Overview of NCD (4783) business.

5. Parking system business. The parking system business specializes in the sale of electromagnetic lock-type bicycle parking equipment and the management and operation of bicycle parking lots. By utilizing IT, not only can parking lot management and operation be streamlined and efficient, but it also contributes to solving the bicycle parking problem, reducing traffic congestion, utilizing land effectively, promoting regional and urban development, and improving the global environment by reducing CO2 emissions. Aimed at solving the bicycle parking problem, it proposed a monthly bicycle parking management method using two-dimensional codes, which was a new technology at that time, and started the parking system business in 1997. From 1999, it started installing NCD bicycle parking. Initially, the company mainly sold electromagnetic lock-type bicycle parking equipment and automated payment machines, but it used its accumulated IT technology to achieve unmanned management of bicycle parking lots by remote control and expanded its business as a pioneer of coin-operated bicycle parking lots (hourly rentals).

The parking system business specializes in the sale of electromagnetic lock-type bicycle parking equipment and the management and operation of bicycle parking lots. Through the deployment of IT, it not only streamlines and makes the management and operation of bicycle parking lots more efficient, but also contributes to the resolution of the bicycle parking problem plaguing urban centers across the country, relieves traffic congestion, promotes effective land utilization, and supports regional and urban development and environmental conservation through CO2 emission reduction. The Company ambitiously took on the challenge of solving the bicycle parking problem by proposing monthly bicycle parking operations management through the application of two-dimensional code technology, which was cutting-edge at the time, and started its parking system operations in 1997. Starting in 1999, the Company commenced the installation of NCD bicycle parking systems. Initially, its main revenue sources were bicycle parking equipment sales and revenue from automated billing machines, but by exploiting its IT technology expertise, the Company realized unmanned management of bicycle parking lots by remote control, and expanded into the business of coin-operated bicycle parking lots, which had previously been dominated by monthly rental schemes for bicycle parking lots.

The Company provides bicycle parking services, such as the hourly coin-operated bicycle parking lot Eco Station 21 (1999-present) and the monthly rental bicycle parking lot ECOPOOL (2013-present), mainly in the Tokyo metropolitan area, as well as in the Kansai, Chubu, and Kyushu regions (where the Company entrusts operation to partner companies). The Company has an extensive network of bicycle parking lots that serve urban centers, commercial facilities, and local governments. Its revenue is divided into three categories: equipment sales, management and operation services, and others. Under the management and operation services category, there are three sub-categories: self-operated bicycle parking lots, which the Company manages and operates based on contracts with private enterprises such as commercial facilities; designated management, under which the Company manages and operates bicycle parking lots designated by local governments; and entrustment, under which the Company manages the bicycle parking lots operated by railway companies or local governments. In the fiscal year ending March 2024, 17% of the Company's revenue was generated from flow (bicycle parking equipment sales, etc.), and the remaining 83% was generated from stock (revenue from self-operated bicycle parking lots, designated management, entrustment, etc.).

The Company's electromagnetic lock-type bicycle parking facilities are widely supported by local governments, railway companies, commercial facilities, and others thanks to their contribution to reducing the problem of abandoned bicycles. The Company boasts one of the largest numbers of installed electromagnetic lock-type bicycle parking facilities in Japan. The Company is selected as a designated manager by local governments for the management of bicycle parking lots, and works with local governments to promote regional and urban development through public-private partnerships. As it is difficult to accurately ascertain the number of bicycle parking lots managed by partner companies in the Kansai and Chubu regions, the Company has changed the calculation criteria for counting the number of such facilities (to exclude sites that are not maintained and operated by the Company), so as of April 1, 2024, the number of NCD bicycle parking facilities managed under the new criteria was 1,962 locations (compared to 2,204 under the previous criteria) with 544,017 units under management (656,149 units under the previous criteria).

Notable cases of installations include Aoyama Street in Shibuya Ward (Shinjuku Station), which pioneered bicycle parking lots on sidewalks in 2007; Tsujido Station/Terrace Mall Shonan, the largest bicycle parking lot of up to 3,000 bicycles in 2011; Shibuya Stream, a redevelopment project in Shibuya district in 2018; Akabane Station East Entrance in 2019; the Minamimachida Granberry Park redevelopment project by Tokyu Group in 2019; and the Gran E-Mio Tokorozawa redevelopment project by Seibu Group in 2020. In April 2022, the Company was selected as the bicycle parking lot management operator for four municipalities (Shinjuku Ward, Itabashi Ward, Shinagawa Ward, and Kawasaki City), and undertook management of a total of 246 locations and about 58,000 bicycle parking spaces. The Company also opened a total of 1,244 bicycle parking spaces in the large-scale commercial facility Kameido Clock in partnership with Nomura Real Estate Holdings 3231(ticker) Co., Ltd. In June 2022, the Company began to manage a total of 1,820 bicycle parking spaces in the Kotolink facility in Tachikawa city, which is a facility for disseminating local attractions. In March 2023, the Company opened a new type of bicycle parking lot equipped with share bicycles operated by Docomo Bike Share Co., Ltd. and electric kick scooters and e-bikes operated by Luup Co., Ltd. in Sasazuka, Shibuya Ward through its collaboration with Sakuragumo 5189(ticker) Co., Ltd. Most recently, the Company opened a large-scale bicycle parking lot capable of accommodating a total of 925 bicycles and motorbikes in March 2024 in the newly opened MEGA Don Quijote store in Narimasu, which has the largest floor area in the Tokyo metropolitan area.

To improve user convenience and reduce operation and management costs, we started a cashless payment service for bicycle parking lots in December 2019 and introduced dedicated cashless payment settlement machines that no longer require cash handling in December 2023. These services reduce collection and maintenance frequencies, enabling cost reduction. In February 2022, as part of our user service at bicycle parking lots, we also started a service for receiving packages at the bicycle parking lot using dedicated lockers called Amazon Lockers. This reduces redeliveries of delivery services, contributing to reducing environmental impact.

In addition, the company has been promoting BPR towards further improvement of the profitability of the parking system business, taking into consideration the temporary decline in revenue due to the COVID-19 pandemic. As progress status, we have consolidated installation and peripheral work of bicycle parking equipment and peripheral work to NCD Pross through strengthening the roles of group subsidiaries, and we are also making progress in insourcing collection tasks centered around specified management sites. Regarding the rationalization of usage fee system (fee revision) and expansion of cashless payment, we are promoting price revision and introduction of QR code payment mainly for self-operated bicycle parking lots. Furthermore, in new market development such as with general contractors, developers and design offices, we have won multiple redevelopment projects by strengthening collaboration with developers. Overall, we evaluate the progress as generally smooth.

(Authored by FISCO guest analyst Masanobu Mizuta)