East Japan Construction Surety Co.,Ltd. (E03838) Stock Price

**Business Overview of Higashi Nihon Construction Industry Guarantee**

Higashi Nihon Construction Industry Guarantee is a specialized company providing guarantee services focused on the construction industry. Its core business is advance payment guarantees for public works projects, whereby the company provides guarantees required when construction companies receive advance payments for construction contracts from municipalities and national government agencies. In addition, the company operates a financial guarantee business that supports fundraising for construction industry participants.

The company's primary customers are construction contractors, particularly those undertaking public works projects. The revenue structure is centered on guarantee fee income, with the primary revenue source being fees paid by construction companies when utilizing guarantee services. Since the business model is linked to public works demand in the construction industry, performance is affected by trends in infrastructure investment and disaster recovery projects.

The company group consists of a parent company, two subsidiaries, and one affiliated company. While guarantee services form the core business, the group also provides related services. The subsidiaries engage in real estate management and operations, with the group as a whole providing diversified services related to the construction industry.

Higashi-Nihon Construction Guarantee is implementing a growth strategy centered on three pillars—"Expand Business," "Refine Business," and "Enhance Business"—under its "Medium-Term Management Plan Phase II" for fiscal years 2024 through 2026. The company positions this plan as the midpoint of a 10-year long-term vision, aiming to establish competitive advantages in the construction industry's guarantee business. Despite challenging industry conditions including rising material costs and labor shortages, the company is actively pursuing measures to expand its customer base and improve profitability.

To strengthen sales capabilities and market responsiveness, the company is systematizing and refining customer data to build more effective sales strategies. It is conducting detailed sales activities tailored to customer attributes and characteristics while expanding and diversifying its sales tools. The company is also pursuing new business ventures, expanding into business areas beyond traditional guarantee services to diversify revenue sources.

To improve business processes and customer service, the company is prioritizing the establishment of non-face-to-face operational processes. In October 2024, it opened a "Customer Support Center" at its headquarters, specializing in inquiries from new customers and financial institutions, thereby improving service quality and reducing the burden on sales divisions. The company is actively promoting the adoption of electronic guarantees, currently achieving implementation in 21 prefectures and 207 municipalities, significantly enhancing customer convenience.

In technological innovation, the company is advancing operational efficiency in response to digital transformation. It has begun pilot testing generative AI and is preparing for full-scale implementation by accumulating effective use cases. For human resource development, the company has established a new "In-House Internship" program for junior employees, supporting career development and activating the entire organization through work experience across various departments, including group companies.