(E03837) Stock Price

Nishi-Nippon Construction Guarantee is a company that provides guarantee services specialized for the construction industry. The company's core business is guarantee services required when construction companies that have won public works contracts receive advance payments from the ordering party. The company collects guarantee fees from construction companies and handles payments to the ordering party in case of default. This enables construction companies to smoothly secure funding for public works projects.

The company's primary customers are construction companies engaged in public works, with revenue primarily derived from guarantee fees paid by these construction companies. Due to the nature of advance payment guarantees for public works, the company is closely involved with construction projects ordered by national and local governments, making its revenue structure dependent on public works trends in the construction industry.

The company's business is divided into two main segments. First is the advance payment guarantee business, which includes guarantees for advance payments on public works as well as contract guarantees that serve as alternatives to contract security deposits. The second segment, financial guarantee business, handles guarantee services for public works-related financing, financing for construction equipment purchases, and financial guarantees for overseas construction projects, thereby addressing a wide range of funding needs in the construction industry.

Nishi-Nippon Construction Guarantee Corporation has identified strengthening the foundation of its guarantee business as the top priority in its medium-term management strategy for fiscal years 2023 through 2025. Operating under the principle of contributing to the healthy development of the construction industry through advance payment guarantee services for public works projects, the company is working to strengthen its medium to long-term management foundation. As specific numerical targets, the company aims to expand the adoption of a 40% advance payment rate with no advance payment limit across 674 municipalities in western Japan to 94.8%, and to increase the adoption of interim advance payments to 97.8%.

In priority investment areas, the company is focusing on digital transformation, reviewing traditional analog-based guarantee procedures and enhancing internet-based guarantee application processes. In promoting electronic guarantees, the company has achieved implementation in 21 prefectures, representing 91.3% of the 23 prefectures in western Japan, and has expanded adoption to 27.4% at the municipal level. The company will continue investing in this area, deploying a differentiation strategy that simultaneously improves customer convenience and reduces administrative burden.

In plans for new market development and business expansion, the company emphasizes deepening communication with both public works project issuers and contractors. While prioritizing face-to-face interactions, the company also leverages digital technologies that have become widespread since the COVID-19 pandemic, providing detailed information to public project issuers on regional construction industry conditions and contract practices. The company is also expanding its contribution to the industry as a whole through public relations activities for securing skilled workers via construction industry organizations, disaster prevention measures, and SDGs support.

In technological innovation efforts, the company is strengthening its operational structure across the entire group and pursuing sustainable guarantee business through internal digital transformation. The company is reviewing its guarantee certificate issuance processing system and advancing efficiency and digitalization of accounting operations, implementing fundamental reforms of back-office functions. Furthermore, to address productivity improvement needs driven by i-Construction promoted by the Ministry of Land, Infrastructure, Transport and Tourism, the company is expanding services as a unified group and building a framework to support technological innovation in the construction industry.