Makoto Construction CO,Ltd

The Group is a small organization, and there is a possibility that it may become difficult to secure excellent personnel in a timely manner for sales, procurement, development, and management functions. There is also a risk that profitability could deteriorate due to increased fixed costs associated with personnel expansion and reinforcement of training and systems facilities. If the development of management structures fails to keep pace with personnel increases, operations could be disrupted.

The Group's development and sales areas are concentrated in the South Osaka region, centered on Sakai City. If the local economy deteriorates or a major natural disaster occurs in this region, there is a possibility of a direct adverse impact on business results. Since regional diversification has not been achieved, the structure is such that risks in a specific region can easily spread to overall business performance.

For the Group, whose core business is speculative production of Spec Homes, acquiring large volumes of land quickly is a prerequisite for business continuity. Since the success of land acquisition and fluctuations in purchase prices directly affect business results, the risk of increased procurement costs rises in an environment of intensifying competition for land acquisition or rising land prices.

Sales of Spec Homes are directly affected by external factors such as economic trends, interest rate trends, housing tax systems, and trends in new supply of properties. A deterioration in the economic outlook, a significant rise in interest rates, or changes to or abolition of housing tax systems could reduce purchasing intent and adversely affect the Group's business results.

The South Osaka region is popular among home buyers, and in recent years the number of competitors newly entering the market has increased. Intensifying competition could simultaneously cause a surge in land procurement costs and a decline in sales prices, putting pressure on profitability. If efficient sales activities become difficult, the impact on business results could be significant.

The Group primarily procures funds for land acquisition through borrowings from financial institutions, with the ratio of interest-bearing debt to total assets at 37.0% for FY2025 (ending March 2025) and 31.9% for FY2026 (ending March 2026). Fluctuations in interest rate levels could affect business results and financial condition through an increase in financial costs. Although the Group has adopted a policy of diversifying funding methods and strengthening equity capital, dependence on borrowings remains high at this time.

The Group is subject to a wide range of legal regulations, including the Building Lots and Buildings Transaction Business Act, the Construction Business Act, the Architects Act, the City Planning Act, and the Building Standards Act, and licenses from government authorities are essential for business continuity. At present, there are no facts corresponding to grounds for disqualification or revocation, but if the Group were to receive a disposition such as license revocation due to a violation of laws and regulations, it could have a material impact on business results.

In the housing sales industry, there is a seasonal tendency for deliveries to concentrate in December and March, and the Group also shows a tendency for business results to be weighted toward the second half of the fiscal year. While the Group is focusing on housing deliveries in the first half to level out sales, this tendency toward concentration could intensify due to tax system issues and other factors. If the second-half weighting becomes stronger, it could affect first-half cash flow and the accuracy of business result forecasts.

If a natural disaster such as a typhoon or earthquake, or a fire accident occurs, there is a possibility of severe damage to sales office facilities and development sites, which could affect business results. In particular, since development and sales areas are concentrated in the South Osaka region, there is a risk that the impact of a large-scale disaster occurring in this region could be extensive.