ENVALITH
ファーストコーポレーション株式会社 logo

First-corporation Inc.

1430・Standard Market・Construction

Official website
ファーストコーポレーション株式会社 logo
First-corporation Inc.1430

Business

First Corporation Co., Ltd. is a construction company established in 2011, specializing exclusively in the construction of condominiums for sale. Its main business areas are the Greater Tokyo area (Tokyo, Kanagawa, Saitama, and Chiba prefectures) and Kyushu and surrounding areas. The company's core operations consist of two segments: the construction business (contracting) and the real estate business (land brokerage and sales), with condominium developers as its primary customers. It employs the RC (reinforced concrete) construction method as its standard, aiming to standardize construction quality and improve efficiency, while building a vertically integrated business model in which its proprietary "Zochu" method (a build-to-order approach in which the company acquires land and commissions construction to itself) generates synergies between the construction and real estate businesses. The company listed on the Tokyo Stock Exchange Mothers market in 2015, changed its listing to the TSE First Section in 2016, moved to the Prime Market in 2022, and then transitioned to the Standard Market in 2023. Consolidated net sales for FY2025 (ended May 2025) were ¥43,194 million.

Business Model

The two pillars of earnings are the construction business (net sales of ¥22,641 million) and the real estate business (net sales of ¥20,275 million). Under the "Zochu" method (build-to-order via land sourcing), the company collects and secures land information itself and proposes business plans to developers, thereby winning construction orders through negotiated (non-competitive) contracts. At the same time, it captures real estate income through land brokerage, sale and purchase, and transfer of contractual positions, among other means. Unlike the competitive bidding method, this approach allows for on-equal-terms negotiation with developers, which is expected to secure high profit margins. The company also utilizes joint business schemes to boost profits on well-located projects.

Company Strengths

The "Zochu method" (build-to-order approach) is a model in which the company itself collects and plans land information and receives negotiated (sole-source) orders for construction work, enabling higher profit margins compared to the bidding method. Real estate segment profit for FY2025 (ended May 2025) expanded sharply to ¥2,187 million (up 113.1% year on year), with the profit contribution from the Zochu method becoming apparent.

The construction business order backlog at the end of FY2025 (ended May 2025) stood at ¥35,760 million (up 103.8% year on year). Combined with orders received during the period of ¥26,630 million, this provides a stable revenue base with an expected accumulation of completed construction revenue from the next fiscal period onward. With a Tokyo metropolitan area market share of about 3%, there remains significant room for growth.

For the structural components (piles, rebar placement, ready-mixed concrete), the company conducts double checks by its Safety and Quality Control Office in addition to statutory inspections. In cases where the client does not conduct third-party inspections, the company implements its own in-house inspections, and it has also added certain interior finishing work to the scope of inspection, institutionalizing quality control that exceeds industry standards.

ENVALITH's Perspective

For FY2026 (ending May 2026), revenue declined to ¥36,417 million (down 15.7% year on year), while operating profit rose to ¥2,896 million (up 12.3%) and profit attributable to owners of parent increased to ¥1,882 million (up 12.8%), securing profit growth despite the revenue decline. Gross profit improved from ¥4,198 million in the prior period to ¥4,692 million, and the operating margin rose sharply from 6.0% to 8.0%. Even as real estate segment revenue fell sharply by 56.5% year on year, improved profitability in the construction segment (segment profit up 74.4% year on year) supported overall performance, confirming a qualitative improvement in the earnings structure.

Cash flow from operating activities for FY2026 (ending May 2026) turned sharply negative at ¥-9,906 million (versus income of ¥2,095 million in the prior period), driven mainly by an increase of ¥8,748 million in inventory (real estate for sale in process). Although ¥7,158 million was raised through financing activities, cash balances declined 51.4%, from ¥5,400 million to ¥2,625 million. Interest-bearing debt (total of short-term and long-term borrowings) surged from ¥5,714 million at the prior fiscal year-end to ¥14,437 million at the current fiscal year-end, while the equity ratio fell from 39.2% to 34.5%. Managing the real estate investment recovery cycle and the risk of rising interest rates will be key focal points going forward.

The earnings forecast for FY2027 (ending May 2027) calls for revenue of ¥44,000 million (up 20.8% year on year), operating profit of ¥3,500 million (up 20.9%), and net profit of ¥2,070 million (up 10.0%). This forecast assumes real estate segment revenue of ¥23,150 million (approximately 2.6 times the ¥8,817 million recorded in the prior period), with the pace of sales progress on ¥17,066 million of real estate for sale in process being the largest variable in achieving the plan. As an external factor, market conditions point to a recovery, with the number of condominium units supplied in the Tokyo metropolitan area in 2026 expected to rise 4.7% to around 23,000 units, and inquiries remain brisk; however, continued attention should be paid to the potential impact on profitability from trends in mortgage interest rates and persistently high construction material prices.

Growth Strategy

Aiming for net sales of ¥100.0 billion in FY2031 (ending May 2031) through raising the zoju (self-originated order generation) ratio, expanding joint ventures, and investing in human capital

In the medium-term management plan announced in January 2026, the company set a target of ¥50.0 billion in net sales for FY2028 (ending May 2028) as Phase 1. Key priorities are improving capital profitability, business promotion, and growth investment, with focus on human capital investment (recruitment, talent development, and response to the new construction industry working-hour regulations, so-called 'Shin-4K'). SG&A expenses for FY2027 (ending May 2027) are planned to increase 11.3% to ¥2,000 million due to rising personnel costs and other factors.

New projects under joint business agreements progressed during the fiscal year, advancing medium- to long-term real estate acquisition. Real estate under development for sale expanded to ¥17,066 million (approximately 2.3 times the level at the end of the previous fiscal year), and preparations are proceeding smoothly toward recording real estate segment net sales of ¥23,150 million in FY2027 (ending May 2027). Sales of business-use land achieved a profit margin significantly exceeding initial expectations.

Orders received of ¥35.0 billion are expected for FY2027 (ending May 2027), with the order environment progressing favorably. Efforts toward appropriate price pass-through have been effective, and the gross profit margin on completed construction contracts is planned to rise to 12% in the next fiscal year. The company will continue to leverage room for growth from its approximately 3% market share in the Tokyo metropolitan area to expand exclusive orders obtained through its zoju (self-originated order generation) approach.

The scope of construction audits by third-party organizations has been expanded to include specific interior substrate work, strengthening the range of quality assurance. Through thorough safety patrols, staged quality inspections, and adherence to proprietary construction manuals, the company maintains the trust of developers and reinforces the foundation for securing exclusive orders through its zoju approach.

Last updated: July 17, 2026