HAMAI INDUSTRIES LTD.

Due to the effects of deregulation and the increasing size of LPG cylinders, overall demand for LPG cylinder valves and similar products is on a declining trend over the medium to long term. Changes in the supply-demand balance may further intensify competition for orders, potentially affecting the Group's financial position and operating results. The Group's policy is to strive to avoid the occurrence of this risk and to respond appropriately if it materializes, but no specific countermeasures are disclosed in detail.

For the Group's product lines, the ratio of primary raw material costs is relatively large, creating a structure in which significant fluctuations in material costs directly affect earnings. If material costs surge sharply and it becomes difficult to pass the increase on to product prices, this could lead to a significant decline in profit margins, potentially affecting the Group's financial position and operating results. The securities report does not describe specific hedging measures or procurement diversification strategies.

To respond to growing demand in East Asia, the Group has established a subsidiary with a production base in South Korea and is expanding its business into South Korea and China. Changes in the political and economic situation in Asian regions such as South Korea and China, changes in laws, regulations, and tax systems, and the occurrence of local conflicts, disasters, or infectious disease outbreaks may constrain business activities and affect the Group's financial position and operating results. The Group's dependence on regions with high geopolitical risk and regulatory uncertainty constitutes a risk factor for the Group as a whole.

The Group's products are incorporated into a wide range of fields, including cylinders, piping, and equipment, and if quality problems or recalls occur in the final products, this could lead to substantial costs and a decline in credibility. Although all production sites have obtained ISO9001 and ISO14001 certification and the Group is working to maintain and strengthen its quality control systems, the risk of defects arising from unforeseen events cannot be eliminated. The occurrence of quality problems could have a significant impact not only on financial position and operating results but also on brand value.

The Group has formulated a BCP (Business Continuity Plan) in preparation for emergencies such as natural disasters and accidents, and has established a system to ensure the safety of human life and the continuity of business operations. However, depending on the scale and circumstances of the damage, business activities may be restricted, potentially affecting operating results and financial position. Although the Group is proceeding with the development of its BCP, this does not guarantee complete business continuity in the event of a large-scale disaster.