Hirano Tecseed (hereinafter HT) reported FY25 OP of ¥1,599mil (-4.9% YoY) on sales of ¥32,285mil (-33.2% YoY), generating an OPM of 5.0% – an improvement from FY24’s OPM of 3.5%. The weak sales performance was mostly triggered by the Coating and Laminating Machinery [C&LM] segment. Machinery orders declined, reflecting its customers’ cautious sentiment on capex. Given the decline in machinery sales, installation works also peaked out. The EV market continued to stagnate, impacting sales in the C&LM segment. Customers were cautious about further investments on lithium-ion battery- [LiB] related capacity, leading to a slowdown in equipment orders. In Q3, HT reported ¥7,229mil worth of cancelled orders which reduced the order backlog. HT started FY26 with the appointment of a new CEO. HT guides for FY26 1H OP of ¥800mil (-33.8% YoY) on sales of ¥13,000mil (-28.4% YoY) and full-year OP of ¥1,500mil (-6.2% YoY) on sales of ¥25,000mil (-22.6% YoY). Given the uncertainty surrounding global electrical vehicle [EV] markets, which may last longer than initially anticipated, management anticipate a possible slowdown in the pace of working through the order backlog. Consequently, C&LM segment earnings will likely remain weak due to low customer sentiment towards CAPEX. While the impact from cancellations is still unknown, given the likely weakness in EV battery-related CAPEX, it is crucial for HT to secure new orders in non-EV sectors and in geographical areas other than the US, such as China.