■Business Overview
1. Gas business
Keiyo Gas ＜9539＞ manufactures, supplies, and sells city gas using the northwestern part of Chiba prefecture, such as Ichikawa City, Funabashi City, Matsudo City, Kashiwa City, Kamagaya City, Urayasu City, and Shiroi City, as the main supply area. Keiwa Gas Co., Ltd., a consolidated subsidiary, receives wholesale gas supply from the company and is engaged in the business of supplying and selling city gas with Nagareyama City as the main supply area. Nanohana Pipeline Co., Ltd., an affiliate company applying the equity method, operates gas pipelines for the purpose of stabilizing the company's procurement of raw materials over the future. Also, some of the raw materials for gas manufactured by the company are purchased from other affiliated companies (major shareholders) Nanyu Trading Co., Ltd. Furthermore, the company's main power, the Ichikawa Plant, which began operation in 1928, initially manufactured city gas by using coal as a raw material, then switching the raw material to natural gas or petroleum from Chiba prefecture, but since the number of natural gas acceptance bases increased, operation was stopped in 2006/3.
The characteristic of the company's gas business is that the supply area is the northwestern part of Chiba prefecture, which is a commuter town in Tokyo, where population density is high and the population itself is on the rise. For this reason, there is growth potential compared to other gas operators, conduit transportation efficiency is high, and since there are many apartment complexes, the efficiency of meter readings performed every month and inspections performed once every 4 years is also good.
The procurement source is mainly Tokyo Gas, and there are also TEPCO Holdings (hereinafter, TEPCO), which imports LNG, which is a raw material for city gas, as fuel, and natural gas produced in Chiba Prefecture. There is no big difference in quality between the 3 routes. Nonetheless, it can be procured as a product from Tokyo Gas, but since it is necessary to adjust the amount of heat with LPG from TEPCO, such costs are slightly reflected. Also, since the yen is currently depreciating, natural gas produced in Chiba prefecture should be relatively advantageous, but since there are mining restrictions, only a fixed amount can be used. In contrast to this, it seems difficult for sales volume (unit sales price) to reflect cost increases in competition. Similar to electric power, city gas has also been liberalized (liberalization is retail, and regional monopoly on the gas conduit business remains), so new gas operators such as Nippon Gas ＜8174＞ (NICIGAS) and ENEOS Co., Ltd. have entered the company's supply area, but currently, due to changes in the business environment, entry by new operators has calmed down.
Involved in the redevelopment project “Reef City Ichikawa”
2. Other businesses
In addition to the city gas business, the company is developing various businesses for the purpose of diversification, such as electricity retail, real estate, gas construction/gas equipment sales, etc.
(1) Electricity retail business
The company and Keiwa Gas mainly sell electricity to city gas customers as so-called new power operators. They offer reasonable prices for gas and electricity sets, and since they use the same billing system, they enjoy cost synergy. Also, for businesses, they are proposing the best mix of gas and electricity in addition to prices. The electricity retail business becomes a slightly difficult business when the system is not stable and price volatility increases. The business environment has become severe in recent years, as procurement costs have risen drastically against the backdrop of a sharp rise in crude oil prices in 2022, and systems have also become unstable.
(2) Real estate business
While the consolidated subsidiary Keiyo Gas Real Estate Co., Ltd. rents real estate, etc., the company leases part of the office building from Keiyo Gas Real Estate and leases part of the land. Since the real estate business is mainly rental income and is characterized by stable profits, it is our policy to continue to focus on it in the future. Currently, the Ichikawa Plant site adjacent to the head office building on the south side of JR Ichikawa Station is about 3.8 hectares, and they are working on the recomplex development project “Leaf City Ichikawa.” Fixed-term condominiums, senior housing, rental apartments, large supermarkets, etc. are planned to be built in Reef City Ichikawa. The 29-story condominiums are 672, and construction began in 2023/11, and completion is expected in 2026/12. The senior housing scheduled to open in the summer of 2025 is a 10-story building with 181 units, and the large supermarket will be a two-story building with a site area of about 7,000 m2 and a total floor area of about 10,500 m2. In addition, a family type is also being planned for a 9-story rental apartment with 235 units, mainly studios, and a central plaza/playground, and community contribution facilities are also planned. In 2023/12, a convenience store opened ahead of time on the south side of Leaf City Ichikawa.
(3) Other businesses (gas construction, gas equipment sales, etc.)
The company and Keiwa Gas sell gas equipment in connection with the city gas business. Also, gas internal pipe construction is being carried out in response to customer applications. Some of the gas equipment sold by the company is purchased from Keiyo Housing Construction Co., Ltd., an affiliate company applying the equity method. In addition, Keiyo Gas Customer Service Co., Ltd., a consolidated subsidiary, undertakes gas meter readings and fee collection operations, etc., and Keiyo Gas Information Systems Co., Ltd., a company related to the application of the equity method, provides computer-based information processing services, etc.
(Written by FISCO Visiting Analyst Miyata Hitomitsu)