■Company overview of Daiwa Axis <4245>

1. Company Overview

The company group focuses on businesses related to "water," such as selling residential water-related products, providing septic tanks and wastewater treatment systems, aiming to protect the world's environment and create a sustainable society and future through a combination of businesses.

Founded in 2023, the company celebrated its 65th anniversary, reorganizing its corporate ethos from the traditional corporate slogan "PROTECT×CHANGE" to a corporate attitude of "protect what needs to be protected, change what needs to be changed." The company group's purpose for society, "solving global environmental issues with technology and ideas to support the lives of people around the world," aims to achieve the corporate mission of "protecting the environment, changing the future" through practical implementation.

Especially in its core "environmental equipment-related business," the company is deeply involved in the 6th of the 17 Sustainable Development Goals (SDGs) adopted at the UN Summit: "ensuring clean water and sanitation for all worldwide". Particularly in emerging countries in Asia and Africa, environmental pollution due to water contamination is a critical issue, highlighting the importance of the company's role and business opportunities globally. The company group's strength lies in the consistency and high quality of its design, manufacturing, sales, construction, and maintenance in small to medium-scale water treatment businesses, with its advantage expected to be prominent in emerging countries, hence, part of its growth strategy includes efforts towards overseas expansion of the "environmental equipment-related business."

2. Business Structure

In addition to the businesses from the early stages of founding, the "Residential Equipment-related Business" and the "Environmental Equipment-related Business," the company has segmented the "Renewable Energy-related Business" since the fiscal year ending December 2018 as its three pillars. Among these, the Water Treatment business covering from surface water to sewerage (septic tanks, wastewater treatment systems, etc.) being expanded for domestic and international markets is responsible for approximately 50% of revenue and around 75% of adjusted operating profit in the "Environmental Equipment-related Business."

3. History

Founded in 1958 in Matsuyama City, Ehime Prefecture, the company celebrated its 65th anniversary in 2023. In 1964, the predecessor Dai Ki Co., Ltd. was established and started the production of back-style purification tanks in the same year. Dai Ki, which entered the home improvement stores business in 1978, formed a business alliance with Homac Co., Ltd. (now DCM Co., Ltd.) and Karma Co., Ltd. (now DCM) in 2003, and decided on a management integration. In 2006, the current DCM Holdings <3050> was established. Prior to that, Dai Ki established the company as a recipient of business other than home improvement stores, and transferred its business. Subsequently, after becoming independent from Dai Ki through MBO (management buyout), the capital relationship between the company and Dai Ki disappeared, but a good business relationship continues. Starting from the core business of wholesale housing equipment, the company expanded its business areas and established the three pillars of management, including utilizing M&A to create the "environmental equipment-related business" and "renewable energy-related business." The overseas business, which is focused on as a growth market, established a foothold in the Southeast Asian market by acquiring a local company in Indonesia in 2013. The company established a subsidiary in the large potential market of India in 2018.

In December 2013, the company was newly listed on the chemical sector of the Tokyo Stock Exchange (hereinafter referred to as TSE) market on the TSE Second Section, and in December 2014, it was designated as the First Section. In the new market classification of TSE from April 2022, it transitioned to the Prime market. Actively pursuing overseas expansion in the "environmental equipment-related business," it selected a market segment aimed at companies focusing on constructive dialogues with global investors. It also established a Sustainability Committee and issued an integrated report. However, there were significant uncertainties regarding meeting the market capitalization criteria for listed shares, and the risks of delisting after the transitional measures end in the Prime market maintenance without meeting the listing maintenance criteria prompted the company to apply for a selection to the Standard Market in May 2023. The market classification was changed to the Standard Market in October of the same year. In January 2024, Yu Okame, who had served as the representative director and president since its establishment in 2005, became the chairman of the board of directors, and Yuki Okame was appointed as the new representative director and president in his place.

(Written by Fisco Guest Analyst Ikuo Shibata)