■Elematec ＜2715＞ Company Overview

2. Features and strengths

(1) Abundant products and a solid customer base

The first characteristic of the company is that it has a large number of business partners and products. The number of suppliers has risen to about 7,000 companies (manufacturers), while sales partners (users) of about 6,000 companies trade various commercial materials, mainly electronic materials and electronic components. Individual suppliers and sales destinations have not been disclosed, but the top 10 main sales companies account for approximately 40% of sales revenue (fiscal year ending 2024/3). Stable growth that is less likely to be greatly influenced by specific customers or product trends is possible due to the dispersion of suppliers, sales destinations, and products handled.

(2) Proposal and manufacturing capabilities (locations)

Since it has a large number of customers, the company receives many requests from customers. Meanwhile, since we have handled many products over many years, we know the characteristics and characteristics of many products thoroughly, and by combining this knowledge with past know-how, we respond to customer requests. The fact that it has the ability to anticipate customer needs and make proposals on its own is an advantage of the company, which can carry out not only “passive” (passive) business development, but also “active” (active) business development.

Furthermore, in the case of the company, it has a manufacturing department (1 domestic factory, 2 overseas factories, many manufacturing contractors), so it is possible not only to simply sell parts, but also to provide modular products, customized products, and semi-finished products in response to customer requests. In a sense, it is a “convenient and convenient vendor” for customers, and due to this fact, it can be said that many customers have continued business with the company for many years, and this point is probably the company's strength.

(3) Three-dimensional profit structure

In the case of a general electronics trading company, customers (X axis) and products (Y axis) are important factors in order to expand profits, and the profit structure is flat. In the case of the company, in addition to this, it also has elements of the 3rd axis (Z axis) such as planning (proposal), manufacturing, quality control, etc., so it can be said that the profit structure is three-dimensional.

Especially in recent years, not only simple trading company functions but also planning and proposal capabilities have been strengthened, and the Z axis direction is getting higher (thicker). If compared to a general building, it is similar to the fact that taller buildings are stronger and less likely to collapse, and it can be said that the company's profit structure is strong and does not collapse easily. The fact that it has such a three-dimensional profit structure is also a characteristic and strength of the company.

3. Main services and functions

The company provides not only basic services and functions as an electronics trading company, such as optimal component supply, credit/finance, and delivery/inventory management, but also more advanced services and functions with high added value, such as planning, development, design, and manufacturing services. The company has listed the following 5 services and functions as features, and it can be said that it is precisely because there are such functions that various products are connected to business and incorporated into business results.

(1) Planning, development and design

The sales department, development department, and technical department cooperate to plan, develop, and design new parts and units.

(2) Procurement agency service

We procure parts that are optimal for the quality, cost, and delivery dates required by customers.

(3) Manufacturing Services

We provide customized products, module products, and finished products (ODM) by utilizing our own factories and excellent domestic and international outsourcing.

(4) Quality and Environmental Management

In order to deliver high quality products, we have established an advanced quality control system.

(5) Overseas Networks

Using a worldwide network, smooth global logistics is realized.

The company maintains a relatively high gross profit margin by adding high value-added services and functions to simple trading company functions. It can be expected that the company's gross profit margin will further improve by utilizing the five services and functions in the future.

Maintain profit growth with a “constitution that allows you to ride in growth fields”

4. Long-term performance trends

Looking back on the company's long-term performance trend, it can be said that while being in the electronics industry with intense ups and downs, it has achieved stable growth by overcoming waves such as economic cycles and product cycles. In the early 2000s, it grew in relation to mobile phones, and FPC (printed wiring board) components, board mounts, optical films, etc. were the main products. As a result of these products, sales exceeded 100 billion yen for the first time in the fiscal year ending 2008/3. After that, due to the transition of televisions to terrestrial digital broadcasting, etc., components related to LCD televisions became a major business. Also, since 2010, smartphones and tablets have grown rapidly, and the company sold various films and glass products there to achieve a quick recovery from the Lehman shock and continuous renewal of the highest profit, and sales exceeded 200 billion yen for the first time in the fiscal year ended 2016/3. The past few years have reached a boom due to the maturing of the smartphone market, but growth has been maintained by strengthening planning and proposal capabilities, such as selling drive recorders as ODM products, and achieved a record high sales of 239.7 billion yen in the fiscal year ending 2023/3. Furthermore, the next growth market for the company is shifting to automobile-related and overseas markets. It is expected that the business opportunities of the company, which not only has a large number of business partners and diverse products, but also has proposal and manufacturing capabilities, will expand further.

In this way, the company has maintained growth by providing appropriate parts and products according to the market and situation from time to time. This can also be said to be a “strategy that is quick to see opportunities,” but in reality, we see “the constitution that allows us to ride winning horses” as an advantage and characteristic of the company. The company can grow sustainably because it has a broad customer base, many products, and in addition development capabilities, because it has a “constitution that can ride in a growth field,” or in other words, a “constitution that can ride a winning horse,” and this is not possible for any company.

(Written by FISCO Visiting Analyst Noboru Terashima)