Space Value Holdings (Space Value HD) is a holding company that operates in four major segments through its subsidiaries: Systemized Construction (core business: 55.5% of total revenue, 109.6% of total operating profit before adjustments in FY03/21), Parking Structure (17.3%, 5.8%), General Construction (23.2%, operating loss of JPY674mn), and Property Development (2.8%, 6.6%). The company traces its roots back to Nissei Building Kogyo Co. Ltd., its core subsidiary, which was founded in Kanazawa, Ishikawa Prefecture in 1961, and originally manufactured and sold assembly-type garages.
In the Systemized Construction segment, the company constructs and sells systemized facilities (including prefabricated and unit facilities) (sales business generated 37.7% of total segment revenue in FY03/21), and also leases such facilities (leasing business, 17.8%). The segment is operated by two consolidated subsidiaries: Nissei Building Kogyo Co., Ltd. and System House R&C Co., Ltd. Systemized facilities are manufactured from standardized materials under systemized procedures for design, factory production, and on-site construction. Compared with traditional steel-frame facilities that use custom designs and materials, systemized facilities cost less (about two-thirds of their traditional counterparts), can be built in half the time, and eliminate specialized construction processes such as formwork and reinforcement work. Based on construction starts data, the market for less than 2,000sqm commercial and industrial steel-frame facilities (used as offices, stores, factories, and warehouses) is valued at about JPY1.5tn. The market for systemized construction* accounts for only about 30% of that amount at present, but it is expanding at a CAGR of approximately 5% due to growing adoption (especially for stores) thanks to the benefits mentioned above and enhancements in design. Space Value HD’s main competitors are Daiwa Lease Co., Ltd. (wholly owned subsidiary of Daiwa House Industry Co., Ltd. [TSE1: 1925]) and Sankyo Frontier Co., Ltd. (TSE JASDAQ Standard: 9639). Shared Research estimates that Daiwa Lease has the largest revenue share of the three companies at roughly 15%, followed by Space Value HD at about 3%.
The value of the market for systemized construction is calculated as the total revenue of the members of the Japan Prefabricated Construction Suppliers and Manufacturers Association that supply systemized, prefabricated, and unit facilities as their core business.
Revenue in the Systemized Construction sales business is calculated as the number of facilities sold multiplied by revenue per facility, or as the facility floor area sold multiplied by revenue per square meter. Although Space Value HD has not disclosed such figures, Shared Research estimates (based on construction starts data) that each systemized facility sold brings in JPY41mn in revenue, implying the company sells some 700 facilities per year.
According to the Survey of Building Construction Work Started by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT), the average floor area for a commercial or industrial steel-frame facility is roughly 280sqm, and the construction cost is JPY220,000/sqm. Shared Research estimates the construction cost for a systemized facility is JPY150,000/sqm (roughly two-thirds of a traditional steel-frame facility). Multiplying JPY150,000/sqm by 280sqm yields revenue of JPY41mn per systemized facility.
In the sales business, Space Value HD designs, manufactures, and constructs systemized, prefabricated, and unit facilities (see the explanations in the box below). The company says it generates much of revenue in the sales business from sub-2,000sqm systemized and prefabricated facilities that are primarily used as offices, stores, factories, and warehouses. It sells facilities around the country supported by a network of 60 sales offices and nine factories (including rental yards).
Systemized and prefabricated facilities are both manufactured from standardized components under systemized procedures that also standardize design, factory production, and on-site construction. However, whereas prefabricated facilities are simply assembled from standardized components and structures, systemized facilities are to a large extent budgeted, designed, and manufactured (production of materials) in accordance with customer requests. Unit facilities have box-type light-gauge steel structure. They can be easily transported, installed, and constructed.
Product characteristics: The company’s mainstay Nissei V Span-S product is the only systemized facility in Japan to use welded H-type light-gauge steel columns and beams. It also uses slant end-plates to achieve strong beam-to-column connections. This combination enables lightweight yet extremely strong facilities, and also simplifies construction, enables the creation of spaces without columns (frontage of maximum 40m), and reduces costs.
In its leasing business, Space Value HD leases prefabricated and unit facilities to customers when needed for as long as is needed. These facilities are typically used as temporary school facilities during construction projects, temporary housing in disaster-affected areas, model rooms for condominiums, and facilities for limited-time events. Revenue in the leasing business is determined by inventory of rental facilities, rent per facility, and the occupancy rate.
The Parking Structure segment was established in 1988 to expand the company’s business domains by leveraging the facilities and technologies of the Systematized Construction segment. The company undertakes contracted construction of mechanical and drive-in multi-level parking facilities (sales business: 9.0% of total segment revenue in FY03/21), provides repair, maintenance, and upgrade services (maintenance business: 2.7%), and offers parking operation and management services (parking operation and management business: 5.5%). The company supplies parking facilities for visitors of suburban shopping centers and train station areas, as well as parking facilities for company employees, condominium residents, hotel guests, and visitors of public facilities such as universities and hospitals. It has a track record of sales of multi-level parking facilities in Thailand, and also operates and manages such facilities in Singapore (overseas revenue was about JPY3.0bn in FY03/20). The company’s transactions with customers in the sales business cease once it delivers a parking facility, but transactions with customers are carried on in the maintenance business. The company says the maintenance business generates higher margins and profit than the sales business.
In the General Construction segment, Space Value HD undertakes non-systemized construction work such as construction of condominiums, public facilities, and railway facilities. It also engages in civil engineering work, seismic reinforcement work, and repair work. The segment was launched after the company made Ozawa Kensetsu K.K. (currently NBC-Kitakantou Co. Ltd.) in Saitama Prefecture a subsidiary in 2012. Two other subsidiaries have been since added to the segment, Sotetsu Kensetsu K.K. (currently NB Construction Co., Ltd.) in Kanagawa Prefecture in February 2013, and Urban-staff Co., Ltd. in Tochigi Prefecture in July 2018. The three subsidiaries that operate the segment are regional construction companies, and their total revenue is below the revenue of the 50th construction company in Japan. NB Construction (formerly Sotetsu Kensetsu), which generates about 90% of segment revenue, excels in railway construction. Its long-term, stable transactions with railway companies are a source of stable revenue.
In FY03/21, revenue was JPY77.5bn (-9.3% YoY), operating profit JPY14mn (-99.4% YoY), recurring profit JPY732mn (-74.4% YoY), and net income attributable to owners of the parent JPY329mn (-67.0% YoY). Revenue was down YoY in all segments except the Property Development segment. All profit items declined YoY due to lower gross profit and higher SG&A expenses. Gross profit declined YoY due to lower revenue and the booking of provision for losses on construction contracts as some extra work was needed in some projects in the General Construction segment. Higher SG&A expenses were attributable to higher labor costs for a proper allocation of personnel, and to an increase in costs to sustain and strengthen an internal control structure.
For FY03/22, the company forecasts revenue of JPY84.0bn (+8.4% YoY), operating profit of JPY2.1bn (JPY14mn in FY03/21), recurring profit of JPY2.4bn (+227.9% YoY), and net income attributable to owners of the parent of JPY1.4bn (+325.5% YoY). It expects revenue to increase, driven by the Systemized Construction segment and the sales business in particular. It expects profits to increase mainly on recovery in parking utilization rates in the Parking Structure segment, along with an end, for the time being, to booking of provision for losses on construction contracts in the General Construction segment.
In November 2020, Space Value HD unveiled a new medium-term business plan covering FY03/21 to FY03/23. The plan calls for FY03/23 recurring profit of JPY4.5bn or more (JPY2.9bn in FY03/20), recurring profit margin of 5% or higher (3.3%), and ROE of 10% or higher (4.0%). The company estimates the systemized construction market (its main target market; including prefabricated construction) only accounted for 10% of the market for commercial and industrial steel-frame facilities as of March 2021. However, it thinks that share will increase over the medium to long term alongside a decline in the number of carpenters and steel frame manufacturers. It aims to increase its share in this growth market by conducting sales promotion and strengthening its product line across the group. Under its previous president, the company pursued growth through M&A deals, overseas operations, and hotel development, but these efforts did not lead to tangible growth. Under the dogmatic approach of its previous president, the company accepted more orders than it could execute, leading to depressed profit margins and an accounting scandal. The current medium-term plan, formulated after the previous president stepped down, targets growth in the company’s existing businesses by strengthening inter-segment cooperation centered on the core Systemized Construction segment.
Shared Research thinks the company’s strengths are (1) its product differentiation by the use of high-strength welded H-type light-gauge steel columns and beams as well as slant end-plates that achieve strong beam-to-column connections, (2) the second largest network of sales offices and production sites in the country, and (3) its ability to provide differentiating peripheral services in the Systemized Construction segment thanks to acquisitions in related fields. Its weaknesses are (1) the fact that it lags the industry leader in terms of a track record, volume, and system in the land information utilization business, (2) less experience and expertise in unit facilities keeping profit margins below those of rival Sankyo Frontier (third-ranked company in the industry by revenue), and (3) the accounting scandal and failed management strategies under the tenure of its previous president. (For more details see the Strengths & Weaknesses section.)
|(JPYmn)||NB non-cons.||NB cons.||NB cons.||NB cons.||NB cons.||NB cons.||NB cons.||SVH cons.||SVH cons.||SVH cons.||Est.|
|Gross profit margin||22.9%||20.7%||15.3%||17.1%||16.8%||18.5%||16.0%||15.7%||14.6%||13.2%|
|Operating profit margin||15.1%||7.3%||5.7%||7.6%||7.8%||8.5%||5.2%||4.9%||2.9%||0.0%||2.5%|
|Recurring profit margin||15.4%||7.8%||6.1%||7.8%||8.2%||8.2%||5.2%||5.0%||3.3%||0.9%||2.9%|
|Per-share data (reverse split-adjusted; JPY)|
|Shares issued ('000)||71,113||71,113||71,113||71,113||71,113||71,113||35,557||35,557||35,557||35,557|
|EPS (fully diluted)||62.82||51.84||53.62||75.68||83.96||106.36||70.23||6.74||28.32||9.35|
|Dividend per share||14.00||10.00||14.00||22.00||32.00||40.00||33.00||26.00||15.00||15.00||-|
|Book value per share||338.02||396.84||435.54||524.22||597.50||721.28||825.61||738.63||696.62||734.38|
|Balance sheet (JPYmn)|
|Cash and cash equivalents||11,388||6,679||4,880||4,492||5,724||8,980||5,272||7,655||4,245||6,654|
|Total current assets||21,686||23,723||25,528||28,880||29,742||37,294||37,016||42,653||39,815||39,809|
|Tangible fixed assets||7,249||8,400||9,206||9,448||15,897||22,185||23,434||28,569||23,459||21,904|
|Investments and other assets||1,320||3,254||3,429||5,632||6,904||10,084||16,682||13,875||11,613||13,113|
|Total current liabilities||14,801||18,773||19,981||21,221||25,984||31,430||34,650||40,495||35,230||37,814|
|Total fixed liabilities||3,715||3,649||3,988||5,963||6,128||12,343||16,738||22,501||19,519||15,465|
|Total net assets||11,820||13,145||14,448||17,061||21,100||26,516||30,084||27,155||24,558||25,895|
|Total interest-bearing debt||4,416||4,550||6,901||7,875||12,061||13,892||22,680||29,234||24,273||25,123|
|Cash flow statement (JPYmn)|
|Cash flows from operating activities||10,368||-50||-1,633||1,729||4,828||11,442||-484||7,605||2,377||3,768|
|Cash flows from investing activities||236||-2,267||-2,248||-2,004||-8,842||-7,823||-8,312||-9,845||3,102||-465|
|Cash flows from financing activities||-1,679||-2,364||1,744||56||5,194||-460||4,968||4,624||-8,846||-882|
On November 12, 2021, Space Value Holdings Co., Ltd. announced that its board of directors had resolved to express its opinion in favor of the tender offer by PTCJ-2 Holdings for Space Value Holdings common shares.
The aforementioned resolution at the board of directors meeting was adopted on the understanding that the tender offeror intends to make the company a wholly owned subsidiary through the tender offer and a series of subsequent procedures, and that the company shares are to be delisted.
Name: PTCJ-2 Holdings Inc.
Business description: Control and management of the business activities of the
company by owning the share certificates, etc. of the company
Major shareholders and shareholding ratio: Polaris Capital Group Co., Ltd. (100%)
Common shares: JPY1,150 per share
The tender offer price represents a premium of 18.6% over the closing price of JPY970 of the company shares on the First Section of the TSE as of November 11, 2021, the business day prior to the announcement of the tender offer and a premium of 36.9% over the simple average closing price of JPY840 for the one-month period ending on that date.
The tender offeror has set the minimum number of shares to be purchased at 23,731,300 shares (ownership ratio: 66.67%) as the objective of the tender offer is to delist the company shares. The tender offeror will not purchase any of the share certificates, etc. tendered if the total number of the tendered share certificates, etc. is less than the minimum number of shares to be purchased.
From November 15, 2021 (Monday) to December 27, 2021 (Monday) (30 business days)
On the same day, Space Value Holdings announced a revision to its FY03/22 year-end dividend forecast (no distribution) and the abolishment of the shareholder special benefit plan.
Subject to the completion of the tender offer, the company decided to revise its FY03/22 dividend forecast (no distribution of year-end dividend) and abolish its shareholder special benefit plan.
|(JPYmn)||Q1||Q1–Q2||Q1–Q3||Q1–Q4||Q1||Q1–Q2||Q1–Q3||Q1–Q4||% of Est.||1H Est.||% of Est.||FY Est.|
|Cost of revenue||13,575||29,223||45,414||67,274||13,648||27,412|
|Gross profit margin||15.2%||14.3%||14.2%||13.2%||16.3%||15.2%||16.0%||14.6%|
|Operating profit margin||-||-||0.1%||0.0%||1.6%||0.6%||1.2%||2.5%|
|Recurring profit margin||0.7%||0.1%||0.6%||0.9%||1.8%||0.7%||1.2%||2.9%|
|Cost of revenue||13,575||15,648||16,191||21,860||13,648||13,764|
|Gross profit margin||15.2%||13.5%||13.9%||11.1%||16.3%||14.1%|
|Operating profit margin||-||-||0.6%||-||1.6%||-|
|Recurring profit margin||0.7%||-||1.5%||1.7%||1.8%||-|
|Operating profit margin||-||-||0.1%||0.0%||1.6%||0.6%|
|Operating profit margin||10.3%||7.8%||8.1%||9.4%||10.3%||8.8%|
|Operating profit margin||0.7%||2.6%||2.0%||-||-||-|
|Operating profit margin||-||2.0%||2.3%||1.6%||-||-|
|Operating profit margin||39.2%||34.0%||28.8%||11.4%||11.3%||13.1%|
|Operating profit margin||-||-||-||-||-||-|
|Operating profit margin||-||-||0.6%||-||1.6%||-|
|Operating profit margin||10.3%||5.4%||8.5%||12.0%||10.3%||7.2%|
|Operating profit margin||0.7%||4.0%||0.9%||-||-||-|
|Operating profit margin||-||4.9%||2.8%||-||-||-|
|Operating profit margin||39.2%||29.1%||16.0%||8.8%||11.3%||14.9%|
|Operating profit margin||-||-||-||-||-||-|
|FY Act.||FY Act.||FY Est.|
|Operations and management||5,025||4,259||4,800|
|Gross profit margin||14.6%||13.2%||14.6%|
|Gross profit margin||16.7%||17.7%||16.4%|
|Gross profit margin||17.3%||15.7%||16.3%|
|Gross profit margin||15.1%||21.8%||16.4%|
|Gross profit margin||15.2%||12.8%||17.0%|
|Gross profit margin||9.4%||8.9%||7.4%|
|Gross profit margin||34.6%||32.5%||36.8%|
|Operations and management||776||395||1,100|
|Gross profit margin||15.4%||9.3%||22.9%|
|Gross profit margin||9.0%||2.4%||7.3%|
|Gross profit margin||22.3%||17.0%||14.3%|
|Gross profit margin||12.2%||13.7%||25.0%|
|Operating profit margin||10.3%||7.8%||8.1%||9.4%||10.3%||8.8%|
|Operating profit margin||10.3%||5.4%||8.5%||12.0%||10.3%||7.2%|
|Operations and management||917||2,026||3,213||4,259||1,053||2,098|
|Operating profit margin||-||2.0%||2.3%||1.6%||-||-|
|Operations and management||917||1,109||1,187||1,046||1,053||1,045|
|Operating profit margin||-||4.9%||2.8%||-||-||-|
|Car parking facilities in Japan||409||413||407||403||401||385|
|Parking space (units)||4,254||4,399||4,326||4,255||4,243||3,963|
|Bicycle parking facilities in Japan||80||79||77||76||69||41|
|Parking space (units)||13,791||13,196||13,031||12,906||11,776||4,495|
|Parking facilities overseas||299||298||313||290||303||308|
|Parking space (units)||126,912||127,089||133,192||123,164||124,662||125,152|
Revenue decreased YoY. Aside from the Construction segment, revenue in all other segments declined. Operating profit and other profit lines increased on improved Construction profit and a decline in corporate-wide expenses.
The company applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29) from the start of Q1 FY03/22. As a result, revenue in the General Construction segment increased by JPY277mn and the cost of revenue also increased by JPY277mn.
From Q1 FY03/22, the company changed the names of its reporting segments from "Systemized Construction" to "Construction," "Parking Structures" to "Parking Lot", and "Property Development" to "Land Utilization." The change in segment names does not affect the business performance of each segment.
Revenue in the sales business was JPY12.0bn (+8.2% YoY). Office construction was firm, and construction of stores, factories, workshops, and warehouses was also steady.
Revenue in the leasing business was JPY7.9bn (+14.0% YoY). Revenue was firm in temporary facilities at schools that are rebuilding. Construction of temporary facilities at welfare facilities undergoing seismic reinforcement also provided a positive contribution.
Revenue in the sales business was JPY2.4bn (-35.2% YoY). Construction of multi-story parking garages for business use was steady,
but there was a decline in construction of parking facilities for residential buildings, including condominiums.
Revenue in the maintenance business was JPY915mn (-6.9% YoY). The decline was attributable to less renovation work.
Revenue in the parking operation and management business was JPY2.1bn (+3.6% YoY). At end-September 2021, the company operated 385 car parking facilities with 3,963 parking spaces (-9.9% YoY) and 41 bicycle parking facilities with 4,495 parking spaces (-65.9% YoY) in Japan. Overseas, it operated 308 car parking facilities with 125,152 parking spaces (-1.5% YoY).
Civil engineering work associated with land readjustment projects in some areas and large-scale renovation and repair work for condominiums was strong. However, construction work for condominiums and other housing-related projects declined, resulting in lower sales and profits.
Although the development of lifestyle-oriented commercial stores (major convenience stores and drugstores) performed broadly in line with the company's plan and rental revenue increased, sales and profits were down due to consulting service revenue recorded in FY03/21.
The company, preparing for its withdrawal, refrained from activity aimed at remaining in the business.
|(JPYmn)||1H Act.||2H Act.||FY Act.||1H Act.||2H Est.||FY Est.|
|Cost of revenue||29,223||38,051||67,274||27,412||44,288||71,700|
|Gross profit margin||14.3%||12.3%||13.2%||15.2%||14.3%||14.6%|
|Operating profit margin||-||0.2%||0.0%||0.6%||3.7%||2.5%|
|Recurring profit margin||0.1%||1.6%||0.9%||0.7%||4.2%||2.9%|
The company’s FY03/22 forecast calls for revenue of JPY84.0bn (+8.4% YoY), operating profit of JPY2.1bn (profit of JPY15mn in FY03/20), recurring profit of JPY2.4bn (+227.9% YoY), and net income attributable to owners of the parent of JPY1.4bn (+325.5% YoY).
|FY Act.||FY Act.|
|FY Act.||1H Act.||2H Act.||FY Act.||1H Act.||2H Est.||FY Est.|
|Operations and management||5,025||2,026||2,233||4,259||2,098||2,702||4,800|
|Gross profit margin||14.6%||14.3%||12.3%||13.2%||15.2%||14.3%||14.6%|
|Gross profit margin||16.7%||17.4%||17.8%||17.7%||16.4%|
|Gross profit margin||17.3%||14.4%||16.5%||15.7%||16.3%|
|Gross profit margin||15.1%||21.9%||21.7%||21.8%||16.4%|
|Gross profit margin||15.2%||12.3%||13.2%||12.8%||17.0%|
|Gross profit margin||9.4%||11.0%||6.4%||8.9%||7.4%|
|Gross profit margin||34.6%||31.1%||33.7%||32.5%||36.8%|
|Operations and management||776||115||280||395||1,100|
|Gross profit margin||15.4%||5.7%||12.5%||9.3%||22.9%|
|Gross profit margin||9.0%||8.8%||-||2.4%||7.3%|
|Gross profit margin||22.3%||60.0%||12.6%||17.0%||14.3%|
|Gross profit margin||12.2%||13.4%||14.1%||13.7%||25.0%|
Space Value HD expects FY03/22 revenue to increase to JPY84.0bn (+8.4% YoY), driven by the Systemized Construction segment and the sales business in particular. The company projects revenue will be essentially flat YoY in the Parking Structure segment, but will rise in the General Construction and Property Development segments.
It forecasts gross profit of JPY12.3bn (+20.2% YoY). Although it expects profit to rise in all segments, the company anticipates an especially substantial rise in the General Construction segment as booking of provision for losses on construction projects ends for the time being.
Space Value HD expects revenue of JPY48.3bn (+12.2% YoY), gross profit of JPY7.9bn (+3.9% YoY), and GPM of 16.4% (-1.3pp YoY). In this segment, it sees sales and profit rising in the sales business but falling in the leasing business.
The company projects revenue of JPY34.9bn (+19.4% YoY), gross profit of JPY5.7bn (+24.2% YoY), and GPM of 16.3% (+0.6pp YoY).
In FY03/20, Nissei Build Kogyo, a main subsidiary, focused on promoting measures to prevent recurrence of accounting regularities, and this led the order backlog to decline to JPY10.4bn at the beginning of FY03/21 (-10.6% versus FY03/20). As a result, despite the systemized construction market remaining robust, sales business revenue declined to JPY29.2bn (-8.5% versus FY03/20). The company expects the market to remain robust in FY03/22, resulting in revenue growth. Incidentally, the order backlog in the sales business at the beginning of FY03/22 was JPY10.2bn ( 2.3% YoY). The company believes profit growth will accompany revenue growth.
The company forecasts revenue of JPY13.4bn (-3.1% YoY), gross profit of JPY2.2bn (-26.9% YoY), and GPM of 16.4% (-5.4pp YoY).
In FY03/21, at subsidiary System House R&C, large renovation projects of public facilities contributed to revenue and profit. The disappearance of that impact will result in lower revenue and profit YoY in FY03/22.
In the sales business, in addition to developing and improving products that highlight the advantages of systemized construction, the company will restructure its sales network so that it can be leveraged for various product distribution channels, improving productivity and customer development.
In the leasing business, the company will concentrate on government projects associated with extending the service life of buildings. In addition to promoting the leasing of three-story rental facilities that were introduced in FY03/21, the company will also work to further strengthen its product capabilities (including materials).
In the Systemized Construction segment, Nissei Build Kogyo developed three-story rental facilities to stimulate the leasing business and introduced them to the market in October 2020. These facilities were developed for temporary use while public buildings are undergoing renovation to extend service life, for example at schools undergoing seismic reinforcement. They were also developed to contribute to the efficient use of rental materials by being compatible with existing rental materials.
In the PPP/PFI business, the company intends to participate only in those projects that can take advantage of the labor-saving, stable cost, and short construction period of systemized construction.
Space Value HD forecasts revenue of JPY13.5bn (+0.9% YoY), gross profit of JPY2.3bn (+34.8% YoY), and GPM of 17.0% (+4.2pp YoY). In this segment, it expects revenue and profit to rise in the parking operation and management business.
The company projects revenue of JPY6.8bn (-2.7% YoY), gross profit of JPY500mn (-19.2% YoY), and GPM of 7.4% (-1.5pp YoY).
In FY03/21, there was a decline in construction of multi-level parking facilities for hotels, tenant buildings, and other commercial facilities. In FY03/22, the company aims to win orders for construction related to commercial facilities, but market growth is unlikely, so the decline in revenue and profit looks set to continue.
The company forecasts revenue of JPY1.9bn (-10.5% YoY), gross profit of JPY700mn (+1.3% YoY), and GPM of 36.8% (+4.3pp YoY).
It aims to improve profit margins by proceeding with its review of contracts, leading to higher profit despite lower revenue in the maintenance business.
The company projects revenue of JPY4.8bn (+12.7% YoY), gross profit of JPY1.1bn (+178.5% YoY), and GPM of 22.9% (+13.6pp YoY).
In FY03/21, revenue declined to JPY4.3bn (-15.2% YoY) due to lower parking utilization rates as more people stayed home due to the COVID-19 pandemic. Gross profit declined to JPY395mn (-49.1% versus FY03/20) due to the increased burden of rents and other costs of revenue. The company expects restrictions on outings to diminish in FY03/22, leading to recovery in parking utilization rates. It also expects profit margins to improve as revenue increases and it makes progress on ridding itself of low-margin contracts.
Space Value HD forecasts revenue of JPY19.2bn (+6.9% YoY), gross profit of JPY1.4bn (+227.1% YoY), and GPM of 7.3% (+4.9pp YoY).
In FY03/21, revenue from railway and facility construction work declined, but the company expects FY03/22 revenue to grow YoY due to robust orders in FY03/21 (JPY16.8bn, +18.8% YoY). It also anticipates a YoY increase in profit with the absence of provision for losses on construction contracts (such provision amounted to JPY991mn in FY03/21).
In terms of initiatives for FY03/22, to focus on margins and improve the quality of projects, the company will avoid projects that might lead to price competition with peers, and will approach non-residential and government projects to broaden its customer base. It will also work to increase synergy between the General Construction and Property Development segments through collaboration on the construction of lifestyle-oriented commercial stores (including drugstores).
The company projects revenue of JPY2.8bn (+29.3% YoY), gross profit of JPY400mn (+9.0% YoY), and GPM of 14.3% (-2.7pp YoY).
Its main FY03/22 initiative will be to increase synergies through collaboration among the grouponill avoid s as it promotes the development of lifestyle-oriented commercial stores (for major convenience store and drugstore chains). Such development is the mainstay of the Property Development segment.
In November 2020, the company’s new management team unveiled a medium-term business plan spanning from April 2020 to March 2023. Its previous President Atsuhiro Morioka, who had led the company for roughly two decades, had stepped down in April 2019, in the wake of an accounting scandal. He was succeeded by Naoki Morioka, who assumed the role of representative director, president, and CEO (current position). In June 2020, the company reported it had fully deployed various systems to prevent recurrence of the accounting irregularities. In November 2020, it released the new medium-term plan.
Mr. Atsuhiro Morioka was the second president of Nissei Build Kogyo. He joined that company in April 1986, and served as the head of the Office of the President, director, managing director, senior managing director, and vice president before becoming president in June 1998, at the age of 36. As of March 2020, he owned an 8.48% stake in the company (including stake in asset management company).
In July 2018, it was discovered that some payments of construction fees to the Nagasaki sales office of Nissei Build Kogyo were missing. Space Value HD launched an internal investigation in October 2018, and subsequently delegated the investigation to a third-party committee in March 2019.
In April 2019, the company received the investigation report from the third-party committee. The report detailed associations with individuals belonging to antisocial forces, instructions to window-dress accounting records, issues involving improper relationships with women and entertainment expenses, improper transfers of funds, violent conduct in and outside the company, and scare tactics. As a result, Mr. Atsuhiro Morioka resigned from his position as representative director, chairman, president, and CEO.
In April 2019, the company revised its securities reports submitted from FY03/14 to Q2 FY03/19 to reflect the findings of the investigation report by the third-party committee.
Investigation by third-party committee
・An inquiry into missing construction payments from a collaborating subcontractor at the Nagasaki sales office of consolidated subsidiary Nissei Build Kogyo in July 2018 led to the discovery of improper substitutions of construction costs in October 2018.
・Following the discovery, the company launched an internal investigation into the Nagasaki sales office in October 2018. In November 2018, it was confirmed that the office had conducted business with 73 companies, and a review of the invoices and actual construction work performed revealed that the office had improperly transferred construction costs to other projects.
・The company learned an additional investigation would have to be completed before its accounting auditor could finish its quarterly review and formulate an audit conclusion.
・In February 2019, the company set up a special investigation committee. However, after it became clear the scope of the investigation had to be expanded, the company resolved at its Board of Directors meeting in March 2019 to move the investigation from the special investigation committee to a third-party committee composed exclusively of external attorneys, certified public accountants, and other experts in an effort to increase the independence and fairness of the investigation.
The company’s previous president thought the domestic systemized construction market had limited growth potential, and therefore pursued growth through M&A deals, overseas operations, and hotel development. This strategy led to the following outcomes.
The company’s operations expanded through M&A activity in the 2010s, but synergies among subsidiaries proved limited.
Earnings contributions from overseas Parking Structure operations were limited. In addition, there are lingering questions over the appropriateness of the company’s construction spending on a multi-level parking facility project in Malaysia.
Third-party committee observations on Malaysia project: As part of a project under which the company had acquired state-controlled land to operate a multi-level parking facility, the company paid over JPY600mn to a local construction company through September 2018. The facility was launched without securing several necessary permits from the Malaysian government. The third-party committee was therefore concerned that the Malaysian government may issue criminal penalties, or impound or dismantle the facility. In addition, the local construction company has filed for liquidation, which means the application for the missing permits may be rejected.
The company acquired hotel development sites and booked JPY1.9bn in impairment losses on the hotel development assets (land) in Kyoto Prefecture in FY03/19. The acquisition of these sites was spearheaded by the previous president. The new management team sold land assets in the cities of Yokohama and Kyoto in FY03/20 and FY03/21, respectively, as it determined these had little affinity with the core business of the company and offered little prospect of synergies.
The previous president neglected investment in the core Systemized Construction business, and this delayed the development of new products.
To meet the ambitious order quotas imposed by the previous president, the company took on orders in excess of its construction capacity. Consequently, it had to increase spending on its construction system to handle a heavy order backlog in FY03/20, which dragged down profit margins in the Systemized Construction segment.
In April 2019, Representative Director, Chairman, President, and CEO Atsuhiro Morioka stepped down, and his cousin, Naoki Morioka, was appointed as representative director and president, and CEO (current position).
In June 2020, the company announced it had fully deployed various systems to prevent a recurrence of the previous accounting irregularities. Specifically, it pushed through governance reforms, rebuilt its processes for cost and revenue accounting, rebuilt its investment management systems, strengthened its internal audit functions, rebuilt its compliance systems and developed systematic education, and reviewed its management systems for overseas subsidiaries.
In November 2020, it unveiled a new medium-term business plan spanning from April 2020 to March 2023.
The previous medium-term business plan (April 2019 to March 2021) promoted hotel development and overseas operations. The company says this not only skewed the distribution of management resources, but also failed to produce tangible growth for the group as a whole. The plan was formulated by the previous president using a top-down approach, and lacked actionable goals for group employees.
Having reflected upon its previous plan, Space Value HD released a new medium-term plan (covering April 2020 to March 2023) in November 2020. Built around the theme of “a return to the core business,” the current plan looks to fuse the expertise of the core Systemized Construction segment with that of the Parking Structure, General Construction, and the Property Development (land utilization) segments, and achieve growth in each segment by strengthening inter-segment collaboration. Under a policy of selection and concentration, the company plans to liquidate assets that have little affinity with its core business or offer little prospect of synergies. Unlike the previous plan, the new plan was formulated using a bottom-up approach, capturing and reflecting the opinions of various group companies. As a result, the company says it includes an effective action plan for its employees.
Recognition of construction demand: The previous plan anticipated murky demand for domestic construction following the Tokyo Olympics. The current plan assumes construction demand will remain firm across the board underpinned by government spending on public projects to prepare for natural disasters, and major projects such as Expo 2025 Osaka and the Linear Chuo Shinkansen Line (bullet train). However, it sees a saturated store market and weak private capital investment as potential risks.
Business environment: The company understands that the Systemized Construction segment faces challenges such as a shortage of manufacturing and construction workers and rising labor costs. However, it thinks systemized construction has greater potential for market expansion than traditional construction owing to benefits such as labor reduction, cost stability, and shorter construction periods.
Focus on System Construction segment: In light of the above, the current medium-term plan allocates management resources to further develop the foundations of the Systemized Construction business, promotes product development, and aims to expand the company’s share in the market for sub-2,000sqm facilities, which is the company’s forte.
Disposal of assets (selection and concentration): The company plans to liquidate assets deemed to have little affinity with its core business or offer little prospect of synergies.
Numerical targets: The current plan calls for FY03/23 recurring profit of JPY4.5bn or more (JPY2.9bn in FY03/20), recurring profit margin of 5% or higher (3.3%), and ROE of 10% or higher (4.0%). It also targets a payout ratio of 30% (52.8%).
According to the Survey of Building Construction Work Started by MLIT, there were 24,726 construction starts for sub-2,000sqm commercial and industrial steel-frame facilities—the target market of the company’s Systemized Construction segment—in 2020, accounting for 94% of the total number of construction starts for steel-frame facilities that year.
On a value basis, the total projected construction spending for commercial and industrial steel-frame facilities (offices, stores, factories, and warehouses) was JPY4.3tn (-9.3% YoY). Shared Research estimates the projected construction spending for sub-2,000sqm facilities was JPY1.5tn (-3.6% YoY), making up 35.9% of the total projected construction spending on steel-frame facilities (33.8% in 2019). According to Space Value HD, systemized construction currently accounts for only about 10% of the market for sub-2,000sqm steel-frame commercial and industrial facilities, most of which are constructed using the conventional methods.
The company says the systemized construction market has expanded at a CAGR of about 5%. Based on its own market research, Shared Research concluded that this growth was supported by the benefits offered by systemized construction over traditional steel-frame construction, including lower costs, a shorter construction period, and the elimination of specialized construction processes such as formwork and reinforcement work. The company sees plenty of room for the share of systemized construction to expand within the larger steel-frame facility market, aided in part by a decline in the number of carpenters and steel section manufacturers. In the US, systemized construction is used to build roughly 60% of all buildings including residential housing.
released by the Nomura Research Institute (NRI), the number of carpenters in Japan fell from 650,000 to 300,000 in the period from 2000 to 2020. It has remained in decline since, and is projected to drop to 210,000 in 2030. According to a report by the Study Group on Employment Policy of the Ministry of Health, Labor and Welfare (MHLW), the number of workers in the mining, manufacturing, and construction industries is projected to have a CAGR of -2.2% from 2017 due to an aging labor force and other factors (under a scenario that assumes gradual changes in economic growth and worker participation), dropping to 2.98mn by 2040 (down 40% from 2017). Space Value HD says the decline in the number of carpenters has already been driving a transition to systemized (including pre-cut) construction methods for new facility construction.
Decline in number of steel section manufacturers: According to the Census of Manufacture by the Ministry of Economy, Trade, and Industry (METI), the number of companies that design and manufacture steel sections (steel section manufacturers) has moved at a CAGR of -3.4% since 2009, and reached 1,806 in 2018. Steel section shipments fell sharply in the wake of the 2008 global financial crisis, and this drove a decline in steel section manufacturers. Since 2012, shipments of steel sections have continued to rise at a double-digit pace, but the number of steel section manufacturers has hovered between 1,800 and 1,900, with the growth in shipments reflecting higher shipment value per manufacturer (see Market and value chain section).
The new medium-term plan looks to achieve growth by combining the expertise of the core Systemized Construction segment with that of the Parking Structure, General Construction, and Property Development (land utilization) segments. The basic policy underpinning the plan is to expand the company’s share of construction of sub-2,000sqm commercial and industrial steel-frame facilities, which are the company’s forte, generate synergies among segments, develop products and make effective investments, and explore strategic M&A deals and alliances.
In the Systemized Construction segment, the company will focus on deepening its presence in the market for sub-2,000sqm commercial and industrial steel-frame facilities, and on revitalizing the leasing business.
In the Systemized Construction segment, the company will focus on sub-2,000sqm commercial and industrial facilities, which is an area expected to grow, and aim to increase its market share by boosting sales activities, collaborating with other segments, and developing new products. Under the previous president, the company assumed the growth potential of the domestic systemized construction market was limited. As a result, it was slow to read the changes in the market environment surrounding systemized construction; formulate measures to strengthen sales activities in response to such changes; and develop and launch new products. The company launched initiatives to address these problems from around March 2018, and it expects these to pay off during the period covered by the current medium-term plan.
Sankyo Frontier, a rival of the company, specializes in unit facilities and virtually dominates this market. According to Space Value HD, unit facilities can be rapidly manufactured (replicated) in a factory due to their high degree of standardization, resulting in a highly efficient business. By reselling unit facilities that have previously been leased as pre-owned unit facilities, Sankyo Frontier has been able to capture both leasing and sales revenue, while maintaining an OPM of about 15%.
Nissei Build Kogyo, the core subsidiary in the company’s Systemized Construction segment, used to operate a unit facilities business, but booked impairment losses due mainly to failures in storing and managing such facilities. The company says it seeks to rebuild its unit facilities business under the current medium-term plan.
The company aims to redevelop the Parking Structure segment into a core business, and will focus on creating and participating in public-private partnerships (PPP) and private finance initiatives (PFIs).
Space Value HD thinks the parking structure market has matured and is unlikely to expand further. To increase its earnings in such an environment, it plans to reinforce collaboration between sales and installation, maintenance and renovation, and operation and management. The company says that Nissei Build Kogyo is unable to capture maintenance and renovation contracts for all the parking facilities its sells or installs. The parking facilities operated and managed by NB Parking also include facilities that were sold or installed by companies other than Nissei Build Kogyo. Under the current medium-term business plan, the company plans to promote collaboration among its subsidiaries in the Parking Structure segment, and aim to build a system that can provide one-stop services to customers.
Because the sales of parking facilities require professional knowledge, the company says it only has a small team of parking sales representatives. Under the current medium-term plan, it intends to strengthen its proposal capabilities by increasing the number of sales representatives with specialized knowledge on parking structures (parking experts).
The market for parking facilities offers little prospect for growth, but PPP/PFI projects involving university hospitals and other facilities are on the rise, and the current medium-term plan focuses on creating and participating in PPP/PFI projects for parking facilities. The company has the necessary functions to sell and install, maintain and renovate, and operate and manage parking facility PPP projects. Space Value HD was selected as a FY2020 PPP agreement partner (individual consultation type), and has gained experience in PPP projects.
In the Property Development segment, the company will focus on strengthening intragroup relationships and collaborating with the Systemized Construction and General Construction segments.
As of November 2020, Space Value HD operated the Property Development segment mainly in the Kanto area (Tokyo, and Chiba, Saitama, and Kanagawa Prefectures). In the segment, consolidated subsidiary NB Investment acquires land for lifestyle-oriented commercial stores (convenience stores and drugstores), builds such stores, leases properties, transfers some developed properties, and undertakes property management after transfer. Under the current medium-term business plan, the company plans to horizontally expand its land utilization expertise and proposal capabilities accumulated to date across the country.
Although the land utilization business requires investment to acquire land and construct facilities, Shared Research understands the business can generate both leasing revenue and sales gains. This means the company can capture multiple revenue streams from the same business by requesting construction to different divisions within its group.
Space Value HD builds, leases, and sells lifestyle-oriented commercial stores in its Property Development segment. Construction is handled by the Systemized Construction and General Construction segments. Depending on the land, it may decide, for example, that a rental condominium complex with an integrated lifestyle-oriented commercial store on the first floor is more suitable than a standalone store. In such cases, it can delegate the construction of the condominium building to its General Construction segment, expanding revenue opportunities.
In April 2020, Space Value HD was selected as a FY2020 PPP agreement partner (individual consultation category) by MLIT. A PPP agreement is concluded between MLIT and a private business operator with the aim of promoting PPPs and PFIs. Under such an agreement, the private business operator is designated a PPP agreement partner, and promotes adoption and awareness of PPPs and PFIs by providing seminars to, holding consultations with, or offering databases to local public entities and local companies. The company was selected as a PPP agreement partner in the individual consultation category in recognition of its track record in PPPs and of its cooperation with municipality support projects led by MLIT. According to the Public Private Partnership/Private Finance Initiative Promotion Office of the Cabinet Office, the number of PFIs and their contract value have doubled over the last decade.
Private Finance Initiative (PFI): The use of private-sector investment to deliver public sector infrastructure such as government buildings, public housing, schools, or water and sewer services. Instead of placing orders for design, construction, and operation of such projects separately, PFIs invite proposals from private-sector companies, select the company with the most attractive proposal, and entrust the entire process of fundraising, design, and operation to that company.
Public Private Partnership (PPP): A collaboration (other than PFI) between a government agency and a private company under which a designated administrator system is introduced, services are comprehensively outsourced to a private company, or public land is leased to a private company.
|No. of projects||383||400||424||446||475||516||549||603||667||741||818|
|Contract value (JPYbn)||3,769||4,006||4,137||4,553||4,653||4,795||5,160||5,450||5,830||6,236||6,554|
In the General Construction segment, Space Value HD will aim to generate synergies with other group businesses centered on the Systemized Construction segment, and endeavor to build stable foundations while improving profitability.
The company will work to generate synergies between the General Construction segment and the rest of the group. Specifically, it will strengthen proposals for the construction of condominium buildings with adjoining parking facilities by using products offered by the Systemized Construction segment. The General Construction segment will also undertake the construction of multi-purpose buildings (e.g., buildings with a lifestyle-oriented commercial store (convenience store or drugstore) on the first floor and a cram school or residential units on the second or higher floors) developed by the Property Development segment. In addition, it will take part in government-contracted construction and service-related work as an agent for temporary office space and other solutions provided by the Systemized Construction segment.
NB Construction (previously Sotetsu Kensetsu K.K.), the main subsidiary in the General Construction segment, provides railway construction and maintenance services and has built long-term business relationships with railway companies such as Sagami Railway Co., Ltd. and East Japan Railway Company (JR East), which are a source of stable revenue. Under the current medium-term plan, the company will draw on its railway construction capabilities to strengthen relationships with railway companies outside its existing customer base, and aim to expand its railway construction operations. It will also utilize its land information and group products and services to enhance added-value services. For example, when the Property Development segment secures an order for a condominium building with a lifestyle-oriented commercial store (convenience store or drugstore) on the first floor and residential units on the second or higher floors, the General Construction segment will undertake construction of the building. In this way, the company will expand earning opportunities.
Under the current medium-term plan, the company plans to dispose assets that have little affinity with its core business or offer little prospect of synergies, and use the proceeds to pay off interest-bearing debt or fund capital investment.
As part of this, Space Value HD sold a hotel development site in the city of Yokohama, Kanagawa Prefecture in January 2020, and another in the city of Kyoto, Kyoto Prefecture in October 2020. The sites were acquired as part of the hotel development push by the previous president. However, the company was forced to book impairment losses of JPY1.9bn on these assets in FY03/19 and extraordinary losses of JPY290mn (including impairments losses of JPY164mn) in FY03/20. It therefore concluded they were detrimental to its finances.
The current medium-term plan forecasts three-year cash flow of JPY13.5bn and JPY4.5bn in the sale of the aforementioned real estate properties (hotel development sites), for a total of JPY18.0bn. The company plans to allocate these funds toward investment in its businesses, M&A deals, and shareholder returns as follows.
Space Value Holdings is a holding company that operates in five segments: Systemized Construction (core business: 55.5% of total revenue, 109.6% of total operating profit before adjustments in FY03/21), Parking Structure (17.3%, 5.8%), General Construction (23.2%, operating loss of JPY674mn), Property Development (2.8%, 6.6%), and Facility Management (1.2%, operating loss of JPY144mn). Its core subsidiary Nissei Building Kogyo Co. Ltd. was founded in Kanazawa City, Ishikawa Prefecture in 1961, and originally manufactured and sold assembly-type garages. The Systemized Construction segment was the original business, and the company leveraged the technology of the segment to launch the Parking Structure segment in 1988. In the 2010s, the company created the General Construction segment by bringing construction companies in Kanagawa, Saitama, and Tochigi Prefectures into the group as subsidiaries. In December 2013, it established a new subsidiary to operate the Property Development business.
Effective from the start of Q1 FY03/22, the company has adjusted the names of its reporting segments, renaming the “Systemized Construction” segment the “Construction” segment, the “Parking Structure” segment the “Parking Lot” segment, and the “Property Development” segment the “Land Utilization” segment. These name changes will have no impact on performance in these segments.
|Segment||% of revenue||% of operating profit||Business description||Main subsidiaries|
|Systemized Construction||55.5%||109.6%||Contracted construction of systemized facilities, and leasing of facilities||Nissei Build Kogyo Co., Ltd., System House R&C Co., Ltd.|
|General Construction||23.2%||Operating loss of JPY674mn||Contracted construction for civil engineering projects that fall outside the scope of systemized construction||NB Construction Co., Ltd., NBC-Kitakantou Co., Ltd., Urban-staff Co., Ltd.|
|Parking Structure||17.3%||5.8%||Contracted construction of multi-level parking facilities (mechanical systems and drive-in facilities), repair and maintenance services, and renovations of such facilities||Nissei Build Kogyo Co., Ltd., NB Parking Co., Ltd., P-PARKING INTERNATIONAL PTE LTD, SPACE VALUE (THAILAND) CO., LTD., NISSEI BUILD ASIA PTE. LTD.|
|Property Development||2.8%||6.6%||Development, sale, and leasing of real estate||NB Investment Co., Ltd.|
|(JPYmn)||NB non-cons.||NB cons.||NB cons.||NB cons.||NB cons.||NB cons.||NB cons.||SVH cons.||SVH cons.||SVH cons.|
|Operating profit margin||15.1%||7.3%||5.7%||7.6%||7.8%||8.5%||5.2%||4.9%||2.9%||0.0%|
|Operating profit margin||20.3%||17.8%||15.1%||16.6%||16.5%||13.0%||11.0%||11.1%||9.0%||9.4%|
|Operating profit margin||-||-||1.9%||3.7%||4.7%||5.1%||4.5%||5.0%||3.0%||-|
|Operating profit margin||7.8%||6.8%||8.4%||8.4%||12.3%||14.2%||7.6%||5.9%||5.4%||1.6%|
|Operating profit margin||-||-||-||6.5%||7.9%||24.2%||12.5%||11.5%||15.9%||11.4%|
The Systemized Construction segment is operated mainly by Nissei Build Kogyo Co., Ltd. (50.5% of segment revenue in FY03/21) and System House R&C Co., Ltd. (formerly Komatsu House Co., Ltd.; 49.5%).
Nissei Build Kogyo sells and leases factory, warehouse, store, and office facilities to customers such as government agencies and private companies.
System House R&C was purchased by Space Value HD from Komatsu Ltd. in April 2016. It has completed projects for numerous major general contractors, and excels in the construction of field offices and temporary lodging for site workers.
Systemized facilities are manufactured from standardized materials under systemized procedures for design, factory production, and on-site construction. Compared with traditional steel-frame facilities that are characterized by custom designs and materials, systemized facilities offer the same durability (lifespan of 30 years or more) at about two-thirds of the cost owing to the use of standardized design and materials. They can be constructed in half the time required for traditional steel-frame facilities, enable the development of product series, and eliminate specialized processes such as formwork and reinforcement work (for details, see the Other information section). However, they lag traditional steel-frame facilities in design freedom.
According to Space Value HD, the market for sub-2,000sqm commercial and industrial steel-frame facilities (used as offices, stores, factories, and warehouses) is worth about JPY1.5tn, and systemized construction currently accounts for only about 10% of this market. Thanks to the benefits described above and enhancements in design, however, the company says the market for systemized construction is expanding at a CAGR of about 5% as systemized facilities are being used as a growing range of retail stores. Its main rivals in this space are Daiwa Lease Co., Ltd. (wholly owned subsidiary of Daiwa House Industry Co., Ltd. [TSE1: 1925]), Sankyo Frontier Co., Ltd. (TSE JASDAQ Standard: 9639), and Nagawa Co., Ltd. (TSE1: 9663). Shared Research estimates that Daiwa Lease has the largest revenue share at roughly 15%, followed by Space Value HD at about 3%.
The Systemized Construction segment constructs and sells systemized facilities (sales business accounting for 37.7% of segment revenue in FY03/21) and leases such facilities (leasing business, 17.8%).
In the sales business, Space Value HD designs, manufactures, and constructs systemized facilities, prefabricated facilities, and unit facilities (see definitions in explanation box below) with areas under 2,000sqm. The company says that most of the revenue from the sales business comes from systemized facilities and prefabricated facilities. Most of the facilities sold by the company are used as offices, stores, factories/workshops, and warehouses. The company receives orders and sells facilities to customers either directly or through agents. It provides services throughout the country through a network of 60 sales offices and nine factories (including rental yards).
Systemized construction can be classified into systemized facilities, prefabricated facilities, and unit facilities. These differ in design freedom and the degree of construction that can be achieved at the factory. The following is an explanation of each category based on market research conducted by Shared Research.
・Systemized facilities are manufactured from standardized materials under systematized procedures for design, factory production and on-site construction. Unlike their prefabricated facilities, which are constructed by simply assembling standardized materials and structures, systemized facilities are to a large extent budgeted, designed, and manufactured (production of materials) in accordance with customer requests, and they offer superior quality in terms of heat resistance and sound insulation.
・For prefabricated facilities, the columns, beams, and wall materials are manufactured in factories, and assembled on site. Because they exclusively use standardized materials, they offer less freedom in terms of design and durability than systemized facilities.
・Unit facilities are box-type buildings assembled from light-gauge steel frames. They can be easily transported by a crane truck, installed, and constructed. They are virtually entirely manufactured in a factory (about 80%), do not require much on-site construction work, and can be constructed in about one day. Electrical wiring and plumbing are built into unit facilities at the manufacturing stage, which means these can be used as soon as they are connected to external supply systems on site. Unit facilities are typically used as temporary and storage facilities.
Revenue in the Systemized Construction sales business is calculated as the number of facilities constructed multiplied by revenue per facility, or as the facility area multiplied by revenue per square meter. Although the company has not disclosed such figures, Shared Research estimates (based on MLIT construction starts data) that each systemized facility brings in JPY41mn in revenue, implying the company sells some 700 facilities per year. According to the Survey of Building Construction Work Started by MLIT, the average area for a commercial or industrial steel-frame facility is roughly 280sqm, and the construction cost is JPY220,000/sqm. Shared Research estimates the construction cost of a systemized facility is JPY150,000/sqm (roughly two-third of traditional streel-frame facilities). Multiplying JPY150,000/sqm by 280sqm yields revenue of JPY41mn per systemized facility.
Product characteristics: The company’s mainstay Nissei V Span-S product is the only systemized facility in Japan that uses welded H-type light-gauge steel columns and beams. It also uses slant end-plates to achieve strong beam-to-column connections. This combination not only produces a lightweight yet extremely strong facility, but also simplifies construction, helps create large spaces without columns (frontage of up to 40m), and also reduces costs.
In its leasing business, Space Value HD leases prefabricated and unit facilities to customers at need for as long as is needed. These facilities are typically used as temporary school facilities during construction projects, temporary housing in disaster-affected areas, condominium model rooms, and facilities for limited-time events. Revenue in the leasing business is determined by inventory of leasing facilities, rent per facility, and the occupancy rate.
Nissei Build Kogyo supplies systemized, prefabricated, and unit facilities. It sells and leases facilities used as factories, warehouses, stores, and offices mainly to government offices and private companies. The lion’s share of its revenue comes from systemized and prefabricated facilities. Shared Research understands that systemized facility business at Nissei Build Kogyo accounted for about 50% of the consolidated revenue in the Systemized Construction segment in FY03/21.
|Systemized facilities||Large space||Factories, stores, educational facilities, public facilities, etc.|
|Prefabricated facilities||Diversity||Stores, offices, apartments and lodging, medical and welfare facilities, etc.|
|Unit facilities||Mobility||Warehouses and storage facilities, agricultural facilities, etc.|
|Systemized facilities ||Nissei V Span-S||・Enables large spaces without columns through the use of H-type light-gauge steel frames
・Provides a combination of strength and rigidity through slant end-plate connections
|Factories, warehouses, stores, public facilities, etc.|
|Nissei V Span II-S||・Two-story Nissei V Span-S model||Factories, warehouses, stores, public facilities, etc.|
|Prefabricated facilities ||V Stock||・Adopts lightweight H-beam
・Allows creation of pillarless indoor spaces
|Garages, parking facilities, waste storage facilities, agricultural warehouses, etc.|
|Flat House Series: Great House||Exterior of facility can be customized based on facility usage||Offices, stores, etc.|
| Flat House Series: Fresh House ||・Enhances livability through the use of insulation panels
・Attaches covers of the same color as the facility exterior to the columns to create a uniform finish
|Unit facilities ||Nissei Unit House CS-4||Foldable unit facility|
| Quality ||・Suitable for wide range of site dimensions and uses thanks to six size options (from 9.6sqm to 19.0sqm) and different interior/exterior options
・High-end finish due to use of ceramic sidings
| Unity ||・Units can be combined to create facilities that match customer needs
・Easy installation/construction shortens setup time, allowing customers to establish stores without losing business opportunities
・Ease of relocation makes this a suitable solution for museum, amusement park, and other event venue facilities
|Offices, lodging, school facilities, factories and warehouses, stores, etc.|
| Presto ||・Available in three sizes
・Finished product can be transported from factory and installed at desired location
・Easy relocation and removal
|Warehouses (storerooms), etc.|
|HD (flexible type)||・Supports various applications by attaching facilities||Warehouses (storerooms), etc.|
|Storage Unit||・Storage facility||Storage facilities, etc.|
|Leasing of temporary facilities||Rental FR40||High thermal insulation performance by the use of insulation panels||Temporary school facilities, temporary housing, temporary clinics, etc.|
The company’s Nissei V Span-S and Nissei V Span II-S are the only systemized facilities in Japan that use welded H-type light-gauge-steel columns and beams. They also use slant end-plates to achieve strong beam-to-column connections. This combination delivers strength and durability while being cost-effective.
Heavy-gauge steel-frame facilities employ a rigid-frame (or rahmen) structure in which columns and beams are rigidly interconnected, eliminating the need for braces. These structures allow columns to be spaced out at wider intervals, contributing to larger spaces. In contrast, light-gauge steel-frame facilities typically use a brace structure, in which braces are used to support the columns and beams and reinforce the facility. This approach limits the size of the spaces that can be designed. Heavy-gauge steel-frame facilities are more expensive to build than light-gauge steel-frame facilities as they need thicker steel, which drives up material costs. Such facilities may also require costs to reinforce ground foundations. In some cases, light-gauge steel-frame facilities can eliminate piling work (installation of posts to support the foundations of a superstructure) owing to their lighter weight. Although ground quality is a factor, heavy-gauge steel-frame structures are more likely to need ground reinforcement to sustain their heavier weight (for details, see the Light-gauge vs. heavy-gauge steel-frame construction section).
The company’s facilities are typically used as large factories or warehouses, retail chain stores, public facilities, and livestock barns with areas of 200–2,000sqm.