HEPHAIST Co., Ltd.

Business Details

Hi-Hyst Corporation Group operates a single segment, the Precision Equipment Manufacturing Business, comprising three product lines: Linear Motion Equipment (Linear Ball Bushings, etc.), Precision Parts Processing (Racing Parts, Prototype Parts), and Unit Products (Stages, Spherical Bearings, etc.) using parallel mechanisms. Major customers are THK Co., Ltd. (52.3% of net sales) and the Honda Group (27.5%). Domestic sales account for over 90% of the total, and the company owns a sales subsidiary in China (Shanghai) as a consolidated subsidiary.

Recent Overview

Net sales declined 27%, and an impairment loss of ¥413 million was recorded, resulting in a significantly worsened net loss of ¥719 million

In FY2026 (ending March 2026), the combination of a delayed recovery in demand related to industrial machinery and regulation changes affecting precision parts processing caused net sales to plunge to ¥1,637 million (down 27.1% year on year). The operating loss widened to ¥262 million, and with an additional impairment loss on fixed assets of ¥413 million recorded as an extraordinary loss, the net loss attributable to owners of parent expanded to ¥719 million. Unit Products was the sole bright spot, achieving a 16.9% year-on-year increase. For FY2027 (ending March 2027), the company forecasts net sales of ¥2,066 million (up 26.3% year on year) and a return to operating profit of ¥101 million. While the company has recognized material events regarding going concern assumptions, it has determined that no material uncertainty exists due to the securing of sufficient funding capacity.

Key Products

Growth Drivers

• Unit Products: Expanding demand for stage products for semiconductor-related equipment applications and the continued effect of price increases for spherical bearings (achieved 16.9% year-on-year growth in FY2026, ending March 2026)
• Linear Motion Equipment: Signs of recovery in industrial machinery-related demand beginning to emerge in the fourth quarter, along with production capacity expansion and sales growth toward FY2027 (ending March 2027)
• Precision Parts Processing: Securing new contract processing orders through enhanced proposal-based sales activities and recovery of orders for racing parts
• Expansion of demand for precision parts processing driven by progress in physical AI-related investment and increasing automation needs
• Improved earnings structure through the consolidation of low-margin model numbers via scrap-and-build and selective concentration on high-value-added product groups
• Overseas market development through partnership with Malaysia's MIRAI INDUSTRIAL AUTOMATION

Risks

• Delayed recovery in industrial machinery-related demand: Sluggish orders for Linear Motion Equipment continued, resulting in a 22.5% year-on-year decline for the full year FY2026 (ending March 2026) (despite signs of recovery in the fourth quarter, the cumulative decline remained substantial)
• Regulation change risk in precision parts processing: A sharp 49.2% year-on-year decline in the full year FY2026 (ending March 2026) due to regulation changes affecting racing parts, with the timing of recovery uncertain
• Material events regarding going concern assumptions: Material doubt has been recognized due to operating losses for three or more consecutive periods and continuous negative operating cash flow (the company has determined that no material uncertainty exists due to the securing of sufficient funding capacity)
• Customer concentration risk: THK Co., Ltd. alone accounts for 52.3% of net sales and the Honda Group for 27.5%, with the top two customers accounting for approximately 80% combined
• China market risk: Continued sluggish orders and prolonged geopolitical risk
• Deterioration of financial foundation: The equity ratio declined to 50.8% (from 56.3% in the prior period), and retained earnings decreased to ¥634 million, with the risk of further shrinkage in financial capacity due to additional losses
• Cost pressure from continued high energy and raw material prices and difficulty in passing on costs through price increases
• Supply chain instability risk associated with international conditions (such as instability in the Middle East situation)