Hoshizaki's Strong Brand Heritage Supports a Higher Valuation

As the largest commercial kitchen equipment manufacturer in Japan, Hoshizaki uses its domestic network of 430 offices/branches to not only sell its products but also provide maintenance services to its customers throughout Japan promptly. This allows Hoshizaki to have a competitive advantage with scale in Japan, where the majority of its total sales are generated. Hoshizaki’s sales are primarily direct, which allows the company to maintain relationships with its customers. These factors have allowed the company to attain the leading market share with its key products, such as commercial refrigerators, ice machines, and beer dispensers, as well as a brand (known for its penguin logo in Japan) in the "cold" kitchen equipment space. We expect the company’s strong reputation and its vast service network to allow it to maintain the leading domestic share and prevent competitors from making a material impact on its incumbent status in the future.