Saibu Gas Co., Ltd
NEWS RELEASE Apr 23, 2020 R&I Affirms A+/a-1, Stable: Saibu Gas Co., Ltd. Rating and Investment Information, Inc. (R&I) has announced the following: ISSUER: Saibu Gas Co., Ltd. Issuer Rating: A+, Affirmed Rating Outlook: Stable Commercial Paper: a-1, Affirmed RATIONALE: Saibu Gas Co., Ltd. serves major cities of the northern Kyushu region, such as Fukuoka, Kitakyushu, Kumamoto, Nagasaki, and Sasebo. The company is ranked after the three leading players in the industry, with about 1.1 million customer households. Its strength lies in the fact that lucrative residential gas accounts for a large proportion of total sales. Meanwhile, it has difficulty raising sales and transmission efficiency because supply areas are geographically dispersed. Since the full liberalization of the retail city gas market, customers, especially in the residential gas segment, have continued to migrate to services provided by other operators, which is partly due to aggressive marketing efforts by Kyushu Electric Power Co., Inc. Saibu Gas intends to avoid a war of attrition resulting from price competition and retain its customers by, for example, providing gas equipment inspection service for free. In the industrial gas segment, on the other hand, potential demand for fuel conversion is large. Wholesale supply of city gas also keeps increasing. In the retail electricity business, which the company entered in FY2016 (the year ended March 2017), the number of supply contracts is steadily growing. Its operating base centered on the city gas business is unlikely to be undermined. That said, the business environment is becoming challenging, as gas demand from major customers, particularly from industrial customers, is expected to decrease amid the spread of the novel coronavirus.
[Show full text]