financial results for the first half of the fiscal year …financial results for the first half of...

Financial Results for the First Half of the Fiscal Year Ending March 31, 2020

■ Financial Results■ Future measures■ Full-year outlook

NOVEMBER 8,2019Tatsuya Ogawa, President

and Representative Director

Shinko Shoji Co., Ltd.

1

Disclaimer

This English translation is only for

reference purpose. When they are any

discrepancies between original Japanese version

and English translation version, the original

Japanese version always prevails.

2

Notes on handling materials

Our forward-looking statements in this presentation are based on information that is available at the moment.

These forward-looking statements are based on management's assumptions

and beliefs in light of the risks and uncertainties that may cause actual results to differ

materially from those expressed or implied.

Major risks and uncertainties are as follows:

・ Economic conditions and consumption trends in major markets (Japan, Asia, etc.)

・ Changes in the electronics industry and technological trends

・ Sharp fluctuations in supply and demand in our major product markets

・ Substantial fluctuations in the exchange rates of the U.S. dollar and other foreign

currencies against the yen

3

Overview of First Half

Settlement

Highlights of First Half Fiscal Year March /2020 Results

●Sales for amusement machine market were higher than the initial forecast owing to the active device replacement from reuse/recycle devices to new devices for amusement machines.

●Sales for industrial equipment market were sluggish due to the impact of trade friction between the United States and China especially in industrial robots and semiconductor manufacturing equipment market.

●Sales for automotive electronics market decreased about 6% compared with the same period of the previous year, solid in Japanese market but sluggish in oversees market.

4


Sales for industrial equipment market, automotive electronics market and amusement machine market, our main business fields, have decreased compared with the same period of the previous year.However, sales for amusement machine market were strong compared with the initial forecast and contributed to the sales results of the first half of the fiscal year March 2020.

5

1H

FY/2019

Results

1H

FY/2020

Initial Forecast

1H

FY/2020

Results

Increase / decrease

(Previous year

comparison)

Increase / decrease

(Initial forecast

ratio)

Net sales 59,131 53,000 51,060 △8,071 △1,940

Gross Profit 5,209 - 4,870 △339 -

Selling, general and

administrative

expenses

4,022 - 4,149 127 -

Operating income 1,187 550 721 △466 171

Ordinary income 1,063 600 706 △357 106

net income for the 2Q 642 380 488 △154 108

Net income per share ￥15.66(Note) ￥9.88 ￥12.86 △￥2.80 ¥2.98

(Note) We conducted a 2-for-1 stock split of common stock on October 1, 2019.

Net income per share has been calculated as if this stock split had taken place at the

beginning of the previous fiscal year.

（Unit; Million yen）

Overview of First Half SettlementOverview of First Half

203

233

80

511212

Automotive34.3%

Consumer2.0%

ＯＡ8.6%

Communication2.0%

1H FY/2019 1H FY/2020

6

59,131million yen

191

190

56

511211

Amusement11.０%

Industry37.2%

Automotive37.4%

Consumer2.3%

ＯＡ10.０%

Communication2.1%

51,060million yen

Sales composition by field

Amusement13.5%

Industry39.5%

（Pie Chart (Outside Box) Value：100 million yen）


0

100

200

1H FY/2019 1H FY/2020

7

Sales composition by field (amount)

（Unit;100 Million yen）


8

63,158

51,946

67,97159,131

51,060

116,617 112,458

127,926

116,405110,000

0

40,000

80,000

120,000

160,000

FY/2016 FY/2017 FY/2018 FY/2019 FY/2020

1H Full fiscal year

Trend of Net sales


（Prospect）


9

591

500

510

520

530

540

550

560

570

580

590

600

1H

FY March/2019

1H

FY March/2020

511

OtherElectronic Devices

▲９

Assembly▲１３

semiconductor device▲１０

Integrated circuit▲４０

Otherbusiness

＋１

CircuitDevices

▲２

LCD▲７

Analysis on factor of increase in salesCompared with the previous year

（100 million yen）


5,776 6,264

5,050 4,531

5,980

5,209 4,870

8.38.6

7.98.7 8.8 8.8

9.5

0.0

2.0

4.0

6.0

8.0

10.0

0

2,000

4,000

6,000

8,000

10,000

FY/2013 FY/2014 FY/2015 FY/2016 FY/2017 FY/2018 FY/2019

Gross profit Gross profit ratio （％）

【1H Results】

10

Gross profit / Gross profit ratio



11

2,037

2,494

1,207 865

2,038

1,187

721

2.9

3.4

1.8 1.7

3.0

2.0

1.4

0.0

1.0

2.0

3.0

4.0

0

1,000

2,000

3,000

4,000

5,000

1H/2013 1H/2014 1H/2015 1H/2016 1H/2017 1H/2018 1H/2019

Operating incom Operating incom ratio （％）

Operating income / Operating income ratio

【1H Results】



1H/2018

(April 1,2018～September 30,2018）

5,209

1,0631,187 642

51,0604,870

721 706 488

1H/2019

(April 1,2019～September 30,2019）

59,131

12


NET

SALESGROSS

PROFIT

OPERATING

INCOMEORDINARY

INCOME NET

INCOME

NET

SALES GROSS

PROFIT

OPERATING

INCOMEORDINARY

INCOMENET

INCOME

Consolidated Statements of IncomeOverview of First Half

売上高売上総利益

営業利益経常利益

Total assets(March 31,2019) （September 30,2019）

5,980

2,038 2,118 1,437

75,29575,29572,139 72,139

49,84051,453

4,664 17,52219,177

6,018

66,12169,404

4,776

5,890

13

Consolidated Balance Sheet

(March 31,2019) （September 30,2019）

Total liabilities and net assets


FixedAssets

FixedAssets

CurrentAssets

CurrentAssets

FixedLiabilities

Total NetAssets

Total NetAssets

CurrentLiabilities Current

LiabilitiesFixed

Liabilities


20,12423,112

5,149

△124

△1,939 △98

14

Cash Flows

Consolidated Statements of Cash Flows1H/2019(April 1,2019～September 30,2019）


Cash and cashequivalents

at the end of period(April 1,2019))

Cash flow from

operating

activities

Cash flow from

investing

activities

Cash flow from

financing

activities

Effect of exchange

rate change on

cash and cash

equivalents

Cash and cashequivalents

at end of period(September 30th,2019))


15

Future measures

Our business domains

【Device solutions】【Global support】

【 Contract development

/ technical support 】【EMS Solutions】

Novalux(Overseas bases）

●Consigned embedded software development

●Hardware, software, and system development

●Consigned development of application software

●ODM development support

（Original Design Manufacturing)

●PWB Mounting and Assembly

●Contract manufacturing partner

Shinko Assembly China Co., LtdShinko Shoji/Novalux Japan Co., Ltd.

●Overseas transfer business support

●Development of overseas EMS business

●Proposal activities for local customers

For our customers' success, Shinko Shoji not only offers products and optimal logistics

proposals, but also offers business solutions tailored to their needs, such as technical

support, development coordination, EMS business, and overseas expansion.

Foreign subsidiaries 9Branches/Offices 10

Shinko Shoji LSI Design Center Co., Ltd. Shinko Shoji/Novalux Japan Co., Ltd.

Future measures

Customer

16

●Semiconductors

Renesas electronics,

Xilinx, etc.

●Electronic Devices

TDK, Tokin, Kyocera, etc.

Shinko Shoji/NT Sales Co., Ltd.

17

１．Renesas Electronics Business

２．Overseas business

３．Core market trends

４．CEATEC 2019 Exhibit Introduction

５．Future actions

Future measuresFuture measures

18

315299

263 273 255215

620562

541

559

489

421

0

200

400

600

800

FY/2015 FY/2016 FY/2017 FY/2018 FY/2019 FY/2020

1H Full fiscal year

1-1. Business for Renesas Electronics

【Sales trend of Renesas products】

（100 Million Yen)

（Prospect）

Future measures

19

215

1-2. Business for Renesas Electronics

255

Industry

28.8%

Automotive

49.5%

Communication

2.5%Amusement

4.2%

OA

14.5%

Industry

25.2%

OA

16.7%

Amusement

0.1%Communication

3.1%

Automotive

54.5%

115

59

35

126

74

37

11 6

【Sales comparison of Division】

1H FY/2019 1H FY/2020

（100 million yen）

Future measures

Customers wishing to make use of PFs provided by Renesas

Focus on customer-specific PF/ARM core systems

(No c

ore

is a

ccep

tab

le)

Em

ph

asis

on

perfo

rman

ce

AR

M c

ore

req

uire

d

Adoption of RX

Our legacy

Other companies'

legacy

ARM of other

companies

Using MCU for the

first time

• Aim to continue to keep RX business

• Proposing optimal products to customers from within the RX/RA/Synergy

• Aim to replace with RA/Synergy when ARM preference is strong

• If you are not committed to the core, naturally expand sales of RX.

・RXへの移行を推奨

ARM嗜好が強い場合は

RA/Synergyを武器に

• Recommended migration to RX

• Armed with RA/Synergy if preference for ARMs is strong

New General-purpose Microcontroller Family with ARM Cortex-M (48-200MHz)

Product Positioning (Definition)

20

Proposal policy (segregation)

1-3. Sales Expansion Strategy of Renesas Electronics (RA Family)

Renesas has released their new microcontrollers with ARM Cortex-M on October

and enabling us to expand sales to customers with ARM preferences that we had

not been able to offer in the past.

We are expected to support customers who want to use

Japanese manufacturers' ARM microcontrollers.

series

series

series

series

Provision of platform solutions

By distributors and

partner companies

Future measures

New ASSP that realizes low-voltage, high-speed operation

and unprecedented ultra-low current consumption

Aiming to expand sales of ASSP microcontrollers that can be operated under

Energy Harvest environment and low-voltage, low-power processors for battery-less apps

21

Existing systems

Battery Conventional

LowｰPower MCU

SOTB embedded controllers

SOTBLow Active and

Standby Current

1/10Of Conventional Battery Free REファミリ

電源＝Battery 電源＝Environment Power

Hybrid Watch Faucet & Remote Control Healthcare Meter Smart agri

・Solar-Driven Battery Maintenance-Less

・MIP-LCD graphics sensor processing

・Battery Maintenance-Less to Minimize Installation Costs

・4μA ultra-low consumption ADC・Low-consumption Flash FW

update of 1mA or less・No battery maintenance

・Cost reductions through smaller batteries

・No battery maintenance・Efficient expansion of

crop yields

Power supply = Battery Power supply = Environment Power

RE Family

1-3. Sales Expansion Strategy of Renesas Electronics (RE Family)Future measures

120.17 112.68 112.19 106.24 110.99 107.92 ←US$Rate

691

464

424

543

456

185

213

0

100

200

300

400

500

600

700

800

FY/2015 FY/2016 FY/2017 FY/2018 FY/2019 FY/2020

398

1H Results

185

22

2-1. Overseas business

【 Sales of Overseas Subsidiaries】（100 Million Yen）

The end of September 2019

（Prospect）

Future measures

2-2.Examples of Overseas Businesses (Expansion of Sales in the Chinese AIplay)

It also sells to Company A, which is headquartered in Hangzhou City, China's largest e-commerce company, and Company H, which is headquartered in Shenzhen, a major global telecommunications company.

Aggressively exhibit at Chinese exhibitions and actively promote market development for future-oriented interfaces!

Cumulative sales of ASKA3D glass-based Plate and resin-based Plate (China) 53 sheets (until September 2019)

China Smart City Expo (September 2019, Zhejiang Province)

23

Future measures

424

455

410 410430 430 427

405

112

190173

119

0

100

200

300

400

500

FY/2017 FY/2018 FY/2019 FY/2020

Industry Automotive Amusement

3-1. Core Market Sales Trends

24

（100 Million Yen）

（Prospect）

Future measures

228 207 202 192

202 223 225213

0

50

100

150

200

250

300

350

400

450

500

FY/2017 FY/2018 FY/2019 FY/2020

Domestic Overseas

405430 430

3-2. Automotive Equipment Business Sales Trends

25

427


（Prospect）

Future measures

Proposes optimal products, solutions, and support to customersin the automotive arena, who are facing major change in CASE

Connected Autonomous Shared / Service ElectricA SC E

Providing total support, including hardware, software, and

design support to enable short-term TAT development

Equipped with Renesas MCU RH850 / C1M etc.

Shinko Original Inverter Development Kit

Equipped with Renesas R-CAR Shinko Original Development Kit

SUSHI Board

26

Future measures

3-3.Expand business by proposing solutions

Latest software technologies: Hypervisor installed in system development kits with automotive SoCs

Promoting Domestic and Overseas Businesses by Real Application Demonstrations

Business development Solution Development【Results】 System Development Kit and Control SW

Completed

【Current Activities】

Integrated cockpit

demo development

【Results】Negotiated with major customers and new customers who wants to utilize automotive SoC

【Future Activities】Design-in for existing customers in Japan and overseas・ By Integrated Cockpit Demonstration・ By Intensive support Customer’s demonstration development for OEMs

Discovering new business opportunities for new customers and OEMs

・ Execute Integrated Cockpit Demonstrationfor new customers and OEMs(from March 2020)

27

Left image Backward image Right image

Navi imageMeter image

Customer development support scheme

business

partner

BSP, Application PWB Design

*SLD：Shinko Shoji LSI Design Center

Future measures

3-4. Build solutions for growing fields (ADAS, IVI, MAV)

Now working on Real-Traction Motor control demo development

Promoting Domestic and Overseas Businesses by Real Motor and Inverter Demonstrations

Business development activities Solution Development【Results】

Acquired business opportunities for traction motors and

inverters by major customers in Japan(MCUs, Gate Dr, Current Sensors, Discharge Resistance,

Passive Components, etc.)


Acquisition of design-in at major domestic customers

・By Reference ECU proposal with Performance test Data・Reference Application SW provision

(Includes technology that allows for wireless program

changes even after the vehicle is installed)

Discovering new customers and OEM business opportunities

・Propose reference ECUs to new customers/OEMs(From April ‘20)

【】【Results】 Inverter development kit H/W completed


Demonstration of Actual Motor Drives Development

インバータ開発キット

Traction motor

(Image) W

V

U

28

Digital part Driving part Power part

Power supply IC

Renesas

IGBT

Gate

driver

Latest

IGBT module

Future measures

3-5. Build solutions for growth fields (EV control)

Supporting prototype development of automotive motors

Exhibited and promoted our solutions for 2 consecutive years at Renesas Electronics India "Automotive Roadshow”

Automotive Roadshow 2019 in Delhi 5/15

1. Brushless DC Motor Control solutionsApplication example: oil pumps, fans

2. For innovative future cabin and ADASApplication example: Digital meter, navigation, digital room mirror

EV Solutions were exhibited for the first time at Pune

in late November

The Indian government announced a policy to prohibit gasoline vehicle sales from 2030 onward.⇒EV development competition

in India intensified.

Shinko ShojiManagement of the solutions business

Domestic partners

S/W SupportRenesas Electronics India

H/W Support

Technical Assistance

- Motor tuning- S/W development support- Sample design circuit- Provision of parts list

Automotive motors

manufacturerin India

ブラシレスDCモータコントロールキャビンシステム、ADAS向け

Shinko OriginalInverter development kit

for EVsWith Renesas MCU RL78

29

Future measures

For cabin systems and ADAS Brushless DC Motor Control

3-6. Overseas Business development (for India Market)

3-7. Industrial Equipment Business Sales Trends

424

455

410 410

0

100

200

300

400

500

FY/2017 FY/2018 FY/2019 FY/2020

※Customers in the industrial sectorMachine tools, Semiconductor manufacturing equipment, Medical equipment, Smart meters, etc.

1H Result

190

30


(Prospect)

Future measures

Always-on Managing System for Safe Operation!

【New Supplier】 Advantech‘s CPU Board MIC-7500

for Gateway Equipment Systems for Acquiring Data of

EV Bus Operational Status in Southeast Asia

New promotion approach・Exhibition follow-up (IOT/M2M

Exhibition) to promote gateway business for EV buses in Southeast Asia.

3-8. Industrial Solutions (EV bus gateway)

31

Started demonstration planned full-scale introduction

tests in 2017 in the 2H of 2021

Future measures

112

190

173

119

0

20

40

60

80

100

120

140

160

180

200

FY/2017 FY/2018 FY/2019 FY/2020

3-9. Amusement Equipment Business Sales Trends

32

1H Result

56


(Prospect)

Future measures

3-10. Solutions for Amusement Machine Business

33

Reel units for slot machines

Transmissive

photo sensor

Stepping motor Reel wheel

（Φ230mm）

Image of the reel unit For these customers

■Those who want to cut the initial cost of introducing a reel gaming machine

■Those who are considering reusing reel gaming machines

Effects of introduction

■Approx. 2.6kg lightweight design

■Energy-saving design

■Can be customized to meet customer needs

Advantages for customers

■To reduce the cost of reel units

■Easy removal of reel wheel

Future measures

Due to the impact of Typhoon No. 19, the total number of visitors to CEATEC venues decreased by about 7.4% from the previous year.However, 1,631 people attended our booth, up about 1% from the previous year!

34

◆Period:October 15 (Tue)-October 18 (Fri), 2019

◆Location:Makuhari Messe

4-1.CEATEC 2019

AIplay

Slot machine

Reel unit

LED

Floor vision

Future measures

4-2.CEATEC display products

Automotive Solutions

<Signage>Cube-type LED

vision

35

Future measures

36

Solar panel inspection and diagnostic drones

Floor inspection robot

moogle evo

36

4-3.CEATEC display productsFuture measures

5-1.Domestic IoT Market Trends and Forecasts

※ Source: NRI 37

2014 2015 2016 2017 2018 2019 2020 2021 2022

Others 343 624 994 1488 2006 2718 3492 4731 6400

Healthcare 11 52 71 186 236 604 970 1494 2240

Distribution 333 468 639 744 944 1208 1552 1992 2560

Automobiles 294 468 710 1023 1416 2114 3298 4731 6400

Security 735 1092 1562 2046 2596 3322 4268 5478 7040

Energy 1785 2496 3124 3813 4602 5134 5820 6474 7360

0

5000

10000

15000

20000

25000

30000

35000

（Unit;100 Million yen）

Future measures

Temperature and humidity sensors manufactured by TDIPS

Oxygen concentration sensor manufactured by a company

Computers for temperature and moisture measurement and Oxygen measurement

Internal LANs

Applicable equipment

Food Manufacturers' Facilities

PC for visualization

Send an email to an administrator

Comprehensive monitoring of temperature, humidity, and Oxygen concentration at plant facilities

Sensor hub

Pulp turnover

5-2.New Business (Proposals to visualize temperature and humidity and Oxygen Concentration for Food Plants)

38

HACCP compatible sensors

Manufactured by NEC Platforms

Collaboration with

TDI Product Solution CO.,LTD.

group

Future measures

5-3.New business (introduction of a real temperature and humidity monitoring system for government offices)

■Monitor environmental conditions in almost real time as a measure against heat stroke

■Installed at 120 elementary and junior high schools in the cities■Service is provided as a package by NEC Solution Innovators

Collaborative Business with the NEC Group!

39

CSV downloadCloud server

Sigfox communication

Sigfox sensor device

Providing all-in-one solutions for devices, lines, and data management PF

Future measures

40

Outlook for the Fiscal Year

Ending March 31, 2020

FY/2019

Results

FY/2020

Forecast

Comparison

with the

previous term

Increase /

decrease

amount

Net sales 116,405 110,000 94% △6,405

Operating income

2,442 1,500 61% △942

Ordinary income

2,299 1,560 68% △739

Net income 1,460 1,000 68% △460

Net income per share ￥36.14(note) ￥25.99 - △¥10.15

Outlook for the FYE March 31, 2020

41

Full fiscal year Forecast （Unit; Million yen）

(Note) We conducted a 2-for-1 stock split of common stock on October 1, 2019.Net income per share has been calculated as if this stock split had taken place at the beginning of the previous fiscal year.

325

266

307

266262248

279

310

0

100

200

300

400

1Q 2Q 3Q 4Q

FY/2019 FY/2020

42

Full-year Forecast (Quarterly Sales)


（Prospect）（Prospect）


1,124

1,279

1,164 1,100

1,400

0

100

200

300

400

500

600

700

800

900

1,000

1,100

1,200

1,300

1,400

1,500

17/3期 18/3期 19/3期 20/3期 22/3期

20

10

0

30

12.7

22.7

14.610.0

28.0

43

Medium-term plan (FY2019-FY2021)

Target period Fiscal year ending March 31, 2022Target Sales Net sales 1,400

Net income 28Net sales

Unit; Million yenNet income

Unit; Million yen

FY/2020FY/2019FY/2018FY/2017 FY/2022

Future measures

Our dividend policy

Total shareholder return ratio is 100% during the 3-year period from

fiscal year March 2020 to fiscal year March 2022, based on total

shareholder return, which includes dividends and share buybacks.

FY March/2018 ¥５０.００４７.７％１９７.０％

FY March/2019 ¥５５.００７６.１％２２８.５％

＊Total return ratio = (Dividend amount + Acquisition cost of

treasury stock)/Consolidated net income × 100

44

Consolidated Dividend Payout Ratio

Dividends Total Return Ratio


●Dividend per share

Shareholder Returns

We conducted a 2-for-1 stock split of common stock on October 1, 2019. Accordingly, we have

revised our year-end dividend forecast for the fiscal year ending March 31, 2020, which was

announced on July 31, 2019, as described above.

As this stock split is effective October 1, 2019, the interim dividend for the fiscal year ending

March 2020 with a record date of September 30, 2019 will be applicable to the shares before the

stock split.

Dividend per share

End of 1H Year end Annual

FY March/2020 Forecast(As of July 31, 2019)

￥27 ￥２８￥５５

FY March/2020 forecast after the stock split

(Conversion before stock split)

￥２７（￥２７）

￥１４（￥２８）

－（￥５５）

Results for the previous fiscal year(Year ended March 31, 2019)

￥２５￥３０￥５５

45


We have completed the acquisition of all treasury stock in accordance with the resolution of the Board of Directors meeting held on October 31, 2018.

Accumulated treasury stock acquired

(1) Total number of shares acquired 4 million shares

(2) Total value of shares repurchased ￥3,613,080,800

(NOTE) We conducted a 2-for-1 stock split of common stock on October 1, 2019. The total number of shares acquired is expressed as the number of shares after the stock split.

Completion of share repurchase2020年3月期の見通し

46

47

Shinko Shoji Co., Ltd.

Director Teru Masaki

Director Shuji Isshiki

Tel: (81)-3-6361-8062

Fax: (81)-3-5437-8481

e-mail: [email protected]

e-mail: [email protected]

Head Office: Art Village Osaki Central Tower 13F

1-2-2 Osaki Shinagawa-ku Tokyo 141-8540 Japan

HP: http://www. shinko-sj.co.jp

Contact Information

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