TMH Inc.

Business Details

TMH Co., Ltd. operates under the philosophy of "Technology Makes Happiness," running its business on two pillars: parts sales and repair services for semiconductor fabs utilizing the cross-border e-commerce platform "LAYLA-EC," and used equipment sales services leveraging the engineering capabilities of its field engineers (FEs). In addition to five domestic sites (Oita, Kumamoto, Tokyo, Yokkaichi, and Iwate), the company has established a Korean subsidiary, TMH KOREA Inc. Sales to Asia (mainly China) account for the majority of net sales, and the company is prioritizing management resources toward the agency (distributor) business as a growth driver.

Recent Overview

Interim net sales of ¥2,126 million and an operating loss of ¥23 million, with the full-year forecast significantly revised downward

For the first half of FY2026 (ending November 2026) (December 2025 to May 2026), net sales were ¥2,126 million, operating loss was ¥23 million, ordinary loss was ¥31 million, and interim net loss was ¥22 million. The main causes of the operating loss were (1) some of the backlog of used equipment sales orders as of the end of the first quarter did not reach revenue recognition by the end of the interim period, and (2) upfront recording of recruitment costs associated with the concentration of management resources on the agency business. The full-year forecast has been revised to net sales of ¥3,179 million (down 63.2% year on year) and an operating loss of ¥276 million. On the other hand, cash and cash equivalents increased substantially to ¥1,640 million due to the issuance of convertible bond-type bonds with subscription rights to shares (proceeds of ¥691 million). The company also acquired 37,800 shares of treasury stock (¥50 million) and disposed of 17,000 shares as restricted stock compensation. There is no note regarding going concern assumptions.

Key Products

Growth Drivers

• Steady demand growth for high-performance logic semiconductors, HBM, and NAND flash memory driven by expanding data center investment amid the spread of generative AI
• Medium- to long-term growth expectations for Japan's domestic semiconductor industry, including TSMC's announcement (February 2026) of plans to introduce 3nm advanced semiconductors at its second Kumamoto plant and Rapidus's 2nm mass production plan (second half of FY2027)
• Growth in the aftermarket driven by the aging of legacy 200mm wafer fabs and expanding needs to extend the life of existing equipment
• Cultivation of new revenue sources through prioritized allocation of management resources to the agency business
• Securing capacity for business investment by leveraging a substantially strengthened cash position (cash of ¥1,640 million at the end of the interim period) resulting from the issuance of convertible bond-type bonds with subscription rights to shares
• Acceleration of Asian expansion centered on the Korean subsidiary, TMH KOREA Inc.
• Medium- to long-term resilience of semiconductor demand in social infrastructure fields such as electronics and automobiles

Risks

• The full-year forecast has been significantly revised downward to net sales of ¥3,179 million (down 63.2% year on year) and an operating loss of ¥276 million, creating high uncertainty over the feasibility of a business recovery
• Customer concentration risk, with 62.4% of net sales dependent on a single customer, New Eastech (Shanghai) Co., Ltd. (China)
• 85.8% of net sales are to Asia (of which 84.4% is China), exposing the company directly to risks from U.S.-China friction and restraints on China's semiconductor-related investment
• Used equipment deals have a lead time of several months to one year from order receipt to revenue recognition, creating a structural risk of quarter-to-quarter revenue skew and recognition delays
• The gap remains large between the interim gross profit margin of 15.4% and the medium- to long-term targets (gross profit margin of 27%, operating margin of 13.8%), making profitability improvement a challenge
• Risk of increased fixed cost burden if sales recovery is delayed while upfront investment in recruitment costs continues
• Instability in the international situation due to geopolitical risks (crude oil and energy price spikes from the de facto blockade of the Strait of Hormuz, the prolonged Russia-Ukraine situation, and worsening Japan-China relations)
• Risk of future dilution of shares from conversion of convertible bond-type bonds with subscription rights to shares (¥700 million)