Nihon Dengi Co., Ltd.

Business Details

Handles design, construction, maintenance, and inspection of air conditioning automatic control systems for non-residential buildings such as office buildings, factories, hospitals, laboratories, schools, and commercial facilities. The business is divided into the "New Construction Division," which targets newly constructed buildings, and the "Existing Buildings Division," which handles maintenance, repair, and renewal of existing buildings. The segment also handles Sales of Control Equipment such as automatic control panels, sensors, and thermostats. Most orders are obtained through sole-source (tokumei) contracting, and this segment accounts for approximately 90% of consolidated net sales, making it the core segment.

Recent Overview

Orders received expanded sharply to ¥48,231 million, up 24.0% year on year, with backlog carried forward also increasing significantly by 28.5%

In FY2026 (ending March 2026), existing building construction work increased substantially, driven mainly by offices and factories, resulting in net sales of ¥41,697 million (up 5.9% year on year). New construction sales declined 14.6% due to a reversal from strong prior-period demand from factories and educational facilities, but this was offset by a 20.9% increase in existing building sales. Segment profit margin improved significantly to 39.7% (from 34.4% in the prior period) due to selective order-taking with a focus on profitability and efforts to improve margins. Orders received expanded sharply to ¥48,231 million (up 24.0% year on year), driven by increases in new construction orders for research and public facilities and existing building orders for factories and offices. The backlog carried forward to the next fiscal year increased significantly to ¥29,421 million (up 28.5% year on year), a leading indicator that points to strong future sales growth.

Key Products

Growth Drivers

• Robust demand for existing building construction: Orders for existing building work expanded on the back of energy-saving and environmental solution needs (existing building orders received of ¥31,031 million in FY2026, ending March 2026, up 24.7% year on year)
• Large-scale projects from Tokyo metropolitan area redevelopment, data centers, and new factory construction: Large-scale new construction projects such as Tokyo metropolitan area redevelopment projects, data centers, and new factories are expected to contribute to sales from the next fiscal year onward
• Improved profitability through selective order-taking: Segment profit margin rose significantly to 39.7% (from 34.4% in the prior period) due to profitability-conscious order-taking and margin improvement efforts
• Significant buildup in backlog carried forward to next fiscal year: The backlog, a leading indicator of future sales, expanded significantly to ¥29,421 million (up 28.5% year on year), supporting sales growth from the next fiscal year onward
• Strengthened construction capabilities: Enhanced capability to handle large-scale projects through strengthened collaboration with affiliated companies and partner firms, along with strengthened relationships with subcontractors
• Promotion of the environmental solutions business: Strengthening the stable earnings base of existing building construction work through expansion of the environmental solutions business in light of sustainability trends

Risks

• Tightening construction capacity: Risk of constraints on order-taking activities and construction capacity due to labor shortages in the construction industry and overtime cap regulations
• Volatility risk in new construction sales: Risk that sales fluctuate depending on the completion timing of large-scale projects, as seen in the 14.6% year-on-year decline in new construction sales in FY2026 (ending March 2026)
• Rising material prices and outsourcing costs: Risk that fluctuations in energy and material prices due to factors such as the situation in the Middle East, along with instability in the supply chain, will squeeze construction profitability
• Impact of compliance with the Act on Promoting Fair Trade Practices for Small and Medium-sized Subcontractors: Risk that thorough compliance with this act, which took effect in January 2026, will affect the order-taking environment and profitability
• Decline in private-sector capital investment due to macroeconomic deterioration: Risk that if risks stemming from the situation in the Middle East or financial market turmoil spill over into the real economy, private-sector capital investment will decline, worsening the order-taking environment