■Future outlook

1. Earnings forecast for the fiscal year ending March 31, 2025

As for Fujibo Holdings' earnings forecast for the fiscal year ending 2025/3, sales are 42,000 million yen (up 5,891 million yen from the previous fiscal year), operating income is 5,100 million yen (up 2,281 million yen from the same period), ordinary profit is 5,300 million yen (same increase of 2,023 million yen), and net income attributable to parent company shareholders is 3,500 million yen (same increase of 1,382 million yen).

As for semiconductor demand trends, cutting-edge semiconductor fields such as generative AI are currently doing well, but the general-purpose semiconductor field for smartphones, personal computers, and 5G base stations is still recovering, recovering moderately in the 2025/3 fiscal year, and is expected to get on a growth trajectory in the 2026/3 fiscal year. Along with this, it is expected that orders for abrasive materials will also be strong in the first half of the fiscal year ending 2025/3, mainly for CMP applications, in the second half, silicon wafer applications will recover, demand for legacy semiconductors (analog devices, discrete devices, sensors, etc.) will also recover in the 2026/3 fiscal year, and the abrasive materials business as a whole will grow.

2. Earnings Forecast by Segment

(1) Abrasive materials business

We anticipate sales of 16,500 million yen (up 23.0% from the previous fiscal year) and operating profit of 3,100 million yen (up 185.2% from the same period, operating profit margin 18.8%). In the CMP application market, which is the main market for the abrasives business, the semiconductor market bottomed out from 2023/6/7, orders have recovered from the second half of the 2024/3 fiscal year, and it seems that sales will continue to be even stronger in the 2025/3 fiscal year. In particular, the company's abrasives (soft pads) have a high usage ratio in the logic semiconductor field, and logic semiconductors used in generative AI and IoT fields tend to grow at a high rate, so it seems that they are driving order recovery. Also, in the semiconductor supply and demand cycle, it is said that the silicon wafer process is delayed by about 5 months compared to the CMP process. Furthermore, since too many silicon wafers themselves have been made, inventory adjustments are taking time, so the inventory adjustment phase will continue for a while in the 2025/3 fiscal year, and it is expected that the order acceptance phase will begin around the 2024/7/9 fiscal year.

Meanwhile, there are high expectations for “SiC wafers” and “miniaturization and lamination of semiconductors” as new application markets. The SiC wafer (power semiconductor) market is expected to become a large-scale market (“second pillar” after CMP applications) in the future, including renewable energy (solar power generation, wind power generation, etc.) as the conversion of automobiles into EVs progresses, and research and development in this field is being prioritized without loosening the accelerator. Also, in the memory semiconductor field, miniaturization technology becomes necessary as lamination progresses, and this is where the company's soft pads come into play. Soft pads have already begun to be used in the NAND flash memory field.

(2) Chemical industrial products business

We anticipate sales of 15,000 million yen (up 19.8% from the previous fiscal year) and operating profit of 1200 million yen (up 35.1% from the same period, operating profit margin of 8.0%). The slump in demand for electronic materials centered on semiconductors is likely to continue for some time to come. As for functional materials, we have been developing and prototyping new materials with major chemical manufacturers since 2021, but some mass production is planned for the 2025/3 fiscal year. In particular, they are trying to focus on efforts to acquire new customers and new orders. Furthermore, since orders for functional materials are expected to expand in the medium to long term, we will further advance the strengthening of cooperation between the 2 domestic factories (Yanai Plant, Takefu Plant), and begin investments related to ancillary equipment for new plant equipment.

(3) Lifestyle clothing business

We anticipate sales of 7,000 million yen (up 0.7% from the previous fiscal year) and operating profit of 700 million yen (down 10.5% from the same period, operating profit margin of 10%). “Angle,” which is a growth field (luxury underwear), has been selling well since the middle of the 2023/3 fiscal year, and orders are flooding in from wealthy people overseas such as China. In the fiscal year ending 2025/3, sales of “angles” for overseas markets will be expanded using EC, etc. In order to make the lifestyle clothing business an even more profitable business, in addition to proper pricing in response to rising costs and narrowing down to high-profit standard products, we are proceeding with the transformation to an e-commerce type business model through direct marketing utilizing SNS, etc.

(4) Other (chemical products) business

We anticipate sales of 350 million yen (up 8.7% from the previous fiscal year) and operating profit of 100 million yen (up 69.5% from the same period, operating profit margin 2.9%). Since demand for medical device parts is expected to expand further, both sales and operating profit for the fiscal year ending 2025/3 are expected to increase by restructuring the production system and utilizing group synergy with IPM, which joined the group in 2022.

3. Prospects for capital investment

The capital investment plan for the fiscal year ending 2025/3 is scheduled to double the previous fiscal year of 6,252 million yen (93.0% increase from the previous fiscal year), and we will prepare for the recovery of the semiconductor market and development of next-generation products by reviewing capital investment plans and prioritizing development investments in response to the current rapid decline in semiconductor demand. In the abrasives business, the movement to increase production capacity has gone round and round, and research and development investments are being strengthened as medium- to long-term growth investments. Investment themes include construction of technology development buildings and Taiwan laboratory facilities. In the chemical industrial products business, orders for functional materials are expected to expand over the medium to long term, so investments related to ancillary equipment for new plant construction have begun.

4. Capacity building investment in the chemical products business

In the chemical industrial products business, electronic materials market conditions, mainly semiconductors, have deteriorated, and the tough business environment is expected to continue for a while. Meanwhile, orders for strategic new products with a view to global expansion are expected in the medium to long term. We have been developing and prototyping new materials with major chemical manufacturers since 2021, and it is a “one-of-a-kind” product with differentiation and uniqueness that only the company can make, and it is a large-scale new product that accounts for a few percent of the industrial chemical products business. Demand for the 2024/3 fiscal year is increasing, and it is expected to expand steadily even after the 2025/3 fiscal year, and order volume exceeding current production capacity is expected. This time, large capital investment (total amount of about 6.2 billion yen) will be carried out in a form commensurate with the order volume. Note, medium- to long-term order volumes (forecasts) and prices are visible to some extent in relationships with client companies. Based on that premise, we made a large-scale investment. Also, the company sees that return on investment in a relatively short period of time is possible. Cooperation between the Yanai and Takefu plants has already been strengthened, and construction of a new plant has begun.

(Written by FISCO Visiting Analyst Keiji Shimizu)