SEIKA CORPORATION

The company has a high proportion of transactions with Mitsubishi Heavy Industries and the Mitsubishi Heavy Industries Group, and fluctuations in the Group's business performance or changes in its policies could directly and significantly impact Seiwa Corporation's business performance. As a countermeasure, the company is pursuing the development of new revenue sources through complementary M&A in the organic domain and accelerating strategic business investments.

There is a risk that changes in the power generation mix based on the 7th Strategic Energy Plan, or the introduction of energy policies unfavorable to the company, could alter the demand structure of its core business. The company addresses this by gathering information on major customers' shifts in primary power sources while incorporating green transformation-related products.

There is a risk that the withdrawal of manufacturers from business, loss of sales agency rights, decline in the competitiveness of business rights, or obsolescence of products could impair the earnings base. The company addresses this by maintaining its sales agency rights with Mitsubishi Heavy Industries, expanding its handling of green innovation-related products such as "decarbonization," "energy-saving/labor-saving," and "DX," and discovering high-value-added products.

Heightened geopolitical risks, such as US-China tensions and concerns over a Taiwan contingency, could disrupt sales activities at overseas business locations. The company addresses this by gathering and analyzing information on the political systems, economic policies, and economic trends of its business locations, with the cooperation of external organizations and local employees.

If unforeseen events such as cyberattacks, information leaks, or unauthorized use occur beyond expectations, there is a risk of a decline in social credibility and adverse effects on business performance. The company implements strengthening and improvement of its IT environment and information systems based on its information security policy, and conducts internal awareness activities through security training on virus infection, unauthorized access, and AI usage.

There are concerns about a decline in the value of business investment targets due to changes in laws and regulations, market changes, or intensified competition, a decline in returns relative to resources invested, and the occurrence of costs and losses associated with deteriorating business performance or business withdrawal. The company addresses this through thorough investment discipline, the formulation and operation of a business investment management framework, detailed business analysis, and thorough monitoring after investment execution.

Challenges include the difficulty of management decision-making due to differences in country of location, industry, business type, and company size, as well as low resilience to environmental changes due to single-product sales businesses, and increasing indirect costs. The company is working to strengthen its group management structure through information sharing across the group, appropriate operation of regulations for supporting affiliated companies, and human resource development, business development, and investment support provided by the parent company.

There is a risk that the emergence of competitors could lead to a decline in market share and intensifying price competition, putting pressure on profitability. The company addresses this through continuous improvement of product quality and creation of high-value-added products, delivering value that meets customer needs, and building product uniqueness and brand strength that are less susceptible to price competition.

There is a risk that changes in business partners' policies, disasters, conflicts, and other factors could disrupt procurement and logistics, leading to interruptions or delays in business operations. The company is working to minimize the impact of supply disruptions through diversification of suppliers, securing of inventory, establishment of alternative routes, and diversification of business.

There is a risk that financial losses could occur due to delays in the collection of receivables or bad debts arising from business partners' bankruptcy or unforeseen circumstances. The company addresses this through detailed gathering of information on business partners' credit conditions, credit investigations, setting of credit limits, and thorough credit review.