major pillars)
Semiconductor opticalfusionOpticalElectronic devices■ Photoelectric fusion device■ AI smartphones• CMOS image sensors• Datacom transceiver• Board connection device• Periscopes lens

• Integrated cockpit/mobility• Power semiconductor• Solid-state battery■ EV/Connected cars

• ADAS (Advanced Driving Support System)■ Green energy■ Communication device■ Spatial computer• Micro LED/LiDAR sensor• Millimeter-wave device(BAW/SAW/RF)• OLED display

Investor Relations / Feb.13 2024

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Mid-term management goals
 Medium-Term Management Plan and Business Strategy
Operating profit margin of above 20% and Return on Equity (ROE) of above 10% are set as management targets. To improve shareholder
value, we are considering stable dividends and flexible stock repurchases with a consolidated dividend payout ratio of at least 30%. The annual
dividend per share for FY2024 is planned at ¥52 (including interim dividend of ¥26). As part of our business strategy, we plan to focus on
three business domains; optical, semiconductor optical fusion, and electronic devices, as the pillars of our future growth.
Chart 6: Mid-term Management Targets by Field (in billions of yen)

Investor Relations / Feb.13 2024

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12

Cash allocation (3 years)
Figure 7: Cash Allocation

Cash inCash out□ R&D investment

Operating CF（Excluding R&D expenses）
15～30 billion yen

Growth・Strategic
investment

R&D investment

Semiconductor optical fusion

CAPEX
M&A

Electronic device□ CAPEX
maintenance of bases□ M&A

Cash on hand

Shareholder
returns

Dividend

working
capitalCash on hand

□ Consolidated payout ratio

33 billion yen

Investor Relations / Feb.13 2024

Copyright © OPTORUN Co. Ltd. 2024, All rights reserved.(6235)

30％ or more

□ Large orders
Preparing for the unexpected13Capital expenditure and R&D expenses
Chart 8: Capital expenditure, depreciation, and R&D
Optorun Semiconductor Technology, Shanghai

Tsurugashima HQs, Japan

Optorun Vina, Bac Ninh, Vietnam

Shanghai•

Global R&D center for semiconductor optical fusion•and electronic devices, etc., currently being upgraded.

Production and R&D base for new technology
equipment such as ALD equipment.

•

Capital Investment

5.0

5.0

4.3

depreciation

4.0

4.0
3.1
3.0

3.7

3.4

3.1

3.0

2020

2021

3.0

2.4

2.0

2.0
1.0

R&D

billion
6.0

5.7

6.0

Equipment installation, maintenance and repair,parts machining for customers in Southeast Asia.
Launched in December 2023.

Commenced operations in January 2024

Capital Investment and Depreciation

billion

•

0.9

0.7
0.2

0.3

2020

2021

0.5

0.8

1.1

1.0

0.0

Investor Relations / Feb.13 2024

2022

2023

2024E

FY

0.0

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2022

2023

2024E

FY
14

Shareholder Return Policy and Dividend Forecast Shareholder Return Policy and Dividend Forecast
While securing the necessary internal reserves to invest in R&D, production capabilities, and new business development, we will return
profits to shareholders under a policy to maintain dividend payout ratio at above 30%. For the fiscal 2024, we plan to pay annual dividends of¥52 per share in total, half of which in the form of interim dividend (dividends may be reconsidered in the event of significant fluctuations inrevenues and earnings in fiscal 2024).
Chart 9: Dividends per Share and Annual Dividend Payment Ratio
ⅱ．事業別売上高

yen
100.0Interim dividend per share

42.2

Payout ratio

80.0
70.0

50

47.1

Year-end dividend per share
90.0

％

40

34.1

35

31.4

31.4

45

60.0

30
50.0

50.0

50.0

50.0

52.0

50.0

25

40.0

26.0

20

30.0

15

20.0

10
26.0

10.0

5

0.0

0
2020

Investor Relations / Feb.13 2024

2021

2022

2023

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2024E

FY
15

Optical Thin Film Equipment/AI Smartphones
Figure 10: Optical thin-film equipment for AI smartphones

Flame-decorating coating(Sputtering Equipment)

Black membrane(Sputtering Equipment)

IR cut filter(Evaporator)

Decorative coating(Evaporator, Sputtering
equipment)
3D decorative coating(Sputtering and ALD Equipment)

Lens
Antireflection film
(Evaporator, ALD Equipment)

Hard antireflective coating
Anti-dirt and anti-glare finish(Sputtering, Etching equipment)
Investor Relations / Feb.13 2024

For periscopes and other smartphones.
Increased demand for new types of equipment due to higher functionality.

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16

Semiconductor optical fusion /photoelectric fusion device
Figure 11: Semiconductor-Optical Fusion technologies for Photoelectric Fusion Devices

Carrier wafer/glass

Optical transceiver

Chip to chip optical transmission(Optical conversion devices /optical wiring)Contributing to the realization of optical transmission devices between chips through photoelectric fusion technology

2nd generation opticalcommunications

Vapor deposition equipment
Investor Relations / Feb.13 2024

3rd generation opticalcommunications

Sputtering equipment
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3.5th generation opticalcommunications

ALD equipment
17

Semiconductor Optical Fusion Device/Spatial Computing
Figure 12: Semiconductor Optical Fusion Device for Spatial Computing

3D camera

Half mirror(Sputtering Equipment)(Evaporator)

Lens surface

Grating/waveguide(Evaporator, Sputtering equipment)(ALD, etching device)

Micro display(ALD, etching device)
Technological innovation in AR/VR depends on micro-machining and 3D thin-film deposition technology

Investor Relations / Feb.13 2024

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18

Electronic device/BAW filter
Figure 13: Electronic Device Deposition Equipment for BAW Filter (Bulk Surface Wave Filter)

Piezoelectric thin film

Electrode partial metal film
(Evaporator)(Sputtering Equipment)

Electrode partial metal film
(Evaporator)

Note: BAW filter stands for Bulk Acoustic Wave Filter, which is essential for mobile communication systems using 2 GHz or higher frequencies. SAW (Surface Acoustic Wave) filters are used for
frequencies ranging between 800 Mhz and 2 GHz.
Investor Relations / Feb.13 2024

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1920