Overview of Mimaki Engineering Co., Ltd. <6638>

1. Business Description

The company's business segments are categorized not only by product but also by market. The market segments include the SG market, which supports the production of advertising and signs; the IP market, which decorates Industrial Products and Trinkets for general consumers; and the TA market, which prints on fabrics and ready-made clothing. Many final products that directly connect to consumer life, such as printed materials, signs, Smart Phone cases, electronic products, and Clothing, reflect the company's technology, making its products surprisingly close at hand. The company quickly captures the needs of each market and swiftly provides new products through targeted development. On the other hand, the product replacement cycle in each market is generally 4 to 5 years, allowing the company to build revenue by introducing new products sequentially each year.

The industrial printing market includes high-digitization areas such as display graphics, but there are still many sectors like textiles, Furniture and interiors, and packaging labels where traditional analog printing remains mainstream. Therefore, the overall digitization rate of industrial printing is said to be as low as 5 to 10% on average, indicating a significant growth potential for industrial inkjet printers. Furthermore, this market has a considerable scope for expansion through the introduction of FA. Competitors include American manufacturers and domestic manufacturers around printers. Although there appear to be some Chinese manufacturers producing industrial inkjet printers, the lack of industrial data, the presence of relatively small manufacturers, and the low quality of inks seem to have led to their omission from market share calculations. Despite this, in response to the rising demand for varied and small-scale production in the industrial sector, high-value-added digital on-demand printing is spreading in production environments where low-value-added analog printing was mainstream. As a result, after the leading SG market, the IP and TA markets are growing significantly as the second and third pillars of the company.

(1) SG (Sign Graphics) Market

In the SG market, printing is performed on advertising signs, window graphics, car wrapping, and soft signs using print materials such as PVC sheets, banner sheets, and window films. With large-format inkjet printers up to 160 cm, the company claims the second position in the world market (with a share of 27.2% in 2022). Additionally, it holds approximately 80% market share in this relatively digitized field among the top three companies, including itself.

(2) IP (Industrial Products) Market

In the IP market, the characteristics of UV curable ink that can print on a variety of materials such as plastics, acrylics, Glass, Metal, and wood are utilized in industrial products like automobile instrument panels and appliance control panels, as well as in Trinkets such as Smart Phone cases, toys, and novelties. The launch of a product priced at the overwhelmingly low price of 3.3 million yen in 2010, when the market price exceeded 10 million yen, triggered the expansion of the company’s market share. As a result, it boasts the number one position in the world market for desktop UV flatbed printers (with a share of 63.9% in 2022). While other companies also handle UV curable inks due to their advantages in digitization, the expertise accumulated over 20 years in responding to market needs since productization is a significant differentiating factor.

(3) TA (Textiles and Clothing) Market

In the TA market, polyester, rayon, cotton, silk, and other pre-sewn fabrics (textiles) are used for fashion clothing, sports clothing, sneakers (upper material), interiors, and fabric prints of ready-made garments. The company developed the world's fastest (according to its own research at the time) sublimation transfer inkjet printer in 2012, which accelerated growth when it was adopted by global fashion brands. Currently, they hold the second position in the global market (with a 19.4% Share in 2022) with sublimation transfer inkjet printers that can achieve a clean working environment at low cost while saving space.

(4) Other Businesses

In addition to industrial inkjet printers and cutting plotters, the company also develops a 3D printer business and FA business. In the 3D printer business, they produce product designs and figures, large three-dimensional signs, and more, from full-color shapes of over 10 million colors to oversized shapes up to 1.8 meters high with 3D printers. In the FA business, they automate the print production process from loading in to printing to coating to loading out using on-demand digital coating machines based on vector technology and mechatronics technology.

(5) Expanding Opportunities in the IP and TA Market

In the production sites of the IP and TA markets, mass production has been the mainstream until now, but due to demand diversification and shortened product cycles, there is a growing need for small-batch, multi-variety production. Digital on-demand production using the company’s products can print only what is necessary when it is needed without using printing plates, thereby achieving short delivery times and low costs for small-batch, multi-variety production. Furthermore, digital on-demand production can easily add value such as individuality, creativity, and seasonality to products, enabling differentiation and high profitability. Also, since space-saving equipment ensures a clean working environment, production can occur closer to consumption areas, reducing time and costs associated with logistics. Such environmental changes are favorable for the company’s products that have advantages in productivity and environmental responsiveness.

(Author: FISCO guest analyst Nobumitsu Miyata)