alconix corporation -...

ALCONIX CORPORATION (Listed on TSE First Section, Code 3036)

May 2016

Company Overview / Appendix

Copyright ©2016 ALCONIX CORPORATION All Rights Reserved 2

About ALCONIX


Business Summary


Business summary

ALCONIX is a trading company group with comprehensive operations that encompass everything from the distribution and sale of non‐ferrous metals to the manufacture of metal products.

Business range

Non‐ferrous metals(metals other than steel)Non‐ferrous metals(metals other than steel)

Non‐ferrous metals(metals other than steel) 5‐6% 1.61.65‐6%


Three main characteristics of the ALCONIX Group Business summary

14 M&As

30 business investments

Business expansion through M&A and business investments

11 overseas sites, 16 locations

Firm, close tie‐up overseas network

UniqueBusiness mix

Trading

Manufacturing

Electronic and advanced materials

Aluminum and copper products

Metal processing

Equipment and materials


Trading/Electronic and advanced materials, Aluminum and copper products Business summary

Businesses Our trading products End products Main business areas

Electronic and advanced materialsJapan, North America, Europe, China, Asia

Consolidated subsidiaries

ADVANCED MATERIAL JAPAN CORPORATION,etc.

Aluminum and copper productsMain business

areas

Japan, China, Asia, Europe, Latin America


ALCONIX SANSHINHAYASHI METALALCONIX•MITAKA HEIWA KINZOKU

Titanium coils

Automobiles (magnetic and battery materials for various

motors)

Tablet PCs, smartphones

(battery materials, etc.)

Titanium products (heat exchangers)

Titanium sponge Rare earth strips

Rare earth ingots Rare earth compounds

Aluminum alloy ingots

Metal scraps

Aluminum coils Copper productsAircrafts

(used in structural parts )

Automobiles (bodies)

Motorcycles (aluminum frames, etc.)

Air conditioners (copper tubes)

Lead frames(for semiconductor) Aluminum cansBrass copper rod

Wind power generation (turbines)

Window materials(coating agents)

LCD panels

Compound semiconductors

and other electronic materials


Manufacturing/Metal processing, Equipment and materials Business summary

Businesses Our trading products End products Main business areas

Metal processing

Japan, China, Asia


OHKAWA CORP.OHBA SEIKEN CO., LTD.

Equipment and materialsMain business

areas

Japan, China, North America, Europe, Asia


UNIVERETICALTOKAI YOGYOMARKTEC

Precision fabricated parts Artificial satellite (communication

parts)

Precision grinding processing parts

Aircrafts(engine parts)

Chip mounters

Tablet PCs, smartphones

(PWBs)

Plating materials

Welding rods

Non‐destructive testing (equipment)

Non‐destructive testing (detection materials)

Vehicle (plating, metal mold

building‐up welding rods, non‐destructive testing) Steel (marking)

Semiconductor (PWB plating)

Construction materials(plating)

Automobiles (driving parts, trial parts)

Power generation plant(non‐destructive testing)


Expansion through M&As and business investments Business summary

■M&A (acquisition of stock) ■M&A (acquisition of business)

■ Business investment (equity‐method affiliates)

TOKAI YOGYO CO., LTD.HEIWA KINZOKU CO., LTD.

Inada Copper CenterK’MAC Co., Ltd.

OHBA SEIKEN CO., LTD. ALUMINUM & COPPER RECYCLING CENTER CORPORATION

UNIVERTICAL CORPORATION (UHI)Shanghai Longyang Precise Compound Copper Tube Co., Ltd.Hangji Chuangfu (Foshan) Metal Product Co., Ltd.

ALCONIX・MITAKA CORP.

OHKAWA CORP.HAYASHI METAL CORP.

Goko Shizai Co., Ltd. (ALCONIX SANSHIN CORPORATION)

Non‐ferrous materials business (Sojitz Metals Co., Ltd.)

Listed on JASDAQ

Listed on Tokyo Stock Exchange, Second section

Listed on Tokyo Stock Exchange, First section

Established Nissho Iwai Non‐Ferrous Metals Corp. Changed company name to Nissho Iwai Alconix Corporation

Management buy‐out –beginning of our second stage of growth

Changed company name to ALCONIX CORPORATION

Overseas network expansion

Singapore AMJ

Taiwan

Relocated thehead office

USA, China, Hong Kong and Thailand

Germany

Malaysia

Thailand ALCONIX LOGISTICS

Domestic sales of copper tubes(Sanshin Rinkei, now ALCONIX SANSHIN)AMJ (minor metal, rare earth)

MARKTEC CORPORATION

Company’s Growth

Business Expansion


Solid overseas network 事業概要

The ALCONIX Group has a unique overseas network that emphasized profitability

● Overseas subsidiaries and liaison offices

(As of March 2016)

Business summary

11 overseas sites, 16 locations

Dusseldorf Moscow

Cairo

Vladivostok

Beijing

Shanghai Shenzhen

Guangzhou

Bangkok

Kuala Lumpur

Singapore

Taipei

Hong Kong

Hanoi

Chicago

Chicago, USA: ALCONIX USA., INC.Hong Kong, China: ALCONIX HONGKONG CORP., LTD.Bangkok, Thailand: ALCONIX (THAILAND) LTD.

ALCONIX LOGISTICS (THAILAND) LTD.Shanghai, China: ALCONIX (SHANGHAI) CORP.Beijing, China: ALCONIX (SHANGHAI) CORP., Beijing BranchShenzhen, China: ALCONIX (SHANGHAI) CORP., Shenzhen BranchGuangzhou, China: ALCONIX (SHANGHAI) CORP., Guangzhou BranchDusseldorf, Germany: ALCONIX EUROPE GMBHKuala Lumpur, Malaysia: ALCONIX (MALAYSIA) SDN. BHD.Taipei, Taiwan: ALCONIX (TAIWAN) CORPORATIONHanoi, Vietnam: ALCONIX VIETNAM CO.,LTD.

Moscow Liaison Office (Russia): ADVANCED MATERIAL JAPAN CORPORATIONVladivostok Liaison Office (Russia): ADVANCED MATERIAL JAPAN CORPORATIONADVANCED MATERIAL BEIJING CORPORATION (China): ADVANCED MATERIAL JAPAN CORPORATIONADVANCED MATERIAL TRADING PTE.LTD.(Singapore)

▲Overseas agents

Cairo, Egypt


Business Model


The integrated ALCONIX business model Business model

Operations that unify manufacturing and sales by using synergies from trading company and manufacturing capabilities

Changes in the external

environmentCustomers’ needs

Manufacturing and recycling(up‐stream activity)

Tradingcompany

(mid‐stream activity)

Wholesale(downstream

activity)

Logistics functions linking materials/non‐ferrous metal refiners with customers

Wholesale/retail functionsBusiness base: within Japan

Direct investment in manufacturersEstablish manufacturing company in joint venture

Business base:domestic/overseas

Business base:domestic/overseas/third‐party countries


Business fields Business model

Ore Ingots Products

Trading segment

Manufacturing segm

ent

Base metals

Minor m

etals

Mining

entities (overseas)

ADVANCED MATERIAL JAPAN CORPORATION (AMJ)

(Consolidated subsidiary)

Major trading firms

Smelting

entities (dom

estic/overseas)

Raw resource‐

trading firms

Group companies of major general trading firms, independent and mid‐sized non‐ferrous trading firms, etc.

Product‐trading firms

Rolling, extrusion, reprocessing entities (dom

estic/overseas)

CompetitorsNon‐ferrous metal smelters' trading firms, group companies of major general trading firms, etc.

Metal processing

Equipment and m

aterials

Precision machining processing OHKAWA

Precision grinding processing

OHBA SEIKEN

Non‐destructive testing equipment and marking device manufacturing

MARKTEC

Plating material manufacturing UNIVERTICAL

Welding rods, thermal spraying TOKAI YOGYO

Electronics and advanced m

aterialsAlum

inum and

copper products

End productsEnd products

End user industriesAutomobiles Semiconductors

End user industriesAircrafts Semiconductors/IT

End productsEnd user industries

Automobiles

Consumer electronics

Semiconductors/IT

Aircrafts


Business model ‐Features of trading capabilities and profit structure Business model

Business style Business flow Inventory Profitability Profit sourceWhen market prices rise

Amount of profit Profit margin

IntermediaryALCONIX concludes each contract with clients or supplier individuallyALCONIX facilitates and control distribution

No inventory

No inventory riskProfitability tends to be relatively high

Margin/ commission ○ (Eager to purchase) ○

Direct

Contract conditions (price, delivery date, amount) are concluded between our client and supplierSupplier deliver directly to our client

No inventory

No inventory riskProfitability tends to be low

Commission (fixed amount)Commission (transaction price x fixed rate)Commission (processing costs x fixed rate)

○(Eager to purchase)○(Eager to purchase)○(Eager to purchase)

Slightly○‐

Slightly△

Inventory‐1 (Already contracted)

ALCONIX takes an order from specific client, holds inventory and delivers just in time

Hold inventory

No inventory riskProfitability tends to be average

Margin/ commission ○(Eager to purchase) ‐

Inventory‐2 (No sales contract)

ALCONIX controls, and holds inventory regardless of any clients order

Hold inventory

Existence of inventory riskProfitability tends to be high

Margin ○(Eager to purchase) ○

○: Positive △: Nega ve ―: Neutral

Market price rise expansion of client demand; Market price drop restraint in client demand Relatively small impact of market volatility on our transactions Some "Intermediary" and "Inventory‐2" transactions are directly impacted by the market. "Inventory‐2" transactions account for only 5% of total transactions. This limits the direct impact of market volatility

on our profits.


Corporate Data


Consolidated financial summary Corporate data

FY3/06 FY3/07 FY3/08 FY3/09 FY3/10 FY3/11 FY3/12 FY3/13 FY3/14 FY3/15 FY3/16

Net sales 127,627 172,781 215,839 165,439 109,192 157,979 220,703 164,769 183,749 201,543 201,755

Cost of sales 122,968 166,668 208,571 159,582 103,259 149,710 210,060 156,010 172,754 189,452 189,574

Gross profit 4,659 6,112 7,268 5,857 5,932 8,268 10,642 8,759 10,995 12,091 12,181

SG&A expenses 3,175 3,631 4,195 4,212 4,395 5,191 5,955 5,473 7,510 7,506 8,388

Operating income 1,483 2,480 3,072 1,645 1,537 3,077 4,687 3,286 3,484 4,584 3,792

Ordinary income 1,214 1,910 2,452 1,577 1,402 2,963 4,499 2,892 3,600 5,205 4,281

Profit before income taxes 1,133 1,903 2,512 564 2,456 3,376 4,453 2,594 4,509 5,213 5,103

Profit 583 1,076 1,427 181 1,799 1,901 2,450 1,430 3,144 3,505 4,977

Total assets 36,660 49,973 54,290 39,137 40,219 64,561 68,600 70,382 85,664 89,848 111,072

Net assets 3,533 5,263 7,152 7,325 9,157 12,144 14,020 15,818 21,368 26,951 31,323

Interest‐bearing debt 7,562 10,520 14,505 13,175 11,915 25,345 23,148 26,926 29,913 30,130 38,611

(Unit: million yen)

Listed on JASDAQ

Listed on TSE 2nd Section

Designated for listing on TSE 1st Section


Main financial indicators Corporate data

FY3/10FY3/11

(Listed on TSE 1st sec.)(stock split in Aug. *note 1)

FY3/12 FY3/13 FY3/14FY3/15

(stock split in Aug. *note 1)

FY3/16

Net assets per share (cons.) (Yen) 1,673.47 1,867.97 2,143.39 2,414.98 3,276.42 2,053.83 2,311.32

Net income per share (cons.) (Yen) 337.61 339.31 385.71 225.16 494.77 274.76 387.09

Dividend per share(of which commemorative dividend)

(of which interim dividend)

(Yen)85.00

（0.00）

50.00Note 2 (5.00)

(0.00)

60.00

（25.00）

60.00

（30.00）

65.00

（30.00）

40.00

(18.00)

44.00

（22）

Dividend payout ratio (%) 12.6% 14.7% 15.6% 26.6% 13.1% 14.6% 11.4%

Number of shares outstanding (Shares) 2,666,400 6,347,800 6,353,200 6,355,200 6,358,800 12,813,200 12,875,600

Return on equity (cons.) (%) 22.4% 18.3% 19.2% 9.9% 17.4% 14.9% 17.7%

Return on assets (cons.) (%) 3.5% 5.7% 6.8% 4.2% 4.6% 5.9% 4.3%

Equity ratio (cons.) (%) 22.2% 18.4% 19.8% 21.8% 24.3% 29.3% 26.8%

Net debt equity ratio (Times) 0.7 1.4 0.9 1.0 0.8 0.7 0.6

Number of employees (cons.) 361 402 411 511 752 797 1,132

Note 1: ALCONIX conducted a 2‐for‐1 stock split on August 1, 2010 and August 1, 2014. The net income per share in FY3/10 and FY3/15 were assumed that the stock split was previously conducted.

Note 2: ALCONIX paid a year‐end dividend for FY3/11 of 50 yen per share, consisting of its original 45 yen dividend plus five yen to commemorate its designation for listing on the First Section of the Tokyo Stock Exchange.

Net income per share: Not considered potential stock

Return on Asset = Ordinary income / (Average of year‐start and year‐end total assets of FY)

Return on Equity = Profit / (Average of year‐start and year‐end net assets of FY, excluding non‐controlling interests and subscription rights to share)

Net debt equity ratio = (Interest‐bearing debt ‐ Cash and deposits) / Net assets

Number of employees: Excludes directors of the Company and employees dispatched from temporary staff agencies, but includes seconded employees dispatched from the Company to other companies, contract staff, and staff dispatched from other companies. All figures are based on the securities report (“Yukashoken Hokokusho”)


Percentage breakdown of ALCONIX Group transactions by product category Corporate data

* Based on results at the end of FY3/16 (value basis)

Non‐ferrous metal materials for automotive applications, metal silicon, magnesium, zinc, valve parts, piping joints, and construction materials

Plating materials, precision machining processing parts, precision grinding processing parts, welding rods, etc.

Aluminum

Copper

Of which nickel3.3%

Minor metalsTotal

Aluminum fins, aluminum foil, tubes, strips, sheets, can materials, aluminum alloy ingots, scraps, primary ingots,fabricated aluminum products, etc.

Copper products (tubes, sheets, strips), electrolytic copper, copper products for semiconductors, brass copper rod, copper scrap, electric wire, and other fabricated copper products

Nickel powder, nickel foam (battery materials), plating nickel ingot, etc.

Titanium, tungsten, molybdenum, rare earth, gallium, indium, cobalt, antimony, cadmium, barium, electronic materials, advanced materials

Industrial productsand others

Manufactured products


Market position (share) Corporate data


Main shareholders Corporate data

Category Number of shares held

Shareholding ratios

Number of shareholders Composition

Financial institutions 3,458,700 26.87% 29 0.93%

Securities companies 323,463 2.51% 30 0.96%

Other Japanese entities 2,853,260 22.16% 63 2.01%

Overseas entities 2,705,764 21.01% 71 2.27%

Individual investors, others 3,534,000 27.45% 2,937 93.80%

Treasury shares 413 0.00% 1 0.03%

Total 12,875,600 100.00% 3,131 100.00%

(As of March 31, 2016)

Name of shareholders Number of shares held

Shareholding ratios

BBH FOR FIDELITY LOW‐PRICED STOCK FUND 1,151,200 8.94%

Japan Trustee Services Bank, Ltd. (Trust Account) 980,400 7.61%

Kobe Steel, Ltd. 853,600 6.63%

Mizuho Bank, Ltd. 396,000 3.08%

The Sumitomo Trust & Banking Co., Ltd. 372,000 2.89%

GOLDMAN SACHS INTERNATIONAL 350,907 2.73%

KITZ Corporation 281,200 2.18%

The Bank of Tokyo‐Mitsubishi UFJ, Ltd. 260,000 2.02%

BNY GCM CLIENT ACCOUNT JPRD AC ISG 229,493 1.78%

The Master Trust Bank of Japan, Ltd. (Trust Account) 209,100 1.62%

Others 7,791,700 60.52%

Total 12,875,600 100.00%

BBH FOR FIDELITYLOW‐PRICED STOCK FUND

8.94%

Japan Trustee Services Bank, Ltd. (Trust Account)

7.61%

Kobe Steel, Ltd.

6.63%Mizuho Bank, Ltd.

3.08%

The Sumitomo Trust & Banking

Co., Ltd.

2.89%

KITZ Corporation

2.18%The Bank of Tokyo‐Mitsubishi UFJ, Ltd.

2.02%

GOLDMAN SACHS INTERNATIONAL

2.73%

BNY GCM CLIENT ACCOUNT JPRD AC ISG

1.78%

The Master Trust Bank of Japan, Ltd. (Trust Account)

1.62%

Others

60.52%

(As of March 31, 2016)


Shareholder returns: Trend in dividend per share and dividend payout ratio Corporate data

Total interim dividends (after the August 2014 stock split)Total year‐end dividends (after the August 2010 and August 2014 stock splits)

Dividend payout ratio (consolidated)

Increase of 5 yen due to stock split

Increase of 2 yen due to stock split

Increase of year‐end dividend by

4 yen(Yen)

FY3/06 FY3/07 FY3/08 FY3/09 FY3/10 FY3/11 FY3/12 FY3/13 FY3/14 FY3/15 FY3/16

Dividend payout ratio

(consolidated)


Stock price indicator Corporate data

April 1, 2014 – March 31, 2016Stock price

Adjusted closing price (yen)

Stock split on August 1

Adjusted closing priceMarket cap(million yen)

June 12, 2015(Highest)2,193 yen

June 12, 2015Estimated PER: 5.9Estimate PBR: 1.0

Record high market capitalization: June 12(28,167 million yen)

Market capitalization (million yen)

2014Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.

2015Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.

2016Jan. Feb. Mar.

Closing stock prices adjusted for the August 1 stock split

Note: Market capitalization represents monthly average


Market Chart (Reference Materials)


Non‐ferrous metal application 1 (smartphones)

Smartphone shipments are consistently high despite increasing competition as new companies emerge to compete with established manufacturers.

Market chart (reference materials)

【スマートフォン出荷台数(四半期ベース）】

データ出所：米調査会社IDC

PWB‐ Aluminum‐ Copper‐ Ceramic

LCD panel(Touch panel) ‐ Indium ‐ Tin‐ Copper ‐ Silicon

Vibrator‐ Neodymium ‐ Dysprosium‐ Iron ‐ Copper ‐ Tungsten

Camera‐ Copper ‐ Nickel ‐ Gold ‐ Lanthanum

Earphones AC Jack‐ Gold ‐ Nickel ‐ Neodymium ‐ Dysprosium

Body‐ Aluminum‐Magnesium‐ Antimony

IC‐ Gold ‐ Silver ‐ Copper ‐ Silicon ‐ Gallium

Condenser‐ Titanium ‐ Barium ‐ Copper ‐ Nickel ‐ Zirconium ‐ Tantalum ‐ SamariumChip resistors‐ Iron ‐ Silver ‐ Nickel ‐ Copper ‐ ZincQuartz crystal units‐ Silicon ‐ Copper ‐ Nickel ‐ Gold

Batteries‐ Lithium ‐ Nickel ‐ Cobalt ‐ Aluminum

Smartphone Shipments (Quarterly)(Million units)

GlobalFirm AFirm B

Source: IDC (US research company)


Market chart (reference materials)Non‐ferrous metal application 2 (automobiles)

【国内販売台数、HV車割合】

データ出所：日本自動車部品協会

Motors for auto equipment(starter, power steering, power window, wiper, seat adjust, etc.)‐ Copper ‐ Neodymium‐ Barium ‐ Strontium

Driving motors(hybrid vehicle)‐ Neodymium‐ Dysprosium‐ Aluminum‐ Copper

Wheels‐ Aluminum‐Magnesium

Pipes‐ Copper

Exhaust emission control system (catalyst)‐ Platinum ‐ Rhodium‐ Palladium ‐ Lanthanum‐ Cerium

Body, interior, electriccomponents‐ Aluminum‐Molybdenum‐ Copper ‐ Antimony‐ Zinc

Car batteries (hybrid vehicle)‐ Nickel ‐ Cobalt‐ Lithium ‐ Lanthanum

【国内販売台数、HV車割合】Number of Domestic Sales; Share of HV

(Thousand units) Total four‐wheel vehicle sales Total HV sales Ratios

Source: Next Generation Vehicle Promotion Center

Engine room, radiator‐ Aluminum‐ Copper‐ Zinc


Non‐ferrous metal application 3 (aircraft)

Global private‐sector aircraft demand is forecast to double over the next 20 years.

航空機はアルミニウム、チタンを中心にレアメタル・レアアースを含む多くの非鉄金属が使用されている。

Market chart (reference materials)

Fuselage, wings, fin stabilizer (external panels and structural parts)‐ Aluminum alloy(Aluminum, copper, magnesium, lithium, etc.)(External panels and structural parts: More than 50% of aircraft)

‐ Stainless steel (chrome/nickel, used in structural parts)‐Magnesium, titanium (joints, bolts, connectors)‐ Nickel, zinc (fuselage plating)

EnginesEngines require many high‐performance non‐ferrous alloys in order to withstand temperatures that range from far below freezing to well over 1,000 degrees. ‐ Titanium alloys (fan, engine frame, case, blades, etc.)(Alloy with vanadium, molybdenum, zircon, etc.)

‐ Nickel alloys (turbine and especially the high‐temperature section after the compressor)(Alloy with chromium, tantalum, molybdenum, niobium, tungsten, etc.)

* Titanium and nickel account for more than 40% of materials used to make jet engines.

Landing gear (leg parts)‐ Nickel ‐ Chrome ‐Molybdenum* Landing gear parts, which require the greatest strength, use nickel‐chrome‐molybdenum steel.

Aircraft use many types of non‐ferrous metals, mainly aluminum and titanium, including minor metals and rare earths.

【地域別ジェット旅客機運航機数および需要予測】

データ出所：日本航空機開発協会

Passenger Jet Aircraft Worldwide and Projected Demand

Current no. of aircraftProjected future demand

Number of aircraft operating

End of 2013: 19,208

End of 2033: 36,769

Estimated increase 2014‐2033: 32,217

Source: Japan Aircraft Development Corporation

North America

Europe Asia/Pacific Middle East

Latin America

Africa

These materials were prepared to help investors understand ALCONIX and were not intended as a solicitation for investment in ALCONIX. These materials were prepared carefully for accuracy, but the completeness of these materials cannot be guaranteed. ALCONIX will not be held responsible for any problems or damages that result from the information provided in these materials. Earnings forecasts and other future forecasts in these materials were made based on the judgment of ALCONIX using information available at the time these materials were prepared. These forecasts embody latent risk and uncertainty. Please understand that actual earnings may differ from these forecasts due to changes in the business environment and other factors.

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