6223.T

Company and Core Technology Overview

• Seibu Giken, founded in 1965, is a leading global manufacturer of special air treatment equipment, competing for the top global position in desiccant dehumidifiers and VOC concentrators. As of end-2025, it has 785 consolidated employees and 11 group companies globally.
• The company's core competitive advantage is its proprietary honeycomb rotor technology, which delivers low air resistance, high structural strength, and large functional surface area. It custom infuses functional agents (silica gel for dehumidification, high-silica zeolite for VOC concentration) to achieve high product performance.
• The company has four core strengths: 1) End-to-end integrated operations from R&D and production to after-sales service, enabling direct user feedback to drive product improvement; 2) Global supply network with 4 factories in Japan, 3 in China, 2 in Europe, and 1 in the US; 3) Full-stack total engineering capabilities, expanding into advanced services such as construction management and process engineering beyond basic equipment sales.

Mid-term Management Plan (2024-2026) Progress

• This plan is the first phase of the company's 2030 vision, focused on expanding market share in the core business, launching full-scale growth of the growth business, and strengthening group governance. The plan has been slightly downward revised overall due to unforeseen declines in Chinese EV battery investment, but overall execution remains on track, as declines in automotive battery demand have been largely offset by growth in other energy device segments.
• Core business progress: Production capacity expansion is ongoing. Overseas, the US and Poland factories were newly built/expanded in 2024. Domestically, a new rotor production facility completed construction in October 2025, with full commercial operation scheduled for September 2026. A new sheet metal processing factory is under construction in China to bring previously outsourced processing in-house and improve cost competitiveness. For VOC concentrators, the company is actively expanding into new applications (tire manufacturing, back-end semiconductor production) and new markets (India, Southeast Asia).
• Growth business progress: Total engineering has seen strong growth in domestic hybrid supercapacitor projects, where the company provides end-to-end services including overall design and contractor selection on behalf of project owners. The company has expanded international total engineering via a JV with Korean partner Gunmyung Eng in the US, and is progressing organic solvent recovery projects for the Indian market.

Strategic Initiatives

• Joined the cross-industry Swiftfab project for battery manufacturing equipment led by Japan's Battery Supply Chain Consortium (BASC), as one of 9 founding member companies. The JV develops more competitive next-generation battery manufacturing processes for global deployment, and a Seibu Giken director serves as the JV's representative.
• Launched new product C-SAVE Green in 2024, a CO2 concentration device that captures CO2 from ambient air for greenhouse agriculture to boost crop yields. The product has lower environmental impact than traditional fossil fuel or CO2 cylinder alternatives, won the Tokyo Governor's Award at the 50th Invention Awards, and is currently conducting pilot trials with a university in the Netherlands targeting European greenhouse tomato production.
• Cash allocation (2024-2026): Planned operating cash flow of ~13 billion yen, investment cash flow of ~6 billion yen, and shareholder returns exceeding 6 billion yen via dividends and share buybacks, which is progressing as planned.

• For 2026 December full year: Seibu Giken guides total revenue of 36.05 billion yen (+5% YoY), operating profit of 4.03 billion yen (-11% YoY), with an operating margin of 11.2%. Revenue growth is expected from recovering demand in China and Europe, following the recent market trough. Operating profit is expected to decline year-over-year due to planned increases in selling, general and administrative expenses, primarily for higher personnel costs, as well as increased IT investment and prototype testing expenses tied to future growth. Extraordinary income from government subsidies is expected to support net income.
• Dividend guidance: The company maintains a target consolidated payout ratio of 40%+ and guides a full year 2026 dividend of 70 yen per share. The company already completed a 1 billion yen share buyback in 2026, acquiring ~425,000 shares.
• Next-generation battery outlook: Full-scale mass production adoption of all-solid-state batteries is expected to begin between 2027 and 2028, which will drive significant new demand for the company's dehumidification and VOC recovery technologies. Stationary energy storage systems, particularly for data centers, are expected to see strong demand growth going forward.
• Growth market outlook: Semiconductor demand is expected to continue growing driven by the spread of generative AI, supporting ongoing demand for the company's products. Non-automotive energy devices such as lithium-ion capacitors and perovskite solar cells have seen strong demand growth since 2025.

By product: 1. Desiccant dehumidifiers: Accounts for ~60% of total revenue, saw steady growth from 2023 to 2025, though Chinese EV battery-related sales declined sharply due to market investment contraction. Japanese domestic EV battery-related projects and perovskite solar cell projects remain solid. 2. VOC concentrators: Accounts for ~30% of total revenue, has seen steady growth since 2023, with solid demand from semiconductor foundries (primarily Taiwan). 2025 replacement unit volume hit 111.3% of 2024 levels. 3. Other products: Accounts for 13.9% of total revenue, including total heat exchangers and honeycomb filters. 2025 saw particularly strong growth in total heat exchanger and construction management revenue related to cleanroom construction. By business type: 1. Core business (equipment sales): Accounts for ~2/3 of total revenue, overall solid performance offsetting Chinese EV battery-related declines with growth from non-automotive energy device segments. 2. Growth business (total engineering/solutions): Accounts for ~1/3 of total revenue, saw strong expansion from 2024 to 2025, driven by energy device and semiconductor material projects. By region: Japan accounts for 45.6% of total revenue, overseas accounts for 54.4%, with China holding the largest share of overseas revenue, followed by the US, Europe, South Korea, and other Asian markets. 2025 full year (December period) consolidated performance: Total revenue of 34.322 billion yen (+7% YoY), operating profit of 4.53 billion yen (+12.4% YoY), operating margin of 13.2%, achieving year-over-year revenue and profit growth.

• Overcapacity in the global EV battery market has led to sharp declines in investment in China and Europe, and the removal of EV policy support in the US has also softened demand, negatively impacting the company's core EV battery-related sales. While the impact has been partially offset by growth in other segments, the slowdown in EV-related investment remains a key near-term risk.
• The mass commercial adoption timeline for next-generation technologies such as all-solid-state batteries is still uncertain, and delays in market adoption would impact the company's expected long-term growth in this segment.
• Geopolitical and macroeconomic volatility in key overseas markets could impact demand for the company's capital goods and lead to project delays.

Q: Has the competitive landscape for desiccant dehumidifiers and VOC concentrators changed since the last update, when it was noted that Munters was top in desiccant dehumidifiers and Seibu Giken was second? / A: The competitive ranking has not changed. Sweden's Munters remains the global share leader for desiccant dehumidifiers, with Seibu Giken in second place. For VOC concentrators, Munters does not prioritize the segment, so Seibu Giken holds the number one global share. A key difference from Munters is that Seibu Giken provides end-to-end services including installation, while Munters only sells equipment, giving Seibu Giken a competitive advantage in integrated solutions.

Q: The mid-term plan targets have been revised downward amid a tough EV-related business environment. Is the slowdown solely due to external business conditions, and what is the progress of capacity expansion investments? / A: The plan was indeed revised downward due to external conditions, specifically the unexpected sharp contraction in Chinese EV battery investment after rapid expansion through 2023. However, strong growth in demand for non-automotive energy devices such as lithium-ion capacitors and perovskite solar cells has largely offset the decline in automotive battery-related sales. Overall, the mid-term plan is progressing on schedule with no implementation issues. Capacity expansion projects in Japan, the US, Europe, and China are all progressing as planned, with the new domestic rotor plant on track to start operations in September 2026.

Q: What is the outlook for EV battery-related capital investment and demand for Seibu Giken's products, especially for all-solid-state batteries? / A: After years of rapid expansion, global EV battery capacity now significantly outpaces demand, so current investment demand is well down from peak levels in China, Europe, and the US. However, long-term structural growth remains, as EV adoption still has room to expand in most markets. The key future growth driver will be all-solid-state batteries; Seibu Giken has already delivered dehumidification systems and VOC recovery equipment for prototyping and pilot production to Japanese manufacturers, and confirms its technology is well-positioned for this segment. Full-scale mass production is expected around 2027-2028, which will drive significant demand growth for the company when it occurs.