Medium-Term Management Plan

Management Objectives and Strategies

Positioning of the Second Medium-Term Management Plan

OKM has designated the fiscal year ending March 31, 2026, as a period for completing the remaining tasks from its first medium-term management plan, extending the structural reform phase by one year. The Company will then seek to transition from the structural reform phase to a growth stage during the period of its second medium-term management plan. In addition to our net sales target, we have also established an operating income target and are committed to improving profitability.

Main Financial Targets

OKM Group Management Policy

The OKM Group shall execute management strategies with the aim of fulfilling its purpose in accordance with its core principles, which reflect a desire to pursue sanpo yoshi—benefiting customers, buyers, and local communities—by applying unique and innovative technologies.

Basic Strategies of the Second Medium-Term Management Plan

During the period of the second medium-term management plan, while continuing to place importance on sales growth, management will shift more of its focus to profitability in response to rising costs and changes in the competitive environment. Three basic strategies have been set to achieve this.

Basic Strategy I: Expand Existing Businesses (Part 1)

Efforts will be made to boost sales of ship exhaust gas valves, for which OKM has secured about 40% of the global market, and LNG valves, for which demand is projected to rise. At the same time, steps will be taken to capture demand for maintenance services, which is expected to grow in the future.

Increase Sales of Ship Exhaust Gas Valves

• Aim to maintain global market share by offering a wider variety of valve sizes and developing Mark III products with higher quality and lower costs
• Speed up both production and development by expanding high-temperature fluid testing facilities
• Expand production systems at factories outside Japan to optimize total costs

Increase Sales of LNG Valves

• Flexibly respond to diversifying market needs by offering a wider range of valve sizes and meeting international specifications for high-pressure valves
• Proactively secure new suppliers in Japan and other countries to expand procurement channels and secure a stable supply of materials

Basic Strategy I: Expand Businesses (Part 2)

Complete development of valves for ammonia and liquified hydrogen, which are essential for decarbonization, and continue to expand into the market.

Increase Sales of Ship Exhaust Gas Valves

• Ammonia Valves
  Complete product development and set up a manufacturing system with the goal of releasing products to the market by March 2027 and capturing half of the global market^* by 2030.
• CO₂ Valves
  Develop products faster in response to customers’ needs by customizing existing products
• Liquified Hydrogen Valves
  Plan to establish a manufacturing system with the goal of releasing products to the market by March 2028

Note: Half of the global market for ammonia valves is based on a combination of two products: ammonia fuel supply valves and unburned ammonia removal equipment valves.

Leverage Digital Transformation to Boost Productivity and Profitability

• Simultaneously offer value to customers through customized products and standardize product designs and manufacturing to make in-house operations more efficient by eliminating low-demand products and packaging customized products according to their type and specifications
• Adopt an enterprise resource planning system that can manage all processes from taking orders to shipping products as a means to digitalize each process and systemize production schedules. Aim to streamline procedures and stabilize operations by reducing personal decisions and sudden reactions in the workplace
• Strengthen “deep-dive” sales strategies that integrate processes from identifying customer issues to offering solutions with the goal of raising both product prices and customer satisfaction

Basic Strategy II: Expand into Global Markets

Backed by its solid product portfolio in Japan, OKM aims to accelerate global expansion and raise the ratio of net sales generated overseas.

Integrate Global Organizations and Improve Performance

• Integrate the management of sales organizations internationally to ensure prompt and consistent responses to customers
• Standardize design criteria, production processes, quality control methods, and business processes across technology, manufacturing, quality control, and administrative departments, and set up systems that enable the Group as a whole to provide uniform services and quality

Enhance Marketing

• Promote products and services that have gained competitive advantages in the Japanese market in overseas markets with corresponding demand characteristics
• Offer products that meet the needs of customers in various countries while bolstering supply capabilities and cost competitiveness by manufacturing products in optimal locations

Basic Strategy III: Break into New Business Areas

By entering new business areas, OKM intends to create new earning pillars.

Establish new business models that utilize communications technologies

• Use IoT technologies, including piping management systems centered on connecting valves, to develop new business models

Initiate Opportunities for Growth through M&A and Business Partnerships

• Set up a team specializing in M&A and business alliances (including experts from outside OKM) to continually select and negotiate with potential companies
• Position M&A and business partnerships as means toward the success of all three basic strategies, and adopt the viewpoint that they can open up possibilities for different business areas in addition to expanding OKM’s already established businesses

Competitive Advantages for Successfully Executing Strategies

OKM can precisely meet the diverse needs of customers with an extensive product lineup that can handle a wide range of heat resistance and temperature specifications. The Company has developed about 20 types of valves that can be customized in over 100,000 ways depending on fluid characteristics.

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  Solid Customer Base

  By promptly supplying products in step with the times and trends, OKM has built up a customer base of leading companies across a broad range of industries. It applies a wide range of data accumulated over many years to design new products.

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  Advanced Product Development

  OKM tests the characteristics of valves and flow rates at its diverse testing facilities and collects and analyzes the data. With the ability to test at temperatures ranging from 196 to 700 degrees Celsius, OKM can closely simulate customer operating environments in line with their needs.

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  Customized Products

  With a lineup of products capable of serving a broad range of industries, OKM can flexibly develop and supply a variety of customized products in small lots and design valves tailored to the specific needs of customers.

Financial Results and Targets

We have designated the fiscal year ending March 31, 2026 as a preparatory phase for the full-scale rollout of our new core system and will prioritize reorganizing our structure. Consequently, net sales, EBITDA, and operating income are all forecast to remain the same year-on-year. However, over the three-year span of the second medium-term management plan, we anticipate steady growth and plan to deliver increases in both revenue and profit.

Financial Strategies and Capital Policy

Analysis of Recent Results

As of March 31, 2025, OKM’s price-to-book ratio stood at 0.58×, having remained below 1.0× since May 2021. Meanwhile, the price-to-earnings ratio has improved, reflecting growing investor confidence. Management estimates the cost of equity to exceed 10%, based on a simplified implied-cost approach.

Future Initiatives to Improve PBR

During the second medium-term management plan, management will analyze the factors behind its low PBR and execute strategic measures aimed at raising its market price per share. Management will also aim to raise the return on equity (ROE) higher than the cost of equity, bringing the equity spread from negative to positive, through measures for improving capital efficiency, including more rigorous balance sheet management. As a step toward sustainably increasing the Company’s market price per share, however, it will first aim for a PBR of 1.0.

Capital Allocation

Management will take steps to optimize the financial structure, revise its shareholder returns policy to increase shareholder returns, and earmark cash generated from operations and balance sheet management primarily for strategic investments.

Shareholder Returns Policy

To return profits to shareholders, OKM will aim to pay a dividend of at least \40 per share during the three years of the second medium-term management plan. In addition to direct shareholder returns through dividends, the Company will execute growth strategies with the goal of maximizing total returns by raising its share price over the medium- to long term.

Dividend Per Share and Payout Ratio

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