■Summary

Kodama Chemical Industries (4222) is a resin processing manufacturer founded in 1946, and has developed by developing creative molding methods in this field. It was listed on the Tokyo Stock Exchange (hereafter, Tokyo Stock Exchange) 2nd section market in 1962, and transitioned to the standard market due to the reorganization of the Tokyo Stock Exchange market division in 2022/4.

The segment is the main “mobility business (formerly auto parts business. It is divided into 3 parts: “same below),” “living space business (former housing equipment/air conditioner parts business),” and “advanced & essential business (former advanced market business).” The “mobility business” handles a wide range of automobile-related products, such as various pillars, luggage trims, trunk trims, door trims, spoilers, fender covers, instrument panels, front spoilers, and skirts. In recent years, in long fiber glass mat molding impregnated with plastic, we have succeeded in mass production of a new glass fiber mat press method product that enables molding of complex shapes while maintaining uniform dispersion of long fiber glass, which was considered difficult with conventional construction methods. Furthermore, we are developing and expanding sales of new products, such as mass production of products using the three-dimensional decoration method, which makes it possible to uniformly bond films that have been printed and textured with high quality to substrates with complex three-dimensional shapes that are unsuitable for decoration. Meanwhile, the “living space business” provides resin products used around water, such as bathroom vanities, kitchens, toilets, and baths, etc., and above all, bathroom vanity mirrors are representative products. Furthermore, the “Advanced & Essential Business” develops game packages, etc. We temporarily fell into excess debt in the fiscal year ending 2020/3, but this is because payments when capital enhancement measures were implemented spanned periods, and the excess debt has already been resolved. Furthermore, in addition to paying off business revitalization ADR debts, the business revitalization plan period ended, and profits began to rise in earnest, and along with that, it became possible to take an aggressive management stance.

The company is also developing business in Southeast Asia such as Thailand and Vietnam, and the Southeast Asian sales composition ratio for the 2024/3 fiscal year is 49.3% for the main “mobility business” and 38.0% for the “living space business.” In the past, they had the experience of being forced to struggle overseas, and in addition to withdrawing from Indonesia in 2018/3, where the slump continued, they also withdrew from China in 2020/4, and proceeded with business structural reforms, such as restructuring the production system and carrying out a drastic review of the profit structure.

In the 2024/3 fiscal year, although the effects of the spread of the novel coronavirus infection (hereinafter, COVID-19) receded along with the domestic transition to Class 5, material prices due to soaring crude oil and depreciation of the yen became negative. Furthermore, due to scandals with finished car manufacturers, which are the main users, delivery of new products fell behind schedule, etc., and this was a factor in sluggish growth. Against this backdrop, sales were forced to decline to 14,696 million yen (down 4.5% from the previous fiscal year), and operating profit fell to 165 million yen (down 56.6% from the same period) following the previous fiscal year. As for the financial results for the fiscal year ending 2025/3, sales are expected to increase slightly to 15,400 million yen (up 4.8% from the previous fiscal year), while operating profit is expected to increase drastically to 460 million yen (up 178.1% from the same period).

■Key Points

・Resin processing manufacturer with strengths in automobile parts, housing equipment, and refrigeration parts

・The profit structure was greatly improved due to the effects of business structural reforms, and business revitalization was completely completed

・The fiscal year ending 2025/3 is expected to recover with a significant increase in profit

(Written by FISCO Visiting Analyst Fumiya Mizuno)