■ Long-term Growth Strategy
Though not having released any mid-term management plans, Tensho Electric Industry <6776> internally declares to execute necessary measures with set goals. The company is poised to execute the following policies, though the outlook is uncertain, including Russia-Ukraine situation.
(1) Establishing a foundation for a sustainable growth-oriented corporate culture
Actively recruit talents and continue investing in facilities. The company is considering not only expanding production investment but also actively pursuing renewal investments such as replacing machinery, thanks to the stable cash flow.
(2) Expand domestically-driven production and decrease the proportion for automobile industry
The proportion of revenue from the automobile industry is currently about 55%, with a goal set to decrease it to around 35%. This means not reducing automobile-related revenue, but expanding domestically-driven production to increase overall revenue, thus reducing the proportion of automobile industry relatively. One of the representative products is a rainwater storage and infiltration tank. It is said that the product has already been gradually penetrating the market. Moreover, it is expected to have a tailwind for the company's products in the long run, as the idea of "storing rainwater" is increasing in each local government due to flood damage by recent typhoons.
(3) Expand overseas businesses
The company's consolidated subsidiary, Sanko America Corporation, has made a large-scale equipment investment of about 4.5 billion yen (construction of a new factory in Mexico). Although the new factory has already started operating in October 2022, it began to greatly contribute to the consolidated performance from the fiscal year ending March 2024*. In the future, the company plans to further expand non-automotive businesses overseas and also expand the "paint-related" business in Japan. While the automotive-related business, which is its mainstay, continues to grow, the company plans to expand non-automotive fields even more, and its future direction is highly anticipated.
*Since the US subsidiary has a December settlement, the results up to December will be reflected in the company's March settlement.
(Written by FISCO guest analyst Noboru Terashima)