K&O Energy Group Inc.
1663・Prime Market・Mining
Business
K&O Energy Group is a holding company established in 2014 through a joint share transfer between Kanto Natural Gas Development Co., Ltd. and Otaki Gas Co., Ltd. Its core business is the gas business, in which it develops and extracts water-soluble natural gas from the South Kanto gas field and supplies it as city gas, LPG, and compressed natural gas to household and industrial customers within Chiba Prefecture. The company also operates a business manufacturing and selling iodine, a rare resource produced from brine associated with natural gas production. The group comprises 10 consolidated subsidiaries and 5 affiliated companies, and also engages in complementary businesses such as construction, electric power, geothermal drilling, and oil and gas development in the United States. It is a regionally focused energy company with approximately 210,000 customer accounts (FY2027 target).
Business Model
In the gas business, Kanto Natural Gas Development Co., Ltd. extracts natural gas and wholesales it to Ohtaki Gas Co., Ltd., which then supplies it to end users, forming a vertically integrated model. In the iodine business, K&O Iodine Co., Ltd. manufactures and exports brine water, a byproduct of gas production, achieving an operating margin of 58.1% in FY2025 (ending March 2025). This structure of generating two revenue streams from the same underground resource is the source of the company's high profitability.
Company Strengths
In FY2025, the iodine business achieved net sales of ¥15,092 million against operating income of ¥8,768 million, an operating margin of 58.1%. Iodine resources are concentrated mainly in Chile and Japan, and their scarcity together with rising export prices support the high margin. Production volume also increased 6.5% year on year, maintaining an upward trend.
At the end of FY2025, the equity ratio stood at 82.4% (versus 80.6% in the prior period), with an extremely low interest-bearing debt ratio and a cash flow to interest-bearing debt ratio of 0.1 years. The company holds total net assets of ¥108,888 million and cash and cash equivalents of ¥29,857 million, giving it the financial capacity to fund capital expenditures from its own resources.
The group has built a vertically integrated structure spanning from natural gas development and extraction by Kanto Natural Gas Development Co., Ltd. to city gas supply by Ohtaki Gas Co., Ltd., all completed within the group. Under its "Sen-san Sen-shou" (local production for local consumption) strategy, gas produced in Chiba Prefecture is supplied within Chiba Prefecture, achieving both energy security and close ties to the local community.
ENVALITH's Perspective
Performance Trend
Over the past five fiscal years, revenue peaked at ¥106,200 million in FY2022 and has since followed a gradual downward trend. The full-year forecast for FY2026 (ending December 2026) stands at ¥87,000 million, down 4.8% from the previous fiscal year's ¥91,354 million. Operating profit, on the other hand, expanded roughly 2.7-fold from ¥3,937 million in FY2021 to ¥10,594 million in FY2025, but the full-year forecast for FY2026 (ending December 2026) is ¥9,200 million, a decline of 13.2% year on year. In the first quarter alone, external factors such as the weaker yen and higher iodine export prices provided a tailwind, with the iodine business driving an increase in operating profit. In the gas business, revenue declined due to lower gas selling prices stemming from falling imported energy prices, but profit was maintained at roughly the same level as the same period of the previous year owing to reduced procurement costs. The substantial decline in net income was due to the drop-off of a special gain recorded in the same period of the previous year (relocation compensation of ¥1,399 million), and on an ordinary income basis, the profit growth trend has continued.
Growth Strategy
Centered on increasing production and expanding customers in core businesses along with iodine production expansion, the company is expanding investment in future businesses such as renewable energy and CCS
Under the Medium-Term Management Plan 2027, the company is promoting increased domestic natural gas production (2027 target: 180 million ㎥/year) and expanding its customer account base (2027 target: 210,000 accounts). Gas business revenue in Q1 FY2026 (ending December 2026) decreased 7.4% year-on-year to ¥18,848 million due to the decline in imported energy prices, but operating profit remained level with the same period of the previous year at ¥2,100 million owing to reduced procurement costs.
The company continues to invest in iodine production expansion based on the Medium-Term Management Plan 2027. In Q1 FY2026 (ending December 2026), a rise in iodine selling prices (due to yen depreciation and higher export price quotations) combined with increased sales volume, resulting in strong performance with revenue up 11.4% to ¥3,889 million and operating profit up 7.4% to ¥2,286 million. Growing global demand in the medical and electronics industry fields, as well as new demand for perovskite solar cells, are also expected to serve as medium- to long-term growth drivers.
Under the Medium-Term Management Plan 2027, the company plans to invest ¥3 billion or more in renewable energy businesses (geothermal, offshore wind, etc.), aiming to respond to the decarbonized society and create new revenue sources. Currently in the investment phase, the construction and electric power businesses within the Other segment are contributing by capturing related construction and survey demand. Other segment revenue in Q1 FY2026 (ending December 2026) increased 13.2% year-on-year to ¥2,715 million, with operating profit sharply improving 237.5% to ¥243 million.
The company plans to implement a stock split at a ratio of two shares for every one share of common stock, effective July 1, 2026. By lowering the investment unit, the company aims to expand its investor base, including individual investors, and improve stock liquidity. The total number of issued shares after the split is expected to be 56,672,122 shares. The dividend forecast is ¥60 per share annually on a pre-split basis (an increase from ¥54 in the previous fiscal year).
Last updated: July 17, 2026