■Summary

C&G Systems ＜6633＞ is a manufacturer specializing in CAD/CAM systems for molds and boasts a domestic market share of 20% (estimated). The number of customers, from major manufacturers to small to medium mold makers with less than 20 employees, has risen to about 7,000 offices.

1. Interim results for the fiscal year ending 2024/12 (actual results)

Consolidated financial results for the interim period ending 2024/12 fell below the initial plan, with sales of 1,830 million yen (down 11.4% from the same period last year), operating income of 54 million yen (down 69.1% from the same period), ordinary profit of 86 million yen (down 62.0% from the same period), and interim net profit attributable to parent company shareholders of 39 million yen (down 70.9% from the same period). In the main CAD/CAM system business, capital investment in the automotive mold and parts manufacturing industry has been suppressed since the direction of the EV shift is still uncertain domestically. Also, although there were some strong regions overseas, demand related to Thai Japanese automobiles did not recover and product sales were sluggish, so sales and profit declined in the same business. In the mold manufacturing business, sales declined drastically due to delays in the development and production of new models of automobiles and the order acceptance situation remained sluggish, and segment losses were recorded, albeit at a small amount.

2. Results for the fiscal year ending 2024/12 (forecast)

Consolidated financial results for the fiscal year ending 2024/12 have not changed from the initial forecast, with sales of 4070 million yen (up 6.4% from the previous fiscal year), operating income of 300 million yen (up 231.3% from the same period), ordinary income of 341 million yen (up 126.2% from the same period), and net income attributable to parent company shareholders of 193 million yen (up 182.6% from the same period). Results for the first half of the fiscal year fell short of initial forecasts, but since there are signs of some recovery currently, an increase in sales and profit is expected for the full year. In the CAD/CAM system business, etc., although there are concerns that the EV shift trend of automobile manufacturers and soaring raw materials will continue to have an indirect impact on capital investment in the automobile mold/parts manufacturing industry where the company's products are used, it is expected that it will move on a moderate recovery trend against the backdrop of recovery in the automobile-related market and semiconductor market, and we will work to expand profits by continuing to promote the medium- to long-term business policies described later. As for the mold manufacturing business, the end of the 2024/12 fiscal year is a temporary cutoff period, and since demand for molds is expected to recover as new model development resumes from the second half of this fiscal year, the company anticipates that earnings will recover from the fourth quarter to the first half of 2025.

3. Continue to expand existing revenue sources and promote the development of next-generation revenue sources

As a medium- to long-term business policy, the company has set four pillars: 1) expansion of core revenue sources, 2) expansion of CAD/CAM adaptation areas, 3) deepening technology (business expansion into the IoT field), and 4) promotion of research and development, and there is no change in this policy. Furthermore, in addition to establishing a research and development department with the aim of providing “high value-added products” and “high value-added functions,” the Vietnam Representative Office “Vietnam Technical Center” was established in Hanoi in 2023/2 to accelerate business development in ASEAN. There are no changes to the quantitative targets CAGR of 5% for the fiscal year ending 2018/12 to the fiscal year ending 2025/12, ordinary profit margin of 20%, and ROE of 15% or more for the fiscal year ending 2025/12. Achieving an average growth rate does not seem easy, but there is a possibility that the target value will be achieved in a single year.

■Key Points

・It is a manufacturer specializing in CAD/CAM systems for molds, with a domestic market share of 20% (estimated), and the number of customers is approximately 7,000 offices

・The first half of the 2024/12 fiscal year is at a standstill, but profit is expected to increase in the second half of the year

・Continuing the medium- to long-term business policy: We aim for growth with four main pillars

(Written by FISCO Visiting Analyst Noboru Terashima)