■Business Overview of Saxa 6675

1. Business Overview

The business details of each company in the company's group are as follows. In addition to group management as a business holding company, the company provides products, services, and support for IT equipment/communication networks, AI, IoT, cloud services, etc. The head office is in Minato-ku, Tokyo, the development base is the Shin-Yokohama office, the sales office is each branch office and sales office in Tohoku, Tokyo, Chubu, Kansai, Kyushu, Sapporo, Omiya, Shizuoka, Kanazawa, Takamatsu, and Hiroshima, and the main production base is SAXA Techno (Yonezawa City, Yamagata Prefecture).

The subsidiary System K (Kita-ku, Sapporo) utilizes technology such as vehicle number recognition systems and AI image recognition/face recognition to develop network video recorders (NVR), network video management systems (VMS), etc. Soar (Yonezawa-shi, Yamagata), which became a subsidiary at the end of 2024/7, was established in January 2022 after operation as a subsidiary of Tohoku Pioneer Co., Ltd., and is developing, manufacturing, and sales of organic EL devices (displays, special light sources, etc.), and development/contract manufacturing services (ODM/EMS), etc. We possess product development capabilities and manufacturing technology know-how centered on car electronics cultivated as a pioneer group. Saxa System Engineering (Hachinohe City, Aomori Prefecture) is developing software development etc. related to information communication. Saxa Techno (Yonezawa-shi, Yamagata) manufactures communication equipment and information devices, assembles printed circuit boards, design/manufacture testers, design/manufacture of molds and jigs, and develops OEM. Saxa Business System (Shinagawa-ku, Tokyo) sells NTT products in general.

2. Sales segments and main products

The company group is developing 3 businesses: “Saxa brand business,” “OEM business,” and “system business,” with small and medium-sized enterprises as the main customer base. The main products in each business are as follows. In the “Saxa brand business,” it is 1) business phones of the Saxa brand, 2) network security-related devices such as UTM (integrated threat management appliances) that protect companies from threats of ransomware and cyber attacks and realize safe, secure, comfortable, and convenient office spaces, and 3) security equipment such as security cameras and reporting devices. Also, in the “OEM business,” it is 1) OEM business phones, 2) amusement-related devices such as card readers and writers, 3) OEM security equipment, etc., 4) EMS for mounting printed circuit boards and design/manufacture of various test and inspection machines, etc., and in the “system business,” it is 1) system development, 2) video solutions such as network video recorders (NVR) and network video management systems (VMS).

As already described, the company changed the disclosure method from the 2025/3 fiscal year, but in order to see past sales trends and sales structure ratios as reference values, the changes in sales for the past 4 periods (fiscal year ending 2021/3 to the fiscal year ending 2024/3) in the conventional classification based on the company's disclosure materials are as follows. Consolidated sales increased from 36.6 billion yen for the fiscal year ending March 31, 2021 to 40.9 billion yen for the fiscal year ending 2024/3. Looking at sales for the fiscal year ending 2024/3 by field, the network solutions field was 26.1 billion yen, the security solutions field was 14.8 billion yen, and by business, the Saxa brand business was 13.6 billion yen, the OEM business was 21.9 billion yen, and the system business was 5.4 billion yen. There has been no major change in the composition ratio for the past 4 periods, and by field, the network solutions field is 60 to 70 percent, the security solution field is 30 to 40 percent, and by business, the Saxa brand business is over 30 percent, the OEM business is over 50 percent, and the system business is over 10 percent. Also, when viewed by business, business phones, networks, OEM business phones, amusement, and EMS are the main forces. Regarding amusement, there is a possibility that sales of card readers, writers, etc. will fluctuate depending on demand for replacement of new card units.

Focus on developing new products and solutions that meet customer needs

3. Risk Factors, Issues, and Countermeasures

Common risk factors include demand fluctuations due to economic/economic factors, etc., intensification of competition, exchange rate fluctuations, product obsolescence and delays in responding to technological innovation, quality/product liability issues, and legal regulations. In the case of the company, demand fluctuation risks are particularly affected by demand fluctuations in domestic information and communication network-related markets and amusement-related markets, and there is a risk of price declines due to intensifying competition. However, there is a sense of market maturity for business phones, which are the company's main products, but currently the division of the market is progressing, with 4 domestic companies securing high market shares in their respective fields of expertise. Furthermore, demand for DX is on an upward trend among small and medium-sized enterprises, which are the company's main customer base, and it is thought that there is room for further market development. Also, with regard to the amusement-related market, there is a possibility that demand will fluctuate due to legal regulations, equipment replacement, etc. in the pachinko/pachislot industry.

Regarding exchange rate effects, the company has few export sales, and there is a possibility that it will be affected by exchange rate fluctuations (depreciation of yen is a cost increase factor) in foreign currency transactions in parts procurement from overseas. In addition to making some exchange reservations as a countermeasure against this, measures such as passing on to product prices are being taken. Regarding response to technological innovation, we are always accurately grasping changes in technology and markets, and focusing on developing new products and strengthening solutions that meet customer needs, such as the use of AI. Note that the sales destination where the ratio of the company's total sales exceeds 10% is the NTT Group (ratio to sales is 28.9% for the fiscal year ending 2023/3, 26.7% for the fiscal year ending 2024/3), but we believe that dependence on specific customers is not at a level where there are concerns.

(Author: FISCO Visiting Analyst Masashi Mizuta Exhibition)