BRIDGE REPORT
(6461)

東証1部

投資家向けIRセミナープレミアムブリッジサロン開催!
Nippon Piston Ring (6461)
Akira Yamamoto, President
Akira Yamamoto, President
Corporate Profile
Company
Nippon Piston Ring Co., Ltd.
Code No.
6461
Exchange
TSE First Section
Industry
Machinery (Manufacturing)
President
Akira Yamamoto
HQ Address
5-12-10, Honmachi Higashi, Chuo-ku, Saitama City, Saitama, Japan
Year-end
March
URL
Stock Information
Share Price Shares Outstanding Market cap ROE (Actual) Trading Unit
¥1,790 8,374,157shares ¥14.989billion 7.9% 100 shares
DPS (Est.) Dividend Yield (Est.) EPS (Est.) PER (Est.) BPS (actual) PBR (actual)
¥60.00 3.4% ¥182.51 9.8x ¥3692.51 0.5x
* Share price as of close on February 3, 2016. A reverse stock split of 1 for 10 was conducted on October 1, 2015.
 
Consolidated Earnings Trends
Fiscal Year Sales Operating Profit Current Profit Net Profit EPS (¥) DPS (¥)
March 2010 39,035 -610 -1,163 -2,787 -339.48 0.00
March 2011 47,411 4,195 3,298 1,666 202.91 0.00
March 2012 49,168 3,847 3,336 4,118 501.41 30.00
March 2013 47,018 2,225 2,184 2,013 245.05 50.00
March 2014 50,430 1,759 1,733 1,352 164.54 50.00
March 2015 51,657 1,946 2,172 2,173 264.44 60.00
March 2016 Est. 52,000 2,200 2,100 1,500 182.51 60.00
* Estimates are those of the Company.
* The definition for net profit has been changed to net profit attributable to parent company shareholders (Abbreviated as parent net profit)
* EPS, DPS have been adjusted to reflect the reverse stock split of 1 for 10 conducted on October 1, 2015.
* A commemorative dividend of ¥10.00 per share in addition to the normal dividend of ¥50.00 was conducted to commemorate
the 80th year of Nippon Piston Ring's operations in FY March 2015.
 
This Bridge Report provides details of Nippon Piston Ring Co., Ltd.'s the first half of fiscal year March 2016 earnings and other information including an interview with President Akira Yamamoto.
 
Key Points
 
 
 
Company Overview
 
Nippon Piston Ring manufactures and sells important automobile engine parts such as piston rings and valve seat inserts. The Company boasts of a market share of just under 30% of piston rings provided to Japanese automobile manufacturers, and supplies its products to all Japanese automobile manufacturers and many prominent overseas automobile manufacturers.
Nippon Piston Ring boasts of strengths in metallic materials, surface quality improvement and precision processing technologies. New products are being developed to expand the range of its business into the metal injection molding products, dental implants, and other products not related to automobile engines.
 
<Corporate History>
Nippon Piston Ring was founded by Tomonori Suzuki in 1931 in Kawaguchi City, Saitama Prefecture just prior to the start of mass domestic production of automobiles by manufacturers such as Toyota and Nissan, following the Government program for "establishment of an automobile industry" adopted in August 1935. The company name Nippon Piston Ring Co., Ltd. was officially adopted along with the establishment of the factory in Kawaguchi City in 1934.
During the Second World War, the Company began mass production of chrome plated rings for airplanes. At the end of the War in 1945, the factory was temporarily closed, but the company began operations along with the listing of its shares on the Tokyo Stock Exchange in 1949.
Nippon Piston Ring's earnings expanded rapidly along with the rapid expansion in Japanese automobile exports, and the strong demand for vehicles due to economic growth in the post-war reconstruction within Japan.
Beginning to provide products to German and American motor vehicle manufacturers in the 1970s, the Company has continued organizing a global manufacturing and sales structure, establishing overseas manufacturing facilities in Thailand, Indonesia, China and some other countries since 2000.
The metal injection molding products business and dental implants business were acquired in 2014 as part of the strategy of expanding its product lineup outside of the motor vehicle engine parts realm, and the Company has started to operate the business by its own facility since 2015.
 
 
President Akira Yamamoto believes that repetitive explanations on a face to face basis of the Company's corporate philosophy and action guideline are highly important. Therefore he visits Japanese and overseas plants and facilities to conduct discussions and explain the corporate philosophy and action guideline with all staff.
 
<Market Environment>
◎ Global Automobile Production Volume
According to the research company "IHS Automotive", the production volume of light vehicles of less than six tons in gross weight is expected to continue to increase from 87.00 million units in fiscal year 2014 to over 100 million in 2018, and to eventually reach 107 million in 2022.
Looking at the details of these estimates, light vehicles manufactured in Europe, North America, Japan and other developed economic regions are expected to see only slight increases. However, stronger growth in China, ASEAN countries, South America, India and other developing economic regions is expected to allow their share of light vehicles to rise from 49.9% in 2014 to 56% in 2022. And while overall average growth is expected to be 2%, it is expected to reach 4% in developing markets.
 
 
At the same time, production estimates by power train (Drive system) call for a slight decline in the share of gasoline and diesel engines due to the rise of environmental awareness, and an increase in the share of hybrid (HV) systems, using gasoline engines and electric motors, and plug-in hybrid (PHV) systems. However, the share of gasoline, diesel, ethanol/compressed natural gas, PHV&HV and EV drive train vehicles of the total 107 million units of light vehicle production expected in 2022 is expected to be 63%, 20%, 8%, 9% and 1.2%, respectively. Consequently, demand for piston rings and valve seat inserts is expected to continue to trend strongly based upon this estimate for gasoline and diesel engine drive trains to continue to be the main power trains for light vehicles in the future.
 
* Sales, operating profit are estimates of the respective companies. ROE is based upon actual data. Market capitalization, PER, and PBR are based upon closing share prices of the respective companies as of November 20, 2015.
 
There are three publicly traded companies that manufacture piston rings, including Nippon Piston Ring, and the companies are operating other businesses respectively. Riken Corporation (6462) boasts of a top share of the piston ring market of close to 50%, but TPR Co., Ltd. boasts of much larger earnings than the other two companies.
Both Nippon Piston Ring and Riken have PBRs of less than one. Nippon Piston Ring needs to grow its earnings to rectify this undervaluation, while also increasing its brand recognition.
 
<Business Description>
◎ Main Products
As reflected in the Company name, piston rings are one of the main products manufactured. In addition, valve seat inserts and various other automobile parts are manufactured and sold. In fiscal year March 2015, automobile related parts accounted for 86.6% of total sales.
At the same time, metal injection molding products business and the dental implant products business were acquired in 2014. New product development is being promoted as a means of expanding its business in the non-automobile engine components realm.
(Please Refer to "Reference. Sixth Midterm Business Plan" for further information about new businesses and products)
 
 
 
 
 
 
Piston rings are fitted in grooves that run around the circumference of pistons and have spring-like characteristics to act as a seal for ideal combustion within the combustion chamber of the engine cylinders and control lubrication of the piston and cylinder walls by forming precise circles. Moreover, three piston rings are normally used, to form a seal to prevent leakage of oil, allow heat to escape and reduce both friction wear and baking.
Smooth movement of pistons will be impeded and fuel consumption will be negatively impacted should the tensional force of the piston ring placed on pistons be too high. Conversely, loss of power and increased oil consumption will result if the tensional force of the piston ring placed on pistons is too low.
Consequently, optimization of the tensional forces of piston rings is crucial in ensuring the optimum performance of internal combustion piston engines.

An oil film is formed between the cylinder wall and pistons to reduce friction wear and baking, which could be caused by the high speed movement of pistons within a high-heat condition of cylinders. However, it's not thicker the better; piston oil rings need to be designed to ensure that an optimal thickness of oil film is formed.
Piston rings are required to provide wear resistance, material strength, heat resistance, heat conductivity, and oil retention capacity to ensure the optimal performance and durability of engines.
In recent years, with the rapid rise in awareness of environment issues, a swift response is vital to adjust to a system that certifies vehicles with low output levels of nitrous oxides and hydrocarbons, and regulations to enforce reductions in a carbon dioxide emission. Consequently, the need for high performance piston rings that respond to these developments and the need for improvements in fuel consumption is on the rise.

With regards to the characteristics required to piston rings, development of piston rings with low friction construction, thinner width, new surface treatment processes, highly durable and low- cost materials is being conducted. At the same time, development and proposal of optimal design technologies using its tuning technic is also being promoted.

Nippon Piston Ring is one of only few companies that have the ability to stably manufacture and supply piston rings, which, as you may see, require extremely advanced technological capabilities, and are able to consistently develop revolutionary technologies.
 
An oil film is formed between the cylinder wall and pistons to reduce friction wear and baking, which could be caused by the high speed movement of pistons within a high-heat condition of cylinders. However, it's not thicker the better; piston oil rings need to be designed to ensure that an optimal thickness of oil film is formed.
Piston rings are required to provide wear resistance, material strength, heat resistance, heat conductivity, and oil retention capacity to ensure the optimal performance and durability of engines.
In recent years, with the rapid rise in awareness of environment issues, a swift response is vital to adjust to a system that certifies vehicles with low output levels of nitrous oxides and hydrocarbons, and regulations to enforce reductions in a carbon dioxide emission. Consequently, the need for high performance piston rings that respond to these developments and the need for improvements in fuel consumption is on the rise.

With regards to the characteristics required to piston rings, development of piston rings with low friction construction, thinner width, new surface treatment processes, highly durable and low- cost materials is being conducted. At the same time, development and proposal of optimal design technologies using its tuning technic is also being promoted.

Nippon Piston Ring is one of only few companies that have the ability to stably manufacture and supply piston rings, which, as you may see, require extremely advanced technological capabilities, and are able to consistently develop revolutionary technologies.
 
 
<Valve Seat Inserts>
Valve seat inserts are parts which are press fitted into the valve seating portion of cylinder heads. Valve seat inserts are a very important part made from sintered alloys that boast of high resistance to wear and deterioration under high heat conditions, and ensure that a tight seal is formed for clean and efficient combustion. Nippon Piston Ring boasts of quality valve seat inserts that meet the needs of automobile manufacturers at a high level, using a wide range of material variation, leveraging its superior materials development capabilities. Consequently, the Company boasts of a top share of slightly less than 40% of valve seat inserts provided to Japanese automobile manufacturers, and it is expanding its sales to overseas motor vehicle manufacturers.
 
 
<Camshafts>
Camshafts are a part designed to open and close the valves for each cylinder in piston engines. Nippon Piston Ring has patented a special camshaft called assembled sintered camshafts, which are lightweight, high resistance to contact pressure and capable of adopting a wide variety of designs. They are used by Fuji Heavy Industries in all of its engines, as well as used by truck manufacturers, which require highly durable products. Most recently, Honda Motor Co., Ltd. has selected Nippon Piston Ring camshafts to be used in its new model of NSX sports car.
 
 
◎ Customers
Nippon Piston Ring supplies piston rings and valve seat inserts to all Japanese automobile manufacturers.
The products supplied by the Company are extremely important in improving the performance of engines and require high levels of technical expertise. In recent years, the need to improve fuel consumption and to seek alternative fuels due to the growing importance of environmental issues has contributed to expanded sales to Audi, Volkswagen, Ford, General Motors and other non-Japanese automobile manufacturers.
 
 
<Manufacturing and Sales Facilities>
<Japan>
Nippon Piston Ring maintains four manufacturing facilities and seven sales offices (Sapporo, Sendai, Tokyo, Nagoya, Osaka, Hiroshima, Fukuoka) within Japan.
 
 
<Overseas>
Nippon Piston Ring maintains both manufacturing and sales facilities for piston rings, valve seat inserts and other products in the United States, China, ASEAN countries, and India.
 
 
 
<Characteristics and Strengths>
Nippon Piston Ring's highly advanced technologies and ability to consistently supply highly reliable functional automobile parts maintained throughout its history over 80 years of operations has allowed it to become the choice of both Japanese and overseas automobile manufacturers. In recent years, development of major products, which can contribute to reductions in exhaust gases and the achievement of "over 50% thermal efficiency rates" in internal combustion engines, is being conducted.
 
 
With regards to product development, the ability to combine the said technologies and its forte of simulation technologies applied to engines is one of Nippon Piston Ring's strengths.
In addition, automobile manufacturers, to whose business the Company's high levels of technological expertise are critical, are what the Company calls its "client assets," which are an important part of its corporate value.
 
 
While ROE has generally trended downward during the past five years, this is not an issue as it is a result of the reduction in interest bearing liabilities and subsequent declines in leverage.
However, profit margins have been identified as an issue for improvement, and the 6th Midterm Business Plan calls for efforts to boost "operating profit margin of 7% or more in FY March 2018."
 
 
First Half of Fiscal Year March 2016 Earnings Overview
 
 
Higher Sales of Main Products, Profits Exceed Initial Estimates by Large Margin
Sales rose by 4.4% year-on-year above both the previous first half and initial estimates to ¥26.304 billion during the first half of fiscal year March 2016. Overseas sales rose by 14.1% year-on-year to ¥14.6 billion and its composition of total sales rose from 52% in the previous fiscal year to 56%. In addition to favorable sales to Japanese automobile manufacturers in North America, sales of piston rings (Ford and others) and valve seat inserts (Audi, General Motors and others) to non-Japanese automobile manufacturers also continued to expand. The composition of sales to non-Japanese automobile manufacturers rose from 8.1% in fiscal year March 2015 to 10.0%. Cultivation of overseas markets is also progressing smoothly. Furthermore, Nippon Piston Ring comments that the capital investments in overseas market including plant construction conducted between 2005 and 2006, which had been negatively impacted by the Lehman Shock, are now producing positive results.

While sales within Japan are on a slight decline, demand from truck applications remains firm. Furthermore, efforts are being promoted to create a structure that can secure profits under a certain amount of sales through shortening of production process. Reductions in cost (¥0.3 billion), retirement benefit expenses (¥0.3 billion, amortization of reserve shortage in 15 years ago completed) and materials & fuel costs (¥0.1 billion), and foreign exchange fluctuations (¥0.1 billion) contributed positively to profits, while higher labor expenses (¥0.2 billion), changes in unit pricing (¥0.15 billion) and depreciation charges (¥0.1 billion) contributed negatively to profits. Consequent to these developments, operating and current profits rose by 31.6% and 18.2% year-on-year to ¥1.452 and ¥1.447 billion respectively. The disappearance of extraordinary profits arising from sale of investment securities and subsidy income booked in the previous term caused parent net profit to decline by 23.6% year-on-year to ¥894 million. Earnings during the first half trended favorably on the back of higher sales, cost reductions, and weakening of the yen, and they exceeded initial estimates announced at the start of the term by a large margin.
 
 
Despite increases in accounts receivables and inventories of ¥1.083 and ¥0.347 billion respectively from the end of the previous term, total assets declined by ¥59 million to ¥67.204 billion on the back of decline in noncurrent assets to ¥1.514 billion due to valuation losses on marketable securities holdings. Notes payables for facilities rose by ¥683 million, but a decline in valuation losses on marketable securities holdings caused deferred tax liabilities to contract by ¥313 million and total liabilities to rise by ¥354 million to ¥36.293 billion. Moreover, interest bearing liabilities rose by ¥282 million to ¥17.985 billion. Net assets declined by ¥414 million to ¥30.911 billion due to increases in retained earnings and foreign exchange translation adjustment accounts of ¥0.4 and ¥0.134 billion respectively, and a decline in other marketable securities evaluation gains of ¥934 million. Capital adequacy ratio of 45.2% was achieved.
 
 
 
Compared with the previous first half, despite of a decline in payments for capital investment of ¥571 million and disappearance of payments for business acquisition amounting to ¥246 million, increase in accounts receivables of ¥748 million, decline in accounts payables of ¥447 million, and disappearance of income from sale of investment securities of ¥412 million caused ¥783 million decline in free cash flow to a net inflow of ¥370 million. The net outflow of financing cash flow contracted due to the increase in short term debt. Subsequent to these changes, cash position declined by a small margin.
 
(4) Topics
◎ Medical Device Center (MDC) Established within the Dental Implant Products Business
Nippon Piston Ring acquired ISO13485 certification to ensure that products made within the dental implant products (highly regulated medical devices) business pass strict requirements for high quality levels. Subsequent to this certification, the Company established a Medical Device Center (MDC) within its Tochigi Plant and began operations there from October 2015.
 
 
◎ Fractional Shares Acquired as Treasury Stock
Nippon Piston Ring conducted a reverse stock split on October 1, 2015. As a result of this reverse stock split, fractional shares of less than one were acquired as treasury stock. (Purchase conducted on October 28, 2015). The total number of shares acquired amounted to 490.9 shares.
 
 
Fiscal Year March 2016 Earnings Estimates
 
 
Full Year Estimates Remain Unchanged, Sales and Operating Profit Expected to Grow on Back of Strong Overseas Sales
While first half earnings exceeded initial estimates by a large margin, Nippon Piston Ring has adopted conservative assumptions for the second half and full year earnings estimates due to uncertainties arising from fears over slowing economies in China and other developing regions in Asia. But despite these conservative assumptions, sales are still expected to rise to a record high of ¥52.0 billion. This outlook is based upon a continuation of strength in sales to both Japanese and non-Japanese automobile manufacturers in North America. At the same time, the share of total sales of non-Japanese automobile manufacturers is expected to rise, and the share of overseas sales to total sales is expected to rise by 3% points year-on-year to 55%. Cost reduction and higher production volume offset increases in labor and depreciation as well as changes in pricing, and allowed operating profit to rise by 13.0% year-on-year to ¥2.2 billion. Declines in foreign exchange translation gains are expected to cause 3.4% year-on-year decline in current profits to ¥2.1 billion. The disappearance of extraordinary profits arising from sale of investment securities and subsidy income booked in the previous term is expected to cause parent net profit to decline by 31.0% year-on-year to ¥1.5 billion. A dividend of ¥60 per share is expected to be paid, for a dividend payout ratio of 32.9%. Moreover, changes in timing of the start of mass production by automobile manufacturers are expected to cause reduction in capital investments from the initial estimate of ¥7.1 to ¥5.7 billion during fiscal year March 2016.
 
 
Interview with President Akira Yamamoto
 
We interviewed President Akira Yamamoto to ask him about major points of the Sixth Medium Term Business Plan.
 
<Acquiring Strategic Models through Differentiation of Products and Promoting Revolutionary Manufacturing>
In order to compete within the global market, automobile manufacturers are transforming their design and development philosophies, and "raising the efficiency of manufacturing" through communalization of platforms and parts. At the same time, suppliers like Nippon Piston Ring must also conduct radical rethinking of its manufacturing.
Two key words that reflect the above trends are "concurrent engineering" and "smart factories."
"Concurrent engineering" to shorten development period and reduce cost through advancing several processes for product development simultaneously requires "manufacturing capability."
In our Company Group, Product Engineering Department, Research and Development Department and Production Engineering Department are working on a project simultaneously in order to achieve results in the eyes of automobile manufacturers and as a means of further increasing customer satisfaction.
Also, demand for traceability, including the need for stable production of high quality, and high productivity by leveraging the "smart factory" concept is called for by the industry.
"Concurrent engineering" and "smart factory" are two concepts that will be promoted to realize simplification of manufacturing processes, improve product quality and process capability, and achieve success relative to our competitors.
Our important strategy of "product differentiation" will be implemented to promote new ways of thinking in product design and development, not suggesting differentiation compared with our competitors. Furthermore, product differentiation will be conducted in conjunction with "revolutionary manufacturing" to improve our overall competitive position.
The new concept production line at our Ichinoseki Plant reflects these principles and represents ongoing efforts to achieve improvements in the production line over numerous years.
 
<Strengthening of Human Resources Development to "Achieve the World's Highest Quality">
Stable hiring and training of human resources are critical to assure that we continue to remain competitive in the global market.
Nippon Piston Ring has established a training institution called "Manufacturing School" within our Company in 2010 as part of our efforts to train staff.
Employees who show strong potential to become key staff in our organization are selected to attend this "Manufacturing School" and learn various technologies over the course of six months of the program.
About 20 employees of the some 60 employees who have graduated from this School have been assigned to the three plants within Japan each. In addition, some of the graduates have also been assigned to our overseas manufacturing facilities. They have become the driving force behind improvements in productivity at the plants where they work.
Nippon Piston Ring will continue to train human resources with superior skills in the future.
Along with the advance of globalization, having the ability to speak multiple languages is also crucial. In addition to foreign language training of staff within our Company, we have also begun to dispatch employees to study overseas as a means of increasing their ability to improve their communication skills.
 
<Strengthening of CSR Activities>
Regulations regarding the CO2 and NOx exhaust gas levels are expected to become increasingly more stringent in the future.
As an automobile parts manufacturer, Nippon Piston Ring will continue to devote its full attention to various activities outside of its normal business activities as a means of increasing its corporate value addition.
Our Company views risk management as a key issue for our Group, in addition to compliance that responds to various rules and laws. Nippon Piston Ring will continue to conduct appropriate risk management with full consideration of each country and region's characteristics.
In addition, efforts will be made to promote a good working environment for female employees and favorable working conditions for all employees.
 
 
Conclusions
 
Due to the maintenance of its outstanding estimates for full year earnings, Nippon Piston Ring's first half current profits were able to achieve a high attainment rate of 69% of its full year estimate. The strong demand trends from Japanese automobile manufacturers in North America and steady expansion in sales to non-Japanese automobile manufacturers that were observed in the first half are expected to continue in the second half. Over the near term, earnings during the current term may be able to exceed estimates. At the same time, close attention should be paid to the efforts to promote revolutionary manufacturing as described in the above mentioned interview with President Akira Yamamoto over the medium to long term.
 
 
 
<Reference:6th Midterm Business Plan>
 
① Reflecting upon the Fifth Midterm Business Plan
The company concluded its three years of 5th Midterm Business Plan in fiscal year March 2015, and has promoted various strategies of the Plan including the main initiatives of "management based upon cash flow and balance sheet strategies," "promoting reforms of its cost structure," and "leveraging unique technologies to achieve commercialization of new products" under the basic policy of "promoting business structure reforms."

The Company has been successful in achieving results in the realms of financial structure improvements, new product releases, and manufacturing foundation creation. However, it has fallen short of its numerical goals of achieving "sales of ¥52.0 billion or more and the current profit to total asset margin of 6% or more" with the actual sales of ¥51.6 billion and the current profit to total asset margin of 3.4% being recorded during fiscal year March 2015.

With regards to sales, the metal injection molding products business has contributed to expansion in new realms and businesses. However, negative factors including changes in market conditions and changes in the vehicle production in some projects had an impact.
With regards to the current profit to total asset ratio, Nippon Piston Ring has yet to adequately control inventories and total assets and reduce costs.
 
② 6th Midterm Business Plan Overview
Nippon Piston Ring celebrated its 80th year of operations in December 2014. At such milestone, efforts are being conducted to expand sales of existing products and cultivate new markets to "establish the foundations for Nippon Piston Ring to prosper for 100 years." These efforts include reflection upon the results of the previous midterm business plan to get a solid start to the current 6th Midterm Business Plan, which is scheduled to be completed in fiscal year March 2018.
 
 
 
Investments will be made, and efforts to further reduce cost and improve technology development will be conducted to achieve operating profit margin of 7% or more in fiscal year March 2018, the final year of the current 6th Midterm Business Plan.
The overseas sales ratio is expected to rise to 59% in the final year of the Plan based upon the outlook for increases in sales to overseas automobile manufacturers.
 
 
The targets for compound annual growth rates (CAGR) between fiscal years March 2015 to 2018 are expected to be 2.2%, 1.8% and 11.7% for overall sales, piston rings and valve seat inserts, respectively. While the scale of its sales is still small, CAGR for new products, including the metal injection molding products business, is expected to be 6.7%.
Sales of piston rings and valve seat inserts to overseas manufacturers are expected to rise from 8.1% in March 2015 to 11.9% in March 2018, the final year of the Plan.
 
 
High levels of capital investments are expected to continue for three years.
Investments for rationalization are expected to be made within Japan with a goal of increasing profit margins. At the same time, investments for new product development promotion are also expected to be made.
Investments for expansion of capacity are expected to amount to ¥8.8 billion, with ¥2.8 and ¥6.0 billion of this total spent within Japan and in our overseas manufacturing facilities, respectively.
By the final year of the Plan, production capacity of piston rings within Japan and in our overseas manufacturing facilities is expected to be equal, with the ratio of production capacity of valve seat inserts expected to be 70% in our overseas manufacturing facilities. Moreover, changes in timing of the start of mass production by automobile manufacturers are expected to cause a reduction in capital investments from the initial estimate of ¥7.1 to ¥5.7 billion during fiscal year March 2016.
 
 
◎ Efforts in the Realm of Existing Business
<Expand Sales to Overseas Automobile Manufacturers>
As discussed earlier in this report, Nippon Piston Ring already supplies all of the Japanese automobile manufacturers, but the potential to begin supplying other overseas automobile manufacturers which it does not currently conduct business with is large.
In many instances, piston rings are supplied to overseas engine manufacturers in modules assembled by tier one suppliers (Piston suppliers). Consequently development support and individual proposals are conducted to each tier one supplier on a project base. In particular, development support proposals to piston manufacturers that do not possess evaluation technologies to assess engines are considered to be an effective marketing strategy.
 
<Gasoline Engine Use Piston Rings>
The automobile manufacturers' needs for "lighter parts" and "improved thermal efficiency" of engines are on the rise. While reducing friction and improving combustion are issues to be properly dealt with when enhancing thermal efficiency, and reductions in the distance between cylinders and various issues associated with material changes require detailed attention regarding lightening of engines, Nippon Piston Ring has effectively responded with its proprietary technologies to these issues, resulting in its expanding business with both Japanese and overseas automobile manufacturers.
 
<Valve Seat Inserts>
Development of high output, low fuel consumption, and low exhaust gas output engines is being conducted against the backdrop of stricter exhaust gas regulations. Nippon Piston Ring's ability to provide thin and large diameter valve seat inserts have come to be regarded highly and consequently being further adopted by manufacturers.
 
◎ Efforts to Commercialize New Products
New technologies and technologies maintained by companies acquired through M&A activities have been added to the Company's own fundamental technologies. Various efforts to validate tentative theories and to leverage existing technologies to commercialize new products in non-automobile engine applications are being conducted.
At the current point in time, efforts are being focused upon developing products for metal injection molding products and dental implant products businesses, in addition to medical use materials and motors parts.
 
<Metal Injection Molding Products Business>
With the goal of expanding the non-automobile engine parts business, the metal injection molding products business of Sumitomo Metal Mining Co., Ltd. was acquired and sales of products began in May 2014.
While Nippon Piston Ring had mass produced automobile engine parts made from various metallic materials by this metal injection molding technique, the acquisition of this business will allow it to expand its sales channels by fortifying its product lineup and strengthening its materials and production technologies.
 
<Dental Implant Business>
Nippon Piston Ring acquired the dental implant business from Ishifuku Metal Industry Co., Ltd. in October 2014.
This IAT () dental implant system uses electric discharge machining to improve the surface conditions for more favorable bone structure affinity and it received pharmaceutical law certification in October 2014 with subsequent shipments being started from November 2014.
The metallic materials and precision processing technologies built up in the main automobile engine parts business will be leveraged in the dental implant business to develop various medical related products.
In addition to the high levels of biological compatibility of the "Ti-Ta alloy" medical product materials currently being developed, it can be used in magnetic resonance imaging (MRI) because it is non-magnetic in character. Therefore, usage of this material in pace maker lead wires, electrodes, embolization coils, stents and other products which are placed in the body for prolonged periods of time is being considered.
Furthermore, Nippon Piston Ring is participating in exhibitions to display its products as a means of cultivating the United States market, the world's largest market.
Nippon Piston Ring acquired ISO13485 certification to ensure that products made within the dental implant products (highly regulated medical devices) business pass strict requirements for high quality levels. Subsequent to this certification, the Company established a Medical Device Center (MDC) within its Tochigi Plant and began operations there from October 2015.
IAT: Intelligent Artificial Teeth
 
 
Disclaimer
This report is intended solely for information purposes, and is not intended as a solicitation to invest in the shares of this company. The information and opinions contained within this report are based on data made publicly available by the Company, and comes from sources that we judge to be reliable. However, we cannot guarantee the accuracy or completeness of the data. This report is not a guarantee of the accuracy, completeness or validity of said information and/or opinions, nor do we bear any responsibility for the same. All rights pertaining to this report belong to Investment Bridge Co., Ltd., which may change the contents thereof at any time without prior notice. All investment decisions are the responsibility of the individual and should be made only after proper consideration.
Copyright(C) 2016, All Rights Reserved by Investment Bridge Co., Ltd.
 
 
PAGE TOP