NIPPON AQUA.Co.,LTD

Business Details

The company belongs to the heat insulation work and waterproofing work categories under the Construction Business Act, with its core business being the development, sale, and installation of insulation materials (on-site spray-applied rigid polyurethane foam "Aqua Forme Series") and waterproofing materials (polyurea-based "Aqua Hajikun"). The business consists of five divisions: insulation installation for detached houses, insulation installation for buildings, waterproofing installation, raw material sales, and product sales. The company has built an integrated system covering everything from raw material procurement and manufacturing to on-site installation, leveraging a nationwide installation network and a network of certified installation partners.

Recent Overview

Q1 revenue and profit grew and exceeded plan, but ordinary and net profit declined year on year due to rising interest rates

In Q1 of FY2026 (ending December 2026), net sales were ¥7,710 million (up 2.8% year on year) and operating profit was ¥543 million (up 3.3% year on year), securing increases in both revenue and profit that exceeded plan. By division, the detached housing division performed strongly at ¥3,907 million (up 6.5% year on year) due to a 3.0% increase in the number of units installed and rising installation unit prices, while the waterproofing division grew 33.4% to ¥212 million. On the other hand, the building division declined to ¥2,171 million (down 8.1% year on year) due to a decrease in large-scale projects. Ordinary profit fell to ¥521 million (down 1.6% year on year) due to expanded non-operating expenses, including increased interest payments and increased amortization of long-term prepaid expenses (¥36 million) associated with rising interest rates, while quarterly net profit came to ¥341 million (down 4.9% year on year). The full-year earnings forecast remains unchanged (net sales of ¥37,000 million, operating profit of ¥2,900 million). Amid concerns over urethane raw material supply stemming from the Middle East situation, the company's stable supply system has gained increased recognition, leading to a sharp rise in requests for specification changes and raw material supply.

Key Products

Growth Drivers

• Structural expansion of insulation demand driven by the mandatory energy conservation standard compliance (Insulation Grade 4) effective April 2025 and the planned tightening to the GX ZEH standard (Insulation Grade 6) to be applied from April 2027
• Growing need for enhanced insulation in non-residential sectors such as data centers, cold chains, and urban redevelopment (full-scale construction of large non-residential projects is expected to gain momentum from the latter half of FY2026 through 2027 and beyond)
• Differentiation and expanded orders from major builders as well as rising installation unit prices, driven by the establishment of the "Marutto Aqua Forme" proposal system combined with airtightness measurement services in the detached housing division
• Sharp increase in demand for specification changes from board insulation to on-site spray-applied polyurethane insulation and requests for raw material supply, driven by urethane raw material supply concerns stemming from the Middle East situation
• Increased inquiries for similar facility and factory renovation projects following an order win from a nationally important facility in the waterproofing division, along with expanding waterproofing renovation demand for aging buildings
• Expanded adoption of the Aqua Forme Series in the renovated condominium sector, supported by stable supply capability

Risks

• Risk of design changes and construction delays in the building division amid rising construction costs and material price volatility (full-scale construction of large non-residential projects is expected from 2027 onward)
• Risk of expanding non-operating expenses and declining ordinary profit margin due to increased interest payments and amortization of long-term prepaid expenses associated with rising interest rates
• Downward pressure on operating margin from increased SG&A expenses associated with growth investments (personnel costs, trainee-related costs, rent, etc.) (Q1 SG&A expenses rose 13.0% year on year)
• Risk of rising procurement prices for urethane raw materials (supply concerns stemming from the Middle East situation and naphtha shortages; being addressed through direct transactions with multiple overseas suppliers and a nationwide inventory network)
• Difficulty securing and training installation personnel (being addressed through enhanced acceptance of specified skilled foreign workers and technical intern trainees, weekend holiday systems, improved working conditions, etc.)
• Risk of failing to achieve medium-term management plan targets (net sales of ¥37,000 million, ordinary profit of ¥2,910 million) (both net sales and operating profit are forecast to decline year on year on a cumulative basis through Q2)