ENVALITH
太洋基礎工業株式会社 logo

Taiyo Kisokogyo Co.,Ltd.

1758・Standard Market・Construction

Official website
太洋基礎工業株式会社 logo
Taiyo Kisokogyo Co.,Ltd.1758

Business

Taiyo Kiso Kogyo is a construction specialist headquartered in Nagoya, founded in 1967. Its core business is specialized civil engineering work such as ground improvement, jacking (pipe-jacking) construction, and liquefaction countermeasures (48% of sales composition), and it operates six businesses: residential foundation reinforcement work, environment-related construction (solar power, wind power, soil purification), building construction (mid-scale condominiums, etc.), machinery manufacturing and sales, and renewable energy power sales. Its main customers are government agencies (net sales of ¥4,625 million) and private homeowners/real estate owners. The company is listed on the Standard Market of the Tokyo Stock Exchange. It has a nationwide network of branches and sales offices, with national resilience initiatives and infrastructure aging countermeasures as its primary target markets.

Business Model

The company adopts a build-to-order model that visualizes its order backlog as "operating assets." The two segments of specialized civil engineering and housing-related business account for approximately 77% of consolidated sales, incorporating both public works (for government agencies) and private housing demand, giving it resilience against economic fluctuations. Renewable energy power sales (operating margin of approximately 59.9%) serve as a highly profitable complementary function, and the company maintains a financial structure in which working capital and capital expenditures are funded through a combination of own funds and partial borrowings.

Company Strengths

At the end of the 59th fiscal period, the order backlog reached a record high of ¥7,069 million. Orders received in the specialized civil engineering works and other business surged to ¥8,196 million (up 47.1% year-on-year), pushing the segment's order backlog to ¥3,578 million (up 52.4% year-on-year). The order backlog in the construction business also grew to ¥3,258 million (up 36.6% from the previous fiscal year-end), functioning as a leading indicator of company-wide sales.

The specialized civil engineering works and other business, accounting for 48% of sales (operating profit of ¥332 million), and the housing-related construction business, accounting for 29% of sales (operating profit of ¥156 million), serve as the two pillars of earnings. In the housing-related construction business, thorough profitability management improved the operating profit margin from 2.7% in the previous period to 3.7% in the current period, despite a decline in sales. The business structure, which diversifies sources of demand across public and private sectors, supports earnings stability.

At the end of the 59th fiscal period, total net assets stood at ¥9,497 million, while total liabilities were low at ¥2,946 million against total assets of ¥12,444 million. Cash and cash equivalents amounted to ¥3,619 million (up ¥649 million from the previous fiscal year-end). Operating cash flow improved to income of ¥898 million, and financial soundness is maintained through financial management centered on internal funds.

ENVALITH's Perspective

Operating profit of ¥335 million in Q1 of FY2027 (ending January 2027) represents 57.0% of the full-year forecast of ¥588 million, indicating favorable progress. However, Q1 order intake was subdued at ¥3,107 million (down 7.5% year on year), with special civil engineering works and other categories declining sharply by 28.2%. While the order backlog remains at a high level, the deterioration in this leading indicator warrants close monitoring as a downside risk to sales and profit from Q2 onward. As an external factor, soaring construction prices are causing housing and private capital investment to remain flat or decline, putting pressure on the order-taking environment.

The annual dividend forecast for FY2027 (ending January 2027) is ¥65 (an increase from ¥60 in the previous period). Against the forecast EPS of ¥237.98, the implied DOE is in line with the medium-term management plan target of 1.5%. However, as shown by the earnings volatility over the past five periods (sharp profit declines in FY2024 and FY2025), there remains a risk that failures in construction cost control or surging construction costs could significantly impair profitability. To correct the low PBR valuation, the company will need to demonstrate over multiple periods that the current profit recovery is not merely temporary.

In Q1 of FY2027 (ending January 2027), order intake for environment-related construction work expanded sharply to ¥474 million (up 699.9% year on year), and the order backlog also grew to ¥533 million (up 79.9% year on year). Backed by the external tailwind of accelerating transition toward renewable energy, this segment has the potential to grow into a third pillar of earnings. On the other hand, order intake in the construction business was weak at ¥14 million (down 22.8% year on year), and securing new orders after working through the ¥2,782 million backlog remains a challenge.

Growth Strategy

Under the mid-term management plan (fiscal years 59 through 61), the company aims to achieve net sales of ¥15.0 billion, ROE of 6%, and DOE of 1.5%.

In the second year of the mid-term management plan, the company has set strengthening sales capabilities to win in competition as its basic policy. It is advancing a transformation toward improved profit margins even with flat sales, through enhanced cost management and negotiation/settlement capabilities. In Q1 of FY2027 (ending January 2027), operating profit margin reached 8.6% (versus 4.7% in the same period of the prior year), confirming the effectiveness of this policy.

The company is considering and implementing the introduction of new machinery for the renewable energy field, aiming to expand the environmental-related construction segment. Orders received for environmental-related construction in Q1 of FY2027 (ending January 2027) surged 699.9% year-on-year to ¥474 million, and the order backlog of ¥533 million will support sales from Q2 onward. The external tailwind of expanding ESG-related investment is also supportive.

The company aims to contribute to earnings by progressively recognizing as sales, from Q2 onward, its construction business order backlog of ¥2,782 million (up 66.4% year-on-year). Through active investment of ¥388 million in real estate for sale (up from ¥284 million at the end of the previous fiscal year), it is pursuing room for expansion in the real estate development business. However, with new orders received of only ¥14 million remaining sluggish, securing orders for the next period is a challenge.

The annual dividend forecast for FY2027 (ending January 2027) has been set at ¥65 (an 8.3% increase from ¥60 in the previous fiscal year). Under the mid-term management plan, the company has set a DOE target of 1.5% and intends to continue stable shareholder returns linked to its profit level. Against a forecasted earnings per share of ¥237.98, the payout ratio stands at 27.3%.

Last updated: July 17, 2026