■Performance Trends

3. Earnings forecast for the fiscal year ending 2024/12

Keiyo Gas ＜9539＞ expects sales of 117,400 million yen (down 4.4% from the previous fiscal year), operating income of 1,100 million yen (down 35.4% from the same period), ordinary profit of 1,800 million yen (down 26.0% from the same period), and net income attributable to parent company shareholders of 130 million yen (down 11.0% from the same period). Sales are expected to decrease due to downward adjustments in gas sales unit prices due to the raw material cost adjustment system, etc., and in terms of profit, profit is expected to decline due to the effects of slide time lag (difference) in the gas business.

The outlook for each segment assumes sales volume per unit for 3 years, so while assuming a recoil that declined due to the effects of the temperature and water temperature in 2023 becoming record high temperatures, a downward adjustment in gas sales unit prices due to the raw material cost adjustment system is anticipated. On the profit side, gas raw material prices fell in the previous year, and a time lag (margin) occurred due to a drop in gas raw material prices prior to a price drop in gas sales prices based on the raw material cost adjustment system, but in 2024, a decrease in profit is expected due to a time lag (difference loss) due to rising gas raw material prices. Electricity retail is expected to increase profits by leaving the worst period due to a decrease in electricity procurement costs, but it seems that surplus conversion is still ahead. For this reason, profit improvement measures will also be taken, such as narrowing down targets to families that use it stably throughout the day. As for real estate, the full-scale opening of Leaf City Ichikawa will be from 2025 to 2026, but it is expected that some rental income will contribute and profit will increase. Other than that, performance levels are generally expected to be on par with the previous fiscal year.

I want to establish each of the three areas as a pillar of profit

4. Medium-term growth image

Since the “Mid-Term Management Plan 2024” is progressing smoothly in terms of performance other than performance, it is likely that strategies for the “Long-Term Management Vision 2030” will continue to be taken in the next medium-term management plan. In the regional energy sector, demand for low-carbon natural gas is strong over the long term, so stable growth is expected, but we will also focus on selling city gas with more carbon-neutral credit. In the area management area, Leaf City Ichikawa's profit contribution is expected, but since stable profits can be expected from real estate, it is expected that in the future, not only will owned real estate be redeveloped, but it is also expected that properties will be purchased and developed as rental real estate. The total life support area is a highly difficult business for the company, but it seems that they are also considering taking on the challenge of total remodeling by making use of fields they are good at, such as water circulation and combustion. In the next medium-term management plan, we want to establish profit pillars in each area and achieve results in terms of performance. Additionally, since it is currently necessary to correct the PBR (stock price-net asset ratio) of about 0.3 times, capital strategies will also be examined.

(Written by FISCO Visiting Analyst Miyata Hitomitsu)