Nippon Air Conditioning Services Co., Ltd. · TSE:4658
Nippon Air Conditioning Services — Q2 FY2021 Earnings Presentation
56 slides from Nippon Air Conditioning Services's earnings presentation, November 2020
Slide 1: 2nd Quarter of Fiscal Year Ended March 2021 Financial Results Reference Materials
We are the doctor of your invisible air. 2nd Quarter of Fiscal year ended March 2021 Financial Results Reference Materials November 2020 TSE 1st section, NSE 1st section: 4658 1
Slide 2: Disclaimer
Disclaimer These materials were prepared by Nippon Air Conditioning Services Co., Ltd. (the “Company”) for the purpose of understanding the current status of the Company, and do not aim at solicitation for investment in securities issued by the Company. The information in these materials is based on
Slide 3: Contents
Contents Ⅰ. Overview and strength p.03-p.30 Ⅱ. Financial highlights p.31-p.45 Ⅲ. Toward the achievement of long-term vision p.46-p.54 3
Slide 4: Overview and strength
Overview and strength Building facilities maintenance Number of technology-related employees: 2,500 Bases: 47 prefectures and 6 overseas countries * Number of Technology-related employees is as of the end of September 2020. * Base information is as of the end of October 2020. 4
Slide 5: Company overview
Company overview Company overview 239-2 Terugaoka, Meito-ku Apr. 1964 The company is established in Head office Nagoya-shi, Aichi Japan Higashijukucho, Nakamura-ku Nagoya-shi, Aichi. Capital stock ¥1,139 million Business General building facility description maintenance service Number of Consolidate
Slide 6: Technology-oriented company
Number of employees ■Number of employees (persons) ■ Regular employees ■ Average temporarily employed workers 3,500 3,065 3,095 3,000 2,500 1,103 1,064 Technology-related employees 2,000 account for more than 80% of 3,000 employees in total. 1,500 ▼ 1,000 1,962 2,031 500 Technology-oriented company
Slide 7: Stock-related information
Stock-related information Stock-related information ■Total shareholder return (%) ● The Company (including dividends) ● TOPIX including dividends Stock price ¥763 Total market capitalization ¥26.9 billion 250.0 Dividends ¥25 per share 192.7 200.0 Dividend payout ratio 50.3% 187.1 150.0 Dividend yiel
Slide 8: Management philosophy
Management philosophy To make all our stakeholders happier ▼ Creation of social value Management philosophy Bringing together the technological capabilities and human resources to maintain optimal environments and give our clients peace of mind through top quality service. ▼ Creation of economic val
Slide 9: Maintenance and management cycle of building facilities
Maintenance and management cycle of building facilities In-house technicians can respond in any phase ▼ Business Model Technological capabilities Total support capabilities Solution capabilities 9
Slide 10: Business division
Business division Net sales Business division Overview composition ■ Inspection, maintenance, repair, replacement, etc. PM of overall equipment / systems of buildings. (mainly air conditioning) ■ Upkeep / maintenance based on annual contracts. 37 ％ Preventive Maintenance ■ Spot maintenance based on
Slide 11: Business contents
Business contents Central surveillance service Solution proposals “Is it possible to create such and such environment?” or “How can we improve the situation?” Daily measurement service Environmental diagnosis service ＋ ▼ Identify potential needs based on communication with customers to increase adde
Slide 12: Value of maintenance 1/2
Value of maintenance 1/2 Maintenance means keeping the initial performance. INPUT Deterioration due to age OUTPUT Capacity 100％ Decrease: large Time INPUT OUTPUT Covered by maintenance Capacity 100％ Decrease: small Time 12
Slide 13: Value of maintenance 2/2
Value of maintenance 2/2 Cost of maintenance ＜ Cost of decreased capacity ▼ “Value of maintenance” Linked to ESG (the environment) 13
Slide 14: History since foundation
History since foundation ■ Net sales (left axis) ■Net sales and operating income changes since foundation (billions of yen) ● Operating income (right axis) 60 Apr. 1964 Establishment 2019 Five-Year Mid-Term Management Plan 6 Start of TECS (Total Environmental Consulting 2016 Three-Year Mid-Term Mana
Slide 15: Goals since foundation and goals in the future
Goals since foundation and goals in the future Three goals since foundation To make all our stakeholders happier (1) Overseas expansion (Jan. 1999) (1) [Customers] Provision of high-added value services (2) IPO in TSE and NSE (Sep. 2006) (2) [Employees] Improvement of satisfaction level and (3) Expa
Slide 16: Domestic expansion
Domestic expansion Domestic: 6 companies, 82 bases ・ Nippon Air Conditioning Services Co., Ltd. Expansion to all prefectures ・ Nippon Air Conditioning Systems Co., Ltd. ・ Nippon Air Conditioning Hokuriku Co., Ltd. ・ Nippon Air Conditioning Tohoku Co., Ltd. ▼ ・ Nikku Business Services Co., Ltd. ・ E-T
Slide 17: Overseas expansion
Overseas expansion Overseas 8 companies, 10 bases Main targets: (2 companies, 5 bases) Japanese-related manufacturing plants ▼ New revenue base Low-priced and local The current results are (2 companies, 1 base) unfavorable * Base information is presented as of end of October 2020. 17
Slide 18: Domestic market size
Domestic market size Construction and maintenance Companies approx. ¥2.2 trillion ▼ Approx. 70% of the air conditioning and heat source system market is for existing buildings ▼ we project a target for the Company of approx. ¥1.5 trillion * Prepared by the Company with reference to “Actual State of
Slide 19: Comparison with other companies in the same business
Comparison with other companies in the same business The Company Company Company Company A B C Total market ¥26.9 ¥141.2 ¥79.1 ¥5.6 capitalization billion billion billion billion High flexibility and PER 15.36x 14.12x 17.20x 5.66x PBR 1.49x 1.79x 1.53x 0.35x Capability to create added value ROE 10.8
Slide 20: Strength in the capability to handle any event regardless of the maker
Strength in the capability to handle any event regardless of the maker There is air-conditioning equipment from various makers inside buildings. Company A- Company B- Company C- manufacture manufacture manufacture No restrictions by makers Quick response in-house ▼ Reduced workload on customers Flex
Slide 21: Strength in the stability
Strength in the stability ■ Annual contract sales ■Ratio of annual contracts to net sales (%) ■ Manufacturing plant, etc. sales excluding annual contracts ■ Other sales 100.0 Stable annual contracts 75.0 Expansion of manufacturing plants, etc. ▼ 50.0 The key to growth is to spread economic risk by o
Slide 22: Strength in excellent technological capabilities 1/2
Strength in excellent technological capabilities 1/2 ■Ratio of sales of facilities with special environment (%) ■ Ratio of sales of facilities with special environment ■ Other sales 100.0 Excellent technological capabilities 75.0 are required for maintenance and management 50.0 Approx. 70% ▼ (Ratio
Slide 23: Strength in excellent technological capabilities 2/2
Strength in excellent technological capabilities 2/2 Examples of the technological capabilities required are shown below. * Picture: Environmental performance measurement / diagnosis, Clean equipment maintenance, Environmental hygiene management, High efficiency filter maintenance, Work environment
Slide 24: Technological capabilities index
Technological capabilities index ■Technological capabilities index (pt) 25.0 Technological type official 19.9 20.0 20.0 qualification acquisition number Target 15.0 8,833 20pt or higher 10.0 ▼ Technological type official × Qualification score Base of technological capabilities qualification acquisit
Slide 25: Reasons for inclination to facilities with special environments
Reasons for inclination to facilities with special environments Office building Hospitals Manufacturing plants Air conditioning equipment in Air conditioning equipment in operating Air conditioning equipment in conference room breaks down room breaks down manufacturing plant breaks down ▼ ▼ ▼ Operat
Slide 26: Share in large-scale domestic hospitals
Share in large-scale domestic hospitals ■Percentage of acceptance of outsourcing for domestic hospitals that have 600 beds or more (%) Strength in maintenance and management of facilities of large-scale hospitals ▼ Integrated management 11.5% Bed-number base Maintenance of environmental performance
Slide 27: Optimization of facility administration
Optimization of facility administration Image, Experience, Intuition ▼ Data creation / visualization Efforts to ensure energy conservation tuning, etc. ▼ Attaining both through optimization Maintenance of of facility administration Energy Environmental conservation performance 27
Slide 28: Future vision
Future vision Achievement of maintenance-free operation (general buildings) Advancement of maintenance and management (facilities with special environments) ▼ The demand is expected to be increasingly divided into the two categories above ▼ Focus on facilities with special environments that require
Slide 29: New approach 1/2
New approach 1/2 New approach to focus on facilities with special environments ▼ Validation total support ▼ A project is under way to build a system toward medium- to long-term deployment * Facilities with special environments indicate “hospital and research facilities,” “manufacturing plants, etc.,
Slide 30: New approach 2/2: Validation total support
New approach 2/2 Validation total support Support for eligibility verification of Good Manufacturing Practice: standard for manufacturing management and quality Based on GMP, implement support to manufacturing environments for drugs, etc., and documentation management of drugs and quasi-drugs mainta
Slide 31: Financial highlights
Contents Ⅰ. Overview and strength p.03-p.30 Ⅱ. Financial highlights p.31-p.45 Ⅲ. Toward the achievement of long-term vision p.46-p.54 31
Slide 32: Financial highlights
Financial highlights Net sales：¥21.7 billion (-7.5％) Operating income：¥1.0 billion (-35.5%) Final income：¥0.6 billion (-41.7％) * For net sales, operating income, final income, the number in the 2nd Quarter of fiscal year ended March 2021 is used. * Final income indicates profit attributable to owner
Slide 33: Results for the 2nd quarter of fiscal year ended March 2021 1/2
Results for the 2nd quarter of fiscal year ended March 2021 1/2 Special demand for renovation work related to air conditioning at schools disappeared. Revenue and profit decreased due partly to the Covid-19 pandemic. (billion yen, %) 2Q FY03/2019 2Q FY03/2020 2Q FY03/2021 Consolidated Year-on- Year-
Slide 34: Results for the 2nd quarter of fiscal year ended March 2021 2/2
Results for the 2nd quarter of fiscal year ended March 2021 2/2 Estimated impact of the Covid-19 pandemic on the results of 2Q of the fiscal year ending March 2021 ▼ Net sales：Approx. ¥ -0.98 billion Operating income：Approx. ¥ -0.36 billion 34
Slide 35: Net sales for each type
Net sales for each type ■Net sales for each type (billion yen) ■ Maintenance services net sales (inside dotted line frame, annual contract sales) ■ Renovation work construction work volume 30.0 25.0 Disappearance of special demand for renovation work 23.5 21.7 + 20.0 Impact of the Covid-19 pandemic
Slide 36: Net sales by quarter
Net sales by quarter The impact of special demand was high in the first half of the year. Demand was almost equivalent to that of two years ago. ■Net sales by quarter (billion yen) ■ Maintenance services net sales ■ Renovation work construction work volume 10.0 9.0 8.2 7.8 7.9 8.0 7.3 7.0 6.0 5.0 4.
Slide 37: Net sales by facilities of which services are entrusted 1/2
Net sales by facilities of which services are entrusted 1/2 ■Net sales by facilities of which services are entrusted ■ Hospitals and research facilities ■ Manufacturing plants, etc. (billion yen) ■ Other special facilities ■ Office buildings, etc. 9.0 8.4 8.1 8.0 Demand related to “Office buildings,
Slide 38: Net sales by facilities of which services are entrusted 2/2
Net sales by facilities of which services are entrusted 2/2 ■Annual contract sales ■ Maintenance services net sales ■ Renovation work ■ Hospitals and construction research work facilities ■ Manufacturing plants, etc. ■ Other special facilities ■ Office buildings, etc. (billion yen) (billion yen) vol
Slide 39: Gross profit margin
Gross profit margin ■Gross profit margin (%) ● Gross profit margin ● Maintenance services gross profit margin ● Completed construction gross profit margin 25.0 The profit margin decreased for both 21.6 20.0 maintenance and work 20.0 15.0 19.2 18.0 ▼ 14.5 Special demand related to air conditioning 13
Slide 40: Net sales overseas
Net sales overseas ■Net sales overseas by region (million yen) ■ China ■ Singapore 400 ■ Thailand ■ Other regions Net sales in seven countries outside Japan: 350 ¥348 million 300 293 251 250 The impact of the Covid-19 pandemic was large 200 ▼ 150 The operating ratio decreased due to lockdowns, etc.
Slide 41: Operating income overseas
海外営業利益 ■operating ■operating income incomeoverseas overseas (million yen) (million yen) 60 Operating income overseas: −7.4% 40 The increase in personnel expenses 20 could not be absorbed ▼ 0 (20) (40) Operating losses were incurred (except for China) (35) (60) Thirteen Japanese staff members were st
Slide 42: Status of cash flows
Status of cash flows 2QFY03/2020 2QFY03/2021 Consolidated The operating CF increased (cumulative period) Year-on-year Year-on-year Amount Amount growth ratio growth ratio (million yen) (％) (million yen) (％) The financing CF decreased ▼ Cash flows from operating activities 682 (48.1) 1,622 +137.8 Cas
Slide 43: Financial position
Financial position FY03/2020 2QFY03/2021 Consolidated (as of the end of period) Amount Year-on-year Amount Year-on-year The capital adequacy ratio increased growth ratio growth ratio (million yen) (million yen) (％) (％) 54.8% ⇒ 60.8% Current assets 19,593 (3.1) 17,075 (12.8) Fixed assets 13,416 (2.2)
Slide 44: Fiscal year ended March 2021 forecast
Fiscal year ended March 2021 forecast Based on the forecast before consideration of the impact of the Covid-19 pandemic Net sales: −2.0 billion yen, operating income: −0.3 billion yen (forecast) (billion yen, %) FY03/2019 FY03/2020 FY03/2021(forecast) Consolidated Year-on- Year-on- Year-on- (cumulat
Slide 45: Assumptions for the forecast for the year ending March 2021
2021年3月期予想 2/2 Assumptions for the forecast for the year ending March 2021 ▼ The impact of the Covid-19 pandemic peaked in the first half of the year Special demand in the first half of the year ended March 2020 disappeared 45
Slide 46: Toward the achievement of long-term vision
Contents Ⅰ. Overview and strength p.03-p.30 Ⅱ. Financial highlights p.31-p.45 Ⅲ. Toward the achievement of long-term vision p.46-p.54 46
Slide 47: Toward the achievement of long-term vision
Toward the achievement of long-term vision Enhanced human resources value ▼ Capital productivity improvement ▼ Creation of sustainable shareholder value ▼ Improvement of happiness of all stakeholders 47
Slide 48: Enhancing human resources value
Enhancing human resources value Promote three projects aiming at enhancing human resources value 「Human」 「Technological capabilities」 「Satisfaction level」 ▼ ▼ ▼ Improvement of Improvement of Recruitment and PR operational efficiency systems and environment ▼ ▼ ▼ Improvement of recognition Shortening
Slide 49: Employee satisfaction levels
Employee satisfaction levels ■Employee satisfaction levels ■Employee satisfaction levels (％) (％) 100.0 Employee satisfaction levels 90.0 80.0 65.9％ 70.0 63.9 65.9 60.0 ▼ 50.0 Target: 40.0 70％ or higher Foundation of corporate value 30.0 20.0 Basis of customer satisfaction 10.0 Linked to human resour
Slide 50: Improving the capital productivity
Improving the capital productivity Most important factor for improving the capital productivity 「enhancement of human resources value」 Linked to ESG(Social) Number of employees Special environment × Net income Net sales ＋ Technological capabilities Overseas development × Satisfaction level ROE Barri
Slide 51: Shareholder return policy
Shareholder return policy Maintain dividend payout ratio of 50% by enhancing capital productivity ▼ Implementation of shareholder return with awareness of dividend on equity ratio ■Return On Equity (%) ■Payout ratio (%) ■Dividend on equity ratio (%) 12.0 10.8 10.8 60.0 6.0 5.5 5.6 50.9 51.8 × ＝ 10.0
Slide 52: Dividends
Dividends ■Dividends (yen) 30.00 interim dividend 28.00 25.00 25.00 ¥12.50 paid 20.00 15.50 12.50 Decisions on matters related to acquisition of 15.00 treasury shares Total number: up to 700,000 shares (1.98%) 10.00 Total amount: up to ¥500 million 12.50 12.50 5.00 Period: November 2020 to July 2021
Slide 53: Sustainable shareholder value creation
Sustainable shareholder value creation ■(PBR＞1 ■PBR (倍) ■(PBR＝1 2.00 1.80 PBR＞1 1.60 Evaluation of non-financial capital 1.40 ▼ 1.20 1.00 “Creation of sustainable shareholder value" 0.80 Linked to ESG (the governance) 0.60 ▼ 0.40 Medium- to long-term expansion of corporate value 0.20 Improvement of
Slide 54: Financial Key Performance Indicator
Financial Key Performance Indicator Net sales：¥55 billion (Ratio of sales of facilities with special environment 75％) Operating income：¥3 billion (Operating income to sales overseas 5％) Profit attributable to owners of parent：¥1.9 billion EPS：¥54 (Payout ratio：50％) ROE： Maintain 10％ * For net sales,
Slide 55: About Nippon Air Conditioning Services Co., Ltd.
About Nippon Air Conditioning Services Co., Ltd. Our company offers comprehensive building facility support. While the main focus of our company is maintenance, management, environmental facility diagnosis, and solution proposals for building facilities, we also have a division that specializes in f
Slide 56: www.nikku.co.jp/en
www.nikku.co.jp/en In charge of IR: Corporate Planning Division E-mail：ir4658@nikku.co.jp 56
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