Dialogue with shareholders
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Dialogue with shareholders

Dialogue with shareholders (November 22, 2024 Up date)

IR activities

The Company holds two earnings briefings each year (for the 2nd and 4th quarters) for analysts and institutional investors. Videos of the earnings briefings are provided on the website, etc.
The Company endeavors to provide important information to overseas institutional investors in English in a timely manner.

FY 2023

One on One※ Japan Overseas Total
First Half 23 1 24
Second Half 42 9 51
Total 65 10 75

※Excludes inquiries by phone and email
Meeting to : analysts (sell-side/buy-side), fund managers, etc.
Our side : IR Department (CEO,CFO and COO participate in some)

FY 2024

One on One※ Japan Overseas Total
First Half 48 5 53

※Excludes inquiries by phone and email
Meeting to : analysts (sell-side/buy-side), fund managers, etc.
Our side : IR Department (CEO,CFO and COO participate in some)

(Reference)
SR Meeting※ Japan Overseas Total
Second Half 5 － 5

Meeting to : Stewardship section (Responsible Investment Department, etc.) Our Side : IR, ESG Management Promotion, Human Resources, PR, General Affairs

(Reference)
Debt IR※ Japan Overseas Total
First Half 10 － 10

Meeting to : Fixed Income Management Section (Credit Analyst)
Our Side : IR, Finance

Financial results briefing for analysts
2Q event date Nov 17, 2023
participant 32
archive viewer Japan : 655
overseas : 61
NEW4Q event date May 17, 2024
participant 31
archive viewer

※as of November 18, 2024

 Japan : 754
overseas : 61

※For details on the day, please refer to the video materials released on our website.

video materials : https://c-hotline.net/Viewer/Default/489809af6403714ed398f942a48ed05af452

Briefing session for individual investors
First Half event date Sep 21, 2023
participant 840
archive viewer 344
Second Half event date Mar 22, 2024
participant 800
archive viewer 506
Briefing session for individual investors
NEWFirst Half event date Sep 20, 2024
participant 714
archive viewer

※as of November 15, 2024

 499

Dialogue Interests

Through dialogue with investors, we receive views and questions on various themes such as business performance, medium-term management plans, and business trends.

➀Summary

1Q FY2024 (April 2024～June 2024)

theme opinions and questions
performance and evaluation
  • Evaluation of previous fiscal year's financial results
    -Reasons for falling short of previous fiscal year's revised forecast
    (factors of growing unprofitability, contribution from Kokusai Kogyo)
  • Response to the construction industry "2024 problem",
    Change of employee wages, Recruitment status
  • Current order status (Reasons for favorable conditions, profitability at time of order)
  • Functions and status of "Business risk management".
  • Progress of core system renewal
Status of the Medium-Term Management Plan
  • Concept of this year's plan
    -Impact of unprofitable projects
    (possibility of new losses arising from existing orders)
    -Businesses to focus on this fiscal year and measures to improve profit margins
    -Kokusai Kogyo's full-year contribution
    (goodwill, seasonality, synergies, profit margins, SG&A)
    -Impact of core system renewal
  • Data center business (business situation, business scale)
  • Aims of regional management reform
  • Progress and evaluation of medium-term management plan
  • M&A strategy - Past evaluations and future targets -
  • Shareholder return policy (Possibility of additional share buybacks in the second half)
  • Human capital growth strategy
    - Human resource development・Progress in human resource flow, Employee reaction -
  • Data Insight Management - Effects on P/L -
MIRAI(future) domains
  • Current order status
  • Profitability (current profitability of green energy business, software business, global business, future outlook)
  • Synergies with Kokusai Kogyo
    (specific areas of collaboration, expected profit contributions)
Environmental and Social innovation
  • Evaluation of 4Q financial results and outlook for this fiscal year
    -Impact of unprofitable projects
    -Driving factors for high targets this fiscal year
    -Profit margin improvement forecast
    -Kokusai Kogyo (Differences from M&A assumptions, reasons for growth this fiscal year)
ICT solution
  • Evaluation of 4Q financial results and outlook for this fiscal year
    -Impact of unprofitable projects
    -Reasons for planning a decrease in sales and an increase in profits this fiscal year
    -Global Business Status
    -Status of data center-related businesses
Telecommunications infrastructure domain
  • Evaluation of 4Q financial results and outlook for this fiscal year
    -Overall situation and outlook for each telecommunications carrier
    -Reasons for improvement in profit margins and continuity
    -Trends by mobile carrier
    -Rakuten Business Outlook

2Q FY2024 (July 2024～September 2024)

theme opinions and questions
performance and evaluation
  • Evaluation of 1Q financial results and outlook for this fiscal year
    -Progress evaluation of full-year plan
    -Reasons for the profit turnaround
    -Presence or absence of unprofitable projects
  • Current order status
Medium-term management plan

Business strategy
  • Progress and outlook for new mid-term plan targets
  • M&A strategy
    -Synergy effects of SEIBU CONSTRUCTION, Kokusai Kogyo
    (amount and period of goodwill amortization)
    -Future targets
  • Approach to financial discipline (ratings, equity ratio)
  • Shareholder return policy (Target range for total return ratio)
  • Human capital growth strategy (recruiting, development, flow)
  • Current status and issues regarding the Tokyo Stock Exchange's request
    (growth strategy from the balance sheet)
MIRAI(future) domains
  • Current order status
  • Orders from the telecommunications infrastructure domain, human resource flow
Environmental and Social innovation
  • Evaluation of 1Q financial results and outlook for this fiscal year
    -Impact of unprofitable projects, Measures to prevent recurrence
    -Current order status, Profit margin status
    -Performance evaluation of SEIBU CONSTRUCTION and Kokusai Kogyo
    (order status, profit contribution)
ICT solution
  • Evaluation of 1Q financial results and outlook for this fiscal year
    -Impact of unprofitable projects, Measures to prevent recurrence
    -Current order status, Profit margin status
    -Global Business Status
    -Status of data center-related businesses, Future outlook
Telecommunications infrastructure domain
  • Evaluation of 1Q financial results and outlook for this fiscal year
    -Current order situation and profit margins by telecommunications carrier
    -Reasons for favorable performance of NTT business
    -Outlook for Rakuten's business recovery

②Questions at Financial results briefing for analysts

November 17, 2023

questions
Q1
  • Background and aims of Kokusai Kogyo's M&A.
  • Reorganization of access related subsidiaries in the NTT business.
    -Why this timing? When do you expect the effect to be and to what extent?
Q2
  • Is it correct to understand that the assets of the "Urban and regional Development" business have reached their potential through this M&A?
  • About the "Beyond a Telecommunications Construction Company" business vision for 2030.
  • "Cash Allocation" Plan: Concept of free cash flow from business and shareholder returns.
Q3
  • Profitability of non-carrier business (current evaluation and future outlook)
  • What is the difference between Kokusai Kogyo's previous shareholders and our company?
    (What are the strengths of our company as a new shareholder?)
Q4
  • Gross profit in Telecommunications infrastructure domain
    (reasons for improved 2Q results, full-year outlook).
  • Current status of SEIBU CONSTRUCTION.

May 17, 2024

questions
Q1
  • Reasons for the increase in gross profit for Environmental and Social Busines this fiscal year.
  • Regarding the profit margins of the "Zero Carbon City Business" and the "Public utility Infrastructure Management Business."
Q2
  • Regarding the request from the Tokyo Stock Exchange to "manage with an awareness of capital costs and stock prices," how do you plan to close the gap from the current market valuation?
  • As a construction company with strengths in the ICT areas, how will your digital transformation(DX) efforts contribute to improving profit margins?
Q3
  • Factors behind the improvement in gross profit for the ICT Solutions Business this fiscal year.
  • Kokusai Kogyo's FY2023 results and FY2024 plans. Regarding synergy effects.
Q4
  • Evaluation and summary of M&A activities to date.
Q5
  • Breakdown of factors behind the increase in gross profit for the Environmental and Social Business this fiscal year (Kokusai Kogyo contribution and organic)
  • Reasons for the increase in SG&A

③Questions at Briefing session for individual investors

March 22, 2024

questions
Q1
  • PBR is below 1x, how do you plan to improve it?
Q2
  • What kind of business does Kokusai Kogyo, a new subsidiary, do?
    What was the background and purpose of the M&A?
Q3
  • How is the company responding to the 2024 Noto Peninsula earthquake that occurred on New Year's Day?
    Also, will it have any impact on business?
Q4
  • Net sales have been increasing year by year since FY2019, but operating income has declined considerably after peaking in FY2021.
    I would like to know the cause and concrete improvement measures.

September 20, 2024

questions
Q1
  • The first quarter of 2024 saw steady growth in both orders and sales compared to the previous fiscal year, but what is your outlook for the full year plan?
Q2
  • Could you please give us a look back at your progress so far and explain your plans for the future in order to improve your PBR?
Q3
  • I think it will become even more difficult to secure of human resources, but what is the current recruitment situation and are any efforts being made to secure human resources?

Feedback to management

We regularly provide feedback on IR implementation status, investor interests, and views to senior management at Group Management Counci and Board of Directors.

Main measures

①Setting and changing medium-term management plan goals

  • In order to further strengthen shareholder returns, from fiscal 2022, we will adopt a policy of "stable dividend growth" and "flexible share buybacks."
    In addition, the KPI for the total return ratio has been raised from the conventional "30% or more" to "50% level".
    Furthermore, in November 2023, we will continue to follow our basic policy and, in order to clarify the linkage between investment in growth and shareholder returns, we will redefine our total return ratio "50%～70%" target range and strive to strengthen the return.
  • Regarding treasury stock with no intended use, we have changed our policy from "Considering cancellation" to "Actively cancel" it.
    - 9 million shares (equivalent to 8.7% of issued shares) will be cancelled in February 2024 -
  • In order to promote management that incorporates the perspective of shareholders, we have set ROE and EPS growth rates as management targets in the 5th Medium-Term Management Plan.
    Furthermore, since we expect to incur a certain amount of goodwill amortization costs as a result of M&A going forward, we have decided to add EBITDA (amount and margin), which is an indicator of our cash flow generation ability, to our KPIs from fiscal 2024.NEW

②Disclosure of gross profit and gross profit margin by business segment

  • From fiscal 2022, we had disclose gross profit margins for three business segments (Environmental and Social innovation, ICT solution, and Telecommunications) in order to provide an appropriate understanding of business strategies and business trends.

③Holding business briefings

  • In March 2022, we held an "ICT Solution Business Briefing" to deepen understanding of new businesses.
  • A total of 25 products and solutions were exhibited at CEATEC 2024 held at Makuhari Messe for four days from October 15th to 18th, 2024.

④Video distribution of financial results presentation

⑤Number of directors

  • By resolution of the general meeting of shareholders held in 2024, the articles of corporation were changed to reduce the number of directors from 21 to 15.
    The number of directors (including audit and supervisory committee members) has been reduced from 19 to 13 (including 3 women).

⑥Expansion of shareholder benefits

  • The Company offers shareholder benefits to all shareholders holding at least 100 shares of the Company’s shares for 1 year or more.
    Previously, customers could only choose between a QUO card or a donation of comparable value to a social contribution, but the menu has now been expanded to include electronic money and "MIRAIT ONE MAI."

IR information