Hoya Corp

Recording in progress.

Simultaneous interpreting is available today.

If you would like to listen in Japanese, please choose the Japanese button. And if you prefer to listen to the English, please choose the English button. The presentation will be shown in Japanese, so if you would like to To see the English presentation, please go to our website. Since it is time, we would like to now start the fourth quarter financial results for year-ending March 2022. You will be able to use the simultaneous interpretation. If you would like to listen to the Japanese, please choose the Japanese button, and in English, choose the English button. From our company, Eichiro Ikeda, CEO, Ryo Hirooka, CFO, and Tomoko Nakagawa, CFO, the three will be presenting. First of all, Ikeda, CEO, and CFO, Nakagawa, will be talking about the direction of the new management. And then, followed by Hirooka, CFO, he will be explaining the fourth quarter results. And then we will take questions after that and plan to end at quarter past five. Those who are participating via PC, please look at the presentation materials shared on the screen. Mr. Ikeda, please. Ikeda will first like to explain. The first two slides is 80-year history of our company. First of all, as you can see on the slide, Hoya Group was established in 1941, starting from optical and glass business. And it has been split into different businesses. And we now have today. And some businesses have been split and replaced in 2007. And the scope business has been acquired by M&A. on a non-continuous basis. Next page, please. And the driving force behind this growth is market selection. We would like to select, engage in niche markets where the company's strengths can be utilized. Development of technology products are based on balances between product out and market in. Manufacturing is based on know-how to mass produce at low cost. to manufacturing processes optimized for Hoya products and sales, consulting type sales and marketing, providing customer feedback to product development improvement. So we always have differentiation in mind when we provide value to our customers. And that is the driving force behind our growth. Next page, please. And this is the mission of Hoya. For every lifestyle, we have eye and health solutions for each lifestyle life stage and information technology essential for modern social socioeconomic activities by raising quality of life of people around the world through the provision of solutions that support our mission that is we have mission we have three perspectives one to support vision and we glasses, contact lenses, as well as intraocular lenses. These are the products. As for functions, myopia management glasses for children, etc. And next, as for supporting health from that perspective, as for our product, we have endoscopes, artificial bones, surgical instruments, and pharmaceutical fillers. These are the group of products that we have. And third is supporting information society. We have masks and plans for semiconductors, ACP substrates for data centers, and photo masks for displays, and lens for in-vehicle cameras, etc. And through these products, we would like to solve social issues. Next slide, please. And this is the Hoya's vision. Innovating for a better tomorrow is Hoya's vision. For a better tomorrow, we would like to cause innovation, as I mentioned earlier. Last year, we celebrated our 80th anniversary, but towards our 100th anniversary, we would like to, toward the century of its founding over the next two decades, constantly pursue the creation and innovation of markets with enthusiasm in order to improve the quality of life of diverse people around the world and bring about a better tomorrow.

As we move towards that direction, we do have some management challenges, which I would like to talk about. There are two points. First, as shown on this slide, to develop future growth businesses. For the group's sustainable growth, we need to build a business portfolio. As of today, some of the businesses are serving as a growth driver, driving the business of the group. develop new businesses that would drive growth in the coming 10 years and 20 years which we believe is the management challenge and the for the purpose of developing such new businesses we need to set select the market and the market selection criteria would be to it's that it fits the hoya's vision and mission And they did explain the structure of our business. It shouldn't be something that is completely different from existing areas. We would like to make sure that the market should be close to our existing areas so that we can utilize the technology capability that we have. We have to choose a market that does not have too many players and also not overly exposed to price competition. And we need to make sure that we select the market that would become profitable. and which actually fits to what I just explained. And that is something that we would like to continue with. Next page, please. And the second management challenge for us is strengthening of ESG. and we do have a timeline a simple timeline on the slide in 1995 we introduced outside the director system and in 2003 we transitioned to company with committees and this in 2008 outside directors became majority of bod and we are quite ahead of other japanese companies we implemented all these systems and we have been working to strengthen our corporate governance system however on the other hand In terms of E and S aspect, in 2019, we have established ESG committee trying to improve our ESG disclosure. And in 2021, last year, we identified ESG materiality. So we have already started our activities, but compared to our governance structure, we wouldn't say that we are ahead of other Japanese companies. And the two aspects need to be strengthened, which we believe is a major management challenge. Next page, please. New leadership team. From the 1st of March 2022, the two management challenges, developing growth businesses and strengthening ESG, we have chief business development officer and chief sustainable officer have been added to the new leadership team. And as you can see in the photographs on the slide, Augustine Yi has been assigned as Chief Business Development Officer, and we have a new member in the top leadership, Tomoko Nakagawa, who is to take the office of Chief Sustainable Law Officer, so that they will be working to promote, to solve the challenges that we are facing as of today. Next slide, please. And the first business challenge, which is strengthening a business development approach, would be the first approach would be to develop from existing businesses. Just to share with you with the recent experience, HDD substrate developing from 2.5 inches to 3.5 inch. For data centers and for semiconductors, mask blanks would transition from DUV to EUV. And we have started development of mask blanks that would be compatible with EUV. We have started development earlier than others. And even in Hoya, we would like to combine different product development capabilities of existing businesses, and we would like to establish an R&D structure that would go across different businesses, which would be something that would come from internal. The other approach would be M&A. For the past 10 years, most of the emergent acquisitions have been predominantly conducted in life care, most of them being bolt-ons. We would like to broader the scope of M&A to cover not only life care businesses, but rather the areas of high-tech areas, semiconductor-related businesses. So we would like to cover wider area by having a broader scope. We would like to capture growth factors as early as possible. Next slide, please. The second challenge is strengthening of AESJ. Nakagawa, who is also online, would like to explain. Nakagawa-san, over to you, please. From the 1st of March, I became the executive officer in charge of sustainability. I am chief sustainability officer. My name is Nakagawa. Very nice to meet you. In the past, I was involved in the job related to governance, such as serving as an Secretariat of BOD, and I would like to promote our activities related to E&S as well going forward. And as shown on the slide, in the Board of Directors meeting that was held today, our sustainability policy was resolved. This is based on a management philosophy. We have identified various items that we believe is extremely important for the company to survive from mid to long term. We will contribute to solving global social issues through business innovations. We will have dialogue with the stakeholders. We will have reduced environmental impact. and that we will respect human rights, and also we would like to strive to create an environment in which a diverse range of human resources can thrive. And of course, different resources out there, human resources, natural resources, and also using the funds from the shareholders, we need to manage our company, run our business, So including the environment, we need to be accepted by all of the stakeholders so that we can provide products and services that is demanded by the market. We would like to engage ourselves in business activities based on the sustainable policy.

With regards to sustainability, of course, this is something that we need to continue to do. And in this slide, Our activity plans for the first half is as shown. We have about 10 different type of different businesses. And in each of the business, there are some slight differences. However, a CO2 reduction, recycling of water, waste recycling. We have been all through all of the business dealing with environment. but we have this time around established an ESG dedicated department so that the department in each members or groups that are dedicated to ESG will be established within each division. And with those people, the ESG promotion dedicated department will collaborate together and KPI will be established. And the Hoya as a whole will also set targets to be achieved. As you can see, our company is listed to the prime market. So disclosure of TCFD is something that we are getting prepared for. Every year around September, we create an integrated report. what we have been achieved by them will be explained within the integrated report. That is all for myself. Next slide, please. In the new management organization, there are things that we will change and things that we will not change. As for business portfolio management, in the past and going forward as a CEO of Hoya or as the whole executive management, this is something that we will continue to work on. However, if we look into the contents so far, life care was the growth segment and information was cash cow. That was how we divided the positions by segment in the past. However, going forward, rather than about deciding things on a segment basis, we will assess each business and product independently. This is the part that we will change. And the second point is for every business, well, there is a management system optimized for its business. In order to generate the profitability or a bottom line, that is something that we need to do. So we will continue on this. However, as I explained earlier, New product and new business needs to be created. And in order for that, technology or sales force or the assets that we have needs to be utilized fully. So in creating new business, we need to create a business development framework that transcends the boundaries of business. That is the change that we would like to implement. And also, as Ms. Nakagawa explained, we will continue to have strong corporate governance, and also at the same time, E&S will be emphasized and promoted. That's the change. And what is very important is we will also have numbers in mind as a ruler, and we will secure profit all the time. And shareholder return policy, we will consider total return from dividends and share buybacks. So the last two will remain the same as we have continued in the past. Next page, please. This will be my last slide. And the focal points in the midterm perspective, what are the current issues? This is a self-advancing to identify the key issues that we face today. Income before income taxes or ROE, in fiscal year 21, we did achieve certain good numbers in 2021. That is how we evaluate. However, as for the market share of healthcare business and profitability of medical products, it's not that we are not doing well, but we have not done good enough or was not good enough to meet the expectations. So while focusing on increasing R&D and developing new businesses, life care market positioning and profitability of medical products is something that we would like to aim at improving going forward. That is all from myself. Mr. Hiroko, please. The floor is yours. Then I would like to give you the highlights of the results. One, the annual basis of revenue and profit was record high. We were able to hit a record high sales and profit. And secondly, to be honest, there were various impacts by COVID. However, life care business basically did well, remained firm. There may be some circles, but basically remained firm. And we were above a 2020 solid basis. And thirdly, information technology business. As shown here, HDD is impacted by seasonality. This is something that we did explain in the previous meeting. And there are some inventory adjustment that need to be made. But all in all, blanks, Continue to be very strong. And let the growth of the information technology business. Lastly, number four. Today we announced our share by vaccine. Also, we also do plan, although this is the plan basis to increase a plan to increase dividends next phase, please. This is just a big picture in the fourth quarter. 169.6 billion, that is plus 12% year-on-year in pre-tax profit, 53.8 billion, that's plus 30% year-on-year. Quarterly profit was 40.1 billion, that is plus 30% compared to the previous year. And just for your reference, profit and profit was 48.1 billion yen, that is plus 11% from last year. As you can see down below, In a constant currency basis, revenue would have been plus 7% equally before tax, plus 25% due to weaker yen. And so we have made adjustments. And income before income taxes increased plus 30% compared to last year, and plus 11% for operating profits. So pre-tax profit was growing larger. And the reason for that is The fourth quarter of last year, 5.1 billion yen of impairment losses have been posted. This year, it's 900 million yen, so the impairment loss is not that big. So the difference between the two figures are the largest strength, however. So that was the reason for why we have a larger pre-tax profit. And also, bridge start or increase and decrease from last year is explained in the report that you may find at the website. Next, please.

And this is for life care business. Revenue was 106.1 billion, year-on-year growth of 11%, pre-tax profit of 19.5 billion, 32% increase year-on-year, operating profit 19.8 billion, 4% increase against the previous year. First of all, impact from the forex. In the constant currency basis, revenue grew by 7%. So again, because of the yen depreciation in yen basis, we have seen big growth for the revenue. And another point I would like to add is that the operating profit margin of 18.6% is not very high. So this business, what we are targeting at is around 20% in terms of margin. that we believe is a reasonable margin for us. And sometimes we are a bit higher than that. However, considering the investment for future growth, we believe that 20% is the kind of target or is the kind of reasonable operating profit margin for us. But as written here at the bottom of the slide, there were some one-off expenses which had negative impact on the operating profit margin. So I will explain the details later on, but it's not a structural issue, but it's a one-off expense. So it's not something that we're concerned about. And I did mention a few things here on the slide, but... a relatively big customer. In terms of account receivable, we did have some problems, which means that we are not receiving payments from the customer. So accounting-wise, we decided to post allowance for accounts. Because this is the year-end numbers, we did do some proactive reviews of the balance sheet. And we did some cleaning up of the balance sheet, and as a result, it increased one-off expenses. And this is for IOL. products in IOL division we are looking at or reviewing some of the products and in terms of the products which we believe will not be profitable in the future we decided to terminate so for the such products we did oppose some allowance for those for the product inventory So again, we have seen increase in runoff expenditures. As a result, we have seen decline in operating profit margin. Next slide, please. Here, I would like to explain details by product in terms of our results. For our medical, our revenue was 27.9 billion, increase of 3.1 billion against the previous year on Japanese yen basis. On the right-hand side, it says year-on-year growth by 1% for endoscopes. This is for constant currency basis. In terms of endoscopes, 1% year-on-year growth. So supply chain issues remains, and the semiconductors, we were not able to procure as we wanted, and this situation continued. In terms of demand, demand is strong, and we have been able to receive orders. However, we haven't been able to manufacture and deliver to our customers as we wanted. So compared to a year ago, we have seen increase in revenue, but the supply chain issue still remains. Now, interocular lenses, IOLs, constant currency basis, 12% increase year-near. So Europe and Asia, the revenue has been strong in those two regions, which drove our revenue growth. We have been impacted by COVID-19, especially in the Japanese market. There are a number of... We are seeing... We have seen recovery, but the recovery is still slow because of the CASI lockdown issuance. So I think, which I believe, since the market is recovering, which I believe is going to be an upside going forward, but it's going to be a gradual recovery. We do not expect the number of surgeries to increase quite suddenly. Now, moving on to health care. The revenue was 78.2 billion for eyeglass lenses on constant currency basis, 7% increase year-on-year. China is growing. Europe is also growing. Again, we have seen 7% growth year-on-year. However, the COVID-19 impact still remains, especially in Europe. Up until mid-February, things have been quite slow, but after that, there has been a gradual recovery. So overall, we have seen positive numbers for revenue in Europe. And in the first quarter of this fiscal year, there may be some ups and downs as a result of the impact from COVID-19, but we do believe that the market will show steady growth. And lastly, for contact lenses, compared to last year, a 7% increase. Again, even though we saw growth by 7%, COVID impact still remains. Kashi lockdown was applied for the full term, full quarter. So therefore, contact lands use increased in autumn for temporary basis. But in the fourth quarter, we have seen decline in contact lands use. However, Kashi lockdown has been lifted and we are seeing recovery in revenue in April. So COVID-19 impact, there may be some ups and downs as a result of COVID-19, but compared to last year, there will be less restrictions, we believe. So I do believe that we will see a steady growth in contact lenses. Next page, please. Thank you. In terms of information technology business, revenue, 62.3 billion, 40% increase year-on-year. Pre-tax profit, 30.5 billion, 13% increase year-on-year. And operating profit, 29.6 billion, 17% increase year-on-year. And constant currency basis, revenue increased by 8%.

Next page, please.

This is a by-product details in terms of imaging, 8.4 billion in revenue, a negative growth of 2% year-on-year. This is in Japanese yen basis, 2% down in constant currency basis. The imaging business, or this is true for all of the information technology business, but imaging business has some seasonalities every year, Second quarter, third quarter, we always see good performance. And performance actually declines in the third quarter and fourth quarter. But in Q4 last year, things were performing quite well. Because of the impact of COVID-19 in the first half, the performance slowed. And the rebound came in the second half. And the Q3, the performance was good. And the strong performance continues into the fourth quarter, which was true for the main products in the imaging. So we are comparing against that. So that is the reason why we have seen a decline on a year-on-year basis. So our concern is the camera. electronic components. It's not really us. However, as the industry, we are seeing shortages in electronic components. So therefore, there are some inventory adjustments and we need to watch carefully how things go to make sure that we maintain our profit. That is something that we need to work on in this fiscal year. And for electronic related products, 53.9 billion. In revenue, we have seen significant growth year-on-year for masks and blanks. On constant currency basis, 15% increase against the previous year. EUV is growing very well. There is a strong demand in the market, and we have been able to meet the requirements of the customers. And the demand will continue to grow in this fiscal year, so we would like to... gradually increase our production capacity so as to meet the demands in the market. Now, in terms of FPD, from Q4, We have started with the new product, so we would like to capture the demands for high precision, so that which we hope would result in increase in revenue and profit. And lastly, for HD substrate, year-on-year, on constant currency basis, a 5% increase, 3.5%, as I mentioned earlier. There are some inventory adjustment, we are seeing some signs of inventory adjustment. So issues related to Ukraine, China, and because of those, it seems as though that the customers are seeing things conservatively. So therefore, we need to be a little bit cautious to make sure that we maintain or secure a profit. But 3.5 is definitely going to be a growth driver for us. On the other hand, 2.5 for the past year, which was true for Q4, It was rather an unusual year. For a long-term trend, 2.5 is going to gradually decline. And I think it was also the case for FY22. However, because of the rebound from COVID-19 in 2021, we were above FY2020 result for 2.5. So momentum is coming down for the Q4. However, we have seen year-on-year increase, which was something that we had not expected. And for this point in FI22, as we expect, 2.5 is going to decline, which will be covered by 3.5. Next, please. Yeah, I will not explain each line, but as I mentioned earlier, in the BOD that was held today, we decided on, there was a resolution on the share buyback of 60 billion yen, and this is only a plan. However, year-end dividend will be increased by 20 yen per share. So that's all from me.

So now I'd like to take questions. In order to avoid any confusion for the interesting channel, those who have selected Japanese channel, please speak in Japanese. Those who have selected English channel, please speak in English. If you have any questions, please use the raise hand button of the Zoom function. And also, if you cannot raise your hand, please enter the questions on the lower part of the screen. And when you ask a question, please say your affiliation as well as your name. First, Mr. Yoshida, please. This is Mr. Yoshida. EB Blanks and Disc Glass Substrate are IT businesses. I have questions of these businesses. The business environment that you are surrounding, I would like to know about that. And also, this In terms of direction and the way of thinking of this year. Then I could I would like to explain. With regards to the business environment, as for EU V Max. If I may Chris give you the internal environment. We are conducting capital investments for each of the processes on our base basis in 2021. manufacturing capacity, production capacity, vis-à-vis the 2021 production capacity. We have a production capacity in Japan and Singapore. The Singapore facility's capacity in 2023 will be doubled. That is the scale of the capital investment. In Japan, the capacity will remain the same. Singapore's capacity will be doubled. That's the size of our capacity. and this is based on customers' demand. And from 2024 onwards, we are having a discussion with customers on what direction we should head towards. As for external environment, I think you're interested in what are the competitors' situation. Our customers, they want to buy from, they want to make dual procurement, and so CES or AGC are supplying products to our customers. I think that is the situation. Most recently, two nano process development will be certified, will be in the stage of being certified. So I don't think we are being compared for this technology by others. If we are able to be qualified, we believe that we will be able to maintain the current status quo or environment. However, Shin'etsu also are a powerful company, and so we would like to closely communicate with customers And so we would like to provide the quality and quantity that will satisfy customers, which is related to our internal environment. And next, as for HDD, as Mr. Hirooka explained, 3.15 is being weak, but the data center investment will be active on the midterm perspective and As for products, currently nine substrates are used, but we will start to see 10 substrate models recently. So nine will become 10 per drive, meaning that we will be able to expect more quantity. And in the 10 substrate model, our customers do not are not really changing much, but in the 11 model, if all drive manufacturers have officially started development of the 11th substrate model, and for the 11 model, we are continuing to conduct the development activities with our customers. So more multiple or increase in the number of substrates are um the direction and we are working together with our customers for certification it is very difficult to define the timing but we more and more we believe that we have more opportunity to be adopted by our customers

Thank you very much.

My next question is related to life care business. Again, can you explain your thinking on each product for this fiscal year? We have seen temporary decline in the margin in the fourth quarter, and you said your target is to achieve 20% in operating profit margin. Can you explain your thoughts on your life care business, please? First of all, for eyeglass lenses, eyeglass lenses is the biggest business in life care. So let me touch upon that. As Hiroko mentioned earlier, our profitability target is around 20%, which we believe is a healthy level of margin. If we control our OPEX, we'll be able to improve our margin. However, instead of going towards that direction, we would like to make investments for our future growth. And based on that, we are targeting it at around 20%. In this fiscal year, in vision business profitability was low which pushed down the the overall operating profit margin of life care business but as explained earlier this was a as a result of one time or one of expenses so it's not something structural so there is nothing to worry about and The second largest revenue comes from a contact lens business, Eye City business in Japan for contact lenses. In the past, every year, we have opened new stores by about 20 every year. That's how we have grown the business, which was a pre-COVID situation. But with COVID-19, there's been decline in the use of contact lenses. And we changed our management so as to maintain our profitability. And now that Akashi lockdown has been lifted, there will be increased use of contact lenses, and we will be targeting revenue of pre-COVID, and we are going towards that direction. But unlike in the past, as we did in the pre-COVID-19, opening new stores is not going to be the revenue driver for us because there will be a shift to online purchases. So, therefore, for us to grow in this business, a pre-COVID approach will not continue. However, we would like to expand our online business. It's going to be a challenge that we need to work on. And the third point is a pentax or endoscope business for endoscopes. So compared to last year, growth of 1%. However, as Iroko-san mentioned, we have a lot of backlog of billions of backlog. So if we're unable to manufacture, we'll be able to increase our revenue. And the procurement component is something that we don't have much visibility on, which makes it very difficult for us to predict our future. And in this fiscal year, a processor performance or rather a high-end, new products in high-end will be launched in this fiscal year. And it did take us a lot of time. A new type of endoscope sales expansion is expected for this fiscal year. So what we would like to do is to sell new products for endoscope, and that's which I believe is going to be our focus. Thank you very much. Thank you very much.

Next, Mr. Damianton.

Yes, I hear you. It's for eyeglass lenses in Japan and overseas.

Well, we have just entered May, but what is the demand environment both Japan and overseas? Can you explain? As Hiroka mentioned earlier, in Japan, because of the quasi lockdown did end, however, we haven't seen a full recovery yet. It's a slight decrease still, or flat. That is the situation here in Japan as we're overseas. Europe, Asia, these markets are doing pretty well. However, most recently, China's lockdown impact was rather big. And it's not only Shanghai. Maybe the impact may spread to other cities of China. If that is the case, then we will be impacted. So it's very difficult to estimate what would be the total situation surrounding us. However, Asia is robust. And then China, Europe, okay. But as for China, as I mentioned, the lockdown impact is pretty big. That is the situation.

Level of decrease on a monthly basis.

What is the level of the decrease? What are the numbers? we haven't the concrete impact is still unknown but it's only Shanghai area so far it's not that we are not able to post sales in whole China that is not the case but maybe not only Shanghai but Shanghai's lockdowns impact? Well, it's not as big as, for example, impacting us to have ourselves. It's not that big.

Are you okay with that?

What about Hong Kong? You have no issues in Hong Kong? In Hong Kong, in the fourth quarter, most of the time it was closed. But the Hong Kong revenue decline, we have seen a quite significant amount of revenue decline, about 20%, I would say. However, if you look at the Asia region as a whole, the portion of Hong Kong is not very big. So if you just look at Hong Kong as a single market, there has been a negative impact, but we have been able to offset the decline in Hong Kong with other countries. Eyeglasses, things are different from country to another. Sometimes we can offset and others not. So overall, we have no concerns. Thank you. This is a follow-up question. you said that the operating profit margin target is around 20%. And in China, even with the negative impact in the fourth quarter, will you be able to achieve the 20% in margin in this fiscal year? It's not like we are generating a lot of profit in China. I don't think there will be a significant impact to overall business operating profit margin. Of course, there is an impact. However, the weight of China in the vision care business, well, I would say that Japan would have a bigger impact, I would say, compared to China. So my second point is mask banks. For the past few years, EUV has grown quite significantly, making contributions to the profit. DUV, however, is also growing, continues to grow. ASML, for example, the exposure devices at 350 75 increased to somewhere around 600. So DUV, I believe there's a potential to grow in the future. Your DUV investment, position? Have you changed your thoughts on your investment in DUV business? EUV's 7nano, 5nano, 3nano, 2nano, as there is a transition, of course, in the mask set, DUV layer will be included. So not everything will be transitioned as DUV is going to increase as well. However, in terms of exposure devices, those devices will have higher functionality. And the demand for mask set, when there is a demand, we deliver in sets or the certification may happen for each layer. If we cannot ship sets, they not only for that layer, but it may have a ripple effects to AUV as well. And that's something that we would like to avoid. So basically responding to the demands of the customers, we don't just invest in EUV. We would like to continue to deliver DUV as well. And in our dialogue with the discussion with the customers, It doesn't mean that we need to make decisions as of today in terms of DVUV. DVUV may increase in the future, but it's not like we will make a major capital investment in that area, in that technology. But basically, we will not just focus on EUV. There is a demand for DUV. And if DUV is required by the customers, we would like to fulfill their demands.

I have a question.

If you are to make investment, Japan or Singapore, to which country or location-wise, to which country will you invest in? It will be in Singapore. I think it will be in Singapore. I don't know whether it will be in Singapore or any other places, but that's my thought now. That is all for my question. Thank you very much. Thank you very much. Although it is already past the ending time, I would like to take one more question. Nakagoro-san? Thank you very much. If you only look at the fourth quarter, how much did it grow in the fourth quarter alone? About 20%. Year on year, 20%. You said that you'll be increasing capacity in 2023. But in 2022, how much capacity are you going to increase?

It's not that we will double in a certain month.

It will be a gradual increase, piece by piece. So it's very difficult to give you numbers. But at the end of 2023, it will be double the 2021. That will be the situation in Singapore. And other than that, please make some estimates. One more. question which is a very ambiguous question i'm very sorry well interest rate is on the hike on a global basis and inflation is being accelerated looking at your business over the next 12 months are there any business areas where you'll be highly impacted by inflation or higher interest rate i think inflation Well, interest rate is going up in order to reduce inflation. But if there is any impact from higher interest rate, I don't think so. If valuation comes down, then it will be an opportunity for M&A and also exchange rates. How much will depreciation of yen accelerate? I think it's an excessively Korean, but on the yen basis, it does look bigger than actual. So our concern is rather inflation, either procurement or logistics, and labor costs as well, in order to deal with them. We need to deal with the situation. Wherever we can transfer cost to price, we will do so, and also deal with more high-value added products.

We will work with mobility.

on a quarterly basis and promote this direction. Do you see that inquiries from distributors are being reduced or any impact from inflation?

I think you had a very strong pull

or inquiry from distributors, but maybe the distributors are sort of softening their inventory level, or do you feel that orders are being reduced a little bit? Well, as I explained earlier, the 3.5-inch we do see some inventory adjustments and cameras because products cannot be manufactured. There is no issue with our supply, but in coordination with other supply chains, it's being a bit sort of clogged. I think It's these two areas that we need to keep an eye on. Thank you very much.

Thank you very much. With this, I would like to conclude today's briefing. Thank you very much for joining us despite your busy schedules. Thank you very much.