PS Construction Co., Ltd.

The civil engineering business is highly dependent on public works, and if public works spending is reduced more than expected, this could have a material impact on performance. The business structure is susceptible to trends in construction investment and government fiscal policy. The securities report does not disclose specific countermeasures.

There is a risk that market contraction and intensifying competition for orders in the construction industry could lead to lost order opportunities and deteriorating construction project profitability. Changes in the market environment represent a structural risk that directly leads to declines in revenue and profit margins. The securities report does not disclose specific countermeasures.

The company operates overseas businesses mainly centered in Asia and Africa, and sudden changes in the political and economic situation or unexpected changes in laws and regulations in these regions could affect performance. Political instability and regulatory risks unique to emerging countries are directly linked to business continuity. The securities report does not disclose specific countermeasures.

If labor costs and raw material prices surge and it becomes difficult to pass on these increases in contract amounts, construction project profitability could deteriorate, affecting performance. Since labor and material costs account for the majority of costs in the construction business, rising costs directly squeeze profits. The securities report does not disclose specific countermeasures.

As construction projects become larger and longer in duration, the period for collecting construction payments has lengthened, significantly increasing the advance funding of working capital. Since working capital is procured mainly through borrowings from financial institutions, if interest rates rise more than expected, financial expenses could increase and adversely affect performance. The securities report does not disclose specific countermeasures.

If a serious accident or personal injury accident occurs, the company may bear restoration costs and experience construction delays, as well as loss of order opportunities due to suspension of qualification for bidding. This could also affect corporate reputation and construction performance ratings, representing a risk related to business continuity. The company is working to thoroughly implement various safety measures, but states that complete elimination of the risk is difficult.

The company is subject to a wide range of laws and regulations, including the Construction Business Act, the Antimonopoly Act, and the Industrial Safety and Health Act, and performance could be affected if illegal acts occur or if regulations are revised, abolished, or newly introduced. Suspension of qualification for bidding resulting from violations of the Antimonopoly Act is specifically noted as a risk that could lead to a significant decrease in order opportunities. The securities report does not disclose specific countermeasures.

Securing human resources is a challenge across the entire construction industry, and if the necessary personnel cannot be continuously secured, the company may be forced to scale down its business, affecting performance. The group is addressing this by promoting operational efficiency and IT adoption, but the industry-wide labor shortage continues as a structural issue.

Much of the company's business activities depend on IT systems, and power outages, disasters, cyberattacks, and similar events could disrupt business activities, result in loss of confidential information, leakage of personal information, or fraud losses. If such risks materialize, performance could be affected through business interruption, claims for damages, and increased information security expenses. The securities report does not disclose specific countermeasures.

If a major earthquake or natural disaster damages management functions or business locations, or if the spread of a new infectious disease causes employee infections or leads private-sector clients to scale back their business plans, performance could be affected. This carries the inherent risk that a decline in investment appetite among private-sector clients, the main source of orders for the building construction business, directly leads to a decrease in orders received. The securities report does not disclose specific countermeasures.