■Future outlook for Wavelock Holdings＜7940＞
(2) Expansion of growth fields
As for sales related to metallic decorative film, which is a growth field, we aim to increase by about 2 times in the fiscal year ending 2027/3 from approximately 3.2 billion yen for the fiscal year ending 2024/3. Whereas the average annual growth rate for the three years up to the 2024/3 fiscal year was 21.1%, growth is planned to accelerate to 26.0% over the next 3 years. Since the automobile industry, which is the main target, the development period for new cars is long, the selection of parts up to 2 to 3 years ahead has almost been decided, so it is thought that the target value is highly probable. If there is a risk that sales will not reach the plan, sales of the adopted model will be discontinued, or there are cases where the number of units sold deviates greatly from the plan. By region, growth for North America is the largest, and the fiscal year ending 2027/3 is expected to account for about 60% of the composition ratio. Next, India and Asia, Europe, Japan, and China/Taiwan are in that order.
In overseas markets, it has been evaluated for its permeability to light and radio waves, high design, and that it is an environmentally friendly product, and adoption is progressing mainly for exterior products such as EV emblems. It is expected that adoption not only as film but also as molded parts will expand in North America. In China, sales for EVs (for Chinese and Western manufacturers) are expected to start from the 2025/3 fiscal year. Also, in India, it was sold to motorcycles, but it is expected that sales to automobiles will expand in the future. Meanwhile, it seems that there are many manufacturers that are cautious about adoption in the Japanese market, and no significant growth is expected in 3 years. For the time being, we will develop new environmentally friendly products and promote them. Regarding profitability, we aim to build a stable supply system and improve profit margins by increasing the operating level of film factories due to volume expansion, and promoting the introduction of robots and automation of inspection processes at molding plants (domestic/US).
(3) Maximizing and Further Deepening Group Synergies
The company is working to create synergy and deepen relationships with the two most recent capital partners, and at the same time explore possibilities such as M&A and further development of new businesses in areas surrounding existing businesses.
In an initiative with RP Topra, which announced the capital and business alliance in 2023/5, in addition to proceeding with studies on production optimization in the company's package solution field and RP Topra's container business, discussions are regularly proceeding on various themes such as joint development of environmentally friendly products, expansion of mutual sales through cross-selling of business partners and manufactured products, joint procurement, and joint logistics, etc., and the idea is to create synergy within 3 years. Of these, it seems that concrete progress has begun with regard to joint purchasing and joint logistics. Also, there is a possibility that further additional investment will be made to deepen the relationship.
The consolidated sales of RP Topra, a comprehensive plastics processing manufacturer, is 23.1 billion yen for the fiscal year ending 2023/3, which is the same scale as the company, and has built an extensive domestic and international production system (overseas has manufacturing and sales subsidiaries in Indonesia, Vietnam, and Malaysia), and is developing business in a wide range of industries such as automobiles and home appliances. Above all, it has a high market share with PET sheets (for parts trays, food packaging materials, etc.), and there are many parts where business areas and products overlap with the company. For this reason, we believe that the synergy effect of sharing management resources owned by both companies, such as production, purchasing, and logistics, is significant.
Meanwhile, TeamLike Co., Ltd. (investment ratio 11.2%), which concluded a capital and business alliance in 2022/9, operates the EC site “Vinipro.com” which specializes in vinyl curtains and sheets for commercial use (over 50,000 companies), and is characterized by having its own product processing plant, which can handle individual orders in short delivery times and small lots, and the sales scale for fiscal 2023 is just over 1 billion yen. Until now, the company's products have been sold through “Vinipro.com,” but in the future, it is planned to utilize processing services with short delivery times, which are Teamlike's strengths. The scale of orders received will decrease, but since ordered products with short delivery times can be sold at a higher price than normal, it is expected that they will contribute to improving profit margins. If there is a need from the company group's customers, an order will be received, and the order will be placed in a team-like manner.
In addition, we are continuing to consider investment in M&A and new business development, and as targets, we are considering investing in fields that join existing businesses in fields close to resin processing, which is an existing business, fields that add value to existing businesses in fields adjacent to resin processing, and even new fields where the company's strengths can be utilized. We are considering an upper limit of 3 billion yen as M&A funds, and we will make flexible decisions on how to raise funds.
(4) Improve employee engagement
As measures to improve employee engagement, we will work on the three points of (1) strengthening and promoting group human resource development, (2) promoting health management, and (3) returning rewards that contribute to improving performance. In human resource development, we will build an education system that fosters employees who will grow on their own, organize various training systems, and invest continuous expenses above a certain level. Also, by promoting wage increases and personnel increases at an annual rate of 3 to 5% during the 3-year planning period, labor costs for the fiscal year ending 2027/3 are planned to increase 20% compared to the 2024/3 fiscal year. Also, the idea is to actively return rewards according to business segments, regions, roles, and results, leading to increased motivation.
(Author: FISCO Visiting Analyst Joe Sato)