Daihen’s FY3/26 results conference

Research evidence excerpt

Daihen’s FY3/26 results conference

ned above. The company believes it can capture

at least 30% of the market. In terms of its sourcing capabilities, it said it has a contract

to buy storage batteries from China-based Contemporary Amperex Technology and

has been ramping up production capacity for power conditioners and transformers and

could also outsource both items. It expects sales to the domestic electric power sector

to decline from ¥74b in FY3/26 to ¥65b in FY3/27 and said its expectations are not

particularly conservative as investments in upgrading wind down. The company aims for

OPM of 15%–20% for energy management over the medium term by fully automating

its transformer factory (Juso facility), which is currently being done in phases, by FY3/28

and by rolling out its automation system at group companies using the factory mentioned

above as a model.

For material processing, the company expects demand to rise for high-frequency SPE

power supplies in FY3/27 and beyond. It expects sales in this business to surge from

¥45.7b in FY3/26 to ¥70.0b in FY3/27 (up 53% YoY). This sales growth for the company

seems high compared to growth in the WFE market and SPE makers’ sales, but

management stated that its sales target is merely in line with client forecasts and is not

stretched. The company noted that it believes that this difference is due to two factors.

1) It expects its sales to rise in value terms as volume increases and high-priced items

account for a larger share of the mix. 2) SPE makers may be placing orders with Daihen

in anticipation for sales growth from FY3/28 since Daihen books sales earlier than these

SPE makers book sales (as SPE makers sell equipment that incorporates Daihen’s high-

frequency power sources).