Investment Bridge Announces Investment Opinion: Bridge Report on Ferrotec Holdings Corporation: The Results for Fiscal Year March 2021 and Earnings Estimates for the Fiscal Year March 2022

NOTE TO EDITORS: The following is an investment opinion issued by Investment Bridge

TOKYO–(BUSINESS WIRE)–Investment Bridge, one of Japan’s leading independent investor relations services companies, has released a “Bridge Report” on Ferrotec Holdings Corporation (JASDAQ: 6890) reviewing its earnings results for the fiscal year March 2021 and earnings estimates for the fiscal year March 2022.

Report Highlights

*For the term ended March 2021, sales grew 11.9% year on year to 91,312 million yen. The sales of the semiconductor and other equipment-related business rose 14.7% year on year, due to the sales increase of material products (quartz, silicon parts, ceramics, and CVD-SiC) used in the semiconductor manufacturing process, etc. The sales of the electronic device business increased 28.1% year on year, thanks to the healthy performance of electronic devices for equipment related to the next-generation telecommunication system 5G. As for profits, gross profit increased due to the sales growth, and operating income rose 60.3% year on year to 9,640 million yen, as the augmentation of SG&A was not significant. Net income rose 363.9% year on year to 8,280 million yen, as the impairment loss in the photovoltaic business, etc. was posted as extraordinary loss, but gain from changes in equity for three wafer companies was posted as an extraordinary income. Both sales and profit exceeded the earnings forecasts which were revised upwardly in February 2021, hitting a record high.

*For the term ending March 2022, sales are estimated to grow 15.0% year on year to 105 billion yen and operating income is projected to grow 55.6% year on year to 15 billion yen. This term, the demand-supply balance of semiconductors will remain tight. It is expected that the company will meet the increased demand and the semiconductor and other equipment-related business, and the electronic device business will perform well. Profit is estimated to grow considerably this term, too, as the augmentation of SG&A will be offset by the sales growth, the rise in utilization rate, etc. As for dividends, the company plans to pay an ordinary dividend of 28.00 yen/share, which is substantially an increase of 2.00 yen/share from the previous term, in which the company paid 30.00 yen/share, including a commemorative dividend of 4.00 yen/share. The estimated payout ratio is 13.4%, which is lower than that of the previous term ended March 2021 (15.1%), due to the investment expansion. However, the company aims to return profit to shareholders as much as possible with stable dividends according to the improvement in profitability.

*The company formulated and announced a three-year mid-term management plan, whose initial fiscal year is this term. Assuming that the semiconductor market will grow for the foreseeable future, the company aims to achieve sales of 150 billion yen in the term ending March 2024, which is the final fiscal year of the plan. In addition, the company will raise operating income margin to 16.7%, by establishing an optimal business portfolio. The company will concentrate on the expansion of businesses and products of semiconductor materials, thermo modules, equipment parts cleaning, power semiconductor substrates, and recycled wafers.

*Like in the previous term, profit is expected to grow considerably this term. Its share price skyrocketed, because its performance made a favorable impression on investors. The share price exceeded the high price in January 2018 and is now at the 3,000-yen level. When the share price marked the high price of 2,900 yen in January 2018 in the monthly chart, PER was 23, while EPS was estimated to be 126.67 yen in the term ended March 2018 (source: the brief report on financial results for the third quarter of the term ended March 2018), and the current PER is lower than that. As the distribution of 5G has finally started, 6G is increasingly discussed. The purposes of use of semiconductors, such as CASE, IoT, and robotics, have diversified and such semiconductors are used abundantly than in 2018. The demand-supply balance will settle eventually, but the business environment is expected to remain favorable for the foreseeable future.

*We would like to pay attention to the progress of plans and the trends of new burgeoning products, such as recycled wafers and power semiconductor substrates, as well as the current core products, which are semiconductor materials whose sales are expected to grow steadily.

To view the full report, please go to the website at the URL listed below.

https://www.bridge-salon.jp/report_bridge/archives/eng/6890/20210728.html

About Bridge Report:

Bridge Report is produced by Investment Bridge Co., Ltd. and provides accurate and objective information about the earnings, business strategies, and other information of publicly traded Japanese companies. Investment Bridge was founded in August 2000 and is one of Japan’s leading independent IR support services companies. Investment Bridge specializes in providing various solutions to Japan’s publicly traded companies with the goal of expanding our clients’ shareholder base and liquidity through increased recognition and understanding of companies.

Contacts

Kaoru Hosaka

Investment Bridge Co., Ltd.

+81-3-5225-3077