COMPANY RESEARCH AND ANALYSIS REPORTElematec Corporation
2715
Tokyo Stock Exchange First Section

9-Jul.-2018
FISCO Ltd. Analyst

Hiroyuki Asakawa

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

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

Elematec Corporation
2715 Tokyo Stock Exchange First Section

9-Jul.-2018
http://www.elematec.com/en/ir/■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Posted higher profits in FY3/18 as automotive-related business and other areas offset decline
in smaller LCD materials business......... ......................................................................................................

01

2. Healthy progress with the longer-term growth strategy focusedon globalization and creating added value...................................................................................................

01

3. Targeting higher sales and profits in FY3/19 with gains in growth areas. .....................................................

01■Company profile---------------------------------------------------------------------------------------------------------------------------------------------------------- 02
1. History................................................... ......................................................................................................

02

2. Company features and strengths........... ......................................................................................................

03

3. Stable growth potential and earnings stability..............................................................................................

05■Business performance------------------------------------------------------------------------------------------------------------------------------------------ 06
1. Overview of FY3/18 results..........................................................................................................................

06

2. Trends by market................................... ......................................................................................................

07■Longer-term growth strategy and progress------------------------------------------------------------------------------------- 08
1. Overview of the “gelematec x (cross)” longer-term business strategy..........................................................

08

2. Status of progress for the medium- to long-term strategy. ..........................................................................

09

3. Stance in the medium-term outlook....... ......................................................................................................

10■Business outlook-------------------------------------------------------------------------------------------------------------------------------------------------------- 13■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 17■Information security------------------------------------------------------------------------------------------------------------------------------------------------ 18

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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
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Elematec Corporation
2715 Tokyo Stock Exchange First Section

9-Jul.-2018
http://www.elematec.com/en/ir/██Summary
Return to a growth trajectory by switching from smartphone-related
to automotive-related business as the driver
Elematec Corporation <2715> (hereafter, also “the Company”) is an electronics trading company that specializes inelectronic materials. It was formed through the merger of Takachiho Electric Co., Ltd. and Ohnishi Denki Co., Ltd.
in 2009 and entered the Toyota Tsusho Corporation <8015> Group in FY2011.
1. Posted higher profits in FY3/18 as automotive-related business and other areas offset decline
in smaller LCD materials business
The Company reported higher profits on a decline in sales with ¥196,238mn in net sales (-3.3% YoY) and ¥6,085mn
in ordinary income (+14.5%). Sales of materials used in smaller LCDs, a core business, dropped sharply due toslowdown in smartphone market growth. However, sales increased for products used in automobiles and industrial
equipment as well as products used in consumer electronics equipment. While overall sales fell because gains inthese other areas were not enough to fully offset the impact of lower sales to the smartphone market, earnings roseby more than expected in guidance thanks to improved profitability from change in product mix. We think the FY3/18
results effectively leveraged the Company’s strengths of having a large number of customers on procurement andsales sides as well as robust adaptability in quickly addressing changes in a broad range of products and growthmarkets.
2. Healthy progress with the longer-term growth strategy focused on globalization and creating added value
The Company aims to be an “electronic materials trading company that consistently delivers high value-added
business globally” and is pursuing 1) real globalization, 2) creation of high added value, and 3) reinforcement of thebusiness foundation. It appears to be making steady progress in each of these areas thus far. The Company’s goals
in three years from now (FY3/21) are ¥250bn in net sales and ¥8bn in ordinary profit. While these levels are the sameas its previous goals, breakdown of sales by markets has changed considerably and Automotive and Broad Market
segments cover a majority of business. This scenario relies on nimble response to changes in growth markets todrive business expansion. We expect the Company to beat its profit goal if the sales outlook is met because of
anticipated improvement in margin from changes in the growth driver.
3. Targeting higher sales and profits in FY3/19 with gains in growth areas
The Company is targeting higher sales and profits in FY3/19 at ¥198,000mn in net sales (+0.9% YoY) and ¥6,300mn
in ordinary income (+3.5%). It expects the same growth scenario as seen in FY3/18 with clear restoration of an
upward trajectory, despite further shrinkage of smartphone-related business, on continued growth in products usedby automobiles, industrial equipment, and other areas. While it only projects single-digit profit gain due to use of a¥105/$ forex assumption (roughly ¥6 of yen appreciation YoY), we think earnings could overshoot depending on
actual trends. This is the first fiscal year of the medium-term outlook that lasts through FY3/21. We will be paying
close attention to the extent to which the Company can expand Automotive and Broad Market sales with heightened
expectations as growth engines.

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

Elematec Corporation

9-Jul.-2018

2715 Tokyo Stock Exchange First Section

http://www.elematec.com/en/ir/

Summary

Key Points
Key strength is agility in addressing waves of change in growth markets and leveraging them to generate higher
income• Implementing a longer-term growth strategy with the aim of being an “electronic materials trading company thatconsistently delivers high value-added business globally”• Making steady progress in genuine globalization, creation of added value, and reinforcement of the businessfoundation•㻾㼑㼟㼡㼘㼠㼟㻌㼠㼞㼑㼚㼐㼟（¥㼙㼚）㻞㻡㻜㻘㻜㻜㻜

㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕
㻣㻘㻜㻣㻣

（¥㼙㼚）

㻻㼞㼐㼕㼚㼍㼞㼥㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻕

㻤㻘㻜㻜㻜
㻢㻘㻤㻤㻜
㻢㻘㻜㻤㻡

㻞㻜㻜㻘㻜㻜㻜

㻢㻘㻟㻜㻜

㻢㻘㻠㻜㻜

㻡㻘㻟㻝㻠

㻝㻡㻜㻘㻜㻜㻜

㻝㻜㻜㻘㻜㻜㻜

㻠㻘㻤㻜㻜㻞㻝㻢㻘㻤㻞㻠

㻞㻜㻟㻘㻜㻜㻠

㻝㻤㻝㻘㻤㻣㻢

㻝㻥㻢㻘㻞㻟㻤

㻝㻥㻤㻘㻜㻜㻜

㻡㻜㻘㻜㻜㻜

㻟㻘㻞㻜㻜

㻝㻘㻢㻜㻜

㻜

㻜
㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣

㻲㼅㻟㻛㻝㻤

㻲㼅㻟㻛㻝㻥㻌㻱

Source: Prepared by FISCO from the Company’s financial results██Company profile
Two companies with specialties in electronic materials merged in 2009
Strengthened the automotive field by entering the Toyota Tsusho Group
1. History
The Company’s predecessors were Takachiho Electric, established in 1947 in Tokyo, and Ohnishi Denki, founded in
1958 in Kyoto. Both companies began by handling insulation materials, subsequently broadened the scope of theirproduct offerings to electronic materials used in electronic products following technology and development trends,
and grew into independent technology trading companies.
These companies merged in 2009 (with Takachiho Electric as the surviving entity) and adopted the Elematec name.
The Company has steadily grown since the merger, even though both predecessors mainly handled electronicmaterials, thanks to complementary geographical positions in Tokyo and Kyoto. It became a subsidiary of Toyota
Tsusho through a TOB transaction in FY2011, and this is its current position.

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

Elematec Corporation
2715 Tokyo Stock Exchange First Section

9-Jul.-2018
http://www.elematec.com/en/ir/

Company profile

The Company had 1,179 employees on a consolidated basis as of the end of FY3/18. It operates 62 sites in Japanand overseas. The regional sales breakdown consists of Japan at 54.9%, China (including Hong Kong) 23.1%,
other Asia (Taiwan, Korea, India, and Southeast Asia) 17.1%, and the US and Europe (US, Mexico, and Czech
Republic) 4.9%.

Strength in having many products customers and the ability
to convert these resources into income through organic linkage
as five services and functions
2. Company features and strengths
Customer and product diversity is an important feature of Elematec. It operates 62 sites in Japan and overseas
and handles a wide range of transactions of primarily electronic materials and components among about 7,200
suppliers (“makers”) and 6,100 sales destinations (“users”). Another major characteristic is its flexible response
to growth markets. We believe that effective interaction of these two traits supports realization of stable earnings
growth potential and robust earnings stability.
Behind the scenes, however, is the vital role of functions and mechanisms that match a massive number of products
and an extensive customer network to customer needs.
The Company goes beyond just the basic services and functions of an electronics trading company of optimal
supply of parts and materials, credit provision and financing, and delivery timing and inventory management. It also
supplies processing services, integrated procurement services, and other more advanced services and functions
that generate higher added value. The Company highlights five services and functions, and we think the presenceof these functions is precisely why it can develop diverse products into businesses and deliver results.
Services and functions the Company provides

Source: Company website

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

Elematec Corporation
2715 Tokyo Stock Exchange First Section

9-Jul.-2018
http://www.elematec.com/en/ir/

Company profile

While each of the five services and functions highlighted by Elematec is important, processing services and planningand development functions stand out as defining features. We also think the overseas networking function is a key
point in regards to the growth strategy explained below.
(1) Processing services
The Company is a trading company and adheres to a stance of avoiding competition with manufacturers, who
are transaction counterparts. However, customers (sales destinations) often request delivery of processed items.
The Company has its own processing sites to accommodate these needs – one in Japan and two in China.
In Japan, Elematec Logi Serve Corporation (based in Yokohama) processes and manufactures electric materials
and other products, conducts acceptance inspections, and handles environment-related material measurements.
In China, Elematec Electronics (Dalian) Co., Ltd. implements surface mounting of parts into electronic circuitboards and Elematec Wuxi Technology Co., Ltd. handles silk-screen printing for plastic panels, cutting andprocessing, and assembly.
The Company starts generating added value and increasing profitability once it gets to the point of supplying
customized products that it has planned and designed utilizing new product development information and information about the latest technology trends and other developments that it possesses.
This is what the Company refers to as “modularization.” Its promotion of modularization often overlaps withpromotion of planning and development functions explained below. If planning and development functions work
well and deals are arranged, modularization business naturally occurs.
The Company does not limit manufacturing and processing in modularization business to only its own processing
sites. However, it is beneficial to outsource from a position of having its own processing and manufacturing
technologies. We will be looking for the Company to accumulate experience and technologies in processing
services and apply them to module processing at its own plants.
(2) Planning and development function
Planning and development business begins with appropriate understanding of customer needs. Fundamental flowin this business involves the Company identifying optimal parts and materials from its roughly 7,200 domestic andoverseas suppliers to meet the wide-ranging needs of customers for electronics, mechatronics, exteriors, design,and other aspects; planning products that satisfy requirements (even creating product prototypes in some cases);and submitting proposals to customers.
Two essential ingredients in this business are grasping and realizing needs. Not many rival companies have bothof these capabilities, and we believe this function is another source of differentiation for the Company versus othercompanies. Additionally, adoption of new products based on the Company’s plans and designs means that it
becomes the one and only to customers. We think this is a very effective way of strengthening relationships withcustomers. As explained above, these new products should generate high profitability due to the Company’srole of modularization for delivery. This kind of planning and development content nearly overlaps with the below
efforts to generate added value.

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

Elematec Corporation
2715 Tokyo Stock Exchange First Section

9-Jul.-2018
http://www.elematec.com/en/ir/

Company profile

Elematec fully leverages these five services and functions in its provision of added value to customers andthereby earns customer trust and makes itself a vital presence to customers. We think diversity in its customers
and products plays a major role in Elematec’s ability to build strong relationships of trust. While a chicken-or-egg
dynamic exists, we believe the “positive cycle” of product and customer diversity and an organization that candeliver added value to customers are the biggest advantages.

Nimbly addresses waves of change in growth markets andrealizes steady growth over the long term
3. Stable growth potential and earnings stability
The Company has a track record of realizing steady income growth over the long term. We think this has been oneof its main characteristics. During these years, meanwhile, growth markets and products changed dramatically,
including mobile phones, game machines, LCD TVs, and smartphones. The Company consistently realized upward
growth through supply of parts and materials to respective growth industries and markets at the various times.
The Company recorded all-time high sales in FY3/16 and ordinary income in FY3/15 due to its smartphone-related
business. However, its smartphone-related sales dropped by about ¥30bn in the two years from FY3/16’s peak to
FY3/18.
Although Elematec’s sales and profits weakened YoY in FY3/17, they turned increases in FY3/18. Details arereviewed below. However, the main driver of improved momentum, meanwhile, is cultivation of new growth markets
and growth business (for Elematec), such as the automotive field. We think Elematec can successfully capitalizeon these growth industry waves because of its product and customer diversity and also organizational strength oforganically connecting this diversity to business, as explained above.

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

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

Elematec Corporation
2715 Tokyo Stock Exchange First Section

9-Jul.-2018
http://www.elematec.com/en/ir/██Business performance
Profit increased (YoY) thanks to improved margin on change
in product mix, despite decline in sales due
to weaker smartphone-related product business
1. Overview of FY3/18 results
Elematec posted lower sales yet sharply higher profits in FY3/18 with net sales at ¥196,238mn (-3.3% YoY),
operating income at ¥6,480mn (+19.9%), ordinary profit at ¥6,085mn (+14.5%), and profit attributable to ownersof parent at ¥4,376mn (+226.0%).
Net sales missed the latest guidance by 4.3%, but operating profit and other profit items overshot by about 10%
each. Sales and profits were all at the Company’s third highest levels. We believe this was a healthy outcome.
Summary of FY3/18 results(¥mn)
FY3/17

FY3/18YoY
growthrate

vs.
forecast

196,238

-3.3%

-4.3%

18,886

10.3%

-

-

9.6%

-

-

6,051

-

12,405

5.8%

-

6.1%

6.6%

-

6.3%

-

-

3,345

3,135

5,800

6,480

19.9%

11.7%

1H

2H

Full-year
results

1H

2H

Full-year
forecast

Full-year
results

Net sales

94,966108,038

203,004

104,134

92,104205,000

Gross profit

7,759

9,368

17,127

9,700

9,186

-

Gross margin

8.2%

8.7%

8.4%

9.3%

10.0%

SG&A expenses

5,569

6,151

11,720

6,354

SG&A expenses ratio

5.9%

5.7%

5.8%

Operating income

2,190

3,216

5,406

Operating margin

2.3%

3.0%

2.7%

3.2%

3.4%

2.8%

3.3%

-

-

Ordinary profit

2,160

3,154

5,314

3,103

2,982

5,600

6,085

14.5%

8.7%

Profit attributable to ownersof parent

-879

2,221

1,342

2,175

2,201

3,900

4,376

226.0%

12.2%

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

Industry output of electronic parts and other products was vibrant in FY3/18 due to tailwinds from IoT-related
demand and increase in automotive use of electronic systems. The white-good consumer appliances market also
expanded as a whole. Smaller LCDs, however, came under pressure from a slump in smartphone sales in China,
the world’s largest market, and a rise in models utilizing OLEDs.
Given these market conditions, the Company’s overall sales fell 3.3% YoY to ¥196,238mn, even with focus on andincreased sales of automotive-related products, TV display-related products, and other areas, because of a heavy
impact from rapid changes in the environment for the smaller LCD market.

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

Elematec Corporation

9-Jul.-2018

2715 Tokyo Stock Exchange First Section

http://www.elematec.com/en/ir/

Business performance

In profits, meanwhile, gross income increased 10.3% YoY to ¥18,886mn on a 1.2ppt rise in gross margin from
8.4% in the previous fiscal year to 9.6% mainly due to improved product mix. Operating income grew 19.9% YoY to¥6,480mn as SG&A expenses only climbed 5.8%, even with increases in personnel costs and packing and freightcosts. Operating margin was up by 0.6ppt from 2.7% in the previous fiscal year to 3.3%.
The hefty 226.0% YoY rise in profit attributable to parent shareholders came as a rebound from heavy pressure on
FY3/17’s profit attributable to parent shareholders due to booking extraordinary losses.
We think the Company delivered healthy quantitative results in FY3/18 as mentioned earlier. The outcome also
confirmed robust adaptability to changes in the business environment. Sales of materials used in smaller LCDs,a core business, fell sharply because of changes in the environment for smartphone market. Nevertheless, theCompany secured higher profits due to steady expansion of products used in automobiles, industrial equipment,
and other areas. While details are explained below, the Company retained its overall sales goal from a year ago in the
final fiscal year (FY3/21) of the rolling three-year medium-term plan but substantially altered breakdown by markets.
We believe the ability to make this type of change is the Company’s biggest strength.

Healthy expansion of Automotive and Broad Market businesses likely
to offset sales decline in Digital Electronics
Large contribution to improved gross margin too
2. Trends by market
Breakdown of net sales trends by market(¥mn, %)
Segment
by market

FY3/17
Results
129,308

FY3/18Composition

Initialforecast

Revisedforecast

Results

63.7%

122,852

119,108

112,123

Growthrate-13.3%

Composition

DigitalElectronics

Automotive

Main target markets

57.1% LCDs, touch panels, and backlight-22,890

Mobile terminal-1,615Home electronics(TVs, monitors, audio, etc.)

5,602

Toys and hobbies

1,286

18,785

9.3%

22,73024,60524,96632.9%

12.7% Automotive

6,181

54,91027.0%59,41761,28759,1487.7%

30.1% Industrial machinery, etc.

2,362

Aftermarket

Broad Market

Medical equipment
Infrastructure and energy

Total

Change203,004

100.0%

205,000

205,000

196,238

-3.3%

1,210
926
-1,072100.0%

Note: T he Company moved “supercomputers, servers, and storage” from Broad Market to Digital Electronics in FY3/18 and also updated FY3/17 values using thesame standard.
Source: Prepared by FISCO from the Company’s results briefing materials

Digital Electronics sales dropped 13.3% (¥17,184mn) YoY to ¥112,123mn. It missed the revised target from the 1H
announcement (¥119,108mn) by ¥6,985mn. This shortfall was the majority of the ¥8,762mn miss in overall sales(vs. guidance).

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

Elematec Corporation
2715 Tokyo Stock Exchange First Section

9-Jul.-2018
http://www.elematec.com/en/ir/

Business performance

The ¥22,890mn YoY decline in LCD, touch panel (TP), and back light (BL) sales was the main cause of the steep
drop in Digital Electronics business. These products are used in smaller LCDs that have smartphones and tablets
as final-demand applications. While the Company anticipated sharply lower FY3/18 sales at period-start in lightof maturing in the smartphone market and increased adoption of OLEDs in smartphones, these negatives did notmaterialize in 1H results. During 2H, meanwhile, concerns surfaced and sales ended up slipping more than initially
expected. Higher sales (YoY) of products for consumer electronics (mainly large LCDs for TVs and monitors in Asian
countries) and toys and hobby equipment (materials and parts used in game machines and other equipment) were
not enough to fully cover sales decline in LCD, TP, and BL business.
Automotive sales increased 32.9% (¥6,181mn) YoY to ¥24,966mn, beating guidance by ¥361mn. This businessexpanded to 12.7% of total sales, moving above 10% for the first time. It handles a wide range of products, including
headlight parts and materials, interior parts and materials, sensors, and various electronic components. We thinksales generally improved in these product areas. Automotive business requires sales activities and joint developments
tailored to the cycle of model changes. The Company has steadily addressed these areas and has moved into aphase of benefiting from the results.
Broad Market sales expanded 7.7% (¥4,237mn) YoY to ¥59,148mn, though this undershot guidance by ¥2,139mn.
Sales of products used in industry equipment climbed on higher sales by machinery and factory automation manufacturers amid vibrant capital investments in China. In aftermarket business, the Company increased sales of partsand materials utilized in back monitor cameras and driver recorders. Weaker solar power-related business resulted
in infrastructure and energy sales decline.
Gross margin in the three above-mentioned market categories was relatively low in Digital Electronics business andrelatively high in Automotive and Broad Market areas. With decline in Digital Electronics sales and increase in sales tothe other two market categories in FY3/18, overall gross margin moved upward on favorable change in product mix.

██Longer-term growth strategy and progress
Aims to be an “electronic materials trading company
that consistently delivers high value-added business globally”
1. Overview of the “elematec x (cross)” longer-term business strategy
The Company does not prepare medium-term business plans with a fixed period, but formulates basic policies for
initiatives related to a medium- to long-term strategy and proceeds with business on this basis. It updated the internal
slogan in FY3/18, switching from “elematec + (plus)” to “elematec x (cross).” Compared to the previous “elematec+ (plus)” slogan, it wants to emphasize accelerated pursuit of synergies and timely action.
As its future vision achieved through “elematec x (cross),” the Company aims to be an “electronic materials trading
company that consistently delivers high value-added business globally.” Three specific themes for accomplishing
this are 1) real globalization, 2) creation of added value, and 3) reinforcement of the business foundation.

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

Elematec Corporation
2715 Tokyo Stock Exchange First Section

9-Jul.-2018
http://www.elematec.com/en/ir/

Longer-term growth strategy and progress

In annual guidance, the Company discloses targets for the current fiscal year and goals for two years later. This style
resembles a rolling medium-term business plan. Therefore, at the start of FY3/19, the Company presented current
fiscal year target and FY3/21 goals. It hopes to reach ¥250bn in sales and ¥8bn in ordinary income in FY3/21,
setting all-time high profits.

Making steady progress in genuine globalization, creation ofadded value, and reinforcement of the business foundation
2. Status of progress for the medium- to long-term strategy(1) “Real globalization” initiatives and progressThis theme addresses promotion of global direct accounts. The Company’s overseas business until now has
been supplying electronic materials and other parts and materials to Japanese device and electronic component
manufacturers and these firms sold parts and materials they produced to overseas assemblers and final productmanufacturers. This approach limited direct transactions with overseas companies. In the shift to direct global
accounts, meanwhile, the Company will establish its own accounts with overseas assemblers and final productmanufacturers and conduct transactions directly.
The relative decline in the standing of Japanese electronics firms, the Company’s direct customers, serves as the
background for the Company’s efforts towards real globalization. Looking at smartphones as an example, Japanlacks companies with sufficient business scale in not only the global market, but even in the Japanese market. In
Automotive and Broad Market segments too, customers have a global presence and the Company must establish
direct global accounts in these areas too, similar to Digital Electronics. We think these concerns provided thecatalyst for Elematec to move forward with real globalization.
In progress thus far, the Company has begun transactions of automotive parts and materials with European
Tier-1 manufacturers. While this currently only applies to some products, transaction value is steadily rising.
Furthermore, the Company is focusing on establishment of overseas sites and enhanced fostering of local staff
from the standpoint of developing operations. A recent case is the launch of an office in Houston (US). We
expect spread to and widening influence on transactions with new customers of these ground-level initiatives
and European successes.
(2) “Added value creation” initiatives and progress
Added value truly becomes a reality when it benefits both customers and the Company. We thus think creationof added value is likely to lead to business expansion too. The Company’s initiatives in developing modules are a
specific example of creating added value.
Added value creation as a process begins by gaining appropriate understanding of customer needs. The Company
looks for optimal products to meet the needs of customers in electronics, mechatronics, exterior, design, andother areas from its 7,200 domestic and overseas suppliers. It might also plan, design, and prototype productsthat address customer needs and propose solutions.

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

Elematec Corporation
2715 Tokyo Stock Exchange First Section

9-Jul.-2018
http://www.elematec.com/en/ir/

Longer-term growth strategy and progress

If customers select proposals (products) that Elematec has prepared and developed, Elematec delivers modularized products and can expand earnings in comparison to selling electronic materials and other items just as
materials. Understanding customer needs, the first step in this process, needs to take place at the customer’s
development stage that defines specifications. While Elematec has handled many products adopted at this earlystage, we think it is important to increase this even more.
In recent progress, the Company has been strengthening personnel in its technology group directly involved inplanning, design, and development. These additions have bolstered its understanding of customer needs andprototyping capabilities. The Company also appears to be steadily expanding activities to arrange build-to-specifications opportunities in Automotive and Broad Market areas. These businesses offer a better fit with thebuild-to-specifications approach than Digital Electronics. We hence expect advances to actual transactions.
(3) “Reinforcement of the business foundation” initiatives and progress
While the previous two topics involve initiatives that target income growth, reinforcement of the business foundation is mainly an effort to strengthen the Company’s own operations. Nevertheless, the Company obviously needs
to establish reliability and trust in order to realize the global direct accounts it is targeting in real globalization.
Trading company business naturally involves some risk, such as counterparty risk. We think reinforcement of thebusiness foundation is similar to an athlete’s training of the body core. It is an important component of the growthstrategy, even though it does not stand out.
The Company booked about ¥3bn in extraordinary losses for the building materials business in China in FY3/17.
Following this experience, it invested heavily to bolster risk management capabilities and improve governance atoverseas sites, including personnel additions. These activities do not have a “completion” point or goal because
trading company business always comes with some risk as mentioned above. However, we think the Company’s
establishment of operations vital to the longer-term growth strategy based on painful experience in FY3/17
indicates that it is making healthy progress in strengthening the business foundation.

Targeting ¥250bn in net sales and ¥8bn in ordinary profit for FY3/21
Possibility of earnings upside if profit margin improves
3. Stance in the medium-term outlook
The Company’s medium-term outlook presented at the start of FY3/19 (April 2018) calls for ¥250bn in net salesand ¥8bn in ordinary income in FY3/21. A year earlier it disclosed ¥250bn in net sales and ¥8bn in ordinary income
as FY3/20 goals. The Company seems to have postponed timing to attain the medium-term outlook by a year.
Closer analysis of sales outlook breakdown by markets and the Company’s initiatives in the various markets,
however, suggests something else. Regarding the FY3/21 outlook, we conclude that the Company is capable ofattaining the sales goal, though it will not be easy, and expect ordinary income to overshoot if it is met.

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

10 18

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

Elematec Corporation
2715 Tokyo Stock Exchange First Section

9-Jul.-2018
http://www.elematec.com/en/ir/

Longer-term growth strategy and progress㻹㼑㼐㼕㼡㼙㻙㼠㼑㼞㼙㻌㼛㼡㼠㼘㼛㼛㼗（¥㼙㼚）㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻟㻜㻜㻘㻜㻜㻜

㻣㻘㻜㻣㻣㻻㼞㼐㼕㼚㼍㼞㼥㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻕

（¥㼙㼚）

㻤㻘㻜㻜㻜

㻤㻘㻜㻜㻜
㻢㻘㻤㻤㻜

㻢㻘㻟㻜㻜

㻢㻘㻜㻤㻡

㻞㻡㻜㻘㻜㻜㻜

㻢㻘㻠㻜㻜

㻡㻘㻠㻜㻢

㻞㻜㻜㻘㻜㻜㻜
㻠㻘㻤㻜㻜㻝㻡㻜㻘㻜㻜㻜
㻞㻡㻜㻘㻜㻜㻜
㻞㻝㻢㻘㻤㻞㻠

㻝㻜㻜㻘㻜㻜㻜

㻞㻜㻟㻘㻜㻜㻠

㻝㻤㻝㻘㻤㻣㻢

㻟㻘㻞㻜㻜㻝㻥㻤㻘㻜㻜㻜

㻝㻥㻢㻘㻞㻟㻤

㻝㻘㻢㻜㻜㻡㻜㻘㻜㻜㻜
㻜㻜㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣

㻲㼅㻟㻛㻝㻤

㻲㼅㻟㻛㻝㻥㻌㻱

㻲㼅㻟㻛㻞㻝㻌㻱

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

The main point is decline in the overall sales share of Digital Electronics business and gains in Automotive and Broad
Market sales presence, compared to the outlook from a year ago. Looking at growth rates from results posted
three years ago, Digital Electronics has slowed considerably and is likely to stay in a flat range, while Automotive
business has sustained 80% growth and Broad Market sales increased substantially to 52.2%. We think the growth
driver from a medium-term perspective has completely switched from Digital Electronics to Automotive and Broad
Market segments.
This shift reflects change in the growth scenario and is not simply opportunistic. We believe it factors in robust potential of Automotive and Board Market businesses to support the above-mentioned strong growth and a conservative
stance of not at all relying on good fortune, such as the “smartphone bubble” that generated past peak earnings.
Market breakdown of the medium-term outlook(¥mn)
FY3/17
Segment bymarketComposition

ResultsWhenformulated

FY3/18Composition

Results-

FY3/20FY3/21

vs. FY3/17
Forecast-

Growthrate

ChangeComposition

vs. FY3/18
Forecast

April 2017

Growthrate

ChangeComposition

April 2018

DigitalElectronics

129,308

63.7%

112,12357.1%

142,000

9.9%

12,69256.8%

115,000

2.6%

2,877

46.0%

Automotive

18,785

9.3%

24,96612.7%

33,00075.7%

14,21513.2%

45,00080.2%

20,03418.0%

Broad Market

54,91027.0%

59,14830.1%

75,00036.6%

20,09030.0%

90,00052.2%

30,852

36.0%

Total

203,004

100.0%

196,238

100.0%

250,000

23.2%

46,996100.0%

250,000

27.4%

53,762100.0%

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

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

11 18

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

Elematec Corporation
2715 Tokyo Stock Exchange First Section

9-Jul.-2018
http://www.elematec.com/en/ir/

Longer-term growth strategy and progress

We accept the prospect of a new growth scenario through replacement of growth drivers as explained above, though
do not think strong Automotive and Broad Market growth potential built into the FY3/21 medium-term outlook
can be taken for granted. The ¥115bn target for Digital Electronics, meanwhile, seems overly cautious. We think
the Company is ultimately capable of attaining ¥250bn in sales even if specific segment content differs somewhat
versus the outlook.
The ¥8bn in ordinary income is overly conservative, in our view. This outlook puts ordinary margin at 3.2% in FY3/21,
which is almost the same as the FY3/18 result (3.1%). However, we expect improvement in overall margin due tobetter product mix with increased sales shares of Automotive and Broad Market businesses that generate relatively
higher margin in the new growth scenario. This dynamic was already evident in FY3/18 results. While it is difficult toprecisely forecast ordinary margin in FY3/21, we think the 0.5ppt YoY rise in FY3/18 ordinary margin deserves notice.
The Company’s medium-term expectations by market are reviewed below.
(1) Digital Electronics
Smartphone business, which led the Company to peak results in FY3/15-16, is fading as an anticipated growth
driver and becoming just one of many product areas. Products in the Digital Electronics segment tend to change
quickly. A good example is change in sales for consumer electronics (TVs and monitors) equipment in the past
1-2 years. As explained in our previous reports, one of the Company’s major strengths is its frank acceptanceof this aspect of the Digital Electronics business and operations that respond to the rapid cycle of customer
products and quickly supplies suitable materials to growing markets (products). Based on the medium-term results
outlook for FY3/21, we think the Company aims to match the growth rate of the Digital Electronics market as awhole by effectively leveraging the waves of various Digital Electronics products, rather than relying on a certain
growth product, such as smartphones. This strategy makes sense and the outlook seems attainable in light of
the Company’s strengths. However, we believe the 2.6% growth rate versus FY3/18 (0.8% average annual rate)
is overly cautious, even compared to the outlook for global economic growth.
(2) Automotive
The average annual growth rate starting from FY3/18 works out to 21.7% because the Company is targeting¥45,000mn in FY3/21 sales. As explained below, however, the anticipated growth rate in FY3/19 is less than
this level at 14.9% and required growth rates in FY3/20 and FY3/21 hence are about 25% each. These are notsimple hurdles.
The Company’s current Automotive sales, meanwhile, mainly come from commercial flow prior to becoming partof the Toyoda Tsusho group. We expect ramp-up of transactions with automotive manufacturers affiliated with
Toyota Motor Corporation (7203) and developed as customers since joining Toyoda Tsusho. This business is likely
to serve as a driver of growth in Automotive income. Activities to build products based on specifications are vitalin the automotive industry as mentioned earlier. We think business expansion based on these efforts is factored
into the medium-term outlook too. In this sense, the certainty of the Company’s medium-term targets might bestronger than generally anticipated.

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

12 18

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

Elematec Corporation
2715 Tokyo Stock Exchange First Section

9-Jul.-2018
http://www.elematec.com/en/ir/

Longer-term growth strategy and progress(3) Broad Market
The Company is targeting ¥90,000mn in FY3/21 sales, and this requires a 15.0% average annual growth rate
starting from FY3/18. Just as with the Automotive business, the FY3/19 growth rate is lower than the required
average at 9.5% and the second- and third-year growth rates must reach 17.9%.
While the Broad Market segment covers a wide range of customer industries, transaction scale in industrial
equipment and aftermarket businesses is relatively large and these areas also offer strong latent growth rates.
This means that Broad Market growth requires expansion of income to these two markets. Given longer-term andmore moderate customer product cycles in Broad Market businesses, compared to Digital Electronics, we expect
the Company to broaden overall scope through accumulation of small deals. This segment also involves manycustomers that fit well with building products to specifications, as noted earlier. In light of these conditions, wethink the Broad Market segment is capable of achieving the medium-term sales goal, though it will not be easy.

██Business outlook
Expecting higher sales and profits with continuation ofAutomotive and Broad Market segments as drivers
The Company forecasts slight increase in sales and profits of ¥198,000mn in net sales (+0.9% YoY), ¥6,600mn inoperating income (+1.8%), ¥6,300mn in ordinary profit (+3.5%), and ¥4,500mn in profit attributable to owners ofparent (+2.8%) in FY3/19.
Overview of the FY3/19 outlook(¥mn)
FY3/17

FY3/17

FY3/191H

2H

Full year

1H

2H

Full year

Full year E

YoY

Net sales

94,966108,038

203,004

104,134

92,104

196,238

198,000

0.9%

Operating income

2,190

3,216

5,406

3,345

3,135

6,480

6,600

1.8%

Operating margin

2.3%

3.0%

2.7%

3.2%

3.4%

3.3%

3.3%

-

Ordinary profit

2,160

3,154

5,314

3,103

2,982

6,085

6,300

3.5%

Profit attributable toowners of parent

-879

2,221

1,342

2,175

2,201

4,376

4,500

2.8%

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

The Company guides for a return to an increase (YoY) in net sales in FY3/19, albeit with the same fundamental
trends as FY3/18 in which growth in automotive and broad market businesses offset decline smartphone-related
business. While sales dropped in FY3/18 because of the Company’s inability to fully counter the large decline insmartphone-related business, the impact is likely to be smaller in FY3/19 and this should leave a sales increase
effect on a net basis.

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

13 18

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

Elematec Corporation
2715 Tokyo Stock Exchange First Section

9-Jul.-2018
http://www.elematec.com/en/ir/

Business outlook

In earnings, meanwhile, the Company projects a 1.8% YoY rise in operating income to ¥6,600mn, delivering higher
profits again. It expects improvement in profit margin from change in product mix of sales to continue in FY3/19.
We think this target also factored in negative impact from yen appreciation by setting the forex rate assumption at¥105/$ (vs. FY3/18’s ¥110.85 actual rate).
Sales growth targets by market reflect the trends explained above at a 6.7% YoY decline for Digital Electronics andincreases of 14.9% in Automotive and 9.5% in Broad Market sales.
In Digital Electronics, the Company forecasts a drop in LCD, TP, and BL sales of just over ¥10bn YoY. This includes
temporary loss of demand for parts and materials used in consumer electronics equipment due to model changes
at customers. Conversely, it projects higher sales in mobile handset business because of restored use of parts andmaterials it handles following model changes.
The Company expects Automotive and Broad Market businesses to exhibit the same trends as seen in FY3/18. Its
outlook assumes steady increase in transaction volume of automotive-related products that strongly boosts overallsales. It also anticipates continuation of industrial equipment and aftermarket areas as Broad Market growth drivers.
Sales breakdown by market for FY3/19(¥mn)
Segment bymarketSegment by market

FY3/19Results

Composition

Forecast

Growth rate

Composition

112,12357.1%

104,571

-6.7%

52.8%

Digital Electronics

Automotive

Main target market
LCDs, touch panels, andbacklight-10,720

Home electronics(TVs, monitors, audio, etc.)-2,592

Mobile terminal

4,115Electronic components

1,550

24,966

12.7%

28,690

14.9%

14.5%

Automotive

3,723

59,14830.1%

64,738

9.5%

32.7%

Aftermarket

2,292

Industrial machinery, etc.

1,430

Broad Market

Medical equipment
Total

Sales increasevalue (YoY)

196,238

100.0%

198,000

0.9%

417

100.0%

Note: Moved supercomputers, servers, and storage from Broad Market to Digital Electronics from FY3/18
Source: Prepared by FISCO from the Company’s results briefing materials

We think earnings could overshoot FY3/19 guidance depending on trends, mainly through 1) improvement in profit
margin from change in product mix and 2) the forex rate. For the former, the Company might be taking a somewhat
cautious view of the FY3/19 effect. For the latter, the yen is currently trading weaker than the rate assumption andcontinuation at this level offers a clear profit upside factor. While it is not appropriate to raise upside expectations
too much at this point because the fiscal year has just begun, we will be closely monitoring progress with emphasison these points.

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

14 18

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

Elematec Corporation
2715 Tokyo Stock Exchange First Section

9-Jul.-2018
http://www.elematec.com/en/ir/

Business outlook

Income statement summary(¥mn)
FY3/16
FY3/15

Reportingbasis

12-month basis

FY3/17

FY3/18

FY3/19 E

181,876

216,824

26.8%

19.2%

205,370203,004

196,238

198,000

12.9%

-1.2%

-3.3%

18,4430.9%

18,763

17,947

17,127

18,886Gross margin

-

10.1%

8.7%

8.7%

8.4%

9.6%

SG&A expenses-

11,068

11,894

11,407

11,72012,405

-

6.1%

5.5%

5.6%

5.8%

6.3%

-

Operating income

7,375

6,868

6,540

5,406

6,480

6,600

Growth rate

40.6%

-6.9%

-11.3%-17.3%

19.9%

1.8%

Operating margin

4.1%

3.2%

3.2%

2.7%

3.3%

3.3%

Ordinary profit

7,077

6,880

6,538

5,314

6,085

6,300

Growth rate

25.4%

-2.8%

-7.6%

-18.7%

14.5%

3.5%

5,105

5,048

4,794

1,342

4,376

4,500

32.2%

-1.1%

-6.1%

-72.0%

226.0%

2.8%

EPS (¥)

249.38246.58-65.57

213.76219.80

Dividend (¥)

75.00

75.00

-

20.00

65.00

66.00

2,095.95

2,170.74-

2,175.80

2,346.79-

Net sales
Growth rate
Gross profit

SG&A expenses ratio

Profit attributable to owners of parent
Growth rate

Net assets per share (¥)

Note: T he FY3/16 financial statements consolidated 15 months for 9 overseas subsidiaries linked to changes in the fiscal year. The 12-month basis
utilizes values that have been converted to 12-month statements in all cases. We calculated the FY3/17 YoY growth rates using a 12-month
basis for FY3/16.
Source: Prepared by FISCO from the Company’s financial results

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

15 18

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

Elematec Corporation
2715 Tokyo Stock Exchange First Section

9-Jul.-2018
http://www.elematec.com/en/ir/

Business outlook

Balance sheet summary(¥mn)
FY3/14
year-end

FY3/15year-end

FY3/16
year-end

FY3/17
year-end

FY3/18year-end

68,426

79,17074,93587,66286,363

Cash and deposits

14,80910,004

12,551

10,28225,893

Notes and accounts receivable

43,61757,57550,59966,95549,673

4,999

5,021

5,636

5,621

5,472

Tangible fixed assets

2,962

2,627

2,465

2,398

2,363

Intangible fixed assets

228

236

1,349

1,115

886

1,808

2,156

1,821

2,107

2,222

Total assets

73,42584,19180,57293,284

91,835Current liabilities

36,37440,93135,892

48,521

43,59734,09436,19933,41942,73440,829

-

1,598

466

2,884

53

107

349

238

217

191

Current assets

Fixed assets

Investments, etc.

Notes and accounts payable
Short-term loans, etc.
Fixed liabilities
Long-term loans

-

-

-

-

-

Shareholders’ equity

35,681

39,672

42,98043,40147,061

Capital

2,142

2,142

2,142

2,142

2,142

Capital surplus

3,335

3,335

3,335

3,335

3,335

Retained earnings

30,89734,88838,196

38,61842,278

-694

-694

-694

-694

-694

1,017

3,238

1,462

1,143

984

245

-

-

-

-

Net assets

36,94342,91044,44244,54548,046

Total liabilities and net assets

73,42584,19180,57293,284

91,835

Treasury shares
Accumulated other comprehensive income
Non-controlling interests

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

Cash flow statement(¥mn)
FY3/14

FY3/15

FY3/16

FY3/17

FY3/18Cash flow from operating activities

2,132

Cash flow from investing activities

21-5,942

7,573-3,30919,257-290-1,387-85

Cash flow from financing activities-51-1,145318-2,837

1,504-3,547

Effect of exchange rate change on cash andcash equivalents

1,007

1,109

-876

-305

-46

Net increase (decrease) in cash andcash equivalents

2,016-4,8052,473-2,195

15,611

Cash and cash equivalents at beginning of period

12,79314,80910,004

12,477

10,282

Cash and cash equivalents at end of period

14,80910,004

12,477

10,28225,893

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

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

16 18

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

Elematec Corporation

9-Jul.-2018

2715 Tokyo Stock Exchange First Section

http://www.elematec.com/en/ir/██Shareholder return policy
Steep dividend hike to ¥65 in FY3/18 on increased profits
The Company primarily pays dividends as its shareholder return policy and aims to keep the dividend payout ratioat 30% while taking into account the earnings outlook (short term and medium term), growth investments, cash
flow, and other factors.
The Company reported stronger profits than planned in FY3/18 with EPS at ¥213.76. It raised the annual dividendby ¥7 from the previous ¥58 target to ¥65 (¥25 at end-1H, ¥40 at period-end) in accordance with its fundamental
policy explained above of maintaining a dividend payout ratio of 30%. This resulted in a sharp dividend hike of morethan three-fold versus the previous period’s ¥20 dividend. The payout ratio worked out to 30.4%.
In FY3/19, the Company presented a dividend target of ¥66 (¥30 at end-1H, ¥36 at period-end). It is aiming for¥219.8 EPS in FY3/19 and this level along with the 30% dividend payout policy puts the dividend target at ¥66.
Actual FY3/19 profit might fluctuate versus current guidance due to changes in the business environment. We
think the Company might adjust the dividend to reflect such fluctuation if profit varies from guidance by more thana certain amount.

㼀㼞㼑㼚㼐㼟㻌㼕㼚㻌㼚㼑㼠㻌㼕㼚㼏㼛㼙㼑㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻘㻌㼐㼕㼢㼕㼐㼑㼚㼐㻘㻌㼍㼚㼐㻌㼐㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻺㼑㼠㻌㼕㼚㼏㼛㼙㼑㻌㼜㼑㼞㻌㼟㼔㼍㼞㼑㻌㻔㼘㼑㼒㼠㻕㻰㼕㼢㼕㼐㼑㼚㼐㻌㻔㼘㼑㼒㼠㻕㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻌㻔㼞㼕㼓㼔㼠㻕（¥）
㻟㻜㻜㻚㻜㻜

㻟㻜㻚㻝㻑

㻟㻜㻚㻡㻑

㻟㻜㻚㻠㻑

㻟㻜㻚㻠㻑

㻟㻜㻚㻜㻑

㻟㻡㻚㻜㻑

㻞㻠㻜㻚㻜㻜

㻞㻤㻚㻜㻑㻝㻤㻜㻚㻜㻜

㻞㻝㻚㻜㻑㻝㻞㻜㻚㻜㻜

㻞㻠㻥㻚㻟㻤

㻞㻠㻢㻚㻡㻤

㻝㻠㻚㻜㻑㻞㻝㻥㻚㻤㻜

㻞㻝㻟㻚㻣㻢

㻢㻜㻚㻜㻜

㻣㻚㻜㻑
㻣㻡㻚㻜

㻣㻡㻚㻜

㻢㻡㻚㻡㻣

㻢㻡㻚㻜

㻢㻢㻚㻜

㻲㼅㻟㻛㻝㻤

㻲㼅㻟㻛㻝㻥㻌㻱

㻞㻜㻚㻜

㻜㻚㻜㻜
㻲㼅㻟㻛㻝㻡

㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣

㻜㻚㻜㻑

Source: Prepared by FISCO from the Company’s materials

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

17 18

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

Elematec Corporation
2715 Tokyo Stock Exchange First Section

9-Jul.-2018
http://www.elematec.com/en/ir/██Information security
Strong awareness of information security
Elematec interacts with more than 7,000 suppliers and over 6,000 sales destinations and possesses technology
information and other important customer-related information. The Company has a strong awareness of information
management and has established an information security system expected of a listed company, including limiting
parties with information access rights and setting passwords. Nevertheless, it is a BtoB company and does not havepersonal information, credit card details, or other data for large numbers of customers as seen at BtoC companies.
We thus see relatively less risk of cyber terrorism that targets such information as well as information leaks fromwithin the Company.

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

18 18

Disclaimer
FISCO Ltd. (the terms “FISCO”, “we”, mean FISCO Ltd.) has legal agreements with theTokyo Stock Exchange, the Osaka Exchange,and Nikkei Inc. as to the usage of stock priceand index information. The trademark and value of the “JASDAQ INDEX” are the intellectual
properties of the Tokyo Stock Exchange, and therefore all rights to them belong to the Tokyo
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This report is based on information that we believe to be reliable, but we do not confirm or
guarantee its accuracy, timeliness,or completeness, or the value of the securities issued bycompanies cited in this report. Regardless of purpose,investors should decide how to use
this report and take full responsibility for such use. We shall not be liable for any result of its
use. We provide this report solely for the purpose of information, not to induce investment or
any other action.
This report was prepared at the request of its subject company using information provided
by the company in interviews, but the entire content of the report, including suppositions andconclusions, is the result of our analysis. The content of this report is based on informationthat was current at the time the report was produced, but this information and the content of
this report are subject to change without prior notice.
All intellectual property rights to this report, including copyrights to its text and data, areheld exclusively by FISCO. Any alteration or processing of the report or duplications of thereport, without the express written consent of FISCO, is strictly prohibited. Any transmission,
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The final selection of investments and determination of appropriate prices for investment
transactions are decisions for the recipients of this report.
FISCO Ltd.