TOPPAN Holdings Inc. (7911) Earnings Call Transcript & Summary

This is Oya, COO. Thank you for taking time out of your busy schedule today to attend the Information & Communication Business Strategy Briefing. I will focus on the growth fields within the segment and explain our strategy. We recognize that we should ideally present the overall strategy for the Information & Communication business, including existing fields. However, as we are currently in the midst of internal discussions for the next medium-term plan, we'll provide a thorough explanation of the overall picture when we announce the plan scheduled for May next year. In that sense, while the strategic direction for the growth fields we will explain today are unlikely to change significantly, quantitative targets may be revised, particularly between businesses within the growth fields and between growth and existing fields. Therefore, please note that the quantitative information presented today reflects the current status. Now I will begin by outlining the growth fields within the Information & Communication business segment. Turn to Page 4, please. Let me briefly reiterate the overview of the Information & Communications segment as it stands today. As shown in the materials, it consists of 4 subsegments. Of those, Digital Business and BPO are classified as growth businesses, which are collectively defined as Erhoeht-X. For fiscal 2024, total net sales of Information & Communications segment increased 3.3% year-on-year to JPY 929.3 billion with non-GAAP operating profit at JPY 50.2 billion. The performance by subsegment is as shown on the right side of the table. Please turn to Page 5. This is the plan for fiscal 2025. We plan for sales to decrease by 2.4% year-on-year to JPY 907 billion, operating profit to increase by 1.8% to JPY 46.5 billion and non-GAAP operating profit to be JPY 50.9 billion. Measures by subsegment are as shown on the right. For this fiscal year, we anticipate profit growth driven by scaling up our Digital Business and the effects of structural reforms in existing businesses. Please turn to Page 6. In the Information & Communication Growth Fields, we aim to establish a cyclical business model, starting with Digital Solutions, encompassing operational support, data analysis and consulting. As shown in the slide, sales have steadily expanded over the 5 years since fiscal 2020, but a large portion of sales remains only from stand-alone Digital Solutions, and we have not yet achieved profit scaling. Through our activities to date, we have focused on solving issues for a wide range of sectors and clients, generating numerous digital solutions. However, we have also identified challenges such as insufficient solution proposal activities, incorporating the operational support domain as an engine for recovery. Please turn to Page 7. As our approach to resolving challenges, we will shift our business model from providing onetime solutions to continuous services that combine multiple solutions, including operational support. We will develop services combining multiple solutions aligned to client challenges, building long-term relationships. Through continuous operational support, we will acquire and accumulate data, leveraging it for data analysis and consulting. Specific measures include concentrating on target areas, bolstering proposal activities, optimizing resources and strengthening AI utilization and AI service development. Please turn to Page 8. This is the first measure. We will concentrate on target areas and bolster proposal activities. We have narrowed down the areas where we can leverage our competitive advantages to 4, which were redefined as growth fields. The Security market is projected to reach about JPY 6.1 trillion by 2030 with a growth rate of 7.6%. The Marketing DX market is estimated at about JPY 2 trillion, growth rate 7.7%. BPO market, JPY 800 billion, growth rate 5%. The IoT and Auto-ID market, JPY 400 billion in 2030, growth rate of 9.9%. Furthermore, we will streamline over 500 digital solutions we own to approximately 100, thus concentrating resources on growth fields. We will establish a one-stop capabilities ranging from introduction of digital solutions to operational support in each field, strengthening our proposal activities. Please turn to Page 9. This is the second measure. We will optimize resources. In April next year, we plan to integrate TOPPAN, TOPPAN Edge, and TOPPAN Digital. At that timing, we will consolidate overlapping functions and visualize skills of about 6,000 DX personnel and reallocate resources and bolster human resources in understaffed consulting and data analysis domains, bringing in external talent and training them. Please turn to Page 10. This is measure #3. We will transition to framework for AI utilization and operation and practical use aligned to each business and accelerate service development. TOPPAN's advantage in AI is to provide high-quality services, incorporating AI technologies based on our expertise and understanding of clients' businesses. And our priority is based on providing services using AI that are aligned to customer needs and customized to be readily usable. By driving initiatives using AI, we would enhance internal productivity and accelerate provision of high value-added services incorporating AI. Next is Page 11. Let me explain our advantages and strategic approach in each business. The common strength that we have is the understanding about our clients and operational capability. And based on that, we create and provide value to customers in each area. In Security DX, based upon our card issuance in DPS, we have the foundation of advanced security data and expertise. And also, we have a capability to operate in the security environment. Approach is that in Japan, we will provide high value-added services. And in overseas, we proactively enter growth markets by leveraging customer base acquired through M&A. In Marketing DX, our strength is our real marketing consultation capability that we gained through catalog, flyers and sales promotion. And we also have marketing support track record across the entire value chain using our know-how. We will make resource shift to achieve high profit model and enhance labor productivity through AI utilization and organizational transformation. In BPO, our strength is the complex operation, design capability and secure structure that we gained in public and financial sector. We will focus on BPO for complex operations and use AI to enhance competitiveness and efficiency. In IoT and Auto-ID, our strength is industry-leading RFID development track record and technology development capabilities in domestic market. We will differentiate by providing services, combining devices and systems and focus resources on industries with stringent quality requirements. Page 12. 2030, we will fully leverage our strength and establish new growth driver. Right now, the sales of the growth field is about JPY 416 billion. We would like to grow that by 5% per year and achieve the percentage of the contribution by the growth field to 60% in 2030 and achieved the sales of JPY 542 billion and aim for operating margin of 10% or higher. As we mentioned at the beginning, the definition of the growth fields differs from that of Erhoeht-X and quantitative information is current working figures. So please keep that in your mind. Page 13. So those are the 4 business-specific performance targets. In Security DX in overseas, we will leverage customer base acquired through M&A and expand the size. In Marketing DX and BPO, through the AI utilization and resource optimization, we will try to improve the productivity. In IoT and Auto-ID, we would try to expand the sales in the long term as the global market grows. That concludes my portion. So we would like to now move on to the 4 growing business areas, starting with Security DX. Now Saito will explain our Security DX business.

First, I will briefly outline the evolution of the Security Business so far. As shown in time line, starting with securities printing using the latest technology when the company is founded in 1900, we have advanced the business providing data management, processing and implementation linked to high-security IDs for people, including data printing services, smart card production and issuance and cashless payment platforms. In recent years, we have advanced initiatives such as acquiring overseas companies and researching post-quantum cryptography and expanded our footprint globally by providing secure information management and services that utilize data. Our Security Business until now, as shown in the diagram on the left, offered a lineup, including ID cards, payment cards and data printing services, focusing on physical media manufacturing using printing processing technologies. In recent years, leveraging these customer touch points, we have focused more on developing DX services, utilizing our strengths in providing hybrid services, combining physical and digital elements, we have expanded our business to include operational support domain. While we have expanded the line of DX services, we recognize the need to take further measures to grow the business and have also worked to acquire footprint for global expansion. We view this as a phase of shifting model from physical media to DX services and believe we have driven a business strategy that leverage our strengths in stand-alone services. The Security DX business we present today will be rebuilt on the premise that changes in social conditions and further accelerated digital transformation should demand more advanced secure social functions. It is now based on a data management business, shifting its focus from stand-alone independent services to more digital ones, providing new value globally. As shown in the left diagram, data management is the cornerstone of the Security DX business. we will shift towards the data cycle-based business depicted here. As approaches for initiatives, what we believe is important include DX service development, strengthening functions, cutting-edge technology development and acquisition, providing implementation and operational support based on consulting and leveraging and expanding the business foundation acquired through M&As. We aim to evolve from stand-alone independent service offerings to building a data cycle-based business that delivers services that address the challenges faced by clients and industries. Now let me recap the fiscal 2024 performance for the Security DX business. Sales reached approximately JPY 193 billion. Operating margin was 7%, and the overseas sales percentage was 20%. Sales by region is as shown in figure 2. Looking at positioning of Security DX business in numbers, notification services rank #1 domestically, and through M&As and among others, we plan to significantly enhance our global positioning in the payment card and personal ID markets this fiscal year. We anticipate overseas sales percentage approaching 30% in fiscal 2025. That said, challenges remain for business growth. Domestically, we face challenges in integrated model development and high value-added initiatives. Overseas, maximizing investment effects remains a key challenge. Next, I will explain TOPPAN's strength and competitive edge in this business. We believe the sources of our advantage in this business lie in, first, a data management platform for securely managing sensitive information; second, bulk processing technologies for data processing match to output; third, creative design and implementation of optimal UI and UX aligned to users and media; and fourth, the ability to approach and cultivate untapped markets globally. Moreover, we have the resources to provide full support from upstream planning and development to operation. We believe few other providers can offer a combination of those capabilities. Next, I will explain the domestic market environment. The primary markets for our Security DX business are Payment, Personal ID and Business Communications. In the Payment Market, driven by the increasing cashless transactions ratio, the digitalization of B2B payment is also expected to accelerate in recent years with future growth projected at around 5%. The Personal ID market exceeds an 8% CAGR and there is a growing demand for enhanced security measures and multifactor authentication. The Business Communication market is also anticipated to expand driven by the trends of digitization and DX as well as diversification of communication channels and increasing personalization. Next, let me explain Security DX market potential in Japan. The SAM or SAM of 3 major markets is about JPY 1.16 trillion. As you can see in the middle of this slide, because of the changes in social and market environment, we expect that SAM to grow to about JPY 1.9 trillion in the CAGR of about 10%. So toward this target market of JPY 2 trillion, we would like to grow our businesses. Next is the Security DX growth strategy for Japan market. As I mentioned, in Payment, Personal ID and Business Communication, we can expect the growth of the markets. Those are the 3 focus areas. We will roll out cyclical business model centered on the data management platform we have built. So for example, we have our facial recognition services, and we will link it to authentication, payment, ID management, digital employee cards as well as credentials so that we can expand our businesses centering around the face as a personal ID. In order to enhance the data management platform value, we will form the API ecosystem formation and enhance by acquiring advanced technologies such as payment technologies and blockchain. And through those, we will secure a competitive advantage by expanding the scale of projects and shift to create an operation-based continuous business model. Next is Security DX overseas market environment. As you can see on the left, mainly in the global South, the population are expected to grow. TOPPAN Group have expanded our footprint in India, Africa and Southeast Asia through M&A. As shown on the right-hand side, in the major target of payment and personal ID-related market, as the population increases, the size of the market is expected to expand. Next is Security DX growth strategy for overseas market. We have acquired businesses and manufacturing facilities through active M&A. Now we are finally ready to develop businesses worldwide. In Payment business, through the acquisition of dzcard in June, we would -- we have seen the increase of the sites to 16. We will enhance cost competitiveness through the joint procurement and provide value-added solutions to expand business. In Personal ID business, last fiscal year, we acquired HID’s CID business, and now we have 21 sites. And our strength is the government consulting. We have the passport business, ID services for the government, and we would also expand the businesses of the digital election services. In addition, as you can see at the bottom, we aim to roll out security technology, research and development from Japan, combined with IT services and know-how. Lastly, let me explain vision for 2030. We would maximize DX business growth in Japan, and we expect a CAGR of about 10% from FY '25 to FY '30. As for the business expansion, there are 4 initiatives and try to improve the profitability through operational automation and process transformation. We would also work on the next-generation technology infrastructure, R&D and acquisition. As for overseas, we expect a CAGR of 17% from FY '25 to '30. So we would leverage the result of the M&A and think about the additional initiatives to expand our businesses. And overseas, we expect the size of the business to exceed JPY 310 billion in FY 2030 and aim for overseas sales percentage of 44%. As for the overseas initiatives, we will review the purchasing strategy such as joint purchasing to improve the profitability. That concludes this part of presentation. Umekawa will explain our Marketing DX business.

Page 28, please. TOPPAN's Marketing DX business supports DX marketing operations across the entire value chain to contribute to subtraction, reducing costs through marketing BPR, and addition generating profit by enhancing customer experience in our clients' business. Page 29, the market size. The SAM is JPY 1.3 trillion, representing a growing market with a CAGR of 7.7%. TOPPAN's sales are also rising from JPY 23 billion in fiscal 2022 to JPY 49 billion in fiscal 2024, JPY 60 billion expected in fiscal 2025 and JPY 100 billion in 2030. We view it as a market with large scope for targeting further growth as the share of DX for main customer groups such as retailers remains below 30%. Page 30, our positioning and aims. TOPPAN aims to expand its share through real and customer-centric with client base. The market consists of 4 transformations, infrastructure, organization, business and experience with specialists making inroads in each. It is important to quickly expand our share on the horizontal axis of real and digital and vertical axis of customers and companies. The competitive landscape is intensifying because system integrators and other DX specialists are targeting the digital and company-centric areas. TOPPAN offers services across all 4 transformations while leveraging superiority in real and customer-centric areas where we have a client base. Page 31, our business model. Creating a cycle of business streamlining and customer experience enhancement is our winning formula. We can propose efficiency improvement that lead to quick results through subtraction in existing operations contracted to TOPPAN. We drive transformation from inside the client's organization through specialist digital marketing talent and hands-on AI support. We excel at establishing robust DX infrastructure by leveraging advanced technologies for product and customer management and extensive track record in implementation. Starting from customer touch points data that can be obtained from there, we can design overall customer experience, including stores and other real elements. TOPPAN's strength is this comprehensive capability to continuously support the cycle of subtraction and addition, maximizing client profits. Page 32, examples of proposals that resonated with executives. On the left is an example of a food manufacturer. This project advances marketing BPR and integration of global customer experience and product brand management. TOPPAN was contracted to handle product package planning, design and production. From this starting point, we came up with proposals to the client CMO for BPR or ballooning brand management person-hours for global operations. We also centralized and apply AI to information management on external vendors consigned traditionally with product creation. We provide collaborative support structure to enable manufacturer-led brand management. We also introduced a design system to streamline information management for expanding customer touch points. Then we contributed to increased profits for the client by integrating the customer experience over multiple channels to enhance brand loyalty. Page 33, the value provided. We contribute to profit maximization for clients' businesses by evolving market operations contracted TOPPAN into continuous and cross-sectional DX support and providing subtraction and addition. Page 34 shows profit targets and initiatives. Toward the profit margin increase of 5%, we listed the challenges as well as solutions. The first challenge is the sales increase based on the solution expansion led to an increase in contracts with low unit price and production efficiency was low. So our solution is to enhance business development functions to scale up unit prices. Secondly, focus on winning new orders led to provision of many single item products and attach rate of about 70%. We will narrow down the number of targeted clients and focus on cross-selling to achieve the attach rate of 90% or higher. Number three is the profit retention function are weak because of the high proportion of the outsourcing. So we would leverage the group resources as a solution. And number four is a onetime cost incurred due to the investment in talent to scale the business. And as a solution, we will shift from the human-dependent model to productivity-led model by using AI and reskilling. Through this, we would like to increase the profit margin. Next page is the sales targets and initiatives. We will promote the Talent Portfolio Transformation to achieve JPY 100 billion for Marketing DX. While retaining the strength of the conventional marketing organization, we will fuse it with the Marketing DX and aim for JPY 100 billion by providing end-to-end Marketing DX. We will accelerate the talent development by dividing functions into consulting, creative production and operations. As you can see here, we would increase the Marketing DX to 100% in FY 2030. Page 36 is maximizing project profit. We will try to increase the scale of the contracts. And when the project unit price increases, the capacity utilization rate can be kept down and profit margin increased by 5%. Right now, the average unit price is about JPY 40 million. We would like to increase that to JPY 160 million in 2030. To raise the unit price, we will bolster our offering capabilities targeting top management and launched the consulting organization capable of designing plans to expand the client earnings. And we will head hunt the senior consultants experience in Marketing DX offering to bring the business development capabilities in-house. We aim to increase the number of clients contributing more than JPY 1 billion in the annual sales to about 20 companies in 2030 and expand to JPY 30 billion pipeline. Page 37 is securing the long-term continuous contract compared with the single item contracts project that involve cross-selling of multiple products, increase LTV to a profit margin of 10% and attach rate of 97% or more. In order to enhance the long-term continuous contract, we would strengthen the creative production organization that co-creates with the clients and aim to cross-sell at least 4 products to 200 companies in fiscal 2030 and generate JPY 3.3 billion in profit by raising LTV. Page 38 is about maximizing profit per person. In Marketing DX, talent is capital by innovating productivity, annual profit per person can be increased by 160% or more. We will develop an in-house production structure, including the group companies centered on the operation-related business process. Currently, the outsourcing is about 60%, and we would try to retain the profit internally. And to develop the in-house structure, we will strengthen the functional capabilities of the operations organization and raise production efficiency by powering all business processes with AI, intend to raise production efficiency by about JPY 1.7 billion by shifting to the production expansion that does not rely on the personnel expansion. Next page is in specific strategies. The traditional Information & Communication business has been weighted towards the retail and manufacturing sectors. From now on, we will aim to raise the proportion of the business with contract-based services and infrastructure sectors. We are standardizing offering scenarios for each industry. We will package the subtraction and addition to address the common management challenges within each industry. Next page is the business investment. We will take steps such as M&A to reinforce in-house structures to secure profits, strengthen the base for powering our business process with AI and launch consulting structure and rapidly develop DX base to support more sophisticated product and customer management. And that concludes the Marketing DX business strategy. Next, Itotani from Information & Communications Division will explain our BPO business.

Please turn to Page 42. First, let me give you the big picture. Our BPO business derives its strength from highly specialized BPR consulting and business process design capabilities rooted in understanding of systems and industries cultivated in the public and financial sectors, and it delivers value by combining flexible operational infrastructure, advanced security and quality management systems. In addition to simple operations, for those that handle complex and sensitive information, we ensure a robust cycle from, step 1, BPR consulting to step 4, Improvement; and continuously contribute to streamlining clients' operations and increasing their effectiveness. Operations handled by client sector are as shown on the slide. Page 43. Next, we will explain the market of BPO for complex operations, a key focus for us. We estimate this market to be around JPY 630 billion worth currently with an average annual growth of 5%. BPO needs are expanding due to changes in the environment, such as impacts of labor shortages and organization selection of operations to focus on. That said, we assume the evolution of DX and AI are driving a decline in the business for simple operations due to progress in automation. On the other hand, outsourcing needs are increasing for industry-specific operations, requiring specialist knowledge and complex operations for compliance with changes to laws and regulations. This is aligned with our strengths, and we see it as a business opportunity. As we target complex operations, high-growth market, as shown in the chart, we have set our sights not only on the public and financial sectors, which have been our core markets, but also on the private sector market with similar needs and a certain market size anticipated. Page 44. This is comparison of positioning by competitors and TOPPAN. In contrast to general BPO vendors, IT companies and consultants, TOPPAN has established its positioning in its complex BPO domain. We have established an advantage not replicated by others by providing the unique value of an end-to-end service from business process design to implementation based on BPR consulting and design capabilities. We aim for turning labor-intensive operations into structure-based ones and transforming them into models that can be standardized. Page 45 will now explain the competitive advantage that leverage the positioning just described. First, in BPR consulting and design capabilities developed in handling public sector projects, leveraging overall design capabilities based on understanding of systems and client operations, we provide a one-stop service up to improvement, standardization and operational implementation, convert even complex operations previously considered difficult to outsource into an outsourceable format. Thus, our strength lies in facilitating both efficiency and profitability for our clients while delivering unique value, leveraging the strength in our targeted private sector growth fields as we see frequent regulatory revisions in Pharmaceutical and Medical Device Act affecting healthcare, pharmaceuticals and health foods as well as integration in the energy industry, we proactively identify them early and approach them systematically. Our advanced security system and reliability cultivated over many years in the financial industry and flexible operational infrastructure developed by handling large-scale projects help enhance the strength shown here. In fiscal 2025, we established a cross-organizational BPO unit to coordinate nationwide operations. Through centralized national management, we have achieved reorganization and efficiency improvements across locations by efficiently investing in system development, including functional reorganization of locations, enhancing workforce mobility and establishing a nationwide production network, we are further refining these strengths. We also leverage DX and AI to achieve fundamental efficiency improvements to meet diverse digital needs, which represent our competitive edge. Next is scenarios to keep winning in complex operations. In order to win in this area, first, we would leverage the BPR consulting and design conscious of the characteristic of the systems and industries, and support outsourcing of complex operations that have been difficult to contract out. So we will try to clarify the client operations and try to support the outsourcing of the complex operations. And then by next standardizing and implementing shared services for operational structure, we will create and enable broad rollout of stable price competitive operational platform. And also, finally, we will realize the complex AI utilization models where AI can assist the decision-making and cross-referencing to increase the profitability as a next-generation service supporting productivity and differentiation. We are already seeing the effects of those strategies. In private sector, we handle the management of plan versus results for the regular inspections of the rental properties for real estate industry. Understanding the complex and segmented contract or content of the inspection, we contribute to streamlining the operations while proposing improvements for BPR. In financial sector, we standardized the models for reception operations for iDeCo, which involves complex processing of multiple form types. And by rolling out a one-stop service handling application via the internet and on paper. And in the public sector, where we lead, we would -- we use AI for complex screening operations where omissions in application data are prone to occur. And AI performs an automated check when applications are filled and to prevent the problems. And part of the screening process is also automated with AI checking consistency and identifying inappropriate entries. It also supports the screening and drives efficiency by suggesting potential responses to inquiries. And through this, we are starting to see the effects in terms of the profit improvement. Page 48 shows the vision for 2030. We intend to expand the sales revenue from JPY 77 billion to JPY 83 billion toward 2030. We also aim to grow the growth target of complex operations at CAGR of 10% and strategically shift the proportion of the complex operations from 40% to 60%. We aim to enhance the profitability by concentrating management resources and significantly raise OP margin from 8% to 15%. In terms of the positioning by sector, we will drive the standardization in the financial sector while securing the presence and know-how in complex operations requiring specialist knowledge in public sector and leverage those strengths for the private sector to increase the sales revenue and profit. Page 49 is the specific measures to enhance profitability. In addition to expanding the sales, we would raise the proportion of the complex operations. And there are 4 major initiatives listed here. The first is talent portfolio transformation. We would acquire, develop and expand next-generation professional talent who can drive high value-added business end-to-end the labor-intensive business. The second is the business foundation optimization. As I mentioned -- as mentioned earlier, from this fiscal year, the nationwide integrated cross-organization BPO unit started. So we will break away from the business structure reliant on the individuals and bases. And as an action, we optimize bases and reorganize by function and standardize business process and others. The third is AI shift acceleration. As mentioned in the case study, we will automate high difficulty intelligent operation with AI to dramatically transform the cost structure and develop the original core AI engine and AI apps that solve business challenges. We aim to increase the percentage of the complex process handled by AI from 5% to 30% in 2030. And through those measures, we will try to contribute to the sales expansion. That concludes the BPO explanation. Now last but not least, Shibatani will explain our IoT and Auto-ID business.

Please turn to Page 51. This business has traditionally been our RFID and IC tag business, which we have pursued since the late 1990s. However, over the past 6 years, we have significantly transformed its business model. I will explain both external environment, namely the market and internal environment, namely our company's initiatives. We began this transformation in 2019. Prior to that, we had advanced as a business providing IC tags driven by large-scale RFID implementation projects overseas. However, starting in 2019, coinciding with the rapid expansion of DX needs, we shifted our strategy, moving away from focusing solely on tags as stand-alone products and aiming to become a business supporting DX in manufacturing and logistics. Over the 6 years, we have developed digital services, expanded functionality, pursued acquisitions and formed partnerships and have built a track record of orders across industries, including automotive, semiconductors, materials and medical devices. Currently, the market needs continue to grow and our service lineup expansion is largely complete. Moving forward, we'll deploy a continuous model based on integrated packages. Page 52, factors improving profitability. Previously, our approach centered on single items and onetime model, resulting in profit margin of around 3%. Starting in 2019, we transformed into a DX business through upfront investment, building a business model characterized by high scalability, expanded system maintenance and operation and the ability to offer consulting proposals leveraging AI and data utilization. Going forward, we plan to promote an integrated packages business model, providing continuous service, aiming to achieve a profit margin of 13%. Page 53. Now let me explain the details of this business. This business targets the market for streamlining related to things such as manufacturing and logistics against the backdrop of recent advancements in DX, AI and IoT technologies. Centered on data accumulation and IDs for people and things, it contributes to the realization of digital society using AI and IoT. Please turn to Page 54. The business is defined as one that gives an ID to everything, generates data and creates customer value. The value provided is by using devices like RFID tags integrated with products and operational infrastructure for capture data, the ID management platform as a core to enable customers to streamline their supply chains and enhance trust through traceability. Page 55. This is the overall service vision. We provide IoT integration services for domains requiring high value-added functionality and quality. Specifically, we advanced the Smart Factory business for manufacturing and the Smart Logistics business for the logistics industry, the Smart Healthcare business for the health care and pharmaceutical sectors and the Brand protection business for Premium markets like the luxury industry. Among these, Smart Factory and Smart Logistics face growing urgency in addressing critical challenges such as ensuring traceability and complying with new regulations driven by shrinking workforce, rising societal quality demands and evolving DX technologies. Smart Healthcare faces challenges in eliminating medical errors and enhancing reliability. In Brand protection, alongside preventing counterfeit distribution and enhancing user engagement, EU has mandated DPP, digital product passport compliance to enable product life cycle management. In Japan, companies exporting products to EU are also seeing growing demand for traceability solutions. Please turn to Page 56. This shows the global market scale. Size of 4 RFID markets, including software and hardware is shown here. SAM represent the markets where we can differentiate with our IoT integration. In all of those 4 areas, we expect the continuous expansion with the development of the technologies. In 2030, the total SAM for 4 markets are expected to be JPY 400 billion. Please turn to Page 57. This shows our competitive advantage. Our strength is in the security business expertise that we have fostered since the foundation, and we also have understanding of the clients' challenges and planning and proposal capabilities. We have been promoting this business this way. We also especially have the flexibility and scalability so that we have a various micro service lineup that we can combine to respond to the different needs of the customers in a flexible and quick manner. And we have a track record of the past 6 years being chosen from the automotive and semiconductor companies. And the approaches to the client starts with the proactive introduction of the best practices and consulting for implementation, initial implementation, convert to stock, functional expansion and data usage. Please turn to Page 58. This is an example of contracts. In Smart Factory, we support the production DX of metal materials company. We combine the micro services, and we have a very quick delivery and we have expanded into the third factory after FY '23. In Smart Logistics, we provide the vehicle location management system for an automotive company when they transfer the finished vehicles to the vessel for export. In Smart Healthcare, we provide RFID tag for prefilled syringes to prevent the errors when the medication is administered for a medical devices company. Page 59 shows the competitor comparison. We are #1 in terms of the market share of the -- in the Japanese high-end RFID market. Our competitors are various, including material handler, RFID provider, leading system integrators. They are basically focused on the large client individual contracts as well as a single service provision in the areas that they are strong. But these days, the market demand, the flexibility and scalability as we explained in the metal materials customer. So not replacing the current resources at one time, but gradually rationalize in the multiple years based upon the priority. So this applies not only to the SME, but to the enterprises. And currently, we are the only company who can provide both flexibility and scalability. Lastly, Page 60 is a snapshot and vision for 2030. The FY 2025 expectation is JPY 23 billion sales and 3% operating margin. But for FY 2030, our target is JPY 44 billion in sales and operating margin of 13%. The market is being formed for this business. So the size is not so big, but we expect the market growth to be around 10%, and we expect our CAGR to be about 13.4%. That concludes the Information & Communication Business Strategy Briefing.