Deep Value - Sonocom [7902.T] Deep Dive - 12/02/2025

Products  

Sonocom’s portfolio consists of complementary products spanning the metal-sheet printing process: 

Screen masks - a cover preventing scratches/glare when metal sheets are against the printing press.  

Metal masks - a cover used to etch out patterns accurately.  

Photo masks - precise quartz/glass plates often used to etch patterns into semiconductors.  

Screen-printing equipment: printers and printer cleaning products. 

While knowing as much about the business as possible has merits, we see no benefit in this case. However, it’s important to acknowledge the adequate coverage of the screen-printing process – the only required knowledge concerning their operations. 

Customer Demographics  

While their filings don’t disclose their customer base, the nature of their operations suggests customers to be electronic goods manufacturers, e.g. semiconductors. With the demographic being businesses, not much is. The operation is extremely simple.  

Pricing Strategy 

Revenues are contract-based, and are growing: 

It’s clear that Sonocom’s either increasingly gathering contracts, or are accruing pricing power. However, the risk the market doesn’t recognise value exists. Which would be harmful to our returns, but isn’t of worry - value doesn’t go unrecogised forever.

We consider the lack of contract information somewhat concerning - we’d prefer the specifics to be disclosed. This makes it harder to assess Sonocom’s pricing power, and therefore the prospects of the business. However, change is unlikely, so we’ll continue to resort to proof being in the pudding – the revenues. However, we have contacted management about this and will update in due course.

Sub-Industry Ties

Sonocom operates in the screen-printing sub-industry. Due to the size of the industry, no research has been done. However, Sonocom is likely to experience things in unison with the metal printing industry, although to a differing degree. This is not a major consideration – but is still worth thought.

The Asian screen-printing sub-industry has experienced significant growth the last few years, especially in Japan.  The key driver has been the development of related technologies, resulting in increased applications in the electronics manufacturing industry. Despite this, we won’t speculate on its continuance – there are too many variables to consider.

The Competitive Advantage

Sonocom’s competitive advantage is their niche operation. Their cheap and high-quality process coverage has allowed them to dig their moat uninterrupted – as demonstrated by revenues. Any business with these qualities is bound to have a competitive advantage of some sort. In a speculative market, despite superior coverage, Sonocom is a walking contradiction. This will change, and value will be realized.