Screen Holdings Co U/Adr

Good afternoon. The time has come, so let us start the Screen Holdings Company Limited's earnings call for the first quarter for the fiscal year, Elegant March 2027. Thank you very much for your participation despite your busy schedule. And I am the moderator for this opportunity. Nakamura, the Deputy Head of Investor Relations, Communication Strategy Division. Thank you very much for your kind cooperation to the end of the program. Before the presentation, let me give you some housekeeping information. There was an earthquake in Kumamoto Prefecture, and we are now collecting information about the event. And there is a case that we have to end this presentation session earlier than scheduled. And we'll give you the further notice when decision is made. I ask for your kind understanding. And this presentation is provided both in Japanese and English. Simultaneous interpretation into English is available for the investors from abroad. And your camera and microphones are disabled. We have the Q&A session after the presentation, so when you confirm you are raising your hand with button, we will enable your microphone. And how to proceed Q&A session will be introduced to you later. And when you make questions, please refrain from mentioning the specific name of the customer or competitors or the specific situation of the specific company. And this session is for the institutional investors and analysts. And as was notified before, we will not entertain a question from the media. Thank you for your kind understanding. And recorded data of the presentation and Q&A session will be available on our website on July 29th, Wednesday. So please find and use it. Now, let me introduce you to these presenters. Representative Director, President and Chief Executive Officer, Masato Goto. I'm Goto. Thank you for this opportunity. And Undersecretary Executive Officer, Chief Financial Officer, Manabu Ishimura. Thank you for this opportunity. I'm Ishimura. Senior Executive Officer, Head of Communication Strategy, Chiho Otobe.

This is Otobe. Nice to talk to you.

Now, let us invite CFO Ishimura to give you the consolidated business results and forecasts. Now, Mr. Ishimura, microphone is yours.

Now, I want to talk about the summary of FY2027 March first quarter earnings and guidance for next fiscal year, the full year. This is the summary of consolidated earnings. The net sales is 121 billion, so year-on-year it's minus 10.3%, minus 14 billion yen year-on-year. OP income is 14.3 billion, which is minus 41.1% year-on-year. It's minus 10 billion yen. Only margin is 11.8% and it's minus 6.2% year-on-year. So all in all, sales and profits both decreased year-on-year. SBE sales and profits fell year-on-year. However, this is within our expectation. So there's no particular things happened. The slide projects are the memory project for China, and the revenue for this company will be posted in second quarter. It almost is going to happen as planned. And GA, sales and profits grew year-on-year. Sales of recurring business increased. For FT, sales and profits rose year-on-year. Equipment sales for OLED and LCD increased. So that was the situation in first quarter, but we have received record high order and full year forecast was guided upward. and the annual dividend plan was increased from 175 to 183, increased by 8 yen. Next is the first quarter consolidated earnings in detail for net sales. As I explained, it's 121.7 billion, which is minus 14 quarter on quarter. and the OP income is 14.3 billion and order income is 15.4 billion and minus 9.1 billion and net income is 10.4 and it's minus 6.1 q on q. This is the sales by destination. The China portion was 41 in fourth quarter and now decreased to 27 in first quarter. On the other hand, The EU increased from 8% to 16% by 8%, and Taiwan increased from 19% to 23%, increased by 4%.

And Korea also increased. Next is the sales price by segment.

So SP actually was a bit low, so 76%. and other business basically no change so this is the consolidated earnings by segment in first quarter SPE the sales and profit both failed it's 93 billion and OP was 14.3 billion and OP margin was 15.4 percent it's Both sales and profits fell and the sales decreased by minus 16 and the OP decreased by minus 11. So the China, Taiwan declined and the sales for Foundry and Logic decreased. And sales from a delay project to be posted in second quarter, as I have explained earlier, for GA, The sales of the first quarter is 13.8 and OP income is 1.4 and OP margin was 10.3%. The revenue increased by 0.9 billion and OP income increased by 0.8. For GA, sales and profits both grew and it's driven by recurring business. And for FT, sales was 10.8 and OP income is 1.2. OP margin was 11.8%. So it's 0.8%... Sorry, 0.8 billion increase and 0.4 billion increase in OP. And PE was 3.1 and OP income was minus 0.2. So sales slightly increased. However, due to fixed cost increase, the profit fell. This is the balance sheet in consolidated. The net assets reached 497.3 billion, and equity ratio is now at 4.6%. So we believe equity ratio is in appropriate range. Next, please. This is the consolidated cash flow. The first quarter was 9 billion. So due to the income tax payment, we had this number, 9.0 billion. For investment cash flow is minus 10, and total free cash flow is minus 0.9 billion. Financing cash flow is minus 16.2 billion.

This is due to the dividend payment.

is R&D and CAPEX and depreciation or amortization. R&D is 10.1. So we had almost expected landing and CAPEX were 17.8 billion in first quarter. So from the trend of past, it seems to be high, but this is due to ATCA in New York. So for rental equipment, we had to post all the rental cost in this term. And if we exclude, everything is ordinarily. And the depreciation is 4.0 billion yen. So full-year forecast hasn't been changed from last time. or IT or production. Those are the investment target. But looking at the order, we have to be ready for the increased capacity for the production. Next is the analysis of operating income growth. Compared to the first quarter last year, it's decreased from 24 to 14. The major factor is the S&P. and others. Profitability and sales declined in SPE, and also utilization has impacted. And profitability improved mainly due to FT plus 2.5. And for fixed cost SPE, mainly in SPE, we had gross investment, so minus 3.5. Exchange rate mainly impacted GA, plus 1.0. So profitability and exchange rate had 2.5 and 1.0 and that will be cancelled by this fixed cost decrease.

Next is the business forecast for full year of FY2027.

For first half We haven't changed as a company total. The revenue, the net sales is 317, and OP is 56, and net income is, OP margin is 17.7%, and ordinary income will be 56 billion. So GAFTPE, there was some correction made. However, in the consolidated, we don't have any major change. To the right is the full-year forecast. So this time, the net sales is 743. So we have increased from 725 in May forecast. And OP is 156.5. Again, we have made some increase from 150 billion. And ordinary income similarly increased to 156.5, and net income is 115. So we have made some increase from 110 in May forecast. If we look into segments, SPE sales is 620, so increased by 20 from May forecast. And accordingly, OP income will be increased to 159 from 153, and OP margin will be 25.6%. And for GA, the sales and OP both increased by 1 billion yen from May forecast. FT, we expected 47 in May forecast, but in The sales of advanced packaging was examined this time. So now we are estimating 43 billion. And for PE, the sales is going to increase by 1 billion from May forecast. So next is the operating income growth forecast. Last year was 122 billion. And our estimate now is 156. And breakdown is the sales and capacity utilization has an impact of plus 74.5. So compared to last time, we have increased it 3 billion. And profitability in SPE, the product mix will change. So we are estimating minus 8.5. and for fixed cost is minus 31.5 and exchange rate is minus 0.5 billion. So together with the sales increase, we are estimating a profit increase. That's the major trend in this fiscal year. And the dividend outlook, Interim forecast was not changed. So 60 yen, but for the year end is 150 yen in the May forecast, but now we are announcing 123. So total will be increased from 175 to 183. This is going to be record high dividend for us. This concludes my part. Thank you very much.

Thank you, Mr. Ishimura.

Now, let us invite President Goto to give us the business environment and outlook. So, this is Goto. Let me give you a presentation about business environment and outlook. First of all, about the full-year outlook overview. As was explained by Ishimura a moment ago, full-year focused. was raised when we made the upward revision. Because mainly with the AI investment, we have witnessed a very strong demand from the market. So the record high level of the inquiry and order have been witnessed. And in the second half, we can turn them into the sales. So that's why we made upward revision for the second half forecast. And given this situation, we have to catch this demand on opportunity to achieve the further growth. And in previous fiscal year, we opened the ATCA in United States as a research and development hub. And in Hikone, we enhanced the production capacity. So with these, we direct to deal with increasing demand. And about SPE, We will capture the strong investment in leading-edge foundry logic and memory. The situation is getting better, so we will surely capture this demand, and we will outperform WFE market growth. That's what we'll surely achieve. And under the current mid-term management plan, we made the investment, and for these In that sense, the ATCA evaluation process will be established and launched. Preparing ourselves against the further growth in the market, we will increase the production capacity of SPE. And we have the plan for them. So we'd like to prepare ourselves against the upcoming opportunities. And we have made a preparation for the enhancement of the competitiveness of the products and also the production capacity. Through these, we'd like to capture the opportunities in expanding the market. Next page, please. And this is a situation in the market. As I mentioned a moment ago, for the whole WFE in calendar year 2026, we expect about 20% growth. And in the same way, in calendar year 2027, we expect a similar level of growth. So the balance between the two years may change because of the situation. The coming two years will be the one with the very steady market growth. And as you know, including the Middle East situation, there is a geopolitical situation which might seem settled down a little bit, but again, the uncertainty is rising. So we'll continue to pay the close attention to the geopolitical situation So that we can be flexible enough to take the appropriate measures when things happen. And investment trends by application. As you can find here, Foundry, AI-driven leading-edge investments to be the primary driver of WFE growth. Logic, the large-scale project launches is a background for the recovery. and in addition to that, we have the support by the ASIC demand. So, logic-related strong demand is expected from now. The Nexus memory, as you know, D1 and HBM, the advanced products, is in shortage now. So the CapEx into D1 will drive the recovery in the memory market. And not only the advanced HBM, but the existing DDR is also in shortage. So in addition to the HBM, the general type of DDR will also receive the CAPEX. So for two years to come, we can expect a very strong investment into memory in general. And the same situation can be expected with NAND. There is a recovery in the investment into data center. So the domestic and overseas NAND manufacturers are now planning investment. So memory, both for the DRAM and NAND, we can expect a very strong demand. Next is image devices. It was sluggish, but now we see the recovery in the situation. So Japanese major auto manufacturers now started to increase their production. So as for the image devices, we can expect a growth from now. And the power devices and others. Compared to the other types of devices, the process was a bit slow, but finally we see the sign of recovery in investment. So in that sense, compared to the other advanced devices, the start is a little kind of slow. But by dealing with that situation, we'd like to capture the demand from the market. And next is advanced packaging. So WLP applications to read initially, followed by the growth in PLP applications. So our key areas of advanced package should be dealt without fault.

And China market.

So other, same as the other device manufacturers, not only among the existing foundry and memory clients, investments are becoming active among the, especially about the emerging and falling affiliated clients. So globally, the market from 2026 to 2027, we can expect the big growth in the SPE business. Next page, please. And this is the composition of equipment sales by application for SPE. And as you can see here, this is the result of the first quarter. So about half is coming from foundry, and we have the strong DRAM. This is the current situation. And queue-on-queue basis, and also on the year-on-year basis, we can see the sales increase of DRAM, which is very clear trend in application sales. Next please. And this is the poster sales. About poster sales. The higher fabric publications rate by the customers, as a background, we can see the stronger demand for the replacement of consumable parts and units. So this is an area of business we can expect further growth. So in addition to the sales of the new equipment, we will have the lineup of the consumable parts and units for the replacement and post sales. Next page, please. And this is the SPE composition of sales by destination. As you see here, Taiwan and China accounts for almost half. And in addition to that, Japan, North America and Europe follow. So when you see the overall situation, in the first quarter, on a queue-on-a-go basis, sales to North America rose, and Taiwan remained solid. And year-on-year basis, we saw the increase of sales to North America. This is the situation from the first quarter.

And this is the composition of sales by application. First of all, the foundry has a large portion, followed by DERA. And this situation will continue. So the proportion will continue in this way.

And this situation is not limited to the first quarter, but we expect the same situation into the second half of the fiscal year.

Next page, please. And this is a poster sales for the SPE focused.

As I mentioned earlier, in order to secure the profitability and in order to follow or maintain the equipment we sold, we'd like to follow this poster sales. So for the first time in this fiscal year, the postal sales will exceed the 100 billion yen and will further enhance this field of business to ensure the profitability.

So in addition to new businesses, this is another key business we have.

And next is the SBA's composition of sales by destination forecast. As I mentioned earlier, as for the situation, we do not expect any big change. So Taiwan and China, these two regions will continue to achieve the big growth, followed by North America and Europe. So as you see here, in the second quarter, compared to the first quarter, top line will grow, but the proportion by destination will not change so much. So China and Taiwan, their ranks are reversed, but this may change quarter by quarter, but the situation will not change. So China and Taiwan will continue to lead the positions. Next page, please. This is a GA sales trends and forecast. So as we have been explaining to you, we We want to increase the recurring business in addition to the sales of the equipment so that we can secure or improve profitability. And in GA business, we newly released the low-fed digital printing process, which received a strong inquiry. In North America, so we'd like to grow this business. And in Japan, the so-called CTP, Offset Printing Government, has a strong demand. But also in Japan, we'd like to promote this new digital printing process. Next page, please. And next is the sales trend and forecast. So led by the OLED, we are promoting the sales so that we can secure the stable profits. And from this fiscal year, we integrated the advanced packaging business into the FT. And so in that sense, compared to in addition to the display business, we can have the synergy with advanced packaging business so that we can secure the sales and profit.

Next is the PE sales trend and forecast.

We struggled in this business, but finally the market has recovered. So investment into memory and inquiry from the packaging business has increased. So finally, as for the PE segment, from the second of this fiscal year, we can expect a full-fledged recovery of the market. So we'll capture the opportunities in this market so that we can achieve the sales and the profit secured for the PE business.

Next please. And these are about the recent screen group news and they were already released.

So I think some of you already know about this. So there are two news about SPE and one news release about GA. and one of them is this news. So SCLEEN joins Applied Materials EPIC Center as innovation partner.

This center will be newly launched in California

and so various research developments have been done together with applied materials. And through this partnership, we can enhance or deepen our relationship with them. So I would like to be involved in this launch of this new EPIC Center. Next is about related to GA, so about the Ajioda Glaviers. We collaborate on promoting digital printing of flexible packaging and we've moved on to the full-scale production. And Shioda Gravia has the market and into which we provide the flexible packaging So from the conventional paper-based packaging, we move on to the film-based packaging. And we'll take this opportunity to provide the flexible packaging into the market in addition to the conventional printing equipment.

And let me have

Give the microphone to Otobe-san to explain the next page. This is Otobe. So as usual, we have the small group meetings after today's earnings call. So we host the small group meetings to follow up this earnings call today. So we have the Japanese version one in the morning of September 2nd and English version one in the morning of September 8th. And for the investors in the United States, I'm sorry for this timeframe, but we would like to give you the opportunities to follow up us at the conferences and other opportunities. And I ask for your kind of participation to these events.

Please go to page 17. And Goto talked about the WFE outlook.

And there was an announcement, we expect about 20% growth in calendar year 2026. And let me give you the breakdown about this part, because I think you may ask questions on this point. And from the forecast in May, we made an update. First one is about the logic foundry, advanced logic foundry. It's a bit less than 25% was a comment we made. And we'll change it to over 20%.

Next is memory, especially about DRAM.

It's a bit less than 25% was a comment we made. And through the revision, We changed it to the over 25%.

And next, about NAND.

Previously, we said it is a little bit less than 15%, and we made the upper division to about 20%. And the power devices and others, no much difference, but it's been a little bit less than 10%. And this time, we changed the slides related to SPE, especially about the one by application. So far, we had application plus alpha, and we had post sales. But we have the page for the application. So we separated application and post sales. So as was explained by Goto a moment ago, we have the page for the application, sales by application and poster sales separately. And you can find the appendix to show you page 32 and page 33 to show you the composition of sales by application and poster equipment and poster sales. So thank you very much, Mr. Goto and Ms. Otobe. I would like to go into Q&A session. Because the time is limited, I'd like you to ask questions, two questions per person. And I will ask for your kind cooperation and kind management. And please use the raise hand button on Teams to ask questions. And when your name is called, please unmute yourself and ask your question.

So now, Yoshida-san from CLSA, would you please?

Thank you very much. I am Yoshida from CLSA. First of all, SPE sales is going to expand towards second half. The lead time for equipment is how long and how much visibility you have. in the order-taking. And maybe if you break down into third quarter and fourth quarter, can you please tell us the breakdown of the second half? Goto is going to address this question. The lead time for equipment, of course, differs depending on the type of model, but currently maybe 4.2 months on average, 4 to 5 months on average. and other visibility. So the order for the sales of this fiscal year is almost fixed. And based on that, we are making upward revision.

So for the sales of this fiscal year is almost visible.

So the breakdown between third quarter and fourth quarter So, the sales is going to be flat. But looking at customer demand, as you may know already, the memory, they have to increase production. So, memory device makers are asking the delivery accelerated. So, probably, The demand is now stronger than our capacity right now.

Thank you very much.

My second question is WFE market is probably same level of growth in next fiscal year from this fiscal year. There was application update in this fiscal year, but toward next year, do you see any different trend in any application? If you have any comment by application, would you please? So the outlook for next year is almost no change in the trend from this fiscal year. As you may know, the DLAM and memory device makers are going to be very aggressive in investment from the second half to next fiscal year. So their capex or production plan, looking at that, probably early next year to second half of next year. So centering around memory, we have seen strong order and also latest logic foundry will be similar to this year level. So there will be no major change in the trend. So how about logic? So maybe some customers are changing in their term. Do you have any upside? As you may know, some customer makes announcement, logic customer as well, making some announcement in strategy. And we are seeing some inquiry, but it's not fixed yet. Individual device maker situation, there's not much we can share with you right now. So as soon as we see any concrete business, we would like to disclose to you. Thank you very much.

Thank you very much, Yoshida-san.

Next, let me invite Mr. Shibano from Citigroup Securities. This is Shibano from Citigroup Securities. The first question is that How should we think about your capacity? So you explained both for the FY26 and FY27, or for calendar, you expected the 20% growth. And when I make the simple calculation in FY27, 17 or 18 billion yen is expected. If the demand grows further, and in 2027, If it reaches 20 billion, or 25 billion yen in 2028, or maybe close to 30 billion yen demand exists, screen holdings or the supply chain of screen holdings, is it possible to respond to such scale of demand? This is my first question.

So about the capacity,

In this fiscal year and next fiscal year, we have the capacity, we already have the capacity to cover the demand coming in two years from now. And if this market situation changes further, and if the further increase in the capacity is requested, in order to prepare ourselves, we have equipment in Nagaoka, in Kyoto, and we are now remodeling them so that we can increase our capacity And that has started in the fiscal year and will be complete in the beginning of next fiscal year. So this is where we can see the expected increase of production capacity. And also in Hikone, we have the existing capacity and we are already going through the measures to enhance their capacities. If the demand goes up to 30 billion yen in a short period of time, we have to solve the issues of the suppliers and others, so it may be difficult to jump to that level. But when we think about the realistic situations, so when we think about the suppliers of equipment and others or the materials, I think even if there's any further increased demand, I think we are prepared so that we will not be behind the other suppliers. For example, we need WFE 2027 and 2028. Do you see any visibility about how much capacity you can increase? So as was mentioned by Otobe-san a moment ago, or as I explained to you, WFE We are going to perform the growth of the WFE market itself. That means that we are going to have the capacity to achieve that. And how much we can achieve is hard to be described. But as I mentioned a moment ago, not only by ourselves, but we also have to look into the supply capacity of other suppliers and have the confidence that we can cover the demand. So we are now establishing the next midterm management plan. So including this point, we'd like to make another announcement when we are ready. But as for the currently expected market growth for this fiscal year and next fiscal year, and plus alpha can be covered by our current capacity. Thank you very much. My next question is about the trust quarter semi sales. It was a little bit slow. And how do you expect the situation in the July to September period? I think you expect a big recovery. And it includes the delayed project. and also the increasing shipment from the April to June period. And how about the probability of this delayed project you mentioned? So the probability of recording the sales for the delayed projects is 80 to 90%. And in July to September period, you are going to record high sales.

And how much of the sales was already shipped? It's about the delayed project.

We have a very high probability. So the final stage of the confirmation about the auditor is waiting. So probability is higher than 90%. And as for the So about the July to September period, how much of the shipment was made against the expected sales? I think about half of the expected sales is already shipped. So already half of the expected sales was shipped, and about the remaining half, in order to record the sales by the end of September, So that means by the first week of September, we will complete the shipment. So you said that about half is already shipped. So this is not the end of the June, but as of now, you shipped about half. Yes, as of today, almost half of the sales was already shipped.

Thank you very much. It's clear.

Thank you very much, Shibano-san. Tamura-san from Morgan Stanley, would you please? Thank you very much. I am Tamura from Morgan Stanley. So, full year guidance. I wanted to ask about full year guidance.

The third quarter and fourth quarter When somebody asked earlier, maybe it's going to exceed the capacity of fourth quarter. So for monthly revenue in SPE, so if there is some more upside, do you think that we should believe that you can achieve? And also, in the last presentation, we had some discussion. So you're going to increase sales in this fiscal year. So profit has to increase, we believe. So again, I want to ask your take on the profit for this fiscal year. The third quarter and fourth quarter, does further sales increase, if there may be or not? As we have received in the first question, The revenue for this fiscal year, we have also almost made production plan. So there is no more room that we can change drastically. However, if there is slight upside, we could still take it. So in that sense, the possibility is not zero. However, as I said earlier, there is no drastic increase like 30% or 20% going forward. That's very difficult. And also for profit, as I explained earlier, the further capacity has to be prepared. So out of our profit, maybe some percentage has to be used for investment for next phase. The increase of profitability and also close investment, we need to look at together in making plum. That's why we are making this kind of plum. So in the fixed cost increase in the plum, As you have explained in the last presentation, are you seeing even more upside or not?

For fixed cost, there's no change. Sorry.

Some investors is not muted. Would you please mute yourself if you're not giving question. And another question is the equipment makers are now increasing prices. So you are in a very favorable position to increase prices, I believe. Not like maybe price increase but you have a very better position in negotiating or are you taking the lead in the price negotiation or do you have any plan? We are not making the negotiation because we are in strong position but we are now improving performance of the equipment and those are evaluated and those are reflected in the price in addition recently there are many geopolitical risk and raw material cost is increasing and for this increase we are making our corporate effort however at the same time we are reflecting those raw material price to The equipment price. So it's not like we are in the strong position. We are increasing prices, but our performance of equipment is improving. And also the low material price is increasing. That's why we need to ask customer to reflect into the prices. So the situation in last year or compared to the past, do you think it is easier to pass on to the price? Or like additional value can be reflected in the price more easily? Yes, for additional value, yeah, we are asking day to day basis to customer to understand. And as long as customer understand that it's reflected into the price. And for raw material increase, It's not only affecting us but the entire market. And the customer understands because their raw material is increasing. So they fully understand that we need to share this kind of situation or environment. So we will continue this effort and negotiation with customer. and for cost increase, we want to share with customer. Thank you. Understood. Very well. Thank you.

Thank you. Next, let me invite Mr. Shimamoto from Okasan Securities. This is Shimamoto from Okasan Securities. I have two questions. First one is about WFE. I want to confirm some figures you gave us. Change the figure from the less than 25% to 20%. Is this a decline or increase? So how do we understand this change?

So we raise the figures.

So previously, it was between 15% to 20%. And we had assumption on the case of the 15% or 20%. And with a bit less than 25%, is the assumption when we have the 20%. So it depends on how much increase we can expect, but anyhow, this is an increase of the figure. We look into the situation of the investment by the customers. We came up with this assumption or expectation. Thank you very much. Second question is about WFE in China. So could you give us how you see the situation? I think there's some differences in the expressions you used.

So about situation in China, as you know, the AI-related new solutions or new AI are released.

So when they have such products released, they need infrastructure for the operation of the AI. That means they need the high-functional devices and the data centers, and they have to make investment into these. And that is a field where we have the competitive edge and strength. So the situation hasn't changed so much from the past. WFE in China is growing. Of course, there are the Chinese local manufacturers for the general type products, but as I mentioned a moment ago, the need is growing, not only for the general type ones, but especially for the advanced type ones. And the situation is same in China, and that trend is favorable for us. So that is a situation we find in China with WFE. So previously you said that you expect a flattish situation in China. You haven't changed it. China is growing. Please understand in this way.

Thank you very much. That's all from me.

Thank you, Shimamoto-san. Nakamura-san from Goldman Sachs, please. Thank you very much. Can you hear my voice? Yes.

Yes, please. The sales and profit of first quarter is as per your plan. That's what you said. But in semiconductor segment, sales and profit dropped so sharp. So can we explain only from the sales drop or not? Can you explain again? Yes, the sales go so much down, so profit has to come down. So this is solely due to the sales drop. There's no other particular reason. So no other particular reason other than sales drop. So annually, you're planning the fixed cost Are you consuming aspirant from the first quarter? Well, slightly increase is less, but almost as per plan. Thank you. And the semiconductor in second quarter, how do you look at the profitability? You said second half is almost full. Thank you very much.

Nakamura-san, thank you very much.

Next, let me invite Mr. Yoshioka from Nomura Securities. Thank you for this opportunity.

This is Yoshioka from Nomura Securities. Can you hear me? Yes.

I have two simple questions, including confirmation. First one is that the sales of the post sales. So on page 19 and on page 22, you explained the post sales. And page 22, in the second half against the first half, there's a decline of the post sales. And the quarterly basis, the sales is about 26 billion yen. And from the second half of the previous fiscal year, I think there's no big change in this figure.

So my question is that in the second half post sales,

You have a kind of conservative view or you expect the increase of the legalization and there's a shortage of the green room. So there's a kind of a big growth of the postal sales first. So expect a kind of decline in the second half. So how do you see or interpret this postal sales in the second half? So about the postal sales itself, We have the maintenance or guarantee period for them. So two years after the sales of the equipment, we can expect the growth of the postal sales. So for this fiscal year, postal sales coming from the sales of the equipment two years ago. This is a background we have about the growth or performance of postal sales. When there's any change in the situation in the market in this fiscal year, that may have some impact on the consumable sales. But as for the major trend of the post sales, as we see in this fiscal year, when we have the big sales of the equipment in the second half, the proportion of the post sales may decline.

So we have the plan for the growth of the post sales based on the

This is a well-established plan, so there's no special factor for that. And as for the improvement of the performance upgrade, the characterization ratio is quite high at this moment at the customer side, so it is difficult to stop it to give the upgrading of the equipment. So this is a kind of situation we now face. So we'd like to cover this situation up with the offering of the consumables. And given these situations, we come up with a plan. Understood. Thank you very much. My second question is about confirmation of some figures. I'm looking at the page 12 and operating profit, others and adjustment column. And in the Q1, it is the 2.4 billion minus. And if you deduct this in the second quarter, we can expect about 6 billion yen or more of the minus figures. So would you explain this big figure for the adjustment and others in the second quarter? So I think there's a kind of buffer from the operating profit from the first quarter. So would you explain this figure for the second quarter? So this is just an adjustment, so it includes a kind of buffer. And a consolidated adjustment is also included.

So there will be no big change. Understood? So this figure is because of the buffer. Understood. Thank you very much.

So closing time is coming soon.

We would like to have the final question from SPI Securities. So I have a question about China. So it's going to explode.

That's what we'll see here.

So they're trying to get the equipment as soon as possible, and they're very fiercely competing over that. So what's the situation? As you have mentioned, the China situation, they have to be prepared, the AI-related infrastructure, so cutting-edge devices in strong demand.

So we are seeing a lot of inquiry in China.

As I said earlier, the cutting-edge device, we are very strong. So we are receiving so many inquiries, not only from China, but also from different regions.

So market situation is maybe record high, the inquiry we are receiving.

It's going to continue for a while. So the ratio of China, we get questions so often. But originally, it will be maybe around 30%. That was our forecast. The manufacturing plan or inquiry will make some effect. The basic situation is not going to change so drastic. And the next one is about PLP. So how much in this fiscal year and next fiscal year can you share the outlook for PLP? So the concrete number in PLP is very difficult to share at this moment. But next fiscal year, as you know, so it's not happening mass production is not happening yet but evaluation phase is starting so compared to this fiscal year probably it's going to be double that's the market forecast we don't have a concrete number and at the end of this fiscal year we hope we can share some number so double of that will be maybe coming to next fiscal year this is our assumption Thank you very much. Thank you, Adaki-san. So we apologize, but due to time, we'd like to conclude this meeting. So this concludes the first quarter presentation of screen holdings. Thank you very much for your time, and thank you very much for your participation. Thank you very much.