Nippon Paint : Q&A Summary

A1Regarding the outlook for the TUC and TUB segments, we project a revenue increase of approximately 15% for TUC and between 0-5% for TUB in 2024. Although there might be some fluctuations moving forward, we do not expect any significant changes. Their first-quarter results were indeed within our projections.

TUC deals in consumer goods, and while there are elements of unpredictability, our products continue to perform well due to strong market demand. In fact, our market share has reached 25%. Despite potential fluctuations from other factors, our strategy remains centered on expanding our market share.

For TUB, we are projecting modest revenue growth of 0-5%. To mitigate any potential impacts, we are diversifying our customer base. We are meticulous in engaging in transactions that secure margins and minimize bad debt risks. While our revenue projections may experience fluctuations, we expect them to remain within the 0-5% growth range.

There may be a divergence in our provisioning approach compared to that of our competitors, as they have made provisions while we have not. However, we are not overly concerned with their actions. In consultation with our auditor, we have made adequate provisions in the past. Notably, we made significant provisions for major property developers in 2022, and in 2023, we took legal actions and set aside provisions for developers with collection concerns. These provisions have been properly accounted for and are not manipulated to maintain margins.

In our business operations, we conduct cash-on-delivery transactions with high-risk business partners, having already set aside necessary provisions. We continue to do business with entities such as government-affiliated developers, whom we consider reliable. While this approach does not mean we are completely free of risk, we believe we have allocated sufficient provisions to cover potential risks.

The slowdown in TUB's market share growth in 2022 was partly a result of our deliberate choice of business partners. Therefore, we do not expect provisions to become a significant concern moving forward.