Business Overview of Ichinen Holdings <9619>
(2) Chemical business
Their main products are chemicals for professionals (lubricants, rust inhibitors, various cleaning agents, repair paints, etc.). In addition, they handle fuel additives for large boilers for power generation and ship engines, chemicals for general consumers (such as car cleaning products), and special chemicals (chemical products for coating difficult-to-adhere materials such as rubber and elastomers, various OA components, etc.). Approximately 75% of the department's products are self-made, with the remaining 25% being sourced products, resulting in a high departmental gross profit margin (30-50%).
(3) Parking Business
This is a business where they lease land from landowners to operate parking lots. The contract types vary from coin-operated to multi-story and entrusted management, etc. Although it has a nationwide presence, it has a high ratio (about 56%) in the Kansai region. They are also focusing on operating and managing parking lots that are part of general hospitals and large commercial facilities. Additionally, in 2022, they grouped Autoly, which operates the parking business, as a subsidiary.
(4) Machinery and tool sales business
As mentioned earlier, the company has partnered with approximately 8,800 automobile repair shops nationwide in connection with their automobile maintenance consignment business. They entered this business because they believed they could gain synergy by selling machine tools to these maintenance shops. Subsidiaries such as Ichinen Access Co., Ltd., Ichinen MTM Co., Ltd., Ichinen TASCO Co., Ltd., Ichinen Net Co., Ltd., and Ichinen Logistics Co., Ltd. conduct this business. Ichinen Access sells automotive parts, maintenance equipment, electric tools, and DIY products, and offers a wide range of product lineups with original brands. Ichinen MTM sells industrial and construction machinery and parts for automobiles and agricultural machinery. Ichinen TASCO handles air conditioning tools and environmental measuring instruments, and the TASCO brand of air conditioning tools has the largest sales record in the industry. Ichinen Net handles Internet sales of equipment and tools, and Ichinen Logistics handles logistics operations. Furthermore, this business has established a joint venture company in Thailand and also conducts overseas sales.
(5) Synthetic resin business
In the synthetic resin business, they handle thermoplastic synthetic resin raw materials, which are further divided into four sub-segments. In the amusement machine parts business, they mainly design and manufacture the housing parts of pachislot and pachinko machines, combining the functions of a trading company and a manufacturer. In the scientific measuring instrument business, they also develop, manufacture, and sell oxygen concentration meters and gas detection alarms. In addition, the manufacture of automotive interior and exterior parts, such as emblems, by Marui Kogyo Co., Ltd. and its subsidiaries, which were newly acquired in October 2023, is included in this segment.
(6) Agricultural related business
Due to its increased scale through M&A, it became a new independent segment from the third quarter of the fiscal year ending March 2024. In addition to the agricultural business (cultivation of mini tomatoes, bell peppers, etc.) that was previously included in "others," it also includes fertilizer and related businesses operated by Nitto EFC Co., Ltd., which was acquired as a subsidiary by M&A.
(7) Others
It includes real estate leasing and management businesses, glass processing businesses, etc. In regards to the glass processing business, they entered the market by acquiring Shinko Glass Industry Co., Ltd. and Shinsei Glass Co., Ltd. in October 2021. They manufacture and sell bent glass, mixed glass with resin, and other products.
Characteristics and strengths As previously mentioned, the company is a specialist manufacturer of road construction machinery such as road rollers, but has the following characteristics and strengths.
(1) Strong adaptability and stability
Through diversified management, they can respond flexibly to changes in the environment. By covering the ups and downs of performance in each business, it is possible to continue stable management as a whole.
(2) Integrated group management
By maximizing synergy through sharing of people, things, and assets within the group and merging of know-how, they continue to grow as a group.
(3) High capital profitability
ROE (net income for the current period as a percentage of shareholder equity) exceeds the cost of capital for shareholders, while ROIC (return on invested capital) exceeds the weighted average cost of capital, achieving a consistent return on capital higher than the capital cost.
(Written by FISCO guest analyst Noboru Terashima)