6824.T

Company Overview & Core Strengths

• 新コスモス電機 is a specialized gas alarm manufacturer founded 66 years ago, with a core mission to eliminate gas accidents worldwide. It conducts end-to-end R&D, manufacturing, sales, and maintenance from core gas sensors to finished residential, industrial gas alarms and fire alarms.
• It is the only domestic Japanese manufacturer that produces both residential and industrial gas alarms, with the technical capability and production system to meet varying specification requirements across both segments.
• It has world-top-level gas sensor production capacity across three production sites: Cosmos Sensor Center in Miki, Hyogo; the newly opened Yodogawa Plant in 2025; and the plant of group company Figaro Engineering.
• Its proprietary MEMS hot-wire semiconductor gas sensor applies MEMS technology to traditional sensors to achieve significant size and power consumption reduction, enabling battery-powered residential gas alarms that have driven strong sales growth in North America.

Mid-Term Management Plan (2025-2027) Progress

This 3-year plan is the first year of the plan, focused on two core pillars: "Deployment" (monetizing prior investments) and "Expansion" (building foundations for new future markets and businesses):

• Deployment Pillar Progress:
  • North American battery-powered methane alarm market expansion: Sales were extremely strong through the first half, but stabilized in the 3rd quarter after New York City extended the installation compliance deadline to after January 2027. In the medium-to-long term, management expects installation mandates to spread across the U.S. and demand to grow steadily.
  • Semiconductor market sales expansion: The majority of sales for this segment are in China and Taiwan, so results have continued to come in below plan for two consecutive quarters due to regional economic slowdown. Management expects this slowdown impact to continue for the remainder of the fiscal year.
• Expansion Pillar Progress:
  • European carbon neutrality market foundation building: The company is conducting market research, expanding brand awareness via trade show participation and web campaigns, and progressing product certification. In-vehicle hydrogen detectors are seeing gradual adoption progress in FC buses and trucks. While European hydrogen market growth is slower than initially expected, the company maintains its strategy of continued focus on this market.
  • Residential battery-powered alarm product line expansion: Development of residential hydrogen alarms is complete, and trial deployment has started. Development of battery-powered LP gas alarms is ongoing.

Balance Sheet & Cash Flow

• Cash and cash equivalents increased by 2.869 billion yen from the prior fiscal year-end to 21.582 billion yen, up 15.3% year-over-year. Growth came from operating activity cash inflows that offset outflows from investing and financing activities.
• Total assets increased by 5.483 billion yen from prior period-end to 72.771 billion yen (+8.1%), driven by increases in cash and deposits (+3.54 billion yen) and inventory assets (+1.308 billion yen).
• Total liabilities increased by 1.906 billion yen from prior period-end to 17.933 billion yen (+11.9%), driven by increases in notes/accounts payable (+1.259 billion yen) and electronic record debts (+1.142 billion yen).
• Net assets increased by 3.577 billion yen from prior period-end to 54.837 billion yen (+7.0%). While treasury stock increased by 0.595 billion yen, retained earnings increased by 3.271 billion yen and valuation difference on other securities increased by 0.869 billion yen, driving overall net growth. The equity capital ratio was 70%, down 0.8 percentage points from prior period-end.

Recent Operational Topics

• The company held its first tsunami evacuation drill with local community participation at its Yodogawa Plant, with 180 total participants (58 local residents/officials and 122 company employees). The Yodogawa Plant was designated as a tsunami evacuation building by Osaka City to address a lack of local evacuation infrastructure, and the company will continue drills to prepare for emergencies.
• The company's hydrogen gas detector was selected for use in a central Tokyo district heat supply plant operated by Akasaka Heat Supply Co., which installed the first green hydrogen heat source facility in central Tokyo. 30 units of the company's PD-14 hydrogen gas detector and 2 units of the UV-810 alarm panel were installed for safety, alongside additional PD-14 refrigerant gas detectors for chiller equipment.

• Management upward revised full-year (April 1, 2025 - March 31, 2026) performance guidance following the 3rd quarter results. While weak sales performance in Asia offset strong North American results, full-year sales are expected to come in broadly around the level of the prior published forecast.
• All profit metrics (operating profit, ordinary profit, net income attributable to parent shareholders) are expected to exceed the prior published forecast. Strong sales of high-margin products in North America, combined with efficiency gains from DX promotion, have absorbed the increased expenses associated with the full operation of the Yodogawa Plant.
• In line with the upward revised full-year earnings forecast and the 30% payout ratio target in the mid-term management plan, management increased the forecast year-end dividend per share by 25 yen to 95 yen per share as a return to shareholders.

For the 9M cumulative period of the 2026 March 3rd quarter, overall company sales reached 36.765 billion yen, up 24.6% year-over-year. Operating profit was 5.572 billion yen, up 27.4% year-over-year. Ordinary profit was 5.9 billion yen, up 24.9% year-over-year, and net income was 4.013 billion yen, up 40% year-over-year. By product segment: 1. Residential gas alarm-related products: Sales of 22.641 billion yen, up 49.6% year-over-year, accounting for approximately 61.6% of total cumulative 3Q revenue. The growth was driven by strong sales of battery-powered methane alarms and alarm gas sensors for the North American market. 2. Industrial stationary gas detection alarm-related products: Sales of 7.989 billion yen, down 3.7% year-over-year, accounting for approximately 21.7% of total cumulative 3Q revenue. Sales and maintenance services for the power and chemical industries were steady, but demand from the semiconductor industry was weak, dragging down overall segment performance. 3. Commercial portable gas detector-related products: Sales of 4.935 billion yen, up 8.2% year-over-year, accounting for approximately 13.4% of total cumulative 3Q revenue. Growth was driven by strong sales of overseas gas detectors and domestic alcohol detectors, alongside steady maintenance service performance. By region: Japan performed in line with plan with no material deviation from prior periods. North America delivered results above plan on a year-over-year basis due to strong residential battery-powered methane alarm sales, though sales momentum stabilized in the 3rd quarter. Asia delivered results below year-over-year levels, as semiconductor industry demand in China and Taiwan remained weak due to ongoing economic slowdown. The overall overseas revenue ratio remained high at 54.2%.

• North American battery-powered methane alarm sales are exposed to regulatory timing risk: New York City extended the installation compliance deadline, which caused near-term sales to cool off, and Illinois has delayed legislative consideration of a new installation mandate to after February 2026. Near-term sales depend on the timing of regulatory mandate implementation across U.S. states, though management expects long-term demand growth as mandates spread.
• Semiconductor market sales are exposed to macroeconomic risk in China and Taiwan: The ongoing regional economic slowdown has continued to weigh on demand for gas detectors for semiconductor manufacturing, and the impact of this slowdown is expected to continue for the remainder of the current fiscal year, with performance dependent on future Chinese economic trends.
• European carbon-neutral/hydrogen market growth is progressing slower than management initially expected, though the company maintains its commitment to this market.

No question and answer section was included in the provided transcript.