DAIICHI KENSETSU CORPORATION
1799・Standard Market・Construction
Business
Daiichi Kensetsu Kogyo Co., Ltd. was established in 1942 as a railway construction specialist company, and now operates as a general construction company engaged in construction (civil engineering and building construction) and real estate businesses. The construction business accounts for approximately 98% of net sales, with work for East Japan Railway Company (JR East) representing 72.3% of net sales (¥43,353 million). While maintaining railway infrastructure construction as its foundation, the company has also expanded into private-sector building construction (condominiums, commercial facilities, etc.). Subsidiaries Hometec Asahi Co., Ltd. and Civil Asahi Co., Ltd. handle small-scale construction projects, with the group as a whole operating both the construction and real estate businesses. Listed on the Standard Market of the Tokyo Stock Exchange.
Business Model
94.9% of civil engineering work is sole-source contracts (railway infrastructure maintenance and improvement work for JR East), giving the company a stable order structure not reliant on competitive bidding. In building construction, the competitive order ratio stands at 62.0%, with orders expanding under competition with private developers and others. Revenue is recognized on a percentage-of-completion basis relative to completed construction value, and the backlog of construction in progress (¥44,383 million) underpins sales in subsequent periods. The real estate leasing business, while small in scale, complements earnings by providing stable recurring income.
Company Strengths
94.9% of civil engineering work orders are sole-source (tokumei) orders, and completed construction revenue from East Japan Railway Company (JR East) reached ¥43,353 million (73.6% of total completed construction revenue). The railway construction track record and trust relationship built over more than 80 years since the company's founding in 1942 form an entry barrier that is difficult for competitors to replicate in a short period.
Backlog of construction orders carried forward to the next fiscal year as of the end of March 2026 stood at ¥44,383 million (civil engineering: ¥15,245 million; building construction: ¥29,137 million), up 51.2% from the end of the previous fiscal year. This includes large-scale projects such as the new construction of AEON Mall Koriyama (scheduled for completion in April 2027) and multiple projects for JR East, meaning a substantial portion of net sales for the following fiscal year and beyond is already secured.
As of the end of the fiscal year under review, the company had no borrowings from financial institutions and held cash and cash equivalents of ¥14,838 million. Against total net assets of ¥74,702 million, total liabilities stood at only ¥11,636 million, indicating extremely low financial leverage and a robust financial base capable of responding to unforeseen circumstances.
ENVALITH's Perspective
Performance Trend
Revenue rose for five consecutive fiscal years, from ¥42,748 million in FY2022 (ended March 2022) to ¥60,003 million in FY2026 (ending March 2026). On the profit side, however, operating profit reached a record high of ¥7,194 million (operating margin of 12.4%) in FY2025 (ended March 2025) before declining to ¥6,912 million (11.5%) in FY2026 (ending March 2026). As an external factor, rising labor costs and construction material prices pushed up the cost ratio, with cost of completed construction contracts expanding to ¥48,207 million (up 4.1% year on year). Net income attributable to owners of parent edged down slightly to ¥5,224 million (down 0.4% year on year), but the forecast for FY2027 (ending March 2027) projects a substantial decline to ¥4,300 million (down 17.7% year on year), making the downward trend in profitability increasingly evident.
Growth Strategy
Under the medium-term management plan "Transformation 2030," the company aims for sustainable growth through the Four Transformations and its Growth Strategy
A five-year medium-term management plan formulated on May 13, 2026. Under the management slogan "Transformation and Breaking the Status Quo," the company aims to enhance dynamic capabilities based on the "Four Management Policies," thereby driving the "Four Transformations" and its "Growth Strategy." It seeks to contribute to the SDGs through ESG management and enhance corporate value through management that is mindful of cost of capital and share price.
Orders received for construction work expanded sharply, up 42.2% year on year to \u00a530,928 million, while the order backlog rose to \u00a544,383 million (up 51.2% year on year). The company continues to invest in renewing large-scale track maintenance machinery for railway maintenance work, aiming to strengthen construction capacity and maintain competitive advantage. Orders received for FY2027 (ending March 2027), including the real estate business, are projected at \u00a563,000 million.
The dividend policy emphasizes the continuation of stable dividends. For FY2026 (ended March 2026), the dividend per share was \u00a5160 (up \u00a530 year on year), achieving a payout ratio of 54.6%. Share buybacks were also significantly accelerated, reaching \u00a52,850 million (up 119% year on year). For FY2027 (ending March 2027), a dividend per share of \u00a5160 is planned (with an expected payout ratio of 65.9%). The company explicitly positions its management to be mindful of cost of capital and share price.
Last updated: July 19, 2026