ENVALITH
東急建設株式会社 logo

TOKYU CONSTRUCTION CO., LTD.

1720・Prime Market・Construction

Official website
東急建設株式会社 logo
TOKYU CONSTRUCTION CO., LTD.1720

Business

Tokyu Construction is a general contractor (Prime Market listed) responsible for the development business field of the Tokyu Group. Comprising the company itself, 11 subsidiaries, and 5 affiliated companies, it operates a "Construction Business," centered on domestic and overseas building and civil engineering works, and a "Real Estate and Other Business," which includes real estate sales, leasing, ICT-related services, PFI, and venture investments. In the building division, the company handles a wide range of projects including logistics facilities, housing, hotels, and redevelopment projects, while the civil engineering division covers road, railway, and water/sewage works. Overseas, the company operates subsidiaries in Indonesia, Vietnam, Myanmar, Bangladesh, the United States, and elsewhere. While maintaining a stable base of continuous orders from Tokyu Group companies, it has also built up a broad track record of construction work for private-sector and government clients.

Business Model

The Construction Business adopts a build-to-order model, whereby order intake and carried-forward construction volume serve as leading indicators of future sales. Non-consolidated carried-forward construction volume at the end of FY2026 (ending March 2026) remained high at ¥618,119 million (up 19.2% year on year), providing strong revenue visibility. Profitability is managed based on the gross profit margin on completed construction, which improved to 16.8% in the Civil Engineering segment. Real Estate Business, etc. generates complementary income through rental income, gains on sale of real estate for sale, ICT services, and other sources.

Company Strengths

The proportion of orders from Tokyu Group companies within non-consolidated architecture segment orders received reached 27.1% (¥82,310 million, up 280.6% year-on-year) in FY2026 (ending March 2026). The company holds large-scale projects in its order backlog, such as the new construction of the high-rise sections of the West Tower and Central Tower in the Shibuya Station block area (scheduled for completion in October 2031), and the continuous, stable order intake from within the group constitutes a unique strength that is difficult for competitors to replicate.

The non-consolidated order backlog at the end of FY2026 (ending March 2026) totaled ¥618,119 million, comprising ¥450,647 million in architecture and ¥167,472 million in civil engineering (up 19.2% year-on-year). This includes long-term, large-scale projects such as the Shibuya Station block area redevelopment (scheduled for completion in 2031) and the Bangladesh port road construction project (scheduled for completion in 2029), providing high visibility of revenue over multiple years.

The non-consolidated gross profit margin on completed construction contracts in the civil engineering segment improved by 5.4 percentage points, from 11.4% in FY2025 (ended March 2025) to 16.8% in FY2026 (ending March 2026), with gross profit on completed construction contracts increasing 60.9% from ¥7,757 million to ¥12,484 million. The improvement in profitability, mainly driven by the acquisition of additional and design-change work, has been confirmed as an actual achievement.

ENVALITH's Perspective

In FY2026 (ending March 2026), the company achieved a substantial profit increase with net sales of ¥341,181 million (up 16.4% year on year) and operating profit of ¥16,306 million (up 84.5% year on year). Profit attributable to owners of parent roughly doubled to ¥13,390 million, up 101.9% year on year. However, this was significantly aided by external factors such as the steady trend in construction investment (continued appetite for private-sector capital expenditure), and careful assessment is needed regarding the sustainability of profit margins amid persistently elevated material and labor costs. The company's forecast for FY2027 (ending March 2027) calls for operating profit of ¥16,500 million (up 1.2% year on year), a flat level that raises concerns about a potential plateau in growth.

Non-consolidated carried-forward construction value of ¥618,119 million (up 19.2% year on year) provides strong support for future revenue. On the other hand, the FY2027 (ending March 2027) non-consolidated civil engineering order outlook plans for ¥76,000 million overseas, but this comes immediately after FY2026 (ending March 2026) actual results plunged to ¥1,976 million (down 94.0% year on year), and the feasibility of such a rapid rebound plan for overseas civil engineering needs careful scrutiny. External factors such as uncertainty over Middle East conditions and US trade policy could also be sources of volatility for overseas operations.

The equity ratio stood at 35.9% (37.1% in the prior period), indicating a generally sound financial base, but short-term borrowings surged from ¥5,580 million to ¥35,081 million while long-term borrowings were compressed from ¥21,130 million to ¥985 million. This shift toward shorter-term borrowing increases the risk of rising funding costs in a rising interest rate environment (external factor). Additionally, operating cash flow declined sharply from ¥41,203 million (prior period) to ¥6,910 million, and the expansion of working capital—including increases in trade receivables and inventories—is pressuring cash flow, a point requiring continued monitoring.

Growth Strategy

Under the long-term management plan "To zero, from zero.", the company is advancing both the deepening of its core businesses and the growth of its strategic businesses as twin pillars.

Positioning domestic building construction and civil engineering as the mainstay core businesses, the company continues to improve construction quality and select orders with an emphasis on profitability. In FY2026 (ending March 2026), the gross profit margin on completed civil engineering work reached 16.8% (up from 11.4% in the prior year), and building construction also improved to 8.3%. The medium-term sales base has been secured through an accumulation of order backlog of ¥618,119 million.

The company has actively promoted the transfer of owned fixed assets to real estate held for sale, expanding the year-end balance to ¥17,244 million. Capital expenditure in the real estate segment reached ¥3,342 million, roughly double the prior year. Revenue diversification away from dependence on construction contracting is being advanced through the leasing business, sales of real estate for sale, and cultivation of new businesses.

In FY2026 (ending March 2026), overseas civil engineering orders sharply declined to ¥1,976 million (down 94.0% year on year), but the non-consolidated order outlook for FY2027 (ending March 2027) plans for ¥76,000 million overseas, aiming for a substantial recovery in overseas civil engineering. The company will seek to re-expand its international business while closely monitoring external risks such as the situation in the Middle East.

Positioning human capital and digital technology as sources of competitive advantage, the company is promoting the securing and development of skilled workers alongside digital-driven technological innovation (structural transformation). It is simultaneously working to maintain productivity following the application of overtime work limit regulations and to strengthen relationships with partner companies.

The company's basic dividend policy centers on a dividend on equity (DOE) ratio of 4.0% or higher, which is less susceptible to short-term profit fluctuations. In FY2026 (ending March 2026), an annual dividend of ¥40 (DOE 4.0%) was implemented. For FY2027 (ending March 2027), an annual dividend of ¥43 (interim ¥21, year-end ¥22) is planned, continuing the trend of dividend increases.

Last updated: July 19, 2026