■Business Overview

1. Business Segment Overview

Sanki Kogyo's main business (1961) can be divided into three segments: construction equipment business, plant equipment business, and real estate business. The company mainly designs and manages construction of various equipment. There is an order acceptance form between when an order is received directly from the client and an intermediate order acceptance via a general contractor, but it is almost half in terms of ratio.

The amount of orders received depends on the project, and ranges from several million yen to several billion yen. The construction period (from order acceptance to sales) also ranges from a few weeks to several years if it is long. Profit margins also vary from project to project, but profit margins at the time of sales may fluctuate from the original plan due to the effects of labor costs, material costs, process management, etc.

(1) Construction equipment business

The construction equipment business plans, designs, constructs, maintains, and repairs equipment for office buildings, schools, hospitals, shopping centers, factories, research facilities, etc. The contents handled by the same division span a wide range, and are further divided into the following business categories (sub-segments) in more detail.

a) Building air conditioning and sanitation

It provides air conditioning equipment for general buildings and facilities such as office buildings, schools, hospitals, department stores, hotels, warehouses, etc., and regional air conditioning and heating facilities, as well as kitchen equipment, disaster prevention equipment, etc.

b) Industrial air conditioning

It provides general industrial air conditioning equipment for factories and research facilities, and in particular, clean room equipment for the semiconductor industry, pharmaceutical/food industry factories, where the company has strengths, special air conditioning equipment and ancillary equipment for chemical manufacturers, medical device manufacturers, etc., and environmental control devices for automobile manufacturers. There is also a historical background, and it is a field where the company is particularly strong.

c) Electricity

It provides electrical equipment, information and communication related equipment, electrical civil engineering, etc.

d) Facility Systems

It constructs offices and dealing rooms for financial institutions, etc., provides project management services and consulting services associated with relocations, and provides central monitoring/automatic control systems, IP solutions, network solutions, BCP solutions, etc. for large buildings.

(2) Plant equipment business

Plant equipment is further divided into two sub-segments: mechanical systems and environmental systems.

a) Mechanical systems

Various transport equipment (conveyors, sorting equipment, etc.), transport systems, so-called “material handling systems”, etc. are provided for factories and automated warehouses. Demand is centered on private companies and is influenced by capital investment trends.

b) Environmental Systems

It provides water treatment facilities (water and sewage treatment equipment, industrial wastewater treatment equipment, sludge treatment equipment, sludge incineration equipment, etc.), waste treatment facilities (garbage incineration facilities, garbage landfill sewage treatment facilities), etc. The main customers are local governments, etc.

(3) Real estate business

Real estate leasing operations and building management work are carried out using idle land such as factory sites.

2. Characteristics, strengths, and competition

(1) Wide range of business areas and one-stop problem solving

In Japan, there are countless companies that provide construction equipment similar to the company. Within such industries, the company's strength is that it has a wide range of business areas such as building air conditioning and sanitation, industrial air conditioning, electricity, facility systems, building control systems, transportation, and water treatment. It is possible to collectively provide many equipment and solutions according to the life cycle of the building, from planning/design to construction/maintenance, renovation/rebuilding, and customers can solve problems and place orders in one stop. Furthermore, it is characterized by being able to provide optimal systems with high added value through “comprehensive engineering” and “life cycle engineering,” which are a cross-cutting fusion of a wide range of businesses, which is the company's strength.

(2) Top class technology and excellent customer base

The high technical capabilities cultivated before the war are the company's strengths, and it can be said that it is at the top level in Japan. Our refined technical capabilities span a wide range of fields. Furthermore, the track record accumulated over a long history has led to trust, and the rich and excellent customer base based on this relationship of trust is probably the company's strength. Not to mention the results before the war, it can also be said that numerous achievements, including the Tokyo Olympics during the period of rapid growth after the war, led to acceptance of orders for large-scale projects such as “Abeno Harukas” and “Tokyo Midtown Hibiya.”

3. Main competitors

To be precise, competing companies differ from business area to business. The main competitors in the major general construction equipment area include major companies such as Takasago Thermal Engineering (1969), Shinryo Thermal Engineering Co., Ltd., Daidan (1980), and Taikisha (1979). The company's strengths when compared to these major companies are that it has a wide range of business areas and is particularly strong in industrial air conditioning (factory-type air conditioning for clean rooms, etc.).

4. Trends in high order acceptance and the economic environment

The most important factor in influencing business results is the high number of orders received. In addition to the company's sales efforts, the volume of orders received each year seems to have a large impact on the overall market, that is, the macroeconomy. Since the company's main business is construction equipment, a similar trend can be seen in the company's order volume when compared to “private non-residential construction investment,” which is a macroeconomic indicator. Therefore, it seems that it can be said that the company's order volume and private non-residential construction investment are quite highly linked.

(Written by FISCO Visiting Analyst Noboru Terashima)