Micronics Japan / 6871
COVERAGE INITIATED ON: 2019.04.19 LAST UPDATE: 2020.10.02
Shared Research Inc. has produced this report by request from the company discussed in the report. The aim is to provide an “owner’s manual” to investors. We at Shared Research Inc. make every effort to provide an accurate, objective, and neutral analysis. In order to highlight any biases, we clearly attribute our data and findings. We will always present opinions from company management as such. Our views are ours where stated. We do not try to convince or influence, only inform. We appreciate your suggestions and feedback. Write to us at [email protected] or find us on Bloomberg.
Research Coverage Report by Shared Research Inc. Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
INDEX
How to read a Shared Research report: This report begins with the trends and outlook section, which discusses the company’s most recent earnings. First-time readers should start at the business section later in the report.
Executive summary ------3 Key financial data ------5 Recent updates ------8 Highlights ------8 Trends and outlook ------9 Quarterly trends and results ------9 Business ------22 Leading developer and manufacturer of probe cards used semiconductor wafer test process ------22 R&D ------31 Market and value chain------34 Market environment ------34 Main customers and competitors ------35 Strengths and weaknesses ------39 Historical performance and financial statements ------40 Income statement ------40 Balance sheet ------42 Cash flow statement ------44 Historical performance ------45 Other information ------51 History ------51 News and topics ------52 Corporate governance and top management ------52 Dividend policy ------53 Major shareholders ------53 Employees ------53 Profile ------54
02/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Executive summary
Business overview
◤ Micronics Japan Co., Ltd. (MJC) is the No. 3 probe card manufacturer in the world with a market share of 14% (according to MJC materials), after the market leader FormFactor, Inc. (US) and No. 2 probe card manufacturer Technoprobe S.p.A. (Italy) (Shared Research estimates). Probe cards are jigs used for electrical testing of integrated circuits (ICs) on semiconductor wafers before the wafers are diced into dies. As consumable products, they have a life ranging from several months to two or three years depending on the type and application. They serve key roles in the testing process for semiconductor wafers, along with testers and probers. Probe card can be classified into two categories by application: 1) memory such as DRAM and NAND flash, and 2) non-memory such as microprocessor and logic ICs for computing applications that perform computing. MJC has some competitive advantage in memory probe cards (which account for roughly 80% of its probe card sales). It is the leading global supplier of memory probe cards with a share of 33%, and develops and manufactures its products in-house. It collaborates with and supplies products to major memory manufacturers and other semiconductor companies around the world. It also provides equipment related to probe cards such as probers and testers.
◤ In FY09/19, the company reported consolidated sales of JPY28.0bn (-7.1% YoY) and operating profit of JPY1.5bn (-54.1% YoY). Its regional sales mix varies by period but generally reflects the geographical locations of memory manufacturers’ mass production fab: 34% in South Korea, 23% in Japan, 18% in Taiwan, 18% in other parts of Asia, and 7% in the US and Europe. The Probe Card segment accounted for 91% of sales and the Test Equipment (TE) segment accounted for the remaining 9%. Its main competitor, FormFactor (NASDAQ: FORM), reported fiscal 2018 sales of JPY58.5bn (-4.9% YoY) and operating profit of JPY4.0bn (-23.2% YoY), and excels in non-memory probe cards (accounting for 60% of its total sales).
◤ MJC stands out because of its contact technology connecting probe cards with semiconductor wafers and its track record of collaborating with a wide range of semiconductor manufacturers. The semiconductor testing process consists of bringing probe card needles into contact with electrodes that measure several tens of micrometers (μm) on semiconductor wafers with micron-level precision. This requires a lineup of needles and corresponding accuracy depending on wafer differences, as well as precise contact technologies related to positioning control, device handling, probe pressure control, and countermeasures against thermal deformation. Because ICs are continually evolving in terms of miniaturization, size reduction, and materials, testing methods need to be reviewed in close collaboration with semiconductor manufacturers. Accordingly, the company has built collaborative relationships with global semiconductor leaders.
◤ In an effort to reduce earnings volatility going forward, the company plans to expand sales of non-memory products (which are less vulnerable to fluctuations in the semiconductor market than memory counterparts) as it seeks to establish a balance between its memory and non-memory products. Ultimately, it aims to bring its memory-to-non-memory business ratio from 80:20 to 60:40. However, non-memory business often entails high-mix and low-volume orders. The company aims to expand the scale of non-memory business through steady efforts to cultivate customers.
Earnings trends
◤ In FY09/19, the company reported full-year consolidated sales of JPY28.0bn (-7.1% YoY), operating profit of JPY1.5bn (-54.1% YoY), recurring profit of JPY1.6bn (-52.7% YoY), and net income of JPY879mn (-64.7% YoY). At its mainstay Probe Card business, sales increased 0.5% YoY to JPY25.5bn. By capturing the surge in demand in 1H, the company maintained sales on a par with FY09/18 despite softening market conditions. At the TE business, sales fell 48.5% YoY to JPY2.4bn on a decline in sales of semiconductor testers.
◤ Due to a change in its fiscal year-end, FY12/20 will be an irregular accounting period with 15 months; in the case of overseas subsidiaries with accounting periods ending in June, the FY12/20 accounting period will be 18 months long (July 2019 through December 2020). Along with its quarterly results announcements the company has been providing forecasts for the following two quarters. In keeping with this, at the time of its Q3 results announcement (on August 11, 2020) the company issued its forecast for full-year consolidated results calling for FY12/20 sales of JPY42.0bn, operating profit of JPY3.6bn,
03/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
recurring profit of JPY3.8bn, and net income of JPY2.9bn. By segment, the company’s full-year forecast sees Probe Card segment sales coming in at JPY39.1bn and Test Equipment (TE) segment sales coming in at JPY2.9bn.
◤ In November 2017, the company unveiled its “MJC Future Vision,” which is intended to replace the previous medium-term business plan. The new vision does not include numerical targets but rather outlines the future business direction for the company. The company aims to strengthen its QDCCSS system (comprehensive management system unique to the company focused on Quality, Delivery, Cost, Compliance, Service, and Safety), enhance competitiveness in quality and delivery, and “contribute to the development of a more prosperous society” through technological innovation. Key strategies incorporated in the vision are executing the company’s mission as a leader in memory-related products, while strengthening logic product operations (Probe Card business) and increasing stable earnings drivers while continuing to generate new businesses (Test Equipment [TE] business).
Strengths and weaknesses
MJC’s strengths are (1) contact technologies, (2) long-term relationships with memory manufacturers established through collaboration, and (3) a customer support structure that covers all aspects, thanks to its operation from development to manufacturing. The company’s weaknesses are (1) a weak track record in the non-memory field, (2) a business structure that is directly linked to semiconductor production and therefore vulnerable to semiconductor market conditions, and (3) low earnings stability in the TE business.
04/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Key financial data
Income statement FY09/11 FY09/12 FY09/13 FY09/14 FY09/15 FY09/16 FY09/17 FY09/18 FY09/19 FY 12/ 20 Cml. Q4 Est. FY Est. (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. (out Aug. 11) Sales 29,049 23,623 20,387 29,159 32,496 26,047 28,455 30,091 27,954 32,700 42,000 YoY 17.5% -18.7% -13.7% 43.0% 11.4% -19.8% 9.2% 5.7% -7.1% -- Gross profit 8,111 5,428 7,405 10,454 13,527 9,710 10,028 11,495 10,436 YoY 11.0% -33.1% 36.4% 41.2% 29.4% -28.2% 3.3% 14.6% -9.2% GPM 27.9% 23.0% 36.3% 35.9% 41.6% 37.3% 35.2% 38.2% 37.3% Operating profit 928 -2,362 1,398 3,237 6,143 1,603 1,508 3,195 1,466 2,700 3,600 YoY 121.5% - - 131.5% 89.8% -73.9% -5.9% 111.9% -54.1% -- OPM 3.2% -10.0% 6.9% 11.1% 18.9% 6.2% 5.3% 10.6% 5.2% 8.3% 8.6% Recurring profit 921 -2,364 1,523 3,553 6,497 1,493 1,573 3,440 1,626 2,800 3,800 YoY 934.8% - - 133.3% 82.9% -77.0% 5.4% 118.7% -52.7% -- RPM 3.2% -10.0% 7.5% 12.2% 20.0% 5.7% 5.5% 11.4% 5.8% 8.6% 9.0% Net income -2,837 -5,043 1,100 2,974 5,681 524 1,154 2,489 879 2,200 2,900 YoY - - - 170.4% 91.0% -90.8% 120.2% 115.7% -64.7% -- Net margin - - 5.4% 10.2% 17.5% 2.0% 4.1% 8.3% 3.1% 6.7% 6.9% Per share data (JPY) Shares issued (year-end; '000) 20,013 20,013 20,013 20,013 20,013 40,025 40,025 40,025 40,025 - - EPS -73.0 -132.8 29.0 76.9 144.7 13.2 29.6 63.9 23.0 57.7 76.0 EPS (fully diluted) -73.0 -132.8 29.0 74.9 142.7 13.2 29.5 63.9 23.0 -- Dividend per share 5.0 - 5.0 15.0 27.5 15.0 10.0 19.0 10.0 - 22.0 Book value per share 435.0 294.0 341.8 450.2 572.6 542.0 564.6 617.2 590.5 -- Balance sheet (JPYmn) Cash and cash equivalents 8,379 7,722 7,423 9,654 16,231 11,860 9,756 11,186 11,375 -- Total current assets 22,340 16,952 18,425 21,169 27,569 22,581 22,838 22,800 20,944 -- Tangible fixed assets 10,001 8,625 7,908 8,572 8,983 9,113 9,187 9,383 9,564 -- Investments and other assets 2,109 1,726 2,033 3,451 2,543 3,095 3,517 3,673 2,687 -- Intangible fixed assets 1,111 1,029 955 906 951 969 958 1,042 1,047 -- Total assets 35,563 28,333 29,321 34,100 40,048 35,760 36,502 36,899 34,244 -- Accounts payable 6,946 4,072 4,887 3,216 4,428 4,563 5,195 4,459 4,415 -- Short-term debt 3,153 3,799 3,197 2,493 2,603 1,395 769 777 1,110 -- Total current liabilities 12,655 11,977 10,459 10,192 11,655 9,501 9,813 8,979 8,543 -- Long-term debt 3,828 2,899 2,975 2,280 1,516 687 602 562 511 -- Total fixed liabilities 5,675 4,474 4,918 5,014 4,106 3,411 3,408 2,820 2,874 -- Total liabilities 18,330 16,452 15,377 15,207 15,762 12,913 13,221 11,799 11,418 -- Net assets 35,563 28,333 29,321 34,100 40,048 35,760 36,502 36,899 34,244-- Total interest-bearing debt 6,981 6,698 6,172 4,773 4,119 2,082 1,371 1,339 1,621 -- Cash flow statement (JPYmn) Cash flows from operating activities 3,176 1,867 561 4,254 9,092 2,082 2,080 4,585 4,015 -- Cash flows from investing activities -590 -1,622 -502 -367 -2,802 -789 -2,660 -1,459 -1,121 -- Cash flows from financing activities 118 -904 -741 -989 -1,550 -3,731 -2,405 -985 -2,360 -- Financial ratios ROA (RP-based) 2.6% -7.4% 5.3% 11.2% 17.5% 3.9% 4.4% 9.4% 4.6% -- ROE -15.5% -36.4% 9.1% 19.5% 28.2% 2.4% 5.3% 10.8% 3.8% -- Equity ratio 46.5% 39.4% 44.3% 51.6% 56.6% 60.1% 60.2% 64.0% 65.8% -- Source: Shared Research based on company data; per-share data adjusted for stock split Note: Figures may differ from company materials due to differences in rounding methods. Note: The company implemented a 2-for-1 stock split of common stock on October 1, 2015. Earnings per share and diluted earnings per share are calculated assuming the stock split occurred at the beginning of FY09/16. Note: Since FY09/18, the company has disclosed earnings forecasts for the next two quarters at each quarterly results announcement.
05/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Segment sales and profit FY09/10 FY09/11 FY09/12 FY09/13 FY09/14 FY09/15 FY09/16 FY09/17 FY09/18 FY09/19 (JPYmn） Act. Act. Act. Act. Act. Act. Act. Act. Act. Act. Sales 24,715 29,049 23,623 20,387 29,159 32,496 26,047 28,455 30,091 27,954 YoY 28.1% 17.5% -18.7% -13.7% 43.0% 11.4% -19.8% 9.2% 5.7% -7.1% Probe Card - - 18,413 16,733 24,381 28,015 21,146 22,470 25,415 25,544 YoY - - - -9.1% 45.7% 14.9% -24.5% 6.3% 13.1% 0.5% % of total sales - - 77.9% 82.1% 83.6% 86.2% 81.2% 79.0% 84.5% 91.4% Cantilever type - - 2,778 2,350 2,469 2,833 4,344 3,638 2,399 1,676 YoY - - - -15.4% 5.1% 14.7% 53.3% -16.3% -34.1% -30.1% % of total sales - - 11.8% 11.5% 8.5% 8.7% 16.7% 12.8% 8.0% 6.0% Advanced - - 14,991 13,820 21,378 24,511 18,066 19,704 22,241 23,111 YoY - - - -7.8% 54.7% 14.7% -26.3% 9.1% 12.9% 3.9% % of total sales - - 63.5% 67.8% 73.3% 75.4% 69.4% 69.2% 73.9% 82.7% Memory - - 11,997 11,241 18,116 20,374 14,774 16,186 20,006 21,303 YoY - - - -6.3% 61.2% 12.5% -27.5% 9.6% 23.6% 6.5% % of total sales - - 50.8% 55.1% 62.1% 62.7% 56.7% 56.9% 66.5% 76.2% Non-memory - - 2,993 2,579 3,262 4,136 3,291 3,518 2,235 1,808 YoY - - - -13.8% 26.5% 26.8% -20.4% 6.9% -36.5% -19.1% % of total sales - - 12.7% 12.7% 11.2% 12.7% 12.6% 12.4% 7.4% 6.5% Test socket - - 1,112 562 534 671 616 659 774 756 YoY - - - -49.5% -5.0% 25.7% -8.2% 7.0% 17.5% -2.3% % of total sales - - 4.7% 2.8% 1.8% 2.1% 2.4% 2.3% 2.6% 2.7% Test Equipment (TE) - - 5,210 3,653 4,778 4,481 4,900 5,985 4,675 2,409 YoY ------6.2%9.4%22.1%-21.9%-48.5% % of total sales - - - - 16.4% 13.8% 18.8% 21.0% 15.5% 8.6% Semiconductor test equipment - - 1,099 552 2,301 1,555 2,934 4,504 2,709 436 YoY ------32.4%88.7%53.5%-39.9%-83.9% % of total sales - - - - 7.9% 4.8% 11.3% 15.8% 9.0% 1.6% Probe unit - - 1,756 1,516 1,465 1,160 1,121 1,171 1,036 1,050 YoY ------20.8%-3.4%4.5%-11.5%1.4% % of total sales - - - - 5.0% 3.6% 4.3% 4.1% 3.4% 3.8% LCD test equipment - - 2,355 1,585 1,012 1,764 844 308 929 923 YoY -----74.3%-52.2%-63.5%201.6%-0.6% % of total sales - - - - 3.5% 5.4% 3.2% 1.1% 3.1% 3.3% (Old seg.) Semiconductor Equipment15,09321,76019,511 ------YoY 11.6%44.2%-10.3%------% of total sales 61.1%74.9%82.6%------(Old seg.) FPD Equipment 9,6227,2884,111 ------YoY 66.5%-24.3%-43.6%------% of total sales 38.9%25.1%17.4%------Operating profit 419 928 -2,362 1,398 3,237 6,143 1,603 1,508 3,195 1,466 YoY -111.0% 121.5% -354.5% -159.2% 131.5% 89.8% -73.9% -5.9% 111.9% -54.1% Probe Card - - 146 3,400 5,340 8,129 3,384 2,653 5,179 4,341 YoY - - - 2228.8% 57.1% 52.2% -58.4% -21.6% 95.2% -16.2% % of total OP - - -14.8% 118.7% 101.3% 94.8% 85.9% 69.2% 89.7% 113.1% OPM - - 0.8% 20.3% 21.9% 29.0% 16.0% 11.8% 20.4% 17.0% Test Equipment (TE) - - -1,130 -534 -69 448 555 1,181 593 -502 YoY ------23.9%112.8%-49.8%- % of total OP -----5.2%14.1%30.8%10.3%- OPM - - -21.7% -14.6% -1.4% 10.0% 11.3% 19.7% 12.7% -20.8% (Old seg.) Semiconductor Equipment 211 2,040 -174 ------YoY -866.8%------% of total OP 12.4%87.3%------OPM 1.4%9.4%------(Old seg.) FPD Equipment 1,496 297 -810 ------YoY --80.1%------% of total OP 87.6%12.7%------OPM 15.5%4.1%------Segment profit adjustments -1,288 -1,410 -1,378 -1,467 -2,033 -2,433 -2,335 -2,325 -2,577 -2,372 Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods. Note: In FY09/13, the company converted the Semiconductor Equipment and FPD Equipment segments to the Probe Card and Equipment segments. The FY09/12 data above has been retroactively revised to reflect this change. In FY09/15, MJC changed the Equipment segment into the TE segment (operations were not changed).
06/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Capital expenditures Depreciation R&D expenses
(JPYmn) (JPYmn) (JPYmn) 4,000 3,000 2,500 3,749 3,735
3,459 2,618 3,500 3,253 3,316 2,049 2,500 1,979 2,000 1,831 1,820 3,000 2,146 2,117 2,084 2,649 1,660 1,663 2,506 2,576 2,000 1,825 1,515 1,541 2,500 2,263 1,500 1,372 2,157 1,554 1,317 1,466 2,000 1,500
1,156 1,070 1,000 1,500 1,000
664 1,000 500 500 500
0 0 0
Source: Shared Research based on company data
07/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Recent updates
Highlights
On October 2, 2020, Shared Research updated the report following interviews with Micronics Japan Co., Ltd.
On August 11, 2020, the company announced earnings results for Q3 FY12/20; see the results section for details.
On the same day, the company issued a revised forecast for Q4 FY12/20 and a full-year forecast for FY12/20, as detailed below.
Revised company forecast for consolidated results for the 12-month period through Q4 FY12/20 Sales: JPY32.7bn (versus previous forecast of JPY31.8bn) Operating profit: JPY2.7bn (versus JPY2.3bn) Recurring profit: JPY2.8bn (versus JPY2.4bn) Net income*: JPY2.2bn (versus JPY1.9bn) EPS: JPY57.66 (versus JPY49.79)
Company forecast for full-year consolidated results for the 15-month period of FY12/20 Sales: JPY42.0bn (no forecast previously) Operating profit: JPY3.6bn (no forecast previously) Recurring profit: JPY3.8bn (no forecast previously) Net income*: JPY2.9bn (no forecast previously) EPS: JPY76.00 (no forecast previously) Dividends per share: JPY22.00 (versus previous forecast of JPY10.00) *Net income attributable to owners of the parent
On the same day, the company announced that it was discontinuing its R&D efforts aimed at developing secondary (rechargeable) batteries under the brand name battenice®.
Explaining its decision, the company said that after putting years of efforts into understanding the fundamental workings so as to improve battery performance and overcome technical obstacles, and studying market needs, it had come to the conclusion that it was not worth trying to establish a secondary battery business at this point in time and that further R&D efforts on its battenice® batteries should be discontinued.
The company noted that the financial impact of this decision is reflected in its new earnings forecasts.
For previous releases and developments, please refer to the News and topics section.
08/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Trends and outlook Quarterly trends and results
Cumulative FY 09/ 19 FY 12/ 20 FY12/20 % of Cml. Q3 Est. % of Cml. Q4 Est. % of FY Est . (JPYmn)Q1 Q2Q3Q4 Q1Q2Q3 Est. (out May 14) Est . (out Aug. 11) Est . (out Aug. 11) Sales 6,380 15,008 21,282 27,954 9,221 16,096 23,700 97.5% 24,300 72.5% 32,700 56.4% 42,000 YoY -19.9% -2.1% -2.5% -7.1% - 7.2% 11.4% - - - Probe Card 5,903 14,018 19,855 25,544 8,585 15,019 22,235 99.7% 22,300 56.9% 39,100 YoY -11.9% 5.9% 4.3% 0.5% - 7.1% 12.0% - - - Test Equipment (TE) 476 990 1,426 2,409 635 1,077 1,464 73.2% 2,000 50.5% 2,900 YoY -62.6% -52.6% -49.0% -48.5% - 8.8% 2.7% - - - Gross profit 3,180 6,434 8,507 10,436 2,906 5,285 7,942 YoY -0.1% 9.3% -0.8% -9.2% - -17.9% -6.6% GPM 49.8% 42.9% 40.0% 37.3% 31.5% 32.8% 33.5% SG&A expenses 2,214 4,142 6,360 8,969 2,426 4,243 6,067 YoY 5.8%0.7%3.5%8.1% -2.4%-4.6% SG&A-to-sales ratio 34.7% 27.6% 29.9% 32.1% 26.3% 26.4% 25.6% Operating profit 966 2,292 2,147 1,466 480 1,041 1,874 93.7% 2,000 69.4% 2,700 52.1% 3,600 YoY -11.5% 29.1% -11.9% -54.1% - -54.6% -12.7% - - - OPM 15.1% 15.3% 10.1% 5.2% 5.2% 6.5% 7.9% 8.2% 8.3% 8.6% Probe Card 1,685 3,740 4,339 4,341 929 1,999 3,347 YoY 14.2% 38.6% 9.3% -16.2% - -46.6% -22.9% OPM 28.5% 26.7% 21.9% 17.0% 10.8% 13.3% 15.1% Test Equipment (TE) -109 -265 -438 -502 94 86 82 YoY ------OPM -22.9% -26.8% -30.7% -20.8% 14.8% 8.0% 5.6% Adjustments -609 -1,182 -1,753 -2,372 -543 -1,045 -1,555 Recurring profit 1,049 2,373 2,276 1,626 519 1,086 1,953 93.0% 2,100 69.8% 2,800 51.4% 3,800 YoY -17.7% 23.0% -12.0% -52.7% - -54.2% -14.2% - - - RPM 16.4% 15.8% 10.7% 5.8% 5.6% 6.7% 8.2% 8.6% 8.6% 9.0% Net income 745 1,723 1,595 879 365 872 1,617 95.1% 1,700 73.5% 2,200 55.8% 2,900 YoY -29.5% 21.0% -19.4% -64.7% - -49.4% 1.4% - - - Net margin 11.7% 11.5% 7.5% 3.1% 4.0% 5.4% 6.8% 7.0% 6.7% 6.9% Quarterly FY09/19 FY12/20 (JPYmn) Q1Q2Q3Q4Q1Q2Q3 Sales 6,380 8,628 6,274 6,672 9,221 6,875 7,604 YoY -19.9% 17.3% -3.5% -19.3% - -20.3% 21.2% Probe Card 5,903 8,115 5,837 5,689 8,585 6,434 7,216 YoY -11.9% 24.1% 0.7% -10.9% - -20.7% 23.6% Test Equipment (TE) 476 514 436 983 635 442 387 YoY -62.6% -36.9% -38.4% -47.7% - -14.0% -11.2% Gross profit 3,180 3,254 2,073 1,929 2,906 2,379 2,657 YoY -0.1% 20.4% -23.0% -33.8% - -26.9% 28.2% GPM 49.8% 37.7% 33.0% 28.9% 31.5% 34.6% 34.9% SG&A expenses 2,214 1,928 2,218 2,609 2,426 1,817 1,824 YoY 5.8% -4.6% 9.2% 21.0% - -5.8% -17.8% SG&A-to-sales ratio 34.7% 22.3% 35.4% 39.1% 26.3% 26.4% 24.0% Operating profit 966 1,326 -145 -681 480 561 833 YoY -11.5% 93.9% - - - -57.7% - OPM 15.1% 15.4% -2.3% -10.2% 5.2% 8.2% 11.0% Probe Card 1,685 2,055 599 2 929 1,070 1,348 YoY 14.2% 68.0% -52.9% -99.8% - -47.9% 125.0% OPM 28.5% 25.3% 10.3% 0.0% 10.8% 16.6% 18.7% Test Equipment (TE) -109 -156 -173 -64 94 -8 -4 YoY ------OPM -22.9% -30.4% -39.7% -6.5% 14.8% -1.8% -1.0% Adjustments -609 -573 -571 -619 -543 -502 -510 Recurring profit 1,049 1,324 -97 -650 519 567 867 YoY -17.7% 102.4% - - - -57.2% - RPM 16.4% 15.3% - - 5.6% 8.2% 11.4% Net income 745 978 -128 -716 365 507 745 YoY -29.5% 166.5% - - - -48.2% - Net margin 11.7% 11.3% -2.0% -10.7% 4.0% 7.4% 9.8% R&D expenses 911 832 957 1,035 870 766 773 Capital expenditures 636 796 587 599 813 408 252 Depreciation 394 420 478 528 528 462 485 Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods. Note: Since FY09/18, the company has disclosed earnings forecasts for the next two quarters at each quarterly results announcement. Note: 1H FY12/20 is the six-month period from October 2019 to March 2020.
09/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Quarterly sales Quarterly operating profit
(JPYmn) Q1 Q2 Q3 Q4 (JPYmn) Q1 Q2 Q3 Q4 45,000 42,000 4,000 3,600 3,195 40,000 3,000 759 35,000 1,466 30,091 30,000 27,954 2,000 661 1,326 8,263 684 833 25,000 6,672 1,000 20,000 7,604 561 6,504 6,274 1,091 966 480 15,000 0 -145 6,875 7,354 -681 10,000 8,628 -1,000 5,000 9,221 7,970 6,380 0 -2,000 FY09/18 FY09/19 FY12/20 FY09/18 FY09/19 FY12/20
Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.
Capital expenditures Depreciation R&D expenses
(JPYmn) (JPYmn) (JPYmn)
850 600 1,200 796 813 528 527 1,032 750 987 500 482 478 485 1,000 964 953 957 462 917 650 636 448 890 911 650 433 869 870 605 598 427 420 832 587 408 819 807 546 396 394 766773 400 371 800 550 523 357
450 408 401 300 600 348 350 315 282 252 200 400 250
150 100 200
50 0 0 (50) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q5 FY09/17 FY09/18 FY09/19 FY12/20 FY09/17 FY09/18 FY09/19 FY12/20 FY09/17 FY09/18 FY09/19 FY12/20 Source: Shared Research based on company data
10/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Q3 FY12/20 results (out August 11, 2020) Earnings summary Consolidated results for the nine-month period through Q3 FY12/20 (October 2019–June 2020)
▷ Sales: JPY23.7bn (no YoY comparison) ▷ Operating profit: JPY1.9bn (no YoY comparison) ▷ Recurring profit: JPY2.0bn (no YoY comparison) ▷ Net income*: JPY1.6bn (no YoY comparison)
*Net income attributable to owners of the parent
▷ Semiconductor market trends: Outside of a few pockets of weakness in automotive devices and other areas where the end-use applications are consumer oriented, the company saw rising demand for both memory and non-memory devices from data center-related applications, which rose in conjunction with the growing trend toward working from home, online conferencing, and cashless transactions. Looking ahead, the company sees demand from the semiconductor market remaining firm as increasing numbers of semiconductors are used in 5G telecommunications and AI- and IoT-related applications. ▷ FPD market trends: Demand for large LCD TVs rose during the period, bolstered by the growing number of people staying at home during the COVID-19 pandemic and handout payments to households. Panel prices rose in response as supply/demand conditions have tightened in the wake of announcements by some manufacturers that they were getting out of the business of
manufacturing flat panel displays for use in televisions. ▷ Company earnings: For the nine-month period through Q3 (October 2019–June 2020), the company reported consolidated sales of JPY23.7bn (+11.4% versus October 2018–June 2019), with Probe Card segment sales of JPY22.2bn (+12.0%) and Test
Equipment (TE) segment sales of JPY1.5bn (+2.6%). Both sales and profit were high in the Probe Card segment thanks to favorable performance from memory probe cards in the midst of healthy data center-related demand. In the TE segment, probe unit sales were stable but sales of equipment for FPDs and semiconductors continued to be sluggish.
11/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Segment overview
Cumulative FY09/18 FY09/19 FY12/20 (JPYmn) Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3 Total sales 7,970 15,324 21,828 30,091 6,380 15,008 21,282 27,954 9,221 16,096 23,700 YoY 16.4% 8.5% 3.4% 5.7% -19.9% -2.1% -2.5% -7.1% - - - Probe Card 6,697 13,235 19,031 25,415 5,903 14,018 19,855 25,544 8,585 15,019 22,235 Advanced (Memory) 5,264 10,405 14,891 20,006 4,811 12,056 16,760 21,303 6,726 12,288 18,511 YoY 27.2% 26.5% 25.3% 23.6% -8.6% 15.9% 12.6% 6.5% - - - % of total sales 66.0% 67.9% 68.2% 66.5% 75.4% 80.3% 78.8% 76.2% 72.9% 76.3% 78.1% Advanced (Non-memory) 564 1,195 1,695 2,235 462 751 1,271 1,808 878 1,185 1,504 YoY -34.3% -27.4% -37.8% -36.5% -18.1% -37.2% -25.0% -19.1% - - - % of total sales 7.1% 7.8% 7.8% 7.4% 7.2% 5.0% 6.0% 6.5% 9.5% 7.4% 6.3% Cantilever type 651 1,220 1,856 2,399 474 884 1,253 1,676 577 946 1,315 YoY 26.9% 16.6% 21.3% -34.1% -27.2% -27.5% -32.5% -30.1% - - - % of total sales 8.2% 8.0% 8.5% 8.0% 7.4% 5.9% 5.9% 6.0% 6.3% 5.9% 5.5% Test socket 218 414 588 774 156 326 570 756 404 600 904 YoY 22.5% 13.4% 22.0% 17.5% -28.4% -21.3% -3.1% -2.3% - - - % of total sales 2.7% 2.7% 2.7% 2.6% 2.4% 2.2% 2.7% 2.7% 4.4% 3.7% 3.8% Test Equipment (TE) 1,273 2,088 2,796 4,675 476 990 1,425 2,409 635 1,077 1,464 Semiconductor test equipment 1,003 1,304 1,421 2,709 76 295 345 436 87 204 309 YoY 16.4% -36.4% -57.9% -39.9% -92.4% -77.4% -75.7% -83.9% - - - % of total sales 12.6% 8.5% 6.5% 9.0% 1.2% 2.0% 1.6% 1.6% 0.9% 1.3% 1.3% Probe unit 222 458 721 1,036 366 576 793 1,050 514 813 1,078 YoY -5.5% -23.9% -15.2% -11.5% 64.9% 25.8% 10.0% 1.4% - - - % of total sales 2.8% 3.0% 3.3% 3.4% 5.7% 3.8% 3.7% 3.8% 5.6% 5.1% 4.5% LCD test equipment 48 326 654 929 34 118 287 923 34 59 76 YoY -20.0% 77.2% 152.5% 201.6% -29.2% -63.8% -56.1% -0.6% - - - % of total sales 0.6% 2.1% 3.0% 3.1% 0.5% 0.8% 1.3% 3.3% 0.4% 0.4% 0.3% Operating profit 1,091 1,775 2,436 3,195 966 2,292 2,147 1,466 480 1,041 1,874 YoY 409.8% 529.4% 146.3% 111.9% -11.5% 29.1% -11.9% -54.1% - - - Probe Card 1,475 2,698 3,970 5,179 1,685 3,740 4,339 4,341 929 1,999 3,347 YoY 160.1% 225.8% 123.7% 95.2% 14.2% 38.6% 9.3% -16.2% - - - OPM 22.0% 20.4% 20.9% 20.4% 28.5% 26.7% 21.9% 17.0% 10.8% 13.3% 15.1% Test Equipment (TE) 230 266 290 593 -109 -265 -438 -502 94 86 82 YoY 15.0%-52.2%-68.0%-49.8%------OPM 18.1% 12.7% 10.4% 12.7% -22.9% -26.8% -30.7% -20.8% 14.8% 8.0% 5.6% Quarterly FY09/18 FY09/19 FY12/20 (JPYmn) Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3 Total sales 7,970 7,354 6,504 8,263 6,380 8,628 6,274 6,672 9,221 6,875 7,604 YoY 16.4% 1.1% -6.9% 12.5% -19.9% 17.3% -3.5% -19.3% - - - Probe Card 6,697 6,538 5,796 6,384 5,903 8,115 5,837 5,689 8,585 6,434 7,216 YoY 17.8% 16.8% 8.5% 9.2% -11.9% 24.1% 0.7% -10.9% - - - % of total sales 84.0% 88.9% 89.1% 77.3% 92.5% 94.1% 93.0% 85.3% 93.1% 93.6% 94.9% Advanced (Memory) 5,264 5,141 4,486 5,115 4,811 7,245 4,704 4,543 6,726 5,562 6,223 YoY 27.2% 25.7% 22.6% 19.0% -8.6% 40.9% 4.9% -11.2% - - - % of total sales 66.0% 69.9% 69.0% 61.9% 75.4% 84.0% 75.0% 68.1% 72.9% 80.9% 81.8% Advanced (Non-memory) 564 631 500 540 462 289 520 537 878 307 319 YoY -34.3% -19.8% -53.7% -31.9% -18.1% -54.2% 4.0% -0.6% - - - % of total sales 7.1% 8.6% 7.7% 6.5% 7.2% 3.3% 8.3% 8.0% 9.5% 4.5% 4.2% Cantilever type 651 569 636 543 474 410 369 423 577 369 369 YoY 26.9% 6.8% 31.4% -74.2% -27.2% -27.9% -42.0% -22.1% - - - % of total sales 8.2% 7.7% 9.8% 6.6% 7.4% 4.8% 5.9% 6.3% 6.3% 5.4% 4.9% Test socket 218 196 174 186 156 170 244 186 404 196 304 YoY 22.5% 4.8% 48.7% 5.1% -28.4% -13.3% 40.2% 0.0% - - - % of total sales 2.7% 2.7% 2.7% 2.3% 2.4% 2.0% 3.9% 2.8% 4.4% 2.9% 4.0% Test Equipment (TE) 1,273 815 708 1,879 476 514 435 984 635 442 387 YoY 10.0% -51.5% -57.0% 25.3% -62.6% -36.9% -38.6% -47.6% - - - % of total sales 16.0% 11.1% 10.9% 22.7% 7.5% 6.0% 6.9% 14.7% 6.9% 6.4% 5.1% Semiconductor test equipment 1,003 301 117 1,288 76 219 50 91 87 117 105 YoY 16.4% -74.7% -91.2% 14.1% -92.4% -27.2% -57.3% -92.9% - - - % of total sales 16.0% 11.1% 10.9% 22.7% 7.5% 6.0% 6.9% 14.7% 6.9% 6.4% 5.1% Probe unit 222 236 263 315 366 210 217 257 514 299 265 YoY -5.5% -35.7% 6.0% -1.9% 64.9% -11.0% -17.5% -18.4% - - - % of total sales 2.8% 3.2% 4.0% 3.8% 5.7% 2.4% 3.5% 3.9% 5.6% 4.3% 3.5% LCD test equipment 48 278 328 275 34 84 169 636 34 25 17 YoY -20.0% 124.2% 337.3% 461.2% -29.2% -69.8% -48.5% 131.3% - - - % of total sales 0.6% 3.8% 5.0% 3.3% 0.5% 1.0% 2.7% 9.5% 0.4% 0.4% 0.2% Operating profit 1,091 684 661 759 966 1,326 -145 -681 480 561 833 YoY 409.8% 905.9% -6.5% 46.2% -11.5% 93.9% - ---- Probe Card 1,475 1,223 1,272 1,209 1,685 2,055 599 2 929 1,070 1,348 YoY 160.1% 368.6% 34.3% 37.7% 14.2% 68.0% -52.9% -99.8% - - - OPM 22.0% 18.7% 21.9% 18.9% 28.5% 25.3% 10.3% 0.0% 10.8% 16.6% 18.7% Test Equipment (TE) 230 36 24 303 -109 -156 -173 -64 94 -8 -4 YoY 15.0%-89.9%-93.1%10.2%------OPM 18.1% 4.4% 3.4% 16.1% -22.9% -30.4% -39.8% -6.5% 14.8% - -1.0% Adjustments -614 -576 -633 -754 -609 -573 -571 -619 -543 -502 -510 Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.
12/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Probe Card segment
Probe Card: Earnings Probe Card: Sales by product
Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.
Probe Card: Sales by region
1,308 1,725 1,701 Japan 1,069 1,225 1,538 1,054 1,764 3,779 1,712 South Korea 2,190 2,996 2,259 2,327 1,208 695 769 Taiwan 1,492 1,741 1,660 1,480 1,069 1,044 1,169 Other Asia 803 1,610 863 1,977 555 871 487 US and Europe 135 1,014 114 378 (JPYmn) 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000
Q1 FY09/19 Q2 FY09/19 Q3 FY09/19 Q4 FY09/19 Q1 FY12/20 Q2 FY12/20 Q3 FY12/20
Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.
Results for the nine-month period through Q3 FY12/20 (October 2019–June 2020)
▷ Segment sales: JPY22.bn (+12.0% versus October 2018–June 2019) ▷ Segment profit: JPY3.3bn (-22.9% versus October 2018–June 2019) ▷ Orders received in the Probe Card segment were JPY9.9bn in Q1, JPY7.8bn in Q2, and JPY8.2bn in Q3. During Q1 FY12/20, MJC recorded some orders that were anticipated in the previous accounting period. The company believes that, if not for this impact, the actual Q1 total for orders received would have been about JPY7.0bn. Based on this assumption, the actual scale of orders received has been continuously increasing since the beginning of FY12/20. The strength in orders was supported by robust demand for semiconductors—both DRAM and NAND flash memories—used in mobile devices, in addition to other applications such as data center equipment and personal computers. ▷ For the three-month period of Q3 (April–June 2020), the Probe Card segment reported sales of JPY7.2bn, up from JPY5.8bn in Q3 FY09/19 and JPY6.4bn in Q2 FY12/20 (January–March 2020). Performance from memory probe cards was favorable in the midst of healthy data center-related demand. By product type, the segment reported Q3 sales of advanced probe cards for memory devices of JPY6.2bn (+32.3% QoQ), sales of advanced probe cards for non-memory devices of JPY319mn (-38.7%
13/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
QoQ), sales of cantilever probe cards of JPY369mn (flat QoQ), and sales of test sockets of JPY304mn (+24.6% QoQ). As can be seen from these numbers, probe cards for memory devices were the primary driving force in the Probe Card segment. ▷ The order backlog in the Probe Card segment has reached JPY8.2bn. According to the company, the Aomori Factory, which is its main production site for probe cards for memory devices, is operating at a high utilization rate. ▷ Quarterly OPM has been stable at 10.8% in Q1, 16.6% in Q2, and 18.7% in Q3 (Q1 sales temporarily rose due to the recording of sales anticipated in the previous accounting period). MJC maintains that solid OPMs were primarily the result of a continuously high and stable utilization rate backed by robust orders and sales, as well as the absence of excessively strenuous competition in the market.
Test Equipment (TE) segment
TE: Earnings TE: Sales by product
Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.
TE: Sales by region
117 297 57 Japan 172 135 114 93
294 198 218 Taiwan 243 458 313 283
66 19 162 Other 568 43 14 12 (JPYmn) 0 100 200 300 400 500 600
Q1 FY09/19 Q2 FY09/19 Q3 FY09/19 Q4 FY09/19 Q1 FY12/20 Q2 FY12/20 Q3 FY12/20
Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.
Results for the nine-month period through Q3 FY12/20 (October 2019–June 2020)
▷ Segment sales: JPY1.5bn (+2.6% YoY) ▷ Segment profit: JPY82mn (versus loss of JPY438mn in October 2018–June 2019)
14/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
▷ In the three-month period of Q3 (April–June 2020), the TE segment reported sales of JPY387mn, with semiconductor test equipment sales of JPY105mn (+110.0% QoQ), probe unit sales of JPY265mn (+22.1% QoQ), and LCD test equipment sales of JPY17mn (-96.1% QoQ). The company secured profit in the TE segment thanks to the stabilization of probe unit sales, which are comparatively profitable. ▷ With regard to business structural reforms, the company appears to be adopting a medium- to long-term perspective as it builds systems designed to eliminate chronic deficits.
For details on previous quarterly and annual results, please refer to the Historical financial statements section.
15/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Company forecast for FY12/20
FY09/17 FY09/18 FY09/19 FY12/20 (JPYmn) 1H Act. 2H Act. FY Act. 1H Act. 2H Act. FY Act. 1H Act. 2H Act. FY Act. 1H Act. 2H Est. FY Est. Sales 14,121 14,334 28,455 15,324 14,767 30,091 15,008 12,946 27,954 16,096 25,904 42,000 YoY 4.3% 14.6% 9.2% 8.5% 3.0% 5.7% -2.1% -12.3% -7.1% - - - Cost of sales 9,678 8,749 18,427 9,437 9,159 18,596 8,574 8,944 17,518 10,811 - - Gross profit 4,443 5,585 10,028 5,887 5,608 11,495 6,434 4,002 10,436 5,285 - - GPM 31.5% 39.0% 35.2% 38.4% 38.0% 38.2% 42.9% 30.9% 37.3% 32.8% - - SG&A expenses 4,160 4,359 8,519 4,112 4,187 8,299 4,142 4,827 8,969 4,243 -- SG&A ratio 29.5% 30.4% 29.9% 26.8% 28.4% 27.6% 27.6% 37.3% 32.1% 26.4% - - Operating profit 282 1,226 1,508 1,775 1,420 3,195 2,292 -826 1,466 1,041 2,559 3,600 YoY -65.7% 56.8% -5.9% 529.4% 15.8% 111.9% 29.1% - -54.1% - - - OPM 2.0% 8.6% 5.3% 11.6% 9.6% 10.6% 15.3% -6.4% 5.2% 6.5% 9.9% 8.6% Recurring profit 399 1,174 1,573 1,929 1,511 3,440 2,373 -747 1,626 1,086 2,714 3,800 YoY -49.0% 65.4% 5.4% 383.5% 28.7% 118.7% 23.0% - -52.7% - - - RPM 2.8% 8.2% 5.5% 12.6% 10.2% 11.4% 15.8% -5.8% 5.8% 6.7% 10.5% 9.0% Net income 79 1,075 1,154 1,424 1,065 2,489 1,723 -844 879 872 2,028 2,900 YoY -67.1% 278.5% 120.2% 1702.5% -0.9% 115.7% 21.0% - -64.7% - - - Net margin 0.6% 7.5% 4.1% 9.3% 7.2% 8.3% 11.5% -6.5% 3.1% 5.4% 7.8% 6.9% Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods. Note: FY12/20 is a 15-month transitional fiscal year containing five quarters. The table above reflects cumulative results for FY12/20 through Q2.
Revised company forecast for consolidated results for the 12-month period through Q4 FY12/20
▷ Sales: JPY32.7bn (versus previous forecast of JPY31.8bn) ▷ Operating profit: JPY2.7bn (versus JPY2.3bn) ▷ Recurring profit: JPY2.8bn (versus JPY2.4bn) ▷ Net income*: JPY2.2bn (versus JPY1.9bn) ▷ EPS: JPY57.66 (versus JPY49.79)
*Net income attributable to owners of the parent
Reasons for revisions In response to recent trends and environments in the semiconductor and FPD markets, the company has upwardly revised its outlook for the 12-month period through Q4 FY12/20. In addition to an anticipated increase in data center-related demand, demand for probe cards for memory devices, the company’s core product, was strong due to higher-than-expected demand for mobile DRAM. Ostensibly, the value of orders received was higher than anticipated as a result of this strong demand. The company revised its forecast for sales and profit upward due to this favorable performance in the Probe Card segment.
Along with each of its quarterly results announcements, the company has been providing earnings forecasts for the following two quarters. In keeping with this, at the time of its Q3 FY12/20 results announcement the company released its forecast for full-year consolidated results for FY12/20, as detailed below.
Company forecast for full-year consolidated results for the 15-month period of FY12/20
▷ Sales: JPY42.0bn (no forecast previously) ▷ Operating profit: JPY3.6bn (no forecast previously) ▷ Recurring profit: JPY3.8bn (no forecast previously) ▷ Net income*: JPY2.9bn (no forecast previously) ▷ EPS: JPY76.00 (no forecast previously)
*Net income attributable to owners of the parent
16/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
The company expects data center-related demand (for general-purpose DRAM probe cards), which has been robust due to the spread of teleworking, to decline gradually moving forward. However, based on the assumption that an increase in demand for mobile DRAM will compensate for this decline, the company believes that demand for probe cards used for memory devices will remain strong in the short term. MJC expects an operating loss in the TE segment throughout the year, but forecasts that the Probe Card segment will compensate for this loss.
The company forecasts that quarterly OPM in Q5 (October–December 2020) will decline from the Q3 level despite a favorable business environment surrounding the Probe Card segment. According to the company, it made this forecast primarily because probe card sales are partly generated by a project involving specialized products, the associated costs of which are difficult to pass on to customers.
Due to the change in the end of the accounting period from September to December in FY2020, FY12/20 will be a 15-month period, from October 2019 to December 2020. For consolidated overseas subsidiaries with accounting periods ending in June, the period for consolidation will be 18 months, from July 2019 to December 2020.
Irregular accounting period in FY12/20 FY12/20
End of extra quarter
FY09/19 Q1 Q2 Q3 Q4 Q5 FY12/21
Oct. 2018– Oct. – Dec. Jan. – Mar. Apr. –Jun. Jul. – Sep. Oct. – Dec. Jan. – Dec. Sep. 2019 2019 2020 2020 2020 2020 2021
Source: Shared Research based on company data
17/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Past company initial forecasts and actual results
We now take a look at how the company’s forecasts have compared with actual results over the last seven years. The company has often been forced to issue substantial upward or downward revisions to its forecasts as its recorded sales are affected by factors such as sharp fluctuations in demand from its customers (semiconductor manufacturers) and acceptance inspections for delivered equipment that are postponed by customers. As a result, the company changed its announcement method for earnings forecasts starting in FY09/18. Specifically, it now reveals earnings forecasts for the following two quarters after the end of each quarter, along with earnings announcements. In other words, when it reports full-year results after a fiscal year has ended, it releases earnings forecasts for 1H of the next fiscal year; when it announces Q1 results, it reviews its 1H outlook and extends its earnings forecasts to Q3; and when it announces 1H results, it reviews its Q3 outlook and releases full-year forecasts. (The FY09/19 forecasts in the table below were released along with 1H results). FY12/20 is a 15-month fiscal year owing to the change in the company’s fiscal year-end from September to December.
Company initial forecasts and actual results
Results vs. Initial Est. FY09/10 FY09/11 FY09/12 FY09/13 FY09/14 FY09/15 FY09/16 FY09/17 FY09/18 FY09/19 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Sales (Initial Est.) 27,000 30,000 30,000 22,000 24,000 27,000 30,000 30,000 30,600 29,500 Sales (Results) 24,715 29,049 23,623 20,387 29,159 32,496 26,047 28,455 30,091 27,954 Results vs. Initial Est. -8.5% -3.2% -21.3% -7.3% 21.5% 20.4% -13.2% -5.2% -1.7% -5.2% Operating profit (Initial Est.) 1,200 2,000 700 300 1,700 2,200 3,000 2,000 3,300 2,600 Operating profit (Results) 419 928 -2,362 1,398 3,237 6,143 1,603 1,508 3,195 1,466 Results vs. Initial Est. -65.1% -53.6% -437.4% 366.0% 90.4% 179.2% -46.6% -24.6% -3.2% -43.6% Recurring profit (Initial Est.) 1,100 1,800 500 200 1,600 2,200 3,000 2,000 3,500 2,700 Recurring profit (Results) 89 921 -2,364 1,523 3,553 6,497 1,493 1,573 3,440 1,626 Results vs. Initial Est. -91.9% -48.8% -572.8% 661.5% 122.1% 195.3% -50.2% -21.4% -1.7% -39.8% Net income (Initial Est.) 700 1,100 300 100 1,200 1,800 2,100 1,500 2,6002,000 Net income (Results) 175 -2,837 -5,043 1,100 2,974 5,681 524 1,154 2,489 879 Results vs. Initial Est. -75.0% -357.9% -1781.0% 1000.0% 147.8% 215.6% -75.0% -23.1% -4.3% -56.1% Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods. Note: From FY09/18, the company has announced full-year forecasts at the end of 1H of each fiscal year.
18/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Long-term vision
On November 16, 2017, the company unveiled its “MJC Future Vision.” It had conventionally released medium-term business plans that spanned three years, but the company decided to formulate and work toward a long-term vision* amid a high degree of uncertainty in semiconductor and flat panel display (FPD) markets (where MJC mainly operates) due to the rapid changes in the structure of industries, technology trends, and market conditions. The company plans to update its vision as necessary following major changes in the business environment.
* The previous medium-term plan, Challenge17, called for FY09/17 sales of JPY31.0bn and operating profit of JPY4.0bn, but FY09/17 sales finished at JPY28.5bn and operating profit at JPY1.5bn.
The MJC Future Vision aims to strengthen the company’s QDCCSS system, enhance competitiveness in quality and delivery, and “contribute to the development of a more prosperous society” through technological innovation.
The company believes earning the trust of its customers is critically important and, to this end, it continually pushes for improvement and reforms at all stages of its operations (product development, sales, design, procurement, after-sales services, management, and system development) while focusing on six themes: (1) Quality (to enhance technologies and maintain quality), (2) Delivery (to ensure timely delivery), (3) Cost (to reduce costs), (4) Compliance (legal compliance), (5) Service (comprehensive service), and (6) Safety (occupational and product safety). QDCCSS is an acronym formed by the first letters of these six themes. The company aims to enhance its competitiveness in product quality and delivery by strengthening QDCCSS, its comprehensive management system. By offering solutions that allow for efficient and precise testing of semiconductors, the company believes it can provide safety and security not only to the various segments of the semiconductor market populated by its customers but also to electronic product users in general.
MJC intends to continue delivering technological innovation to the semiconductor industry, where most of the company’s customers operate. Semiconductors are indispensable components in electronics products and demand for semiconductors is expected to increase in the future. Given the position of semiconductors as components that are key to the development of a more prosperous society, contributions to the semiconductor industry can also contribute to society overall.
To accomplish this vision, MJC has adopted the following core policies.
▷ Constantly pursue technological innovation as a leading company, creating new and unparalleled value ▷ Secure stable earnings resistant to market environment changes by developing and expanding sales of products that meet customer needs ▷ Continually take on challenges in new business areas ▷ Develop human resources suited for a truly global company
MJC will pursue three growth concepts: (1) provide maximum benefits to customers by further strengthening technological and development capabilities; (2) pursue QDCCSS and other aspects of corporate culture while enhancing brand recognition and providing improved services at every MJC location around the world; and (3) develop human resources who can be active globally through a wider variety of internal and third-party training programs to further enhance corporate value.
By business field, the company will pursue the following key strategies:
Probe Card business (1) Maintain position as a leading company; work to preserve product competitiveness and retain market share in a fiercely competitive environment by providing leading-edge technology based on sound management supported by a corporate structure that can flexibly respond to market condition changes
19/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
(2) Increase market share for logic probe cards by expanding sales of logic products; logic probe cards currently account for about 20% of the company’s total sales, and the company targets an increase to about 40% without lowering its sales value for memory probe cards; in this way, it plans to expand its share in the logic probe market (currently 3%). (3) Strengthen overseas operations in line with global expansion; expand presence in Asian markets by strengthening response capabilities through local subsidiaries while cultivating human resources that can be active globally
* Refer to the Business section for technical terms such as probe card, memory, and logic.
Probe card sales ratio target Logic probe card market share (2018)
Source: Shared Research based on company data Source: Shared Research based on company data
Test Equipment (TE) business (1) Secure stable earnings; rapidly develop the next generation of test equipment and cultivate new customers for existing products, while pursuing stability in existing businesses (2) Cultivate new businesses and use them to generate revenue; aim to develop new products centered on semiconductor test equipment and expand sales of these products (3) Focus on businesses (products) with high potential; concentrate development resources and cultivate new businesses while taking market conditions into account
Finally, the company will contribute to existing businesses by establishing fundamental technologies for next-generation products while promoting technological R&D for new businesses.
To recap, the company will aim to realize its vision by executing three key strategies: (1) strengthening its logic product lineup in the Probe Card business while continuing to execute its mission as a leading company in memory products field, (2) increasing the number of stable earnings drivers in the TE business, and (3) creating new businesses.
The MJC Future Vision is grounded in the company’s management philosophy, management policy, and action guidelines, which are provided below for reference.
Management principle: “Contribute widely to society through electronic measurement technology” Management policy:
▷ Provide optimal benefits for customers through accumulated technology and production expertise ▷ Pursue the establishment of new technology by focusing continuously on development ▷ Allow all employees to achieve self-realization by building a creative corporate culture
20/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
▷ Bring together all employees’ abilities to enhance and improve the company’s QDCCSS system
Action guidelines:
▷ Value natural laws and principles. ▷ Emphasize three qualities when pursuing human resources development: observation, impression, and imagination. ▷ Implement five steps to achieve goals: “Dream (or Needs),” “Foresight,” “Originality,” “Motivation,” and “Execution.”
21/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Business Leading developer and manufacturer of probe cards used semiconductor wafer test process
The company is the No. 3 probe card* manufacturer in the world (with a market share of 13% based on MJC estimates). Probe cards are jigs used to test the quality of semiconductor chips formed on wafers, making them essential products in prototype and mass production processes for semiconductors. The company has secured a leading global share of 28% in memory probe cards**, which are its forte. In the non-memory field***, it is ranked sixth with a share of 4% (share rankings based on company materials). By application, memory products account for 70–80% of sales, with non-memory products making up the remaining 20–30%. It develops and manufactures its products in-house and supplies these products to manufacturers of DRAM and NAND flash memories and to other leading semiconductor manufacturers around the world.
The company also handles testing equipment for semiconductors and LCD panels. It operates in two segments: (1) the Probe Card segment, which focuses on probe cards and other measuring equipment, and (2) the Test Equipment (TE) segment, which handles testing systems. In FY09/19, the Probe Card segment was the mainstay business, generating 91% of total sales and nearly 100% of operating profit since the TE segment was in red.
The measuring equipment and testing systems developed, manufactured, and sold by the company are used in semiconductor and FPD testing processes. The production flow for probe cards starts with development, which is either handled in-house or conducted in collaboration with tester or semiconductor manufacturers (customers). Thereafter, the company procures materials such as probes, PCB or ceramic substrates, reinforcing plates, and other items. It then manufactures products in accordance with customer specifications at its three domestic plants (Aomori Factory, Aomori Matsuzaki Factory [no mass production of probe cards], and Oita Technology Laboratory) and at three factories operated by overseas subsidiaries. Afterward, it finally supplies these products to semiconductor companies via its sales bases. Because probe cards come into physical contact with semiconductors, their maintenance can have an impact on semiconductor production yield, making them key components of the production process. To ensure MJC can provide on-site maintenance services, it has established bases of operations in Japan, South Korea, Taiwan, China, the US, Germany, and Singapore.
* For more details on probe cards and test equipment, see the following product overview section.
** Semiconductors can be broadly categorized into memory and non-memory (logic) devices. Main memory devices include DRAM and flash memory. DRAM is a type of memory that needs a constant electrical charge to store data. It is commonly used as the primary type of memory in computers thanks to its high storage capacity and low cost. Flash memory, on the other hand, retains data even in the absence of power supply and also allows data to be electronically erased and reprogrammed. It is available in two major types: NAND-type and NOR-type. The former is distinguished by compact size, large data capacity, low cost, and high writing speeds and is commonly used as a storage medium. The latter offers higher reading speeds and is used in applications that store software in electronic devices. NAND-type flash memory has been adopted in a wide range of applications and therefore developed into a large market. Leading DRAM manufacturers include Samsung Electronics (South Korea), SK Hynix (South Korea), and Micron Technology (US). Major NAND manufacturers are Samsung Electronics, Kioxia (formerly Toshiba Memory; Japan), and Western Digital (US).
*** Logic ICs control, process, and perform logical operations on signals. A classic example is a microprocessor unit (MPU) of a computer. Other non-memory devices include analog semiconductors that process analog signals. Leading manufacturers of non-memory devices are Intel (US), TSMC (Taiwan), Globalfoundries (US), and other foundries (semiconductor fabrication plants).
22/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Semiconductor/LCD production processes and MJC products Semiconductor manufacturing process and MJC products
Semiconductor manufacturing process
Source: Company data
MJC supplies the following semiconductor-related products: probe cards, wafer probers, semiconductor test equipment (testers), and test sockets. The semiconductor production process broadly consists of the following steps: First, semiconductor electrical circuits are formed on the surface of thin silicon crystal wafers (cut from a silicon crystal) through chemical, optical, and physical processing (back end of line [BEOL] process). Second, the circuits formed on the wafer are tested to confirm they operate properly (wafer testing). Third, the circuits formed on the wafer are diced into individual semiconductor ICs and further processed to ensure they can connect to external electrical circuits (mounting, assembly process, and packaging). Fourth, a final inspection is conducted before the product is shipped.
Probe card Probe cards are jigs (tools) used in the wafer testing process. They essentially consist of disc-shaped structures equipped with a large number of metal pins referred to as “probe needles.” The probe needles are brought into physical contact with an array of fine terminals (bonding pads, etc., shown in the following figure) positioned on a wafer to test the electrical properties of each circuit (go/no-go evaluation). To ensure this contact takes place in a uniform, accurate, and efficient manner, probe card manufactures have creatively developed probe cards in a range of shapes.
23/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Probe needles (examples) Microcantilever Cantilever
Source: Company data
Probe card and wafer Tester, wafer prober, and probe card
Source: Company data
Source: Company data
Wafer prober The device used to connect a probe card and a wafer is called a wafer prober. The wafer is fixed on top of a wafer prober stage (positioned above a wafer chuck used to hold the wafer in place in the figure above) and the probe card is attached to a test head. The wafer is brought into contact with the probe card by opening and closing the test head and via horizontal and vertical adjustment of the stage position. The wafer prober is connected to a tester, which sends electrical signals from the prober to the wafer (IC) through the probe card. The signals then pass around the wafer (IC) before traveling back to the tester via the probe card. The tester compares output signals against expected values to test if the circuit has been formed in accordance with design specifications. By repeating this process, the tester analyzes the signals for any IC defects.
Test socket In the final testing process (inspection of electrical properties and reliability including durability) that follows the packaging process (encapsulation of separated ICs into plastic or ceramic cases to protect circuits and facilitate connections with external circuits), a test socket plays the crucial role of connecting the semiconductors and the tester.
In short, probe cards and test sockets are tools that connect testers and semiconductor devices, and therefore need to fit the design of various semiconductors and testers.
The Probe Card business handles probe cards and test sockets, and the TE business deals in wafer probers and testers.
24/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
MJC’s Probe cards MJC’s probe cards can be broadly divided by type into cantilever probe cards, which have been in use for a long time, and advanced probe cards, which offer improved measuring performance through leading-edge technology. The company labels all its non-cantilever probe cards as advanced probe cards. In FY09/19, advanced probe cards accounted for about 90% of sales in the Probe Card segment and cantilever probe cards for about 10%. By application, memory probe cards made up about 80% and non-memory probe cards about 20%.
Cantilever-type probe cards Cantilever-type probe cards are a variety of probe card that conducts probing using probe needles, one end of which acts as a fulcrum, facilitating a smooth connection with semiconductor wafers. Cantilever probe cards were once the mainstream probe card solution. However, they are not used as often today, mainly because they must be manufactured manually (labor-intensive product) and because the number of wafers (ICs) they can test in one touchdown is limited. They are distinguished by low cost, short lead times, and fine-pitch support and are suitable for testing logic devices such as LCD drivers and CMOS image sensors.
Advanced probe cards Advanced probe cards can be further divided into the following four products based on manufacturing methods of probe needles (which connect to the semiconductor device pads [i.e., electrodes]), their shapes, and the devices they test. The company has not disclosed the sales breakdown for these products, but U-Probe cards account for the bulk of sales.
◤ U-Probe cards, MJC’s mainstay products, are used to test semiconductor wafers for memory devices such as DRAM and flash memory. They are the world’s first probe cards to achieve wafer-scale probing through the use of a MEMS* probe micro cantilever and thin-film multi-layer substrate production technology. U-Probe cards for DRAM have become an industry standard as they dramatically reduce the number of touchdowns thanks to their crescent layout. U-Probe cards for NAND flash are the world’s first probe cards that enable one-touchdown testing for 12-inch wafers.
◤ Vertical-Probe cards are vertical-needle-type probe cards used to test logic devices, which continue to evolve in terms of density, speed, and pin number. Because of their short needles and vertical contact with the devices being tested, they can flexibly accommodate various pad (electrode) arrangements and are suitable for fine-pitch area arrays and multi-die testing. This makes them ideal for testing leading-edge logic products such as SoC.
◤ MEMS-SP cards were developed to test flip-chip-type** logic devices, such as SoC devices. They allow for highly accurate and reliable testing because they are manufactured with MEMS technology and utilize vertical-spring-pin-type probes. They also have a structure that allows single pin replacement, which reduces maintenance time.
◤ SP-Probe cards are vertical-spring-pin-type probe cards that enable one-touchdown testing for 12-inch wafers. They are mainly used to test NAND flash memory and allow single pin replacement.
U-Probe (for DRAM) Vertical-Probe SP-Probe
Source: Company data Source: Company data Source: Company data
25/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
MEMS-SP MEMS-SP probe head
Source: Company data Source: Company data
* MEMS stands for “microelectromechanical system.” It generally refers to high-density devices (particularly those with moving parts) that are produced by integrating machine element components, sensors, actuators, and electrical circuits on the surface of a single silicon substrate, glass substrate, or organic material through microfabrication technologies. MJC’s MEMS type probe cards utilize MEMS technology responding to the need for miniaturization and have a structure that allows for mechanical movement of probe terminals. They are manufactured with specialized equipment (in contrast to labor-intensive cantilever probe cards) and accordingly resemble products in the manufacturing equipment industry. MEMS probe cards are growing as leading-edge products, and they are currently surpassed in popularity only by cantilever and vertical-type probe cards.
** A flip chip is a type of downward-facing semiconductor on which electrical components are bonded directly onto a substrate. Flip chips have bump electrodes on the chip surface and the bumps are connected through soldering or conductive adhesive.
Testers In addition to the Logic Tester μTAT product series, the company develops specialized testers with a specified set of functions tailored to testing environments and customer budgets. The company has not disclosed a sales breakdown by product.
Logic tester μTAT 5300 Automatic prober PW-8000 (for power device)
Source: Company data Source: Company data
Wafer probers The company offers a broad wafer prober lineup ranging from manual probers for R&D testing to automatic probers for mass production testing. The company has not disclosed sales data for wafer probers.
Test sockets The company provides two types of test sockets: the J-Contacts series and the BeeContacts series. Compared to conventional test sockets, both series offer superior high-frequency characteristics and contact properties, making them suitable for testing mobile communication and in-vehicle semiconductors, power devices, and electronic parts.
26/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Ball Grid Array (BGA) test socket
Source: Company data
LCD production process and MJC products
LCD production process
Source: Company data
MJC offers the following LCD test equipment: probers, probe units, Automated Optical Inspection (AOI) equipment, and mura (unevenness) inspection and compensation systems. The LCD production process broadly consists of the following steps: First, thin-film-transistor (TFT) circuits that function as switches are formed on top of a large glass substrate. The resulting TFT array substrate is tested for electrical and optical properties to ensure there are no defects (array testing). Afterward, the TFT array substrate and color filter substrate (coated with the three primary colors) are brought together (with liquid crystals injected between the two layers) and cut to a certain size, completing the liquid crystal cell. Following an optical test for dot defects and line defects as well as uneven color or contrast (cell panel test), the driver IC that powers the circuits on the outer edge of the cell and the backlight unit that serves as the light source are attached to the cell panel, completing the module. The module is inspected to check for dot defects, line defects, and contrast (module test) as well as to correct mura (unevenness). The final product then undergoes a visual inspection and performance and durability testing before shipping.
27/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Array probers and probe units are used during array test and cell test processes. As in semiconductor testing, probe units are devices that send electrical signals to test arrays or cells through direct contact, while probers are devices equipped with probe units that facilitate this contact. AOI equipment is used to automatically detect panel display defects (testing to see if dots light up correctly) using CCD cameras, eliminating the need for conventional visual inspections. Mura inspection and compensation systems automatically detect and compensate for panel display mura (unevenness) using optical techniques. MJC’s probe units are considered the industry standard.
Segment trends Sales breakdown by segment: Probe Card 90%, TE 10% The Probe Card business generates 90% of total sales, and the TE business produces the remaining 10%.
Sales by product Segment sales and profit FY09/15 FY09/16 FY09/17 FY09/18 FY09/19 (JPYmn） Act. Act. Act. Act. Act. Sales 32,496 26,047 28,455 30,091 27,954 YoY 11.4% -19.8% 9.2% 5.7% -7.1% Probe Card 28,015 21,146 22,470 25,415 25,544 YoY 14.9% -24.5% 6.3% 13.1% 0.5% % of total sales 86.2% 81.2% 79.0% 84.5% 91.4% Cantilever type 2,833 4,344 3,638 2,399 1,676 YoY 14.7% 53.3% -16.3% -34.1% -30.1% % of total sales 8.7% 16.7% 12.8% 8.0% 6.0% Advanced 24,511 18,066 19,704 22,241 23,111 YoY 14.7% -26.3% 9.1% 12.9% 3.9% % of total sales 75.4% 69.4% 69.2% 73.9% 82.7% Memory 20,374 14,774 16,186 20,006 21,303 YoY 12.5% -27.5% 9.6% 23.6% 6.5% % of total sales 62.7% 56.7% 56.9% 66.5% 76.2% Non-memory 4,136 3,291 3,518 2,235 1,808 YoY 26.8% -20.4% 6.9% -36.5% -19.1% % of total sales 12.7% 12.6% 12.4% 7.4% 6.5% Test socket 671 616 659 774 756 YoY 25.7% -8.2% 7.0% 17.5% -2.3% % of total sales 2.1% 2.4% 2.3% 2.6% 2.7% Test Equipment (TE) 4,481 4,900 5,985 4,675 2,409 YoY -6.2% 9.4% 22.1% -21.9% -48.5% % of total sales 13.8% 18.8% 21.0% 15.5% 8.6% Semiconductor test equipment 1,555 2,934 4,504 2,709 436 YoY -32.4% 88.7% 53.5% -39.9% -83.9% % of total sales 4.8% 11.3% 15.8% 9.0% 1.6% Probe unit 1,160 1,121 1,171 1,036 1,050 YoY -20.8% -3.4% 4.5% -11.5% 1.4% % of total sales 3.6% 4.3% 4.1% 3.4% 3.8% LCD test equipment 1,764 844 308 929 923 YoY 74.3% -52.2% -63.5% 201.6% -0.6% % of total sales 5.4% 3.2% 1.1% 3.1% 3.3% Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.
28/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Sales by region (FY09/19 result)
Source: Shared Research based on company data
Probe Card The Probe Card business covers a range of operations, spanning from in-house development of probe cards (essential components of the wafer test process) to manufacturing of production equipment.
Probe Card sales
Source: Shared Research based on company data
Characteristics of probe cards MJC handles all aspects of the probe card production process from development to manufacturing. The company focuses on development of new technologies that are in high demand. These include contact stability (establishing stable contact), transmission characteristics (resistance, speed), support for very fine pitch and high densities, and support for greater numbers of pins and multilayer/larger substrates. We understand that memory customers request support for a greater number of pins and multilayer/larger substrates while non-memory customers demand transmission characteristics and support for fine pitch and higher densities.
Probe cards are manufactured in accordance with customer specifications, and lead times from order to delivery take between two and 12 weeks depending on the product type and customer.
29/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Business Because probe cards are made-to-order and affect the productivity of semiconductor manufacturers (customers), MJC tends to have strong relationships with its customers. Demand for probe cards typically increases when semiconductor manufacturers replace equipment (production startup phase) and when they begin mass production (mass production phase). Probe cards are consumable products with a life ranging from several months to two or three years depending on the product. This makes a comprehensive maintenance structure necessary. Overseas, MJC provides maintenance services by establishing subsidiaries in key regions or repair centers at customer facilities. In Japan, it dispatches engineers to the customer sites upon request.
MJC’s mainstay products are probe cards, which are used in conjunction with probers and testers in testing processes conducted by semiconductor manufacturers. Although the company also provides probers and testing equipment, large manufacturers such as Teradyne, Inc. (US; NASDAQ: TER) and Advantest Corporation (TSE1: 6857), excel in general-purpose testers. The company aims to differentiate itself from manufacturers of general-purpose testers by offering specialized testers tailored to customer needs.
Price trends Probe card market prices vary by product. As MJC’s products are all made-to-order, Shared Research thinks its unit prices reflect the technical difficulty involved in manufacturing these products and other factors.
Core technologies underpinning probe cards MJC’s elemental technologies are electronic measurement technologies known as contact technologies, which enable contact with the fine terminal ends on semiconductor and FPD devices and receive and return test signals from measurement devices. These technologies allow probe needles to stably make contact with wafers and enable the application of uniform contact pressure. This contact is achieved through precision machine technology (technologies involving ultrafine processing tools and plated metal processing) and material development technology (The development of materials with optimal electrical properties, stress-resistance, and expansibility is essential to enabling contact), as well as MEMS technology.
MJC’s contact technology receives foundational support from its process and systems technologies. Process technology transforms contact technology into actual products, while systems technologies enhance such products or further develop them into completely new products.
Process technology (Production technology of multi-layer substrates that include ceramics firing) Ceramic thin-film multi-layer wiring substrates are a key component of probe cards. They combine the high heat and pressure resistance of ceramics with the high signal transmission performance (high speed, high density, and high quality) of thin-film multi-layer wiring. This technology has helped realize one-touchdown testing for 12-inch wafers, which had long been considered difficult to develop. It has also supported the development and production of next-generation probe cards, reduced lead times, lowered costs, and led to a reduction in equipment size.)
Systems technologies (Solutions that incorporate probe cards, probers, and testers) The company has a solid track record in delivering probe cards and probers to major customers. It has also developed specialized testers according to the demands of these customers. The customized development and manufacturing of testers for individual customers not only helps ensure compatibility between probe cards and probers, but also facilitates the introduction of testing systems in customers’ production lines.
30/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
TE business
Test Equipment (TE) sales
Source: Shared Research based on company data
Profit trends Profit margins in the TE business recovered for a time thanks to a strategic approach of selection and concentration, which involved focusing on semiconductor test equipment and transferring part of the LCD test equipment business to Gallant Precision Machining Co., Ltd. (Taiwan). However, market conditions softened in FY09/19 and the segment once again dipped into the red. Shared Research understands MJC is reviewing its medium-term plan to incorporate a policy of narrowing the company’s focus to certain businesses and improving operational efficiency.
The mainstay products in the TE business are Automated Optical Inspection (AOI) equipment, probe units (instrument that transmits test electrical signals to FPD panel), and semiconductor testing equipment. AOI equipment employs automated optical inspection technology made possible through image processing. AOI equipment enables quantitative testing by processing images acquired through an image sensor with a unique algorithm and ultimately aims to achieve automate and reduce manpower in testing processes. Alongside expansion of sales of AOI equipment, MJC aims to secure new customers for probe units, a product category for which the company is already enjoying steady customer demand. Similarly, the company is looking to capture new customers for its semiconductor testing equipment. The company does not disclose unit prices of equipment or devices because all of its products are made-to-order.
R&D
MJC conducts R&D both independently and in collaboration with customers (which often takes the form of joint development of probe cards or testing equipment). The company’s customers (semiconductor manufacturers) all manufacture different products, so the jigs and equipment used to test these products have to be compatible. According to MJC, probe development—specifically the development of new probe manufacturing techniques—makes up the largest share of its R&D spending.
Production, sales, and maintenance structure
MJC has established a global production, sales, and maintenance structure. In Japan, it operates three factories: the Aomori Factory, the Aomori Matsuzaki Factory, and the Oita Technology Laboratory. The Aomori Factory mainly mass produces advanced-type U-Probe cards and cantilever-type probe cards while the Oita Technology Laboratory manufactures Vertical-Probe, MEMS-SP, and SP-Probe cards. The company manufactures equipment for the TE business such as LCD test equipment and probe units at the Aomori Matsuzaki Factory.
31/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
On the sales front, the TE division at the company’s headquarters handles tester sales, while the Probe Card division at headquarters and sales divisions in Aomori, Oita, and Kumamoto are in charge of probe card and test socket sales. The company provides maintenance services through repair centers established at customer facilities and other channels. It also dispatches engineers upon request.
Domestic network
Source: Company material
Overseas, the company operates production sites as well as sales/maintenance offices in South Korea, Taiwan, and China (Kunshan for Probe Card, Shanghai for TE) for Probe Card and TE businesses. It also has sales/maintenance offices dedicated for Probe Card business in the US (Austin and Santa Clara), Germany, and Singapore.
Overseas network
Source: Shared Research based on company data
32/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Main overseas subsidiaries
Company Location Stake Business description
Design, manufacture, sales, and maintenance of LCD test equipment; sales and maintenance of Taiwan MJC Co., Ltd. Taiwan 100% probe cards
China MJC Co., Ltd. Shanghai, China 100% Sales and maintenance of LCD test equipment and other products
MJC Electronics Corporation US 100% Design, manufacture, sales, and maintenance of probe cards and other products MJC Europe GmbH Germany 100% Design, manufacture, sales, and maintenance of probe cards and other products
Manufacture, sales, and maintenance of probe cards and other products; sales and maintenance MEK Co., Ltd. South Korea 100% of LCD test equipment and other products
MJC Microelectronics (Kunshan) Co., Ltd. Jiangsu, China 100% Design, manufacture, sales, and maintenance of probe cards and other products
MJC Electronics Asia Pte. Ltd. Singapore 100% Sales and maintenance of probe cards and other products Source: Shared Research based on company data
33/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Market and value chain Market environment
Probe cards are used in testing processes for semiconductor wafers, and probe card demand is therefore driven by trends in semiconductor production volume. The same is true for demand for testers and other testing equipment, although capital investment trends at semiconductor and LCD manufacturers also have an impact.
Global semiconductor market According to the World Semiconductor Trade Statistics (WSTS), the 2018 global semiconductor market continued along a recovery trajectory that began in 2017, growing 14.6% YoY to USD393.3bn (JPY43.4tn at an exchange rate of USD/JPY110.4). The memory market—a key market for the company’s probe cards—climbed 27.4% YoY to USD158.0bn (JPY17.4tn) in 2018. The rebound mainly reflected strong demand for smartphone-related products, growth in chip demand for server and data center equipment, and rising demand for NAND flash memory products driven by a shift from HDDs to SSDs*.
* Hard disk drives (HDDs) are storage media that use magnetic disks to store and retrieve digital information. Solid state drives (SSDs) are storage media that use semiconductor elements (memory) for the same purpose. SSDs offer superior performance in terms of data access mainly because they do not have moving parts and therefore do not need to mechanically search for storage locations. They also offer other advantages such as low power consumption, silent operation, and resistance to vibration and physical shocks. The use of SSDs is rapidly spreading thanks to a decline in the price of semiconductors. On a storage capacity basis, however, HDDs are still less expensive.
Global IC market Global memory market
(USDbn) (USDbn) 450.0 40.0% 180.0 80.0% 393.3 158.0 400.0 160.0 61.5% 31.3% 355.1 30.0% 60.0% 343.2 336.9 55.4% 350.0 140.0 124.0 116.9 300.0 277.3 274.5 276.7 24.0% 20.0% 120.0 109.6 40.0% 249.9 247.1 251.8 238.2 14.6% 250.0 217.8 100.0 18.2% 27.4% 208.7 10.1% 10.0% 17.6% 20.0% 190.3 79.2 77.2 76.8 200.0 5.7% 5.4% 80.0 69.6 4.0% 67.0 57.9 -3.3% 60.7 57.0 6.6% 150.0 0.8% 0.0% 60.0 0.0% -1.1% -1.0% -1.1% 46.3 -4.2% -3.6% 44.8 -2.6% -0.6% 100.0 40.0 -12.7% -8.8% -6.2% -14.3% -10.0% -19.9% -20.0% 50.0 20.0 -30.6% 0.0 -20.0% 0.0 -40.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F 2020F 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F 2020F
IC YoY (RHS) Memory YoY (RHS)
Source: Shared Research based on WSTS Semiconductor Market Forecast Spring 2019 WSTS forecasts that demand in the global semiconductor market is expected to pick up after a correction phase in 2019. It expects the IC market to shrink 14.3% YoY to USD336.9bn in 2019 but expand 5.4% YoY to USD355.1bn in 2020 and projects that the memory market will shrink 30.6% YoY to USD109.6bn in 2019 but expand 6.6% YoY to USD116.9bn in 2020. Turning to non-memory devices, WSTS projects single-digit decline in 2019 and single-digit growth in 2020. However, trends in the semiconductor market are naturally influenced by peaks and valleys in demand (the so-called semiconductor cycle), and although some observers believe we have entered a supercycle**, the market is generally expected to go through cyclical ups and down as it continues to expand.
* The WSTS data categorizes micro-processing units (MPUs), digital signal processors (DSPs, microprocessors specializing in digital signal processing), and microcontrollers (MCUs) under “micro,” while application-specific integrated circuits (ASIC), gate arrays (GA; semicustom LSIs made from combinations of basic circuits), field-programmable gate arrays (FPGA; GAs reprogrammable at development sites), and systems on chip (SoC: semiconductors that integrate various digital circuits, memory circuits, and analog circuits) are classified under “logic.”
**Semiconductor demand has traditionally exhibited an up-and-down cycle of three to four years. However, some market observers believe that growth in new fields such as AI and IoT has ushered in an unprecedented period of long-term growth. In the last 10 years, the IC market contracted in 2008– 2009 (during global financial crisis), 2011–2012, and 2015. It is expected to shrink in 2019 as well.
34/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Worldwide IC market
Worldwide IC market 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (USDmn) Forecast Forecast Analog 36,453 35,637 32,001 42,285 42,338 39,303 40,117 44,365 45,228 47,848 53,070 58,785 55,846 58,639 Micro 56,211 53,140 48,330 60,633 65,204 60,238 58,688 62,072 61,298 60,585 63,934 67,233 66,519 69,147 Logic 67,292 73,531 65,215 77,377 78,782 81,703 85,928 91,633 90,753 91,498 102,209 109,303 104,912 110,450 Memory 57,854 46,348 44,797 69,614 60,749 56,995 67,043 79,232 77,205 76,767 123,974 157,967 109,590 116,873 Total IC 217,810 208,656 190,343 249,909 247,073 238,239 251,776 277,302 274,484 276,698 343,187 393,288 336,867 355,109 YoY Analog -1.3% -2.2% -10.2% 32.1% 0.1% -7.2% 2.1% 10.6% 1.9% 5.8% 10.9% 10.8% -5.0% 5.0% Micro 4.2% -5.5% -9.1% 25.5% 7.5% -7.6% -2.6% 5.8% -1.2% -1.2% 5.5% 5.2% -1.1% 4.0% Logic 11.9% 9.3% -11.3% 18.6% 1.8% 3.7% 5.2% 6.6% -1.0% 0.8% 11.7% 6.9% -4.0%5.3% Memory -1.1% -19.9% -3.3% 55.4% -12.7% -6.2% 17.6% 18.2% -2.6% -0.6% 61.5% 27.4% -30.6% 6.6% Total IC 4.0% -4.2% -8.8% 31.3% -1.1% -3.6% 5.7% 10.1% -1.0% 0.8% 24.0% 14.6% -14.3% 5.4% Source: Shared Research based on WSTS Semiconductor Market Forecast Spring 2019
Probe card market Probe cards can be classified into different types based on semiconductor wafer type (memory, non-memory) and application (pilot production, mass production). Electronic Device Industry News estimated that the global market for probe cards was worth USD1.5bn (JPY162.5bn) in 2017. In 2017, the market grew 11% YoY driven by strong memory demand (mainly for DRAM and NAND).
Tester market The market for semiconductor testers was valued at USD3.7bn (JPY407bn at an exchange rate of USD/JPY110) in 2018, comprising USD2.6bn for non-memory and USD1.2bn for memory testers (according to materials disclosed by Advantest). Non-memory tester demand is growing steadily over the long term, while the market for memory testers is expected to see temporary contraction in 2019 due to slower demand in the memory industry, which is currently in a correction phase.
Main customers and competitors Main customers MJC already has a track record of supplying products to leading semiconductor manufacturers, including memory manufacturers (DRAM and NAND), and logic products manufacturers. Moving forward, it also intends to develop and strengthen relationships with foundries and fabless manufacturers*. Key customers accounting for over 10% of the company’s annual sales are shown in the following table.
* Fabless manufacturers design products but do not own production facilities. They subcontract manufacture of products designed and developed in house to other companies and sell them under their own brands. This means fabless manufacturers in the semiconductor field design the circuits but leave their manufacture to partner companies (such as foundries). Foundries are companies that specialize in the production of semiconductors. A leading company of semiconductor foundries is Taiwan Semiconductor Manufacturing Co., Ltd. (NYSE: TSM, also abbreviated TSMC).
Main customers
(JPYmn) FY09/09 FY09/10 FY09/11 FY09/12 FY09/13 FY09/14 FY09/15 FY09/16 FY09/17 FY09/18 Sales 19,301 24,715 29,049 23,623 20,387 29,159 32,496 26,047 28,455 30,091 Samsung Electronics Co., Ltd. 325 5,362 6,414 6,073 10,775 10,689 6,195 6,491 6,338 % of total sales 1.3% 18.5% 27.2% 29.8% 37.0% 32.9% 23.8% 22.8% 21.1% Samsung Japan Corporation 3,6113,394 % of total sales 18.7%13.7% Micron Memory Japan, G.K. 2,087 3,409 % of total sales 7.2%10.5% Panasonic Liquid Crystal Display Co., Ltd. 5,352 % of total sales 21.7% Renesas Electronics Corporation 2,1104,057 % of total sales 8.1%14.3% Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.
Competitors The probe card market is populated with over 100 manufacturers, each focusing on different of semiconductor types and applications. However, only about five companies have achieved a formidable scale, and they control a combined market share close to 70%. According to Electronic Device Industry News, FormFactor Inc. (US; NASDAQ: FORM) is the market leader with a
35/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
share of 28%, followed by Technoprobe S.p.A. (Italy, unlisted) at 15%, MJC at 14%, Japan Electronic Materials Corporation (TSE1: 6855) at 7%, and MPI Corporation (Taiwan; TPEX: 6223) at 5%.
FormFactor, Inc. (NASDAQ: FORM) FormFactor (FFI) is a probe card manufacturer that was established by a former IBM researcher in 1993. It has expanded its business scale by acquiring logic (SoC) probe card supplier MicroProbe Inc. in 2012 and semiconductor test equipment supplier Cascade Microtech, Inc. in 2016.
In FY12/18, FormFactor reported a 3.4% YoY decrease in sales to USD529.7mn (approx. JPY58.5bn at an average 2018 exchange rate of USD/JPY110.42), a 2.4% YoY decrease in gross profit to USD210.3mn (JPY23.2bn), a 22.0% decrease in operating profit to USD36.1mn (JPY4.0bn), and a 154.3% increase in net income to USD104.0mn (JPY11.5bn). GPM was 39.7% and OPM 6.8%. FFI’s Probe Card business posted sales of USD434.3mn (JPY48.0bn, 83% of total sales) and gross profit of USD187.3mn (JPY20.7bn; GPM of 43.1%) while its Systems business recorded sales of USD95.4mn (JPY10.5bn, 17% of total sales) and gross profit of USD47.1mn (JPY5.2bn; GPM of 49.3%). Company-wide costs stood at USD24.1mn and R&D expenses came to USD75.0mn (JPY8.3bn).
FormFactor’s sales by product and region are shown in the following table. Its mainstay products are MEMS probers for logic devices, and a large portion of the company’s sales are booked in the US. Sluggish sales pushed operations in the red from the late 2000s to FY2016, but earnings have since been consistently in the black with some contribution from M&A activity that expanded the scale of the business.
FormFactor: Sales breakdown (USD'000) 2015 2016 2017 2018 Sales 282,358 383,881 548,441 529,675 Foundry & Logic 145,839 237,591 313,714 258,459 DRAM 125,512 86,910 124,685 135,333 Flash 11,007 13,469 16,395 40,477 Systems 0 45,911 93,647 95,406 % of Probe Card sales Foundry & Logic 51.7% 70.3% 69.0% 59.5% DRAM 44.5% 25.7% 27.4% 31.2% Flash 3.9%4.0%3.6%9.3% Sales by region US 23.4% 33.3% 34.0% 25.2% South Korea 25.2% 17.1% 14.9% 17.2% China 0.0% 7.4% 11.1% 14.7% Taiwan 21.9% 14.9% 17.7% 20.3% Europe 9.0% 12.9% 8.2% 7.5% Asia/Pacific 11.1% 4.0% 5.5% 4.9% Japan 9.4% 10.0% 8.1% 9.4% Rest of World 0.0%0.4%0.5%0.8% Source: Shared Research based on company data
FormFactor: Long-term earnings trends
(USD'000) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sales 369,213 462,191 210,189 135,335 188,565 169,325 178,535 231,533 268,530 282,358 383,881 548,441 529,675 Gross profit 185,126 246,707 36,263 -469 -2,272 20,958 25,331 42,284 77,439 85,738 102,682 215,597 210,339 Operating profit 66,978 93,204 -138,011 -145,186 -197,178 -70,362 -64,118 -58,791 -20,558 -4,103 -47,907 46,301 36,109 Source: Shared Research based on company data
Japan Electronic Materials Corporation (TSE1: 6855) Japan Electronic Materials Corporation started out as a manufacturer of parts for cathode ray tubes in 1960. After entering into a technical alliance with US-based Rucker Kolls Inc. in 1970, it became the first company to manufacture and sell probe cards for wafer testing in Japan. In FY03/19, the company reported a 0.1% YoY increase in sales to JPY14.4bn, a 95.5% YoY increase in operating profit to JPY1.0bn, and a 163.8% YoY increase to JPY810mn in net income. In addition to probe cards, the company supplies electron tube components, but corresponding sales are negligible. By probe card type, MEMS probe cards account for
36/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
45% of sales, vertical probe cards 35%, and cantilever probe cards 20%. By region, the Japanese market generated 59% of sales and overseas markets (mostly Asia) 41% in FY03/19.
Technoprobe S.p.A. (unlisted) Technoprobe is an Italian probe card manufacturer that was established in 1995. Its sales exceeded USD160.8mn (JPY17.8bn at an exchange rate of USD/JPY110.42) in 2018. Its market share has trended upward recently owing to steady production following the launch of a cutting-edge factory in September 2017 and aggressive sales activities.
MPI Corporation (TPEX: 6223) MPI, established in 1995, is an LED and semiconductor testing equipment supplier. In FY12/18, the company reported sales of TWD5.4bn (JPY19.2bn at an exchange rate of TWD/JPY3.57) and operating profit of TWD323mn (JPY1.2bn). Probe card sales were TWD2.6bn (JPY9.2bn).
Nidec SV TCL (unlisted) Nidec SV TCL is a wholly owned subsidiary of Nidec Read Corporation, which is a subsidiary of Nidec Corporation (TSE1: 6954). In October 2017, Nidec Read acquired all shares in SV Probe Pte. Ltd (headquartered in Singapore; established in the US in 1994; wholly owned subsidiary of Ellipsiz Ltd. since 2006), making it a subsidiary. In July 2013, SV Probe acquired the probe card business of Tokyo Cathode Laboratory Co., Ltd. (which started civil rehabilitation proceedings in March 2013). In FY06/17, Nidec SV TCL reported sales of SGD74.9mn (JPY6.1bn at an exchange rate of SGD/JPY81.6), operating profit of SGD11.7mn (JPY955mn), and OPM of 15.6%.
Financial indicators for main competitors
Micronics Japan (6871) Japan Elect ric Mat erials (6855) FormFact or（FORM) (JPYmn) FY09/17 FY09/18 FY09/19 FY03/17 FY03/18 FY03/19 FY12/16 FY12/17 FY12/18 Cons. Cons. Cons. Cons. Cons. Cons. USGAAP USGAAP USGAAP Sales 28,455 30,091 27,954 12,489 14,405 14,416 41,762 61,513 58,487 Gross profit 10,028 11,495 10,436 3,188 3,808 4,212 11,171 24,181 23,226 SG&A expenses 8,519 8,299 8,969 3,075 3,294 3,206 16,384 18,988 19,238 Operating profit 1,508 3,195 1,466 112 514 1,005 -5,212 5,193 3,987 Recurring profit 1,573 3,440 1,626 129 456 1,058 -5,461 4,734 3,746 Net income 1,154 2,489 879 78 307 810 -713 4,589 11,488 ROE 5.3% 10.8% 10.8% 0.8% 2.9% 7.4% -1.6% 8.9% 17.9% ROA (RP-based) 4.4% 9.4% 9.4% 0.8% 2.6% 6.0% -8.1% 6.5% 4.7% GPM 35.2% 38.2% 37.3% 25.5% 26.4% 29.2% 26.7% 39.3% 39.7% OPM 5.3% 10.6% 5.2% 0.9% 3.6% 7.0% -12.5% 8.4% 6.8% Total assets 36,502 36,899 34,244 16,845 17,645 18,055 67,345 72,520 80,410 Net assets 23,281 25,099 22,825 10,490 10,634 11,160 43,635 51,441 64,062 Equity ratio 60.2% 64.0% 65.8% 61.6% 59.8% 61.8% 64.8% 70.9% 79.7% Operating CF 2,080 4,585 4,015 738 -2,038 1,527 1,896 9,682 7,586 Investing CF -2,660 -1,459 -1,121 1,997 -1,131 -397 -22,447 -6,665 -2,351 Financing CF -2,405 -985 -2,360 -180 887 170 15,625 -3,715 -4,555 Cash and deposits 9,756 11,186 11,375 3,925 2,168 3,379 11,033 10,400 11,102 Interest-bearing debt 1,371 1,339 1,621 2,590 3,637 3,442 15,034 15,631 10,218 Net debt -8,385 -9,847 -9,754 -1,335 1,469 63 4,001 1,624 -884 Source: Shared Research based on company data Note: Recurring profit data for FormFactor shows pretax profit. Exchange rates: USD/JPY121.0 in 2015, USD/JPY108.8 in 2016, USD/JPY112.2 in 2017, USD/JPY110.4 in 2018.
37/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Sales at three major listed sector companies (JPYmn)
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
FFI MJC JEM
Source: Shared Research based on company data
Sales at FormFactor, MJC’s largest rival, have continually trended up since 2012. This upward trend is supported by expansion in the company’s non-memory business, which was caused by the acquisitions of MicroProbe and Cascade Microtech. MJC has indicated it competes with FormFactor in memory probe cards for some of its customers, but that growth in FormFactor’s memory business has been slower than in its non-memory business and is trending broadly in line with the market average.
38/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Strengths and weaknesses
Strengths
◤ Contact technologies: To test the electrical properties of ICs formed on semiconductor wafers, probe card needles must be brought into physical contact with the electrodes of these ICs at precise locations, and with appropriate pressure, ensuring stable contact and uniform needle pressure. The company possesses control technologies that facilitate precise contact, including micron-level handling and fine needle-pressure control as well as expertise developed through collaboration with customers.
◤ Long-term relationships with memory manufacturers developed through collaboration: MJC supplies probe cards for test processes developed through collaboration with global memory manufacturers and other semiconductor manufacturers. These companies tend to limit their relationships with production equipment manufacturers to protect their intellectual property and reduce costs associated with production processes. For this reason, collaborative relationships with such companies function as a barrier to entry. As all semiconductor manufacturers have unique testing processes, close collaboration with equipment suppliers on testing methods is essential, and MJC has built collaborative relationships with leading memory manufacturers around the world, including Samsung Electronics, SK Hynix, Micron, Toshiba Memory, and Western Digital.
◤ Comprehensive customer support structure covering all aspects from development to manufacturing: The company offers comprehensive services ranging from product development to manufacturing. It also provides flexible maintenance services to semiconductor manufacturers, whose earnings are directly connected to production efficiency. Shorter maintenance times are an essential factor in controlling declines in semiconductor production yields. The company has established maintenance offices adjacent to semiconductor manufacturers (its customers) and dispatches engineers to customers upon request. It has thus developed a structure that allows it to rapidly respond to the needs of its customers.
Weaknesses
◤ Weak track record in non-memory field: MJC is the leading global supplier of memory probe cards but ranks second in the overall probe card industry (including the non-memory field, which accounts for over 60% of the market). The company has a market share of 4% in non-memory (logic) probe cards. This puts it in sixth place in the logic field, well behind the market leader, FormFactor (US), which has a logic share of 32%. The company plans to capture more logic customers to expand its business, but it has been slow to build relationships with non-memory companies. Because the non-memory business often entails high-mix and low-volume orders, the company also needs a different business strategy than it does for its memory operations, which are distinguished by low-mix and high-volume.
◤ Earnings structure directly affected by rapid adjustments to production and inventory at semiconductor manufacturers: Contrary to other semiconductor production equipment fields, where added value is derived from growing complexity in ICs and internal components, the earnings structure of MJC’s Probe Card business is directly linked to semiconductor production volume and demand trends. When the supply/demand balance changes, semiconductor manufacturers are forced to adjust production. When production ramps up, probe cards can be depleted and therefore need replacement in the space of a few months. However, when production is adjusted, MJC incurs a large fixed-cost burden consisting of R&D expenses and depreciation, which can make up as much as 15% of sales. Consequently, production trends at customers tend to amplify earnings fluctuations at MJC.
◤ Low earnings stability in TE business: The company has a solid track record in supplying probers and probe cards to a wide range of customers (mainly memory manufacturers), but its TE business develops customized solutions for specific customers. In contrast, the two leading manufacturers of general-purpose testers in the world—Teradyne Inc. (US; NYSE: TER) and Advantest Corporation (Japan; TSE1: 6857)—provide high-efficiency and low-cost systems that include all three components, which can be an advantage for memory and other semiconductor manufacturers pursuing testing process efficiency gains. MJC has not expanded into the general-purpose tester field on a full-scale, and is not in a position to adopt a similar approach. Therefore, earnings in its TE business tend to be affected by the capital expenditures trend by some customers.
39/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Historical performance and financial statements Income statement
Income statement FY09/10 FY09/11 FY09/12 FY09/13 FY09/14 FY09/15 FY09/16 FY09/17 FY09/18 FY09/19 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Total sales 24,715 29,049 23,623 20,387 29,159 32,496 26,047 28,455 30,091 27,954 YoY 28.1% 17.5% -18.7% -13.7% 43.0% 11.4% -19.8% 9.2% 5.7% -7.1% Cost of sales 17,405 20,938 18,195 12,982 18,705 18,969 16,337 18,427 18,596 17,518 Gross profit 7,310 8,111 5,428 7,405 10,454 13,527 9,710 10,028 11,495 10,436 YoY 85.3% 11.0% -33.1% 36.4% 41.2% 29.4% -28.2% 3.3% 14.6% -9.2% GPM 29.6% 27.9% 23.0% 36.3% 35.9% 41.6% 37.3% 35.2% 38.2% 37.3% SG&A expenses 6,890 7,183 7,791 6,006 7,216 7,383 8,106 8,519 8,299 8,969 SG&A ratio 27.9% 24.7% 33.0% 29.5% 24.7% 22.7% 31.1% 29.9% 27.6% 32.1% Operating profit 419 928 -2,362 1,398 3,237 6,143 1,603 1,508 3,195 1,466 YoY - 121.5% - - 131.5% 89.8% -73.9% -5.9% 111.9% -54.1% OPM 1.7% 3.2% -10.0% 6.9% 11.1% 18.9% 6.2% 5.3% 10.6% 5.2% Non-operating income (expenses) 103 240 212 262 430 443 207 175 286 225 Non-operating expenses 433 247 214 137 114 89 317 111 41 65 Recurring profit 89 921 -2,364 1,523 3,553 6,497 1,493 1,573 3,440 1,626 YoY - 934.8% - - 133.3% 82.9% -77.0% 5.4% 118.7% -52.7% RPM 0.4% 3.2% -10.0% 7.5% 12.2% 20.0% 5.7% 5.5% 11.4% 5.8% Extraordinary gains 415 194 3 52 9 154 30 3 7 624 Extraordinary losses 32 404 2,458 241 63 10 18 5 143 271 Income taxes 290 3,381 230 135 183 430 604 191 592 902 Implied tax rate 61.4% 475.5% -4.8% 10.1% 5.2% 6.5% 40.1% 12.2% 17.9% 45.6% Net income attrib. to non-controlling interests 6 167 -6 97 341 530 375 225 223 197 Net income 175 -2,837 -5,043 1,100 2,974 5,681 524 1,154 2,489 879 YoY -105.5% -1721.1% 77.8% -121.8% 170.4% 91.0% -90.8% 120.2% 115.7% -64.7% Net margin 0.7% -9.8% -21.3% 5.4% 10.2% 17.5% 2.0% 4.1% 8.3% 3.1% R&D expenses 2,506 2,576 3,253 2,157 2,263 2,649 3,316 3,459 3,749 3,732 Capital expenditures 1,156 1,070 1,466 664 1,825 2,146 2,084 1,554 2,117 2,617 Depreciation 2,049 1,979 1,831 1,515 1,317 1,372 1,541 1,660 1,663 1,819 Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.
Summary MJC’s earnings are subject to sharp fluctuations. Over the last 10 years, the gap between peak and bottom sales was JPY13.2bn (peak sales were 1.6x higher than bottom sales). The gap for operating profit was even larger with peak operating profit coming in at JPY6.1bn and bottom operating profit at -JPY3.8bn. This was mainly attributable to a high marginal profit ratio and high fixed-cost.
Sales Company sales are influenced by trends in the Probe Card business, which generates about 80% of total sales. Unit prices for probe cards vary greatly by application and product type, and sales and earning power therefore fluctuate based on the probe card sales mix. In the TE business, sales are mainly driven by equipment installed in production lines. These sales are booked once installation of delivered equipment has been completed.
Operating profit The company’s GPM has stayed between around 35% and somewhat over 40% since FY09/13. However, the company is carrying a heavy burden of SG&A expenses, and OPM has fluctuated between a little over 5% and almost 20% due to rising and falling sales.
40/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
SG&A expenses in last three fiscal years
SG&A expenses FY09/17 FY09/18 FY09/19 FY09/17 FY09/18 FY09/19 (JPYmn) Act. Act. Act. % of total % of total % of total Personnel expenses 1,555 1,738 1,633 18.3% 20.9% 18.2% Salaries, allowances, and bonuses 1,332 1,394 1,436 15.6% 16.8% 16.0% Employee bonuses 90 153 109 1.1% 1.8% 1.2% Provision for directors' bonuses 40 100 26 0.5% 1.2% 0.3% Retirement benefit expenses 93 91 62 1.1% 1.1% 0.7% Provision for product warranties 198 -86 462 2.3% -1.0% 5.2% R&D expenses 3,459 3,749 3,735 40.6% 45.2% 41.6% Provision for doubtful accounts -117 19 4 -1.4% 0.2% 0.0% Other 3,424 2,879 3,135 40.2% 34.7% 35.0% Total 8,519 8,299 8,969 100.0% 100.0% 100.0%
Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.
The SG&A-to-sales ratio has tracked above 20% since FY09/10 and has even exceeded 30% in some fiscal years. The two largest components of SG&A expenses are R&D expenses and personnel costs, with the former outweighing the latter.
Advanced technologies used in the Probe cards area account for a large portion of R&D expenses at MJC, and the company says it incurs heavy expenses in the area of MEMS technology, one of its focus areas. Regarding response to variations in deliveries to semiconductor manufacturers, the company is forced to keep a certain degree of production capacity available, which results in a large fixed-cost burden due to upgrades and expansion of production equipment and related depreciation.
41/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Balance sheet
Balance sheet FY09/10 FY09/11 FY09/12 FY09/13 FY09/14 FY09/15 FY09/16 FY09/17 FY09/18 FY 09/ 19 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. ASSETS Cash and deposits 5,587 8,379 7,722 7,423 9,654 16,231 11,860 9,756 11,186 11,375 Notes and accounts receivable 8,911 10,347 6,437 6,890 7,839 7,054 6,797 7,862 7,034 5,202 Operational investment securities Inventories 3,073 3,225 2,581 2,965 3,288 3,466 3,164 4,174 4,245 3,866 Allowance for doubtful accounts -265 -74 -58 -60 -90 -61 -74 -55 -56 -45 Other 2,433 463 270 1,207 478 879 834 1,101 391 546 Total current assets 19,739 22,340 16,952 18,425 21,169 27,569 22,581 22,838 22,800 20,944 Total tangible fixed assets 11,143 10,001 8,625 7,908 8,572 8,983 9,113 9,187 9,383 9,564 Total intangible fixed assets 1,158 1,111 1,029 955 906 951 969 958 1,0421,047 Investment securities 2,187 1,800 1,456 1,703 3,005 2,002 2,571 2,953 3,060 2,095 Shares in subsidiaries and associates Other 2,334 526 469 553 662 771 720 731 793 762 Allowance for doubtful accounts -266 -217 -199 -223 -216 -230 -196 -167 -180 -170 Investments and other assets 4,255 2,109 1,726 2,033 3,451 2,543 3,095 3,517 3,673 2,687 Total fixed assets 16,557 13,222 11,381 10,896 12,930 12,487 13,179 13,664 14,099 13,299 Total assets 36,296 35,563 28,333 29,321 34,100 40,048 35,760 36,502 36,899 34,244
LIA BILITIES Notes and accounts payable 5,709 6,946 4,072 4,887 3,216 4,428 4,563 5,195 4,459 4,415 Short-term debt 2,465 3,153 3,799 3,197 2,493 2,603 1,395 769 777 1,110 Income taxes payable 72 269 52 146 248 307 205 263 467 192 Other 2,076 2,287 4,054 2,229 4,235 4,317 3,338 3,586 3,276 2,826 Total current liabilities 10,322 12,655 11,977 10,459 10,192 11,655 9,501 9,813 8,979 8,543 Long-term debt 3,702 3,828 2,899 2,975 2,280 1,516 687 602 562 511 Deferred tax assets 526 454 534 1,031 669 821 941 280 403 Other 1,627 1,321 1,121 1,409 1,703 1,921 1,903 1,865 1,978 1,960 Total fixed liabilities 5,329 5,675 4,474 4,918 5,014 4,106 3,411 3,408 2,820 2,874 Total liabilities 15,651 18,330 16,452 15,377 15,207 15,762 12,913 13,221 11,799 11,418 Ne t a s s e t s Capital stock 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 5,018 Capital surplus 5,769 5,769 5,769 5,769 6,096 6,054 6,050 5,976 5,934 5,705 Retained earnings 9,626 6,497 1,263 2,364 5,149 10,015 9,254 10,011 12,111 12,250 Treasury stock -671 -953 -953 -953 -452 -216 -163 -943 -943 -1,663 Shareholders' equity 19,743 16,332 11,099 12,199 15,811 20,871 20,158 20,063 22,120 21,311 Valuation difference on marketable securities 919 686 677 841 1,687 1,087 1,461 1,661 1,735 1,090 Foreign currency translation adjustments -513 -495 -610 -58 201 698 -216 180 132 -78 Other 61 135 208 217 -32 82 245 282 301 502 Non-controlling interests 434 574 507 744 1,225 1,547 1,198 1,095 811 0 Total net assets 20,644 17,232 11,881 13,943 18,892 24,285 22,846 23,281 25,099 22,825 Total liabilities and net assets 36,296 35,563 28,333 29,321 34,100 40,048 35,760 36,502 36,899 34,244 Working capital 6,275 6,626 4,946 4,968 7,911 6,092 5,398 6,841 6,820 4,653 Total interest-bearing debt 6,167 6,981 6,698 6,172 4,773 4,119 2,082 1,371 1,339 1,621 Net debt 580 -1,398 -1,024 -1,251 -4,881 -12,112 -9,778 -8,385 -9,847 -9,754 Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.
Assets Current and fixed assets respectively make up 60% and 40% of total assets. Current assets mainly comprise cash and deposits (40%) and the combined total of accounts receivable and inventories (just below 50%). The share of cash and deposits is rather large. Fixed assets consist of property, plant and equipment (just below 70%), intangible fixed assets (nearly 10%), and investments and other assets (just over 20%). Investments and other assets are mostly investment securities in 10 companies held for purposes other than pure investment (with half of the securities held in MPI Corporation, a Taiwanese manufacturer of testers; MJC stake of 8.2%).
Looking at changes in assets over the last 10 years, assets have only expanded marginally, especially with a noticeable decline in fixed assets, while sales have increased about 1.5x during that period. Over the last few years, the company’s capital expenditures have exceeded depreciation due in part to an increase in production capacity for MEMS amid an expansion in the memory probe card business. However, after the company acquired its headquarters building and constructed a new building at its Aomori Factory, it curtailed capital expenditures until FY09/13 due mainly to factors such as the global financial crisis and a sluggish semiconductor market. In FY09/12, the company implemented structural reforms. Despite an increase in cash, the growth rate in
42/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
current assets has been lower than in sales due to stagnancy in accounts receivable and inventories. In FY09/19, assets contracted as the company sold investment securities and accounts receivable decreased on lower sales.
Liabilities Current and fixed liabilities respectively make up just over 70% and nearly 30% of total liabilities. Accounts payable account for the largest ratio, at 40%. Short and long-term loans account for only a small portion of liabilities (JPY1.4bn in FY09/17). Total liabilities have contracted over the last 10 years, mainly reflecting a decline in interest-bearing debt. In FY09/19, short-term interest bearing debt increased due to planned borrowing at a subsidiary, but the company expects to repay the amount within the fiscal year.
Net assets Retained earnings inevitably fluctuate with ups and downs in earnings, but they have recently held steady at around JPY10.0bn. Net assets have increased over the last 10 years in tandem with valuation difference on available-for-sale securities. The decrease in net assets in FY09/19 can be attributed to the buyback of treasury shares, elimination of non-controlling interests, and making subsidiaries wholly owned companies.
As a result, the company has maintained healthy level of financial balance (equity ratio of over 60%, effectively debt-free) despite operating in an industry susceptible to sharp volatility.
Shareholders’ equity
Shareholders' equity FY09/10 FY09/11 FY09/12 FY09/13 FY09/14 FY09/15 FY09/16 FY09/17 FY09/18 FY 09/ 19 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Shareholders' equity 19,743 16,523 11,166 12,982 17,588 22,657 21,507 21,992 24,042 22,532 Equity ratio 55.5 46.5 39.4 44.3 51.6 56.6 60.1 60.2 64.0 65.8 Net interest-bearing debt 580 -1,398 -1,024 -1,251 -4,881 -12,112 -9,778 -8,385 -9,847 -9,754 Net debt / Equity ratio -0.21 -0.53 -0.68 -0.58 -0.82 -1.18 -0.99 -0.78 -0.77 -0.43 Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.
43/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Cash flow statement
Cash flow statement FY09/10 FY09/11 FY09/12 FY09/13 FY09/14 FY09/15 FY09/16 FY09/17 FY09/18 FY 09/ 19 (JPYmn) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cash flows from operating activities (1) 3,464 3,176 1,867 561 4,254 9,092 2,082 2,080 4,585 4,015 Pretax profit 472 711 -4,819 1,334 3,499 6,641 1,505 1,571 3,305 1,979 Depreciation 2,049 1,979 1,831 1,515 1,317 1,372 1,541 1,660 1,663 1,820 Amortization of goodwill 0 0 0 0 0 0 0 0 0 0 Change in accounts receivable -1,265 -1,447 3,841 -100 -852 1,067 -72 -916 823 1,758 Change in inventories 619 -136 614 -399 -249 -16 44 -886 -82 326 Change in accounts payable 2,818 1,235 -2,724 372 -1,877 860 571 431 -73444 Cash flows from investing activities (2) -829 -590 -1,622 -502 -367 -2,802 -789 -2,660 -1,459 -1,121 Purchase of tangible fixed assets -762 -606 -1,644 -476 -1,244 -1,833 -1,644 -1,942 -1,942 -2,145 Purchase of intangible fixed assets 2 -79 Purchase, sale, and redemption of inv estment securities -28 -7 -30 -51 -99 0 661 Change in loans (short- and long-term, net) 0 0 0 0 0 0 0 0 0 0 Free cash flow (1+2) 2,635 2,586 245 59 3,887 6,290 1,293 -580 3,126 2,894 Cash flows from financing activities -2,044 118 -904 -741 -989 -1,550 -3,731 -2,405 -985 -2,360 Change in short-term debt -1,462 311 218 -491 -454 307 -529 -42 0 352 Change in long-term debt 512 564 -418 -53 -950 -1,009 -1,461 -680 -32 -58 Acquisition of treasury stock 0 -281 0 0 -8 -1 0 -913 0 -719 Dividends paid -194 -292 -189 0 -189 -585 -1,286 -396 -389 -740 Source: Shared Research based on company data Note: Figures may differ from company materials due to differences in rounding methods.
Cash flows from operating activities Cash flows from operating activities fluctuate sharply with changes in profit and working capital that mirror sales swings. Another important component is depreciation, which has hovered around JPY1.3–2.0bn over the past 10 years. In FY09/19, the company invested aggressively in the Probe Card business.
Cash flows from investing activities Cash flows from investing activities mainly reflect investment in factory equipment. The company’s capital expenditures continued to exceed depreciation from FY09/14 to FY09/19. In FY09/19, the company made aggressive investments related to the Probe Card business concentrated in Q2, but some acceptance inspections were delayed, resulting in underperformance versus company forecasts.
Cash flows from financing activities Cash flows from financing activities mainly comprise changes in loans, dividends, and treasury shares. Dividends are primarily driven by earnings. Borrowings have continued to decline since FY09/11, but increased temporarily in FY09/19 owing to a planned increase in borrowings.
44/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Historical performance
Cumulative Q2 FY12/20 results (out May 14, 2020) Earnings summary Consolidated results for cumulative Q2 FY12/20 (October 2019–March 2020)
▷ Sales: JPY16.1bn (no YoY comparison) ▷ Operating profit: JPY1.0bn (no YoY comparison) ▷ Recurring profit: JPY1.1bn (no YoY comparison) ▷ Net income attributable to owners of the parent: JPY872mn (no YoY comparison)
In cumulative Q2 (October 2019–March 2020), the company reported consolidated sales of JPY16.1bn (+7.2% versus October 2018–March 2019), with Probe Card segment sales of JPY15.0bn (+7.1%) and Test Equipment (TE) segment sales of JPY1.1bn (+8.8%). Sales to core customers were steady.
Semiconductor market trends Demand remained firm, aided by expectations of growing demand for semiconductors in connection with the rollout of next-generation 5G telecommunications services and the growing use in the AI and IoT fields. While the novel coronavirus pandemic has restricted the movement of people and products, and this in turn has led to delays in capital spending plans and depressed factory utilization rates at some manufacturers, memory semiconductors and most non-memory semiconductors are continuing to be produced.
FPD market trends Although increases in inventory levels within the supply chain has been pushing up panel prices, the slump in demand for large LCD TVs, smartphones, and other end-use applications has fostered concerns about an excess supply.
Orders Probe Card segment orders appear to have exceeded the company’s expectations. At end-Q1, the company expected Q2 orders to be in the JPY5.0–5.9bn range seen in Q3–Q4 of FY09/19, but orders came in at JPY7.8bn. According to the company, orders were higher than expected due to changes in demand caused by the novel coronavirus pandemic. Demand for memory probe cards evidently was buoyed by growth in demand for server-related products, which offset weak demand from manufacturers of DRAM chips used in mobile devices. Further, the company saw an increase in inquiries owing to the pandemic’s effect on competitors’ operations, while MJC’s production was little affected by the pandemic. Although the increase in inquiries had only a marginal impact on the orders additionally received, it nonetheless led to the Probe Card segment’s order backlog at end-Q2 of JPY7.2bn, considerably higher than the JPY4.0–5.0bn level seen over the past three years. Shared Research assumes this will contribute to sales in Q3 and beyond.
Segment overview Probe Card Results for cumulative Q2 FY12/20 (October 2019–March 2020)
▷ Segment sales: JPY15.0bn (+7.1% versus October 2018–March 2019) ▷ Segment profit: JPY2.0bn (-46.6% versus October 2018–March 2019)
In the three-month period of Q2 (January–March 2020), segment sales finished down on both YoY and QoQ bases, but demand for its mainstay DRAM probe cards remained firm. By product, sales of advanced probe cards for memory devices declined 17.3% QoQ to JPY5.6bn, sales of advanced probe cards for non-memory devices declined 65.0% QoQ to JPY307mn, sales of cantilever probe cards declined 36.0% QoQ to JPY369mn, and sales of test sockets declined 51.5% QoQ to JPY196mn. As usual, advanced probe cards for memory devices comprised the largest share of segment sales. While sales were down versus Q1 in all product
45/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
categories, considering overseas subsidiaries reported results with a three-month lag relative to the parent due to a difference in financial year-end up until FY09/19, comparisons with Q3 or Q4 FY09/19 would be more appropriate (since Q1 FY12/20 included sales results of overseas subsidiaries from the six months period spanning July–December 2019).
Regarding orders for DRAM and NAND flash memory probe cards, MJC benefited to some extent from its ability to maintain stable production as demand from manufacturers of memory chips for server equipment continued to recover. In the market for logic probe cards, the company said it is awaiting evaluations from customers in the hope of securing new demand.
Test Equipment (TE) Results for cumulative Q2 FY12/20 (October 2019–March 2020)
▷ Segment sales: JPY1.1bn (+8.8% versus October 2018–March 2019) ▷ Segment profit: JPY86mn (versus loss of JPY365mn in October 2018–March 2019)
In the three-month period of Q2 (January–March 2020), semiconductor test equipment sales were JPY117mn (+34.5% QoQ), probe unit sales were JPY299mn (-41.8% QoQ), and LCD test equipment sales were JPY25mn (-26.5% QoQ). In cumulative Q2, probe units accounted for the lion’s share of sales, while sales of equipment for semiconductors and FPDs were weak. Although there is an order backlog for FPD-related test equipment, the company expects sales to remain weak.
Segment profit returned to the black on strong Q1 sales of probe units and the impact of the impairment loss posted at end-FY09/19. Nonetheless, the company is still carrying out structural reforms and remains focused on improving the segment’s profit structure.
Q1 FY12/20 results (out February 13, 2020) Earnings summary Consolidated earnings results for Q1 FY12/20 (October–December 2019)
▷ Sales: JPY9.2bn (no YoY comparison) ▷ Operating profit: JPY480mn (no YoY comparison) ▷ Recurring profit: JPY519mn (no YoY comparison) ▷ Net income attributable to owners of the parent: JPY365mn (no YoY comparison)
▷ Compared to Q1 FY09/19 (October‒December 2018), sales were up 44.5%, while operating profit was down 50.3%, recurring profit was down 50.5%, and net income attributable to owners of the parent was down 51.0%. ▷ Semiconductor market: Despite the ongoing weakness in DRAM market amid a slump in smartphone and data center-related demand, semiconductor consumption is expected to rise in areas such as 5G (the next-generation communications standard), artificial intelligence (AI), IoT, and autonomous driving. Amid such an environment, the signs of a recovery in investment at semiconductor manufacturers are starting to appear. ▷ FPD market: Many panel manufacturers faced tough operating conditions as excess supply depressed panel prices and demand slumped in end-user applications, including smartphones and large LCD TVs. ▷ Conditions for the company: Total company orders were JPY10.5bn (+76.2% QoQ) in Q1 (October‒December 2019), including JPY9.9bn (+95.7% QoQ) for the Probe Card business, and JPY570mn (-35.4% QoQ) for the TE business. Amid growing demand for next-generation products in the semiconductor memory market, the company saw firm orders for memory probe cards. The increase in orders only partially contributed to sales due to lead time factors, but sales grew 44.5% YoY to JPY9.2bn mainly because six months of subsidiary earnings were included in consolidated results in line with the unification of fiscal periods for all group companies. On the other hand, several extraordinary factors combined to send profit
46/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
levels at the company sharply lower. In addition to a profit increase booked in Q1 FY09/19 on adjustments of accounting period, fixed costs in Q1 FY12/20 rose as a result of measures taken in anticipation of increased demand for memory probe cards (see the following section). The three-month reporting period differential between the overseas subsidiaries and the parent was eliminated in Q1 FY12/20.
Segment overview Probe Card Q1 FY12/20 (October–December 2019) Probe Card results
▷ Segment sales: JPY8.6bn (no YoY comparison) ▷ Segment profit: JPY929mn (no YoY comparison) In Q1 (October–December 2019), logic and NAND sales were weak. Performance was largely driven by firm demand for DRAM probe cards and growing demand for next-generation standard products. Showing strong growth in mainstay memory probe cards, sales of advanced probe cards for memory devices totaled JPY6.7bn (+48.1% QoQ), sales of advanced probe cards for non-memory devices were JPY878mn (+63.5% QoQ), cantilever probe card sales were JPY577mn (+36.4% QoQ), and test socket sales were JPY404mn (+117.2% QoQ). The segment profit margin declined 17.1pp from 28.5% in Q1 FY09/19 (October–December 2018, segment sales of JPY5.9bn, segment profit of JPY1.7bn) to 10.8% in Q1 FY12/20 (October–
December 2019, segment sales of JPY 8.6bn, segment profit of JPY929mn). However, this decline was due to several extraordinary factors, including a profit increase booked in Q1 FY09/19 on adjustments of accounting period and up-front expenses booked in Q1 FY12/20 on an expansion in headcount and equipment in anticipation of increased demand.
Test Equipment (TE) Q1 FY12/20 (October–December 2019) TE results
▷ Segment sales: JPY635mn (no YoY comparison) ▷ Segment profit: JPY94mn (no YoY comparison) ▷ In Q1 (October–December 2019), sales of semiconductor test equipment totaled JPY87mn (-4.4% QoQ), sales of probe units JPY514mn (+100% QoQ), and sales of LCD test equipment JPY34mn (-94.6% QoQ). Improved sales of probe units drove
performance during the term. While demand for probe units from the company’s key customers has been stable, it actually increased from those customers during the quarter.
Full-year FY09/19 results (out November 14, 2019) Earnings summary Consolidated earnings results for full-year FY09/19 (October 2018–September 2019)
▷ Sales: JPY28.0bn (-7.1% YoY) ▷ Operating profit: JPY1.5bn (-54.1% YoY) ▷ Recurring profit: JPY1.6bn (-52.7% YoY) ▷ Net income attributable to owners of the parent: JPY879mn (-64.7% YoY)
▷ Semiconductor market: Demand remained firm for non-memory devices due to expansion of applications to automotive devices, industrial equipment and others, but demand for memory devices weakened amid stagnation in demand for smartphones and a slump in data center investments.
47/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
▷ FPD market: While demand remained flat for OLEDs and LCDs, Chinese manufacturers invested in G10.5 LCDs and G6 OLEDs, leading to market oversupplies. ▷ Conditions for the company: Total company orders were JPY6.0bn (-15.3% YoY) in Q4 (three months from July to September 2019), including JPY5.1bn (-7.2% YoY) for the Probe Card business, and JPY883mn (-43.5% YoY) for the TE business. Note: Because the company’s overseas subsidiaries report results with a three-month lag relative to the parent due to a difference in fiscal year, consolidated results include lagged sales from overseas subsidiaries. ▷ Regarding recent order levels, the company says it is starting to see demand picking up for its probe cards from some customers in the memory industry, which is currently in a correction phase. However, it has not been able to confirm so far whether this trend will expand across the entire industry.
Segment overview Probe Card In full-year FY09/19 (October 2018–September 2019), the Probe Card business reported increases in both sales and profit.
▷ Segment sales: JPY25.5bn (+0.5% YoY) ▷ Segment profit: JPY4.3bn (-16.2% YoY) ▷ In Q4 alone (July–September 2019), segment sales were JPY5.7bn (-10.9% YoY). Sales of advanced probe cards for memory devices totaled JPY4.5bn (-11.2% YoY), sales of advanced probe cards for non-memory devices were JPY537mn (-0.6% YoY), cantilever probe card sales were JPY423mn (-22.1% YoY), and test socket sales were JPY186mn (unchanged YoY). For the core advanced probe cards for memory devices, sales to South Korea increased 31.9% YoY in Q4. In other regions, sales were down
46.0% YoY in Japan, down 32.2% YoY in Taiwan, and down 76.8% YoY in Europe and the US. The higher sales to South Korea were not sufficient to offset dwindling demand in other regions, resulting in a decline in total sales. In cantilever probe cards, which are mainly supplied by the company for logic devices, sales fell in Q4 due to impact from smartphone sales trends. ▷ Over the full year, sales rose only modestly due to major changes in the demand environment from 1H to 2H amid a correction in the semiconductor memory industry. Segment profit declined sharply from Q3 (April–June 2019), falling to as low as JPY2mn in Q4 (July–September 2019).
Test Equipment (TE) In full-year FY09/19 (October 2018–September 2019), the TE business reported lower sales and a turn to the red.
▷ Segment sales were JPY2.4bn (-48.5% YoY) ▷ Segment loss was JPY502mn (versus profit of JPY593mn in FY09/18) ▷ In Q4 (July–September 2019) alone, sales of semiconductor test equipment totaled JPY91mn (-92.9% YoY), sales of probe units JPY257mn (-18.4% YoY), and sales of LCD test equipment JPY634mn (+130.5% YoY). In full-year FY09/19, LCD test equipment sales were flat, but sales of semiconductor test equipment, the core of the business, were affected by investment trends at major customers. ▷ Over the full year, the sales decline driven by lower customer demand weighed heavily on FY09/19 results, and the company posted operating losses in excess of JPY100mn in each quarter other than Q4 (July–September 2019). Shared Research thinks the company is reviewing its medium-term plan including selection and concentration of businesses and improvement in operational efficiency.
48/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Q3 FY09/19 results (out August 7, 2019) Results summary Consolidated results for the nine-month period through Q3 FY09/19 (October 2018–June 2019)
▷ Sales: JPY21.3bn (-2.5% YoY) ▷ Operating profit: JPY2.1bn (-11.9% YoY) ▷ Recurring profit: JPY2.3bn (-12.0% YoY) ▷ Net income attributable to owners of the parent: JPY1.6bn (-19.4% YoY)
▷ Semiconductor market: Smartphone demand, previously a key driver of semiconductor consumption, has peaked out, and a slowdown in semiconductor manufacturers’ capex, has led to slump especially in memory. ▷ FPD market: Slump in demand related to big-screen LCD TVs and smartphones. Slump in large LCD panels and small and medium-sized OLEDs. ▷ Company order trends: For Q3 (April–June 2019), the company reported a three-month order total of JPY5.9bn (-15.8% YoY), with the Probe Card business booking orders of JPY5.6bn (+0.9% YoY) and the TE business booking orders of only JPY273mn
(-80.9% YoY). The deteriorating market environment slowed order growth at the company’s mainstay Probe Card business, compared with the first half of the fiscal year (October 2018–March 2019). The majority of the orders received at the TE business were for probe units, not semiconductor test equipment. Note: Because the company’s overseas subsidiaries report
results with a three-month lag relative to the parent due to a difference in fiscal year, consolidated results include lagged sales from overseas subsidiaries.
Segment overview Probe Card
▷ For the nine-month period through Q3 FY09/19 (October 2018–June 2019), the Probe Card business reported increases in both sales and profit. ▷ Segment sales: JPY19.9bn (+4.3% YoY) ▷ Segment profit: JPY4.3bn (+9.3% YoY) ▷ The top- and bottom-line gains logged for the nine-month period through Q3 were largely due to the strong order trends through Q2, though the company also noted some changes in its product sales mix. ▷ In Q3 (April–June 2019), segment sales of JPY5.8bn were up a modest 0.7% YoY. Sales of advanced probe cards for memory devices totaled JPY4.7bn (+4.9% YoY), sales of advanced probe cards for non-memory devices were JPY520mn (+4.0% YoY), cantilever probe card sales were JPY369mn (-42.0% YoY), and test socket sales were JPY244mn (+40.2% YoY). The company indicated that the sharp decline in cantilever probe card sales was due to certain factors. ▷ Segment profit of JPY599mn in Q3 (April–June 2019) was down 52.9% YoY. The sharp drop reflects a decline in utilization rates caused by sales that came down from levels seen in Q1 and Q2.
Test Equipment (TE)
▷ For the nine-month period through Q3 FY09/19 (October 2018–June 2019), the TE business reported lower sales and an operating loss. ▷ Segment sales were JPY1.4bn (-49.0% YoY) ▷ Segment loss was JPY438mn (versus profit of JPY290mn in Q3 FY09/18)
49/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
▷ In Q3 (April–June 2019), sales of semiconductor test equipment totaled JPY50mn (-57.3% YoY), sales of probe units JPY217mn (-17.5% YoY), and sales of LCD test equipment JPY169mn (-48.5% YoY). Earnings were hit especially hard by the decline in sales of semiconductor test equipment, which is normally the segment’s biggest earner.
50/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Other information
History
Date Description November 1970 Establishes Towa Electric Co., Ltd. in Meguro, Tokyo, with the aim of providing maintenance services for synchroscopes, facsimiles, industrial semiconductors, and vacuum test equipment July 1971 Relocates the head office to Musashino, Tokyo; begins R&D on semiconductor testing and miniaturization process technologies November 1973 Starts development and sales of semiconductor test equipment and precision measuring units April 1975 Changes trade name to Micronics Japan Co., Ltd. August 1977 Completes its first manual prober May 1981 Opens Hiraka Factory in Hiraka (current Hirakawa), Aomori March 1985 Opens New Hiraka Factory (current Aomori Factory) in Hiraka (current Hirakawa), Aomori August Opens Oita Factory in Oita (Kyushu) December Completes its first LCD test equipment March 1987 Opens Kumamoto Factory in Kumamoto January 1992 Starts development of package probe April 1997 Registers shares on the Japan Securities Dealers Association OTC market June Relocates Oita Factory and Oita Sales Office to Takaenishi, Oita and renames them Oita Technology Laboratory July 2000 Opens Aomori Matsuzaki Factory in Hiraka (current Hirakawa), Aomori January 2003 Establishes MJC Microelectronics (Shanghai) Co., Ltd. as a subsidiary in China January 2004 Commercializes automated optical inspection (AOI) equipment for LCDs July Establishes Taiwan MJC Co., Ltd. as a subsidiary in Taiwan December Cancels registration on the Japan Securities Dealers Association and lists on the JASDAQ Securities Exchange January 2005 Commercializes the world's first 8-inch full wafer contact probe card March Establishes China MJC Co., Ltd. as a subsidiary in China May Commercializes semiconductor BIST tester June 2006 Establishes MJC Electronics Corporation as a subsidiary in the US May 2007 Establishes MJC Europe GmbH as a subsidiary in Germany October 2008 Establishes MEK Co., Ltd. as a subsidiary in South Korea April 2011 Establishes MJC Microelectronics (Kunshan) Co., Ltd. in Jiangsu, China July 2013 Shares listed on Tokyo Stock Exchange's JASDAQ (Standard) market following the merger of TSE and Osaka Securities Exchange May 2015 Establishes a business tie-up with Taiwan-based GPM on LCD equipment business November Changes listing to the First Section of Tokyo Stock Exchange December 2016 Establishes MJC Electronics Asia Pte. Ltd. as a subsidiary in Singapore October 2017 Merged with MJC Techno Co., Ltd. in an absorption-type merger
Source: Shared Research based on company data
MJC’s history can be categorized into the following four phases.
◤ Phase 1: The company started operating in 1970 as a provider of maintenance services for electronic equipment that leveraged electronic measurement technologies. It subsequently began product development using electronic measurement and ultrafine processing technologies. It later took advantage of unique Japanese technologies to develop probe cards in 1976 and manual probers in 1977.
◤ Phase 2: The company honed its probing technologies in 1980–1993, a period during which it established a probe card factory in Aomori that strengthened its foundations as a manufacturer. In 1985, it leveraged its probing technology to launch test equipment that would become the industry standard for LCD display testing.
◤ Phase 3: It developed into a global company in 1994–2003. It positioned itself as a global leader in cantilever probe cards and LCD test equipment, and expanded overseas bases in tandem with overseas sales growth.
◤ Phase 4: From 2004, the company pursued new technologies including unique MEMS probe cards that, through commercialization, made it possible to conduct wafer-scale, one-touchdown testing (the first such achievement in the world at the time); LCD AOI testing; and semiconductor BIST testers. It invested substantial internal and external resources into the
51/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
development of wafer scale, one-touchdown probe cards, which have become its earnings driver. In 2012 and 2013, the company implemented large-scale structural reforms.
News and topics May 2020 On May 14, 2020, the company revised its previous forecast for Q3 and announced a forecast for Q4 FY12/20.
See discussion under the Company forecast for FY12/20 section for further details.
February 2020 On February13, 2020, the company revised its 1H FY12/20 consolidated earnings forecast.
November 2019 On November 14, 2019, the company announced partial changes to the Articles of Incorporation.
Corporate governance and top management Corporate governance Organizational form and capital structure Organizational form Company with Audit & Supervisory Board Controlling shareholder, parent company None Directors and members of Audit & Supervisory Board Number of directors per Articles of Incorporation 13 Number of directors 8 Terms of directors per Articles of Incorporation 1 year Chairperson of the Board of Directors President Number of outside directors 3 Number of independent outside directors 3 Number of member of Audit & Supervisory Board 3 Number of outside members of Audit & Supervisory Board 2 Voluntary committee Compensation and Nomination Committee Other Participation in electronic voting platform In place Preparation of convocation notice in English None
Performance-linked remuneration Implementation of measures regarding director incentives and stock options
Directors, employees, directors and Eligibility for stock options employees of subsidiaries Disclosure of individual director's compensation None Policy on determining amount of compensation and calculation methodology In place Corporate takeover defenses In place Source: Shared Research based on company data
The company has adopted a governance structure that includes an Audit & Supervisory Board. It sees providing comprehensive functions for management structure monitoring as essential to enhancing its corporate value and fulfilling its social responsibilities in that it ensures appropriate and transparent decision-making. The company aims to strengthen its corporate governance by having its Board of Directors and Audit & Supervisory Board execute their roles and responsibilities and by implementing its Core Policy for Developing Internal Control Systems. As a voluntary committee, the company has also established a Remuneration and Nomination Advisory Committee with a majority of outside directors. In addition, it has introduced takeover defense measures (valid for three years), which were updated following the approval at the annual general meeting of shareholders on December 19, 2017.
52/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Top management President & CEO Masayoshi Hasegawa
Apr 1990 Joined Kokusai Securities (currently Mitsubishi UFJ Morgan Stanley Securities)
Nov 1994 Joined Seki Technotron Corporation (currently Cornes Technologies Limited)
Mar 1998 Joined MJC
Dec 2001 Director and Product Planning Manager
Dec 2004 Managing Director and Product Planning Manager & Director of Package Probe Group in the Semiconductor Equipment Division
Apr 2005 Managing Director and Aomori Factory Manager in Semiconductor Equipment Division & Director of Semiconductor Equipment Production Management Group
Dec 2005 Representative Director and Vice President
Apr 2007 Representative Director and President
Dec 2010 Representative Director, President, and CEO (current role)
Dividend policy
(JPY) FY09/10 FY09/11 FY09/12 FY09/13 FY09/14 FY09/15 FY09/16 FY09/17 FY09/18 FY09/19 Dividend per share 7.5 5.0 0.0 5.0 15.0 27.5 15.0 10.0 19.0 10.0 Dividend per share (split adjusted) 4.5 -73.0 -132.8 29.0 76.9 144.7 13.229.663.923.0 Payout ratio 166.1% - - 17.3% 19.5% 19.0% 113.3% 33.8% 29.7% 43.5% Source: Shared Research based on company data
MJC’s core policy is to continue paying stable dividends while taking factors such as earnings trends and payout ratio into account.
Major shareholders
Shares held Shareholding Top shareholders ('000) ratio
Masayoshi Hasegawa 2,496 6.54% Japan Trustee Services Bank, Ltd. (Trust account) 2,307 6.04% Nippon Life Insurance Company 1,685 4.41% MUFG Bank, Ltd. 1,331 3.48% The Master Trust Bank of Japan, Ltd. (Trust account) 1,283 3.36% Katsumi Hasegawa 1,186 3.11% Takehiro Hasegawa 1,184 3.10% MTK Asset Co., Ltd. 1,116 2.92% Yoshiei Hasegawa 941 2.46% Sumitomo Mitsui Banking Corporation 739 1.93% SUM 14,272 37.40% Source: Shared Research based on company data Note: As of September 30, 2019. Ownership ratios exclude 1.1mn treasury shares.
Employees
Number of employees FY09/10 FY09/11 FY09/12 FY09/13 FY09/14 FY09/15 FY09/16 FY09/17 FY09/18 FY09/19 (year-end) Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Cons. Probe Card - - - 799 808 880 914 969 1,001 1,150 Test Equipment (TE) - - - 271 217 164 163 161 156 173 (Old seg.) Semiconductor Equipment9779901,059------(Old seg.) FPD Equipment 434408324------Corporate 57 66 73 115 122 108 114 121 128 133 Total 1,468 1,464 1,456 1,185 1,147 1,152 1,191 1,251 1,285 1,456 Source: Shared Research based on company data
MJC’s workforce had remained at around 1,400 employees since FY09/08. As part of the business restructuring efforts started in July 2012, the company consolidated its bases of operation and streamlined personnel. As a result, its personnel declined by 271 employees in FY09/13. However, anticipating an increase in demand, the company increased headcount to over 1,400 employees in FY09/19.
53/55 Micronics Japan / 6871 RCoverage LAST UPDATE: 2020.10.02 Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
Profile
Company Name Head Office Micronics Japan Co., Ltd. 2-6-8 Kichijoji Hon-cho, Musashino-shi, Tokyo 180-8508, Japan Phone Listed On 81-422-21-2655 First Section, Tokyo Stock Exchange Established Exchange Listing November 2, 1970 November, 2015 Website Fiscal Year-End https://www.mjc.co.jp/en/ September 30 IR Contact IR Web https://www.mjc.co.jp/en/contact/entry.php?subject=8 https://www.mjc.co.jp/en/ir/
54/55 About Shared Research Inc. RCoverage Research Coverage Report by Shared Research Inc. | https://sharedresearch.jp
We offer corporate clients comprehensive report coverage, a service that allows them to better inform investors and other stakeholders by presenting a continuously updated third-party view of business fundamentals, independent of investment biases. Shared Research can be found on the web at https://sharedresearch.jp.
Current Client Coverage of Shared Research Inc.
A ccordia Golf Trust Digital Arts Inc. KAMEDA SEIKA CO., LTD. SanBio Company Limited A dvance Create C o., Ltd. Digital Garage Inc. Kanamic Network C o.,LTD SANIX INCORPORATED ADJUVANT COSME JAPAN CO., LTD. DIP Corporation Kawanishi Holdings, Inc. Sanrio Company, Ltd. Aeon Delight Co., Ltd. Doshisha Corporation KFC Holdings Japan, Ltd. SATO HOLDINGS CORPORATION Aeon Fantasy Co., Ltd. Dream Incubator Inc. KI-Star Real Estate Co., Ltd. SBS Holdings, Inc. Ai Holdings Corporation Earth Corporation KLab Inc. Seikagaku Corporation A I inside Inc. Edion Corporation Kondotec Inc. Seria Co.,Ltd. AirTrip Corp. Elecom Co., Ltd. Kumiai Chemical Industry Co., Ltd. Serverworks Co.,Ltd. and factory, inc. en-Japan Inc. Lasertec Corporation SHIFT Inc. ANEST IWATA Corporation Estore Corporation. Locondo, Inc. Shikigaku Co., Ltd AnGes Inc. euglena Co., Ltd. LUCKLAND CO., LTD. SHIP HEALTHCARE HOLDINGS, INC. Anicom Holdings, Inc. FaithNetwork Co., Ltd. MATSUI SECURITIES CO., LTD. SIGMAXYZ Inc. Anritsu Corporation Ferrotec Holdings Corporation Media Do Co., Ltd. SMS C o., Ltd. Apaman Co., Ltd. FIELDS CORPORATION Medical System Network Co., Ltd. Snow Peak, Inc. ARATA CORPORATION Financial Products Group Co., Ltd. MEDINET Co., Ltd. Solasia Pharma K.K. A rtspark Holdings Inc. First Brothers C ol, Ltd. MedPeer,Inc. SOURCENEXT Corporation AS ONE CORPORATION FreeBit Co., Ltd. Mercuria Investment Co., Ltd. Star Mica Holdings C o., Ltd. Ateam Inc. Fujita Kanko Inc. Micronics Japan Co., Ltd. Strike Co., Ltd. Aucfan Co., Ltd. Gamecard-Joyco Holdings, Inc. MIRAIT Holdings Corporation SymBio Pharmaceuticals Limited AVANT CORPORATION GameWith, Inc. Monex Goup Inc. Synchro Food Co., Ltd. Axell Corporation GCA Corporation MORINAGA MILK INDUSTRY CO., LTD. TAIYO HOLDINGS CO., LTD. Azbil Corporation Good Com Asset Co., Ltd. Mortgage Service Japan Limited. Takashimaya Company, Limited AZIA CO., LTD. Grandy House Corporation NAGASE & CO., LTD Take and Giv e Needs Co., Ltd. AZoom, Co., Ltd. Hakuto Co., Ltd. NAIGAI TRANS LINE LTD. Takihyo Co., Ltd. Base Co., Ltd Hamee Corp. NanoCarrier Co., Ltd. TEAR Corporation BEENOS Inc. Happinet Corporation Net Marketing Co., Ltd. Tenpo Innovation Inc. Bell-Park Co., Ltd. Harmonic Drive Systems Inc. Net One Systems Co.,Ltd. 3-D Matrix, Ltd. Benefit One Inc. HENNGE K.K. Nichi-Iko Pharmaceutical Co., Ltd. The Hokkoku Bank,Ltd. B-lot Co.,Ltd. Hope, Inc. Nihon Denkei Co., Ltd. TKC Corporation Broadleaf Co., Ltd. HOUSEDO Co., Ltd. Nippon Koei Co., Ltd. TKP Corporation CanBas Co., Ltd. H2O Retailing Corporation NIPPON PARKING DEVELOPMENT Co., Ltd. Tsuzuki Denki Co., Ltd. Canon Marketing Japan Inc. IDOM Inc. NIPRO CORPORATION TOCALO Co., Ltd. Career Design Center Co., Ltd. IGNIS LTD. Nisshinbo Holdings Inc. TOKAI Holdings Corporation Carna Biosciences, Inc. i-mobile Co.,Ltd. NS TOOL CO., LTD. Tokyu Construction Co., Ltd. CARTA HOLDINGS, INC Inabata & Co., Ltd. OHIZUMI MFG. CO., LTD. TOYOBO CO., LTD. CERES INC. Infocom Corporation Oisix ra daichi Inc. Toyo Ink SC Holdings C o., Ltd Chiyoda Co., Ltd. Infomart Corporation Oki Electric Industry Co., Ltd Toyo Tanso Co., Ltd. Chori Co., Ltd. Intelligent W av e, Inc. ONO SOKKI Co., Ltd. Tri-Stage Inc. Chugoku Marine Paints, Ltd. ipet Insurance CO., Ltd. ONWARD HOLDINGS CO.,LTD. TSURUHA Holdings cocokara fine Inc. Itochu Enex Co., Ltd. Pan Pacific International Holdings Corporation VISION INC. COMSYS Holdings Corporation JAFCO Co.,Ltd. PARIS MIKI HOLDINGS Inc. VISIONARY HOLDINGS CO., LTD. COTA CO.,LTD. JMDC Inc. PIGEON CORPORATION World Holdings Co., Ltd. CRE, Inc. JSB Co., Ltd. QB Net Holdings Co., Ltd. YELLOW HAT LTD. C REEK & RIVER C o., Ltd. JTEC C orporation RACCOON HOLDINGS, Inc. YOSHINOYA HOLDINGS CO., LTD. Daiichi Kigenso Kagak u Kogyo Co., Ltd. J Trust Co., Ltd Ray sum Co., Ltd. YUMESHIN HOLDINGS CO., LTD. Daisek i Co., Ltd. Japan Best Rescue System C o., Ltd. RESORTTRUST, INC. ZAPPALLAS, INC. Demae-Can CO., LTD JINS HOLDINGS Inc. ROUND ONE Corporation DIC Corporation JP-HOLDINGS, INC. RYOHIN KEIKAKU CO., LTD. Attention: If you would like to see companies you invest in on this list, ask them to become our client, or sponsor a report yourself.
Disclaimer: This document is provided for informational purposes only. No investment opinion or advice is provided, intended, or solicited. Shared Research Inc. offers no warranty, either expressed or implied, regarding the veracity of data or interpretations of data included in this report. We shall not be held responsible for any damage caused by the use of this report. The copyright of this report and the rights regarding the creation and exploitation of the derivative work of this and other Shared Research Reports belong to Shared Research. This report may be reproduced or modified for personal use; distribution, transfer, or other uses of this report are strictly prohibited and a violation of the copyright of this report. Our officers and employees may currently, or in the future, have a position in securities of the companies mentioned in this report, which may affect this report’s objectivity.
Japanese Financial Instruments and Exchange Law (FIEL) Disclaimer: The report has been prepared by Shared Research under a contract with the company described in this report (“the company”). Opinions and views presented are ours where so stated. Such opinions and views attributed to the company are interpretations made by Shared Research. We represent that if this report is deemed to include an opinion from us that could influence investment decisions in the company, such an opinion may be in exchange for consideration or promise of consideration from the company to Shared Research.
Contact Details Shared Research Inc. 3-31-12 Sendagi Bunkyo-ku Tokyo, Japan https://sharedresearch.jp Phone: +81 (0)3 5834-8787 Email: [email protected]
55/55