Basic Report (Issued by The Stock Research Center)

TOWA HI SYSTEM (4172 TSE Standard)

July 18,2024

Specializing in integrated systems for dental clinics, primarily in western Japan
This report is an English translation of part of the report issued on June 28, 2024.
For inquiries concerning the report, please contract info@stock-r.org【4172 TOWA HI SYSTEM Sector：Information & Communication】
Fiscal YearNet sales

YoY

OperatingprofitYoY

Ordinary
profitYoYProfit

YoY

EPS

BPS

DPS

(mn yen)(%)(mn yen)(%)(mn yen)(%)(mn yen)

(%)

(yen)

(yen)

(yen)

Sep. 2022

2,215-6.5

416-30.8475-16.8

316-15.8 142.0

1,611.2

78.0

Sep. 2023

2,041-7.8

230-44.6

385-18.8258-18.3 116.0

1,675.9

50.0

Sep. 2024 CE

2,302

12.8

368

59.5

418

8.6

293

13.4 131.6-60.0

Sep. 2024

E

2,291

12.2

372

61.3

516

33.8

361

40.0 162.0

1,675.9

60.0

Sep. 2025

E

2,719

18.7

550

47.8

586

13.6

411

13.6 184.5

1,758.4

70.0

Sep. 2026

E

3,160

16.2

749

36.0

785

33.8

550

33.8 246.9

1,877.980.0

Note: CE(company expectations),E(Stock Research Center expectations)
Source: Stock Research Center

1. Corporate Overview
TOWA HI SYSTEM is a company that develops and provides integrated systems for dental
clinics based on electronic medical records.

2. Financial Analysis
From fiscal year ended February 2015 through fiscal year ended September 2023, net
sales remained flat, and ordinary profit fell at an annual rate of 0.5%. After a period of slow
profit growth attributable to the company prioritizing the reinforcement of internal controlsystems, net sales and profits picked up in fiscal year ended September 2021 but declined
in both fiscal years ended September 2022 and September 2023.
When comparing financial indicators with listed companies that provide systems for
medical institutions, despite a high safety profile, the company’s small size and low growthpotential are noteworthy. Moreover, ROE, an indicator of profitability, remains low due tolow total asset turnover.

3. Non-Financial Analysis
The source of the company’s intellectual capital is the founder’s commitment over manyyears. The company’s concentrated strategy of specializing in systems for dental clinics
has seen success. By developing highly competitive products and devising a sales strategy
suited to its products, the company grew its customer base, particularly in western Japan.
This led to the accumulation of know-how in system development, creating a virtuous cycle
that, in turn, led to the development of subsequent products.

4. Corporate Strategy Analysis
Issues that should be addressed include expanding sales of AI and voice series,
developing customers and growing market share in the Kansai and Tokyo metropolitan
areas and securing human resources.
The company’s immediate plans are to concentrate on expanding its business by boostingsales of the AI and voice series it developed in collaboration with Hitachi, Ltd.
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The contents indicated in the report are based on information as of the date the report was created and are subject to change without prior notice. The Stock Research Center
makes no warranty or representation concerning the accuracy, reliability, completeness, adequacy and reliability of the information indicated in the report, and shall not assume
no responsibility or obligation whatsoever. The Stock Research Center assumes no responsibility for any direct or indirect loss, lost profit, damage or other results from investors
accessing and using the report or relying on the report concerning the distribution of the report. Final investment decisions shall be made by the investors themselves, and entire
responsibility for investments lies with investors that accessed the report. In addition, intellectual rights concerning the report belongs to The Stock Research Center and may
not be copied, reprinted, quoted, etc. without permission.

Basic Report (Issued by The Stock Research Center)

TOWA HI SYSTEM (4172 TSE Standard)

July 18,2024

5. Analyst Evaluation
We commend TOWA HI SYSTEM for adopting a strategy that specializes in systems fordental clinics and formulating a unique style in terms of product development, sales andsupport.
The focus for the time being will be on sales trends of the AI and voice series, which thecompany is currently in the process of releasing new products. As it is a product boasting
industry-first features, it will be interesting to see the extent of its contribution to theacquisition of new customers while also watching the introduction of the product to existingcustomers.

Newly Listed Company Introduction Report

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The contents indicated in the report are based on information as of the date the report was created and are subject to change without prior notice. The Stock Research Center
makes no warranty or representation concerning the accuracy, reliability, completeness, adequacy and reliability of the information indicated in the report, and shall not assume
no responsibility or obligation whatsoever. The Stock Research Center assumes no responsibility for any direct or indirect loss, lost profit, damage or other results from investors
accessing and using the report or relying on the report concerning the distribution of the report. Final investment decisions shall be made by the investors themselves, and entire
responsibility for investments lies with investors that accessed the report. In addition, intellectual rights concerning the report belongs to The Stock Research Center and may
not be copied, reprinted, quoted, etc. without permission.

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