Business Overview 4. DX Regional Collaboration Project Signpost's DX and Regional Collaboration Project started in March 2022 with the establishment of the DX and Regional Collaboration Division. It aims to provide products and services that contribute to regional collaboration by collaborating with local financial institutions nationwide, utilizing its own DX technology and open innovation. In August 2022, it began working with Oita Made Co., Ltd., which was established with the investment of multiple companies in Oita Prefecture, including Oita Bank, to sell original products made in Oita Prefecture to both domestic and overseas markets and to match local companies and Signpost's products and services in order to promote the revitalization of Oita Prefecture's economy. In addition, in April 2024, it started offering DX support services for medium-sized and small businesses. As the first effort, it supports the creation of DX declaration by (The) Fourth Hokuriku Bank, Ltd. (Niigata City, Niigata Prefecture) to deploy DX declaration support services to the market. Furthermore, it will realize new solutions by commercializing its own technology and open innovation and promote regional collaboration through innovation.

1. Business content The main business of Sakai Heavy Industries <6358> is the manufacturing and sale of road rollers used for road paving, and road roller related products account for about 95% of its revenue. In addition, the company's corporate philosophy is to contribute to the world's land development through its road construction machinery business. 2. Characteristics and strengths As previously mentioned, the company is a specialist manufacturer of road construction machinery such as road rollers, but has the following characteristics and strengths. (1) Long history as a specialist manufacturer The company's biggest feature (strength) is its long history as a specialist manufacturer of road construction machinery, including road rollers. In other words, by focusing on and specializing in its global niche strategy, it has accumulated its own unique technologies. This long history and experience have enabled it to enhance its technical and credit strengths. (2) Technical strengths Simply saying "compacting or paving roads" requires different pressures, rotation forces, etc. (compaction technology) depending on the location, soil conditions, etc. According to the company, the construction function of the roller itself determines the final quality (density, flatness, lifespan) of the road or embankment, and it is generally said that if the compaction density is increased by 1%, the road lifespan is extended by 10%. Therefore, for construction clients and contractors, product quality (performance) is also a very important factor, in addition to the price of road rollers. Since the company has been a specialist manufacturer of road construction machinery, including road rollers, for a long time, it boasts high technical strengths in compaction technology that are not easily matched by other companies in the same industry. In summary, the technical strength of the company can be described as "knowledge about entities and concepts." In other words, it is their engineering ability to oversee the entire construction project and their ability to adapt to a variety of materials. Specifically, it is the combination of various technologies, such as mixing with tires, vertical vibration to increase the compaction force, horizontal vibration to scrape the ground, vertical vibration to form a thick layer of compaction, further high-density compaction by tire vibration, and solution to difficult compaction problems through high-frequency vibration. An example of the company's high technical strength is the ability to control the relationship between "mechanical vibration technology" and its "vibration suppression technology." Various mechanical vibrations are an important means of improving construction performance in road rollers, but this vibration itself can cause machine malfunctions and have a significant impact on operator comfort. Therefore, the power (technology) to control the conflicting relationship between vibration compaction strength and machine quality is important, and this cannot be accumulated in a short period of time.

Mimaki Engineering Co., Ltd. <6638>'s business content is segmented not only by product but also by sales market. The sales market segment includes three segments: the SG market, which supports the production of advertising and signage, the IP market, which decorates industrial products and small consumer items, and the TA market, which prints on cloth and ready-made clothing. Because many of the final products are directly related to consumers' lives, such as printed matter, signs, smartphone cases, electrical products, and clothing, products that utilize the company's technology are surprisingly ubiquitous. The company quickly captures market needs and quickly provides new products through targeted development. On the other hand, the replacement cycle for SG, IP, and TA market products is generally 4-5 years, so the company has a revenue structure that can accumulate annual sales by regularly introducing new products into each market.

Digitalization is advancing in the industrial printing industry, and there are genres with a high digitalization rate, such as display graphics, such as signage. However, there are still many genres that mainly rely on analog printing, such as textiles, furniture and interior, and package labels, which have large markets. Therefore, the overall digitalization rate of industrial printing is said to be as low as 5-10% on average, and there is great growth potential for industrial inkjet printers. In addition, there is a large room for expansion through the introduction of FA. Competitors include American and domestic printer manufacturers. Although there are companies in China that manufacture industrial inkjet printers, it seems that they are omitted when calculating market share due to the shortage of industrial data and the relatively small size of manufacturers, and the low quality of ink. Against this backdrop, the company's sales in the IP and TA markets are rapidly expanding. Due to the increasing demand for multi-product and small-lot production needs in the industrial sector, high-value-added digital-on-demand printing has spread, replacing the conventional low-value-added analog printing that was the mainstream in the production site. As a result, the IP and TA markets are growing significantly as the second and third pillars alongside the SG market.

(1) The SG (Sign Graphics) market In the SG market, printing is performed on advertising and signage, window graphics, car wrapping, and soft signs using printing materials such as vinyl sheets, banner sheets, and window films. The company boasts the second largest share of the world market (27.2% of share in 2022) in large-format inkjet printers up to 160cm. In addition, they occupy about 80% of the market in the three major companies, including the company, in relatively digitized fields. (2) The IP (Industrial Products) market In the IP market, UV-cured ink is used to print a wide variety of materials, including plastics, acrylics, glass, metals, and wood, as well as industrial products, such as instrument panels for automobiles and operation panels for home appliances, and small items such as smartphone cases, toys, and novelties. In 2010, when the market price was over 10 million yen, they released a product for a greatly reduced price of 3.3 million yen, which became the catalyst for expanding the company's share. As a result, the company ranks first in the world market (63.9% of share in 2022) for desktop UV flatbed printers. UV-cured ink can easily demonstrate the advantages of digitization since it can print on any material, but the field still offers many analog genres that rely on conventional printing. As a result, the overall digitalization rate of the industrial printing industry is said to be as low as 5-10% on average, making the growth potential of industrial inkjet printers extremely high. The chemical field accumulated over the past 20 years since product development has become a major differentiation factor in responding to market needs. (3) The TA (Textile & Apparel) market In the TA market, pre-sewn fabric (textile) or printed ready-made clothing fabrics, such as fashion apparel and sportswear, sneakers (upper materials), interiors, and fabrics made from polyester, rayon, cotton, and silk, respectively, are used. The company developed the world's fastest (at the time) sublimation transfer inkjet printer in 2012, which accelerated growth after being adopted by leading global fashion brands. Currently, their sublimation transfer inkjet printer that can achieve a clean work environment in a small space at low cost has a 19.4% share of the world market (2022).

The SG (Sign Graphics) market

In the SG (Sign Graphics) market, printing is performed on advertising and signage, window graphics, car wrapping, and soft signs using printing materials such as vinyl sheets, banner sheets, and window films. The company boasts the second largest share of the world market (27.2% of share in 2022) in large-format inkjet printers up to 160cm. In addition, they occupy about 80% of the market in the three major companies, including the company, in relatively digitized fields.

In the IP (Industrial Products) market, UV-cured ink is used to print a wide variety of materials, including plastics, acrylics, glass, metals, and wood, as well as industrial products, such as instrument panels for automobiles and operation panels for home appliances, and small items such as smartphone cases, toys, and novelties. In 2010, when the market price was over 10 million yen, they released a product for a greatly reduced price of 3.3 million yen, which became the catalyst for expanding the company's share. As a result, the company ranks first in the world market (63.9% of share in 2022) for desktop UV flatbed printers. UV-cured ink can easily demonstrate the advantages of digitization since it can print on any material, but the field still offers many analog genres that rely on conventional printing. As a result, the overall digitalization rate of the industrial printing industry is said to be as low as 5-10% on average, making the growth potential of industrial inkjet printers extremely high. The chemical field accumulated over the past 20 years since product development has become a major differentiation factor in responding to market needs.

In the TA (Textile & Apparel) market, pre-sewn fabric (textile) or printed ready-made clothing fabrics, such as fashion apparel and sportswear, sneakers (upper materials), interiors, and fabrics made from polyester, rayon, cotton, and silk, respectively, are used. The company developed the world's fastest (at the time) sublimation transfer inkjet printer in 2012, which accelerated growth after being adopted by leading global fashion brands. Currently, their sublimation transfer inkjet printer that can achieve a clean work environment in a small space at low cost has a 19.4% share of the world market (2022).

The TA (Textile & Apparel) market

Other businesses

In addition to industrial inkjet printers and cutting plotters, the company also operates a 3D printer business and FA business. In the 3D printer business, they manufacture products such as product design, figures, and three-dimensional sign products using 3D printers, which can produce more than 10 million colors and large-scale designs up to a height of 1.8m. In the FA business, they contribute to the automation of the production process, such as loading-printing-coating-loading out, using on-demand digital coating machines based on vector technology and mechatronics technology.

(5) The chance for the IP and TA market.

In the production sites of the IP and TA markets, the demand for small-lot production with high variety has increased due to diversification of needs and shortening of product cycles, although mass production has been the norm until now. The digital on-demand production of the company's products can achieve quick delivery and low cost for small-lot production with high variety, because they can print only the necessary amount without using printing plates. In addition, digital on-demand production can easily add value to products, such as individuality, originality, and seasonality, to differentiate and increase profitability. Moreover, since they can secure a clean work environment with space-saving equipment, they can produce near consumption areas in the city, which can reduce time and cost for logistics. Such productivity and environmental suitability of digital printing are considered to have advantages that can be exerted in the entire industry, not just for specific markets, such as IP and TA.

(Author: FISCO guest analyst Nobumitsu Miyata)