46th Interim(From April 1, 2020 to September 30, 2020)

Securities code: 6787

Financial highlights
Net sales

53,236

Consolidated balance sheet
End of FY2019(As of March 31, 2020)

million yen（in million yen）

Noncurrent assets
Property, plant and equipment
Intangible assets
Investments and other assets
Total assets
Liabilities
Current liabilities
Noncurrent liabilities
Total liabilities
Net assets
Shareholders equity
CapitalCapital surplus
Retained earnings
Treasury stocks
Cumulative other comprehensive income

Valuation diﬀerence on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of deﬁned beneﬁt plans
Non-controlling interests
Total net assets
Total liabilities and net assets

60,98371,55864,473887
6,196
132,541

52,06453,837
46,529100,367

32,116
12,8886,464
13,159
△396
172
△8
30
375
△224
193
32,482
129,237

Consolidated statement of income
First half of the 45th term
(year to date)(As of September 30, 2020)

59,716
69,52062,997827
5,696
129,237

44,69196,755

1,814

At the end of the second quarter forthe ﬁscal year under review

AssetsCurrent assets

Net income attributable to owners of parent

Operating income

32,15812,8886,464
13,202
△396
△130
0
129
△53
△206
145
32,173
132,541(April 1, 2019 to September 30, 2019)

million yen（in million yen）

First half of the 45th term
(year to date)(April 1, 2020 to September 30, 2020)

59,122

53,236

Cost of sales

49,96146,499Gross proﬁt

9,160

6,736

Selling, general and administrative expenses

5,749

4,921

Operating income

3,410

1,814

Non-operating income

266

445

Non-operating expenses

654

1,700

3,022

560

Extraordinary income

32Extraordinary losses

182

290

Net income before income taxes

Consolidated statement of cash ﬂows

First half of the 46th term
(year to date)

Net sales

Ordinary income

194

2,842

272

Income taxes

476

120

Net income

2,366

152

Net loss attributable to non-controlling interests―△42

Net income attributable to owners of parent

2,366

194

(April 1, 2019 to September 30, 2019)

million yen（in million yen）
First half of the 46th term
(year to date)(April 1, 2020 to September 30, 2020)

Net cash generated from operating activities

4,480

1,308

Net cash expended in investment activities△8,899△5,702

Net cash generated from (expended in) ﬁnancing activities

5,828

4,753

The eﬀect of changes in the exchange rate on cash and cash equivalents

△382

△108

Cash and cash equivalents at the beginning of the period

11,41913,646

Net increase (decrease) in cash and cash equivalents
resulting from the change in scope of consolidation−

229

Cash and cash equivalents at the end of the period

12,446

14,126

Key points of the financial results●Consolidated balance sheet

・Total assets at the end of the second quarter under review increased 3,303 million yen
from the end of previous fiscal year to 132,541 million yen.
・This is mainly attributable to increases of 482 million yen in cash and deposits, 533
million yen in notes and accounts receivable-trade, and 381 million yen in inventories,
included in current assets, as well as increases of 1,476 million yen in property, plantand equipment and 500 million yen in investments and other assets, included in
noncurrent assets.
・Liabilities at the end of the second quarter under review increased 3,611 million yen
from the end of previous fiscal year to 100,367 million yen.

・This is mainly attributable to a 1,624 million yen decrease in notes and accounts payable-trade,a 6,729 million yen increase in short-term borrowings, a 2,782 million yen decrease in current
portion of long-term borrowings, and a 466 million yen decrease in other current liabilities,
included in current liabilities, as well as a 1,897 million yen increase in long-term borrowings,
included in noncurrent liabilities.
・Net assets at the end of the second quarter under review fell 308 million yen from the end of
previous fiscal year to 32,173 million yen.
・This is mainly attributable to a 42 million yen increase in retained earnings and a 429 million yen
decrease in foreign currency translation adjustment.

Interview with the President

To our shareholders
I would like to express my sincere gratitude to all shareholders and investors for the outstanding support.
The following is a report summarizing the operating results for the first half of the term ending March 2021.

Yuichiro Naya, President & CEO
1st Half Results and Full-Year Outlook
FY2020- Consolidated
Year-on-year

FY19 1st half FY20 1st half
results

results

Diﬀ.

forecast

591
34

532
18

Ordinary
income30

6-24 -81.5%

2-22 -91.8%

5.8％
5.1％

1.1%

4.0％

0.4%

24

Net
incomeforecast

628 1,160
35
53-59 -10.0%-16 -46.8%

3.4%

5.6%

4.6%

4.6%

3.0%

4.0%

2.3%

29

35

25

27

Average FX rate
(JPY/USD)

108.66106.30106.00106.15

Dividend pershare

15 yen0

20 yen20 yenHalf-Yearly Net Sales and Operating Income
Net sales
591

FY20191H

564

FY20192H

Automobiles(in 100 million yen)

Operating income
628

FY20201H

FY20202H
forecast

Smartphones/Tablets

35

34

532

FY20191H
IoT/AI appliances

18

18

FY20192H

FY20201H

FY20202H
forecast

Storage

OthersAmusement

Sales by Product Specification
Double-sided PCB

Four-layer PCB

In the first half of the fiscal year, the electronic parts industry witnessed a moderate
recovery after being hit by the economic slump caused by the COVID-19 pandemic.
However, the outlook remains clouded as there are also some regions that are showing nosigns of the virus abating.
Against this backdrop, our group is also experiencing a moderate recovery in thenumber of orders received. Although automotive PCBs are seeing a return in businessfrom customers that had gone to competitors thanks to a recovery in global automotive
production, sales fell year-on-year. Smartphone PCBs and PCBs for IoT modules and AI
appliances are seeing an influx in new orders, but also reported a year-on-year decline insales. Meanwhile, PCBs for amusement applications continued to fare well, recording
year-on-year sales growth. The EMS business saw sales increase year-on-year, owing
partly to expansion of the Vietnam Plant. On the profit front, our company pushed forwardwith group-wide cost reduction, but soaring prices of resources such as copper and gold
as well as the booking of 933 million yen in foreign exchange losses in non-operating
expenses and 290 million yen in restructuring and other costs in extraordinary losses
resulted in profit decrease year on year.
As a result, we posted net sales of 53,236 million yen (-10.0% year-on-year), down
5,885 million yen compared with the same quarter of the previous year. Concerning profits
and losses, operating income was 1,814 million yen (-46.8% year-on-year), ordinary
income 560 million yen (-81.5% year-on-year) and net income attributable to owners ofparent 194 million yen (-91.8% year-on-year).

FY20 2 nd half FY20 full-year%

OperatingincomeNet sales

Regarding the operating results in the first half(in 100 million yen)Six-layer or more

Regarding the full-year forecast
Our company has upgraded the full-year forecast in light of the anticipated earnings
recovery in the second half of the term. We forecast net sales to grow 0.5% year-on-year
to 116,000 million yen, operating income to increase 2.1% year-on-year to 5,300 million
yen, ordinary income to fall 26.9% year-on-year to 3,500 million yen, and net income
attributable to owners of parent to increase 4.4% year-on-year to 2,700 million yen. As forthe outlook for sale of each product application, we see sales of automotive PCBs
decreasing 9.5% year-on-year to 49,800 million yen, because the sluggish automotive
market is recovering. For smartphone PCBs, we estimate sales jumping 19.3% year-onyear to 29,700 million yen, backed by increased uptake of our products in customer
applications and the smooth launch of new models. For PCBs for IoT modules and AI
appliances and PCBs for amusement applications, we project sales to grow 18.6% yearon-year to 10,200 million yen, also on increased uptake of our products in customer
applications. Meanwhile, we forecast profit falling 4.2% year-on-year to 2,300 million yen
for automotive PCBs, advancing 29.4% year-on-year to 2,200 million yen for smartphone
PCBs, and remaining flat year-on-year to 500 million yen for PCBs for IoT modules and AI
appliances and PCBs for amusement applications.

(in 100 million yen)

HDI PCB

Heat dissipation board

Flexible PCBs

FY20202H
forecast

Others

EMS

628

8

million yen

532

FY20201H

million yen

（

（

（

＋34

43

-59
（-10.0%）8FY20191H

591

million yen

Mid-term Market Trend

5G Application

Global pandemic has accelerated social and economic change to cloud connected devices.
5G adoption drives digital transformation across many market sectors.
5G smartphones(in 100 million devices)

1,050 million

10

Storage Device(in 100 million devices)

HDD

SSD

6

Electric Vehicle(EV)(in million cars)Connected Car(in million cars)

7.8 million

750

74 million

Industry

Smartphone

6,000

200 million
4 260 million

2

250 million

0

340 million
280 million

0
2020

2025
Source：Edit IDC Data

250 1.7 million
0

2020

2025

Source：Edit DEMPA PUBLICATIONS Data

4,000

IoT
Device2,000

Connected
Car

43 million

500

5

0
2020

2025

Source：Edit FUJI KEIZAI Data

2020

2025

Source：TrendForce・5G unleashing full potential of IoT to become an integral part of our economy and lifestyle.
・Advanced Analytics and AI processors driving SSD penetration in data centers.
・EV and Connected Car growth occurring through Environmental Regulations andcompetition for Autonomous Driving.
・Increased data rates requiring higher complexity and functionality HDI PCB
with high-speed signal capability.

Data
CenterStorage

Product

Application

Factory

StatusFeatures

PCB Stackup

Main Board

Wuhan
VietnamHigh Speed
Volume Fine Line Width& Spacing

RF Module

VietnamVolumeThin Dielectrics
8L AnyLayer
Smaller Microvia

Communication
Wuhan
ModuleVolumeHigh Speed
SMT Reliability

12L AnyLayer

Communication Vietnam
High Speed
SampleModuleIshinomaki
SMT Reliability

12L AnyLayer
12L HDI

10L AnyLayer
12L AnyLayer

High Speed
16L HDI
Hybrid Structure

SSD

Wuhan

SampleMemoryPackageVietnamThin Dielectrics
Sample Fine Line Width& Spacing

3L AnyLayer
4L AnyLayer

Global Market Forecast

Regarding capital investments(million units)

We plan to conduct capital investments of 10 billion yen in the current fiscal year, in
accordance with the budget formulated at the beginning of the term. Until now, we havefocused such outlays on boosting production capacity, but going forward we intend toinvest in advanced automotive, smartphone, and 5G fields, as well as module PCBs,
which will be the mainstay of our business in the future. We plan to focus our investments
on fields expected to contribute to earnings growth in the next fiscal year onwards and on
smart factory.

Regarding Mid-term Strategy(100 million units)

Light Vehicle Sales

Regarding dividends

13.7

88.7

Source: Edited IDC data

Source: Edited Markets and markets data

Strategic Goals
Operating Margin Increase

Revenue Growth■Advanced automotive ﬁeld
■Advanced smartphone ﬁeld
■5G・Module ﬁeld

■Increase sales portion ofadvanced ﬁelds■Productivity improvement■Fixed cost and SG&A cost
reduction■Proﬁtability improvement ofJapan business■EMS business

Investment Strategy

Financing Strategy■Commitment line:
30 billion yen, 5 years■Interest bearing debt reduction■5G・Module■Automotive■Smart factory■Self-capital ratio improvement■ROIC improvement

SALES/CAPEX Highlights by Country
Japan
700

China

（including intercompany sales）

675

642

Vietnam

695

615

600

503

500
400

（100 million yen）

369

366

382

500

428

425

359
289

300

192

200
100
0

401

5

13

FY2016FY201724
FY2018

8

13

18

24

FY2019FY2020FY2016FY201747
FY201817

21

FY2019FY2019Forecast

FY2016FY2017

95

79

59

8

FY2018FY2019Forecast

Net Sales

66

FY2020
Forecast

CAPEX

Key items
Carbon dioxide
emission
Reuse of water

Solar power plant in Fukushima, Japan

Copper recycling plant using
electrochemical process

Resource recycling
Social contribution
Surgical mask donation

On-site childcare facility

Women empowerment& Diversity
Enhancement ofCorporate Governance

ESG/SDGs assessment loan certificate

Organic vegetable farming in Vietnam

Design Proposal for Automotive ECU Integration

Ethernet Speed

400Gbit/s
8Gbps (Gen3)

16Gbps (Gen4)

Package
ModuleFlash Memory / RF Module(MSAP L/S=25/25um)

Base Station
ServerData Center Server SSD(16Layer Low-Loss Transmission Line PCB)

Multi-function Integrated Power PWB

800Gbit/s
32Gbps (Gen5)

Flash Memory(L/S=20/20um)
Ultra Low-Loss
Transmission
Line PCB

Connected Car
IoT Device

Communication Module(12Layer AnyLayer PCB⇒ Low-Loss Transmission Line PCB)

Smartphone

Mother Board(MSAP L/S=30/30um ⇒ 25/25um)
ECU Integration(Multi-function Integrated Power PCB)
Level 3

Y2020

77.3

ESG initiatives

PCB Technology Roadmap

Autonomous
Driving

110.6

71.6

Promote disclosure of ESG initiatives
・Enhance ESG contents on the website
・Issue integrated report

Autonomous
Driving
Electric Vehicle

15.0

12.4

92.2

Sales and profit have both declined due to the impact from the COVID-19 pandemic.
After the contemplation of this situation, we have come to a conclusion to forgo theinterim dividend for the current fiscal year. As we expect earnings to recover, we plan to
pay year-end dividends of 20 yen per share, bringing the annual dividend to 20 yen per
share.
In order to live up to the support and expectations from stakeholders, including
shareholders, we will implement various improvement measures with utmost effort, toimprove our performance and corporate value. We would appreciate your continued
support and encouragement.

Bit Rate

IoT Device

3G/4G

95.2

Source: MarkeLines and SMBC Nikko

Going forward, we plan to expand sales by strengthening our operations in
cutting-edge products for automotive and smartphone, the 5G/module products, and the
EMS business, which are designated as key areas. For operating income, we will strive toexpand aforementioned advanced domains, improve productivity, and reduce fixed costs
and SG&A. We will also work to improve the profitability of our domestic operations. As
for our financing strategy, we will carry out initiatives to reduce interest-bearing debt,
enhance our self-capital ratio, and improve ROIC.
Impact from the COVID-19 that spread from the beginning of the year resulted in a
temporary halt in growth, but we have gradually begun to recover from the fallout on thisfront. Meanwhile, capital investments carried out through the previous fiscal year have not
yet provided sufficient contributions to sales due to this impact. In order to boost growth
going forward, we first plan to make full use of the capital investments already made.
Company sales and investments in each region are as follows. In Japan, we expect
sales to decline slightly due to the impact from the COVID-19 pandemic. For China, weconsiderably fell below our initial estimates in the previous fiscal year due to thesuspended operations at our Wuhan Plant and the subsequent loss of orders tocompetitors. We expect performance in China to gradually recover in the future. In
Vietnam, sales have been on a growth trend on the back of heavy investments. We
expect this growth momentum to continue going forward.
As for ESG initiatives, we place importance on reducing the burden our operations
place on the environment. We are therefore vigorously promoting the reduction of carbon
dioxide emissions by shifting to production equipment with better energy efficiency, thereuse of water resources, and the recovery of resources contained in waste. We are also
actively promoting corporate management with SDGs in mind, and will disclose
information on these activities on our website as well as in our integrated reports.

(billion USD)

Smartphone

Y2021

Power PWB with Combination of Larger Current, Heat Dissipation,
3D-Assembly and Miniaturization

Miniaturization

Larger Current

Heavy-Cu PWB

Automotive HDI PWB
2 Layer HDI PWB, Line Width / Space= 100/100μm

Cu Thickness for Current 105 μm
Use for Power Device & Larger Current Unit

High-Density Wiring by Using Microvia

X-section of HDI PWB

X-section of Heavy-Cu PWB

Vehicle Computer(3Layer HDI PCB)

Heat Dissipation

3D-Assembly

Cu-Inlay PWB

Semi-ﬂex PWB

Cu-Inlay φ6 mm

Bending Angle 180

Heat Dissipation from FET to Heat Sink
through Cu-Inlay

Level 4Assembly into a Limited SpeceUse of FR-4.0 & 4.1 Material
X-section of Cu-Inlay PWB

Y2025

Flex Area

X-section of Semi-ﬂex PWBMANAGEMENT VOICE

Takashi Harada
Outside Director

VOL.

9

I was appointed as an outside director at the General Meeting of Shareholders held in June 2020.
Prior to my new role, I served as an outside audit & supervisory board member for this company for
four years. I consider it important to maintain sound corporate governance when expanding business
operations. During periods of tough operating conditions or long periods of sharp growth, companies
tend to prioritize business execution, which can lead to governance failure. I hope to contribute to theimprovement in corporate value by observing company strategies and business execution from my
objective standpoint as an outside director and ensuring governance is upheld, thus facilitating smoothcompany management and increasing medium/long-term proﬁtability.
At present, market trends and industrial structures are undergoing drastic changes. We need to carefully monitor and predict major changes in the business environment, such as Tesla s plans to launch a
midsize electronic vehicle (EV), Model 3, priced at 2.6 million yen in 2023, as well as trends for tech
giants Google, Amazon, Facebook, and Apple in the U.S., Baidu, Alibaba, Tencent, and Huawei in China,
and electronics manufacturing services (EMS) in Taiwan. Steadily capturing business opportunities on adaily basis is key to achieving renewed growth. By also advising on general management matters withan eye to the future, I will endeavor to work closely with the company and fulﬁll my duties.
I ask for your continued support going forward.

Corporate data (As of September 30, 2020)
Corporate Proﬁle

Stock Information

MEIKO ELECTRONICS CO., LTD.
November 25, 1975
12,888 million yen
12,193 (consolidated)(Japan: 871) (Overseas: 11,322)
Outline of Business Design and manufacturing andsales of PCBs and auxiliaryelectronics business

Number of Shares Authorized

70,000,000 shares

Number of Shares Issued

26,173,893 shares

Number of Shareholders

4,407

Name
Established
CapitalNo. of Employees(excluding treasury stock of 629,427 shares)

Principal Shareholders

President & CEO
Director and Senior Managing Executive Officer
Director and Managing Executive Officer
Director and Managing Executive Officer
Director
Director
Director
Director
Audit & Supervisory Board Member (Standing)
Audit & Supervisory Board Member
Audit & Supervisory Board Member

Yuichiro Naya
Masakuni Shinozaki
Takahiro Matsuda
Junya Wada
Yoon Ho, Shin
Nao Tsuchiya
Yosuke Nishiyama
Takashi Harada
Toyohiko Tsuyuki
Takayuki Sato
Hiroshi Miyauchi

Aﬃliated Companies
Yamagata Meiko Electronics Co., Ltd.
Meiko Tech Co., Ltd.
Meiko Techno Co., Ltd.
Meiko Electronics (Guangzhou Nansha) Co., Ltd.
Meiko Electronics (Wuhan) Co., Ltd.
Meiko Elec. Hong Kong. Co., Ltd.
Meiko Electronics Vietnam Co., Ltd.
Meiko Electronics Thang Long Co., Ltd.
Meiko Electronics America, Inc.
Meiko Electronics Europe GmbH
Meiko Towada Vietnam Co., Ltd.

Auxiliary electronics business
Auxiliary electronics business
Auxiliary electronics business
Auxiliary electronics business
Auxiliary electronics business
Auxiliary electronics business
Auxiliary electronics business
Auxiliary electronics business
Auxiliary electronics business
Auxiliary electronics business
Auxiliary electronics business

Fiscal year

Yuichiro Naya

4,703

17.97

CLEARSTREAM BANKING S.A.

1,459

5.57

Custody Bank of Japan, Ltd. (Trust Account)

1,448

5.53

PICTET AND CIE (EUROPE) S.A.

1,333

5.10

BNP PARIBAS SECURITIES SERVICES LUXEMBOURG/JASDEC/FIM/LUXEMBOURG FUNDS/UCITS ASSETS

1,230

4.70

The Master Trust Bank of Japan, Ltd. (Trust Account)

924

3.53

Meiko Kosan Co., Ltd.

608

2.32

Yuho, Ltd.

521

1.99

STATE STREET BANK AND TRUST COMPANY 505019

444

1.70

Seiichi Naya

435

1.66

*The Company owns treasury stock of 629,427 shares and is excluded from theabove principal shareholders. The percentages for the total number of issued
shares have been calculated after excluding treasury stock.

Shareholding Structure（Common Stock）
Individuals and others 40.33%
Financial institutions 19.14%
Foreign institutions and others 30.99%
Other institutions

5.72%

Financial instruments business operators 1.47%
Treasury stock

Headquarters: 5-14-15 Ogami, Ayase, Kanagawa, 252-1104 Japan
Tel: 0467-76-6001 (main)
URL:
https://www.meiko-elec.com/
Notes on Forecasts
The information in this report contains future forecasts, such as the plans and business results of the Company.
These forecasts are based on information available at the time when these forecasts were made and certain
preconditions that the Company believes to be reasonable. Please note that actual business results may differ fromthe forecasts herein due to a variety of factors.

2.35%

April 1 to March 31 of the following year

Annual shareholders’ June
meeting
Record dateYear-end dividends: March 31
Interim dividends: September 30
Transfer agent

Sumitomo Mitsui Trust Bank, Limited
1-4-1 Marunouchi, Chiyoda-ku, Tokyo,
100-8233 Japan

Transfer office

Sumitomo Mitsui Trust Bank, Limited Stock
Transfer Agency Dept. 1-4-1 Marunouchi,
Chiyoda-ku, Tokyo, 100-8233 Japan
Sumitomo Mitsui Trust Bank, Limited
Stock Transfer Agency Dept.
2-8-4 Izumi, Suginami-ku, Tokyo,
168-0063 Japan

Number of shares held
% of shares held
(thousands of shares)

Name of shareholder

Executives

Shareholders’ Information

Address forsending mails

Contact

Tel: 0120-782-031

Stock exchange JASDAQ (Standard), Tokyo Stock Exchange
Method ofpublic noticeElectronic public notice in our official page
Official Page:
https://www.meiko-elec.com/ir/pa.shtml
In the event of an accident or other
unforeseen
eventsthat
prevent
publication of the electronic public notice,
it will be published in The Nikkei.

Enquiries concerning shareholdings•Shareholders who need to update information onshareholdings, including change of address andmethod of receiving dividends, are advised to contact
the securities companies where securities accounts
are held.
•Shareholders who do not have accounts withsecurities companies and need to process paymentsof dividends are advised to contact Sumitomo Mitsui
Trust Bank, Limited Stock Transfer Agency Dept. asstated above.