| OPTEX CO., LTD. (6914) |
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Company |
OPTEX CO., LTD. |
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Code No. |
6914 |
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Exchange |
TSE 1st Section |
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Industry |
Electric equipment (manufacturer) |
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President |
Toru Kobayashi |
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HQ Address |
5-8-12, Ogoto Otsu, Shiga |
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Year-end |
December |
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URL |
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* Stock price as of the close on November 7, 2014. Number of shares at the end of the most recent quarter excluding treasury shares.
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* Estimates are those of the Company.
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| Key Points |
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| Company Overview |
 Business Description   |
| Fiscal Year December 2014 3Q Earnings Results |
 Year-on-year increases of 8.8% in sales and of 12.8% in ordinary profit
Sales are ¥18,734 million, up 8.8% yoy (up 4.6% yoy in Japan, up 11.0% overseas). For the performance of each segment, the sensing (security-related), sensing (automatic door-related), and FA segments have been healthy. A positive impact from foreign exchange is ¥1,010 million. Without considering it, sales growth rate is 2.9%. Operating profit is ¥2,077 million, up 21.1% yoy. The augmentation of SG&A costs (increases of 194 million in personnel expenses, of ¥70 million in costs, of ¥132 million in expenditures for establishing a joint venture, and of ¥291 million in the effect of exchange rate change) is offset by the increase in gross profit (increases of ¥260 million in sales and of ¥654 million in exchange gain, and a decrease of ¥135 million in costs), but without considering the effect of exchange rate fluctuation, it is nearly equal to that for the same period of the previous year. Ordinary profit is ¥2,295 million, up 12.8% yoy, due to the decrease in exchange gain.
 Quarterly Financial Results
  Sensing Business
Sales are ¥13,116 million (up 9.4% yoy), and operating profit is ¥1,386 million (up 21.6% yoy). As for the breakdown of sales, the security-related business earned sales of ¥9,513 million (up 8.5% yoy), while the automatic door-related business achieved sales of ¥3,106 million (up 9.7% yoy). The domestic sales of the security-related business decreased 5.1% yoy. The number of orders from security firms has been healthy, but the number of orders from nuclear power-related organizations reached a peak and then declined. As for overseas sales, there were year-on-year increases of 6.3% in North America, of 14.1% in Europe, and of 23.1% in Asia. The sales for outdoor security sensor for residential market in southern Europe and the sales subsidiary in South Korea increased steadily. The domestic sales of the automatic door-related business increased 4.0% yoy. Performance has been healthy, as the sluggishness after the consumption tax hike was not so significant and the construction field has been lively. Outside Japan, sales increased 15.8% yoy in North America, and 23.0% yoy in Europe. The sales toward large automatic door manufactures have been healthy. FA Business
Sales are ¥3,862 million (up 14.6% yoy), and operating profit is ¥192 million (down 13.1% yoy). Domestic sales increased 17.1% yoy, thanks to the active equipment investment in the fields of distribution, electronic parts, and automobiles. Outside Japan, sales were preferable in Europe where the products are sold to mainly SICK in Germany, and in China where a joint venture was established (up 6.3% yoy in Europe; up 52.8% yoy in Asia). Profits declined, as profit margin decreased due to the change in the composition of sales and SG&A costs increased due to the full-scale operation of the joint venture in China. EMS Business
Sales declined by 15.5% yoy to ¥611 million, while the segment profits surged by 64.9% yoy to ¥221 million. The decrease in orders led to a drop in sales but the improvement in the cost ratio pushed up the profits.
  (4) Topics
The company released 15 models of the Raytec Vario Series of auxiliary projectors for cameras (*) in Sep. 2014.◎ 15 models of auxiliary projectors for cameras added to the lineup. The subsidiary Raytec's auxiliary projectors for security cameras for intruders have been distributed to be used for security at important facilities, including power plants, factories, and airports, inside and outside Japan, and their global share is 50%. The projector Raytec Vario series added to the lineup can illuminate a broad area homogeneously at a long distance. The angle, range, distance, etc. of light can be selected and combined freely according to the setting environment and camera specs, and these products can meet the diversified demand for cameras, including the monitoring for preventing disaster and keeping safety. The company will cultivate markets while assuming the following use of purpose.  Anti-disaster surveillance: water volume in dams and rivers, snow depth meters, volcanoes, landslideSafety surveillance: traffic record, railroadsOthers: a system for reading number (license) plates, and improvement of the surveillance performance of existing cameras
(※) What is the supplementary lighting for cameras?
High-resolution surveillance cameras are now available due to recent technological innovation, but when a picture is taken in the dark, the light amount on each pixel decreases, and so the image becomes vague. By combining a projector and a surveillance camera, it is possible to offer optimal illuminance according to the angle of view and imaging distance of the camera, bring out the potential of the camera at night, and obtain clear images. |
| Fiscal Year December 2014 Earnings Estimates |
 The earnings forecast has not been revised. The double-digit increases in sales and profits are expected.
The earnings forecast has not been changed. As for the sales in each segment, sales are estimated to be as healthy as ¥13,612 million for the security-related segment (up 14.6% yoy), ¥4,198 million for the automatic door-related segment (up 7.0% yoy), ¥5,306 million for the FA segment (up 13.7% yoy), and ¥3,584 million for others (up 15.1% yoy). The second half will see double-digit increases in sales and profits from the first half. Dividend per share will be an annual total of ¥35, composed of a ¥20 interim dividend, including the ¥5 dividend for commemorating the 35th anniversary of foundation, and a ¥15 term-end dividend. Estimated payout ratio is 31.1%.
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| Conclusions |
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However, it is concerned about the fact that the effects of exchange rate change on sales and profits are large and when excluding the effects, the performance has not improved from the same period of the previous year. According to the interview with the company, they are well aware of this problem, and plan to strengthen its earning system by reducing fixed costs further. In the short term, it is expected that corporate structures will be fortified, while considering the effects of the recent yen depreciation. In the medium term, it is expect the outcomes of the cultivation of the security camera market, for which the product lineup has been enriched. |
| <reference : Progress in Business Strategies> |
 Strategies for each business are as follows: Security-related Business
Two pillars of business strategies in EMEA (the company's main focus area) are 1) to maintain the largest share in the outdoor security sensor market and 2) to enter into Middle East and African markets. On the back of heightening security consciousness, outdoor security sensor has now become fast-growing market with high potential. Demand for high-end sensors for oil-related facilities is rising in Middle East, while many projects are in progress in African countries. Americas are the second important area after EMEA for the company, where it intends to focus on Visual Verification. In US, police normally dispatches its officers to actual sites after confirming intruders on security cameras (some states have revised the legislation in that way), so demand for alarm systems equipped both with a sensor and a camera is growing. Meanwhile, in Japan, the company focuses on expanding sales of high-end security products for solar power companies as well as promoting system using LED lighting to parking lots and car dealers. In Asia, it tries to enhance sales of high-end products to meet an increasing demand created by infrastructure building as well as self-protection products for residential markets. According to the company, the security market is worth ¥10 trillion worldwide, of which ¥8 trillion is dominated by cash transport and call for services and the remaining ¥2 trillion is the equipment market. Within the latter, the market for security camera system is said to be worth ¥800 billion and the alarm system ¥300 billion, of which intrusion sensors account for ¥100 billion (¥30 billion for outdoor sensors). Honeywell keeps the largest share of 18.5% within the intrusion sensor market followed by tyco (11.5%), United Technologies (10.0%), OPTEX (7%), and BOSCH (6%). OPTEX plans to meet demand for overall security system by reinforcing products such as sensor cameras and lighting for cameras. Automatic Door-related Business
EMEA is the prime area for the company's automatic door-related business and it focuses on enhancing the product line-up which is compliant to European safety/product standards (enhancement of the product line-up for major sensors have completed). It now plans to enhance peripheral equipments and to build relationships with automobile makers based on trust by sharing business road maps. In Americas, another important area along with EMEA, the company tries to differentiate itself by its superior infrared technology. Specifically, it highlights the reliability of its infrared technology by installing 'doorway detection function' to all models. Furthermore, the company plans to launch appropriate products to maintain high level of customer satisfaction. And in Asia, where products with high quality and reliability have become widespread, it strives to work together with local makers in order to improve efficiency in sales activities. New Business Fields
The company drives forward its growth strategy in accordance with 'Matrix of Business Development', using matrices of market development and product development to achieve four strategic goals: 'expansion of core businesses', 'development of new application', 'development of newly emerging markets' and 'entry into new business fields'. New business fields include electric railway, public transport and vehicle detecting and the actual business plans for these fields are currently being drawn up in US and UK.In UK, an increasing number of laser scan sensors have been installed to prevent accidents at railroad crossings. Meanwhile, sensors for parking meters are under the proving tests in US.  ※ FA Business (scope of business of consolidated subsidiary OPTEX FA Co., Ltd.)
OPTEX FA aggressively offers solutions to automobile, semiconductor, electric/electronics, food/pharmaceutical/cosmetics, logistics and other industries to acquire new customers in Japan and overseas (particularly in emerging markets). As a part of this effort, it intends to reinforce the existing partnership with Mitsubishi Electric and explores other collaboration opportunities in Japan. In China, where production automation is under way, the local distribution company (joint venture) has officially started operation.
Disclaimer
This report is intended solely for information purposes, and is not intended as a solicitation to invest in the shares of this company. The information and opinions contained within this report are based on data made publicly available by the Company, and comes from sources that we judge to be reliable. However we cannot guarantee the accuracy or completeness of the data. This report is not a guarantee of the accuracy, completeness or validity of said information and or opinions, nor do we bear any responsibility for the same. All rights pertaining to this report belong to Investment Bridge Co., Ltd., which may change the contents thereof at any time without prior notice. All investment decisions are the responsibility of the individual and should be made only after proper consideration.Copyright(C) 2014 Investment Bridge Co., Ltd. All Rights Reserved. |
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