ENVALITH
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TAISEI CORPORATION

1801・Prime Market・Construction

Official website
大成建設株式会社 logo
TAISEI CORPORATION1801

Business

Taisei Corporation is a general construction company with a history dating back to its founding in 1873. The company operates on three core pillars: civil engineering (roads, dams, tunnels, marine works, etc.), building construction (offices, factories, commercial facilities, etc.), and development (real estate sales, leasing, and management), forming a group comprising 75 consolidated subsidiaries and 77 equity-method affiliates. Its major clients span a broad range of entities, including government agencies, major private developers, and manufacturers. In September 2025, the company made Toyo Construction a wholly owned subsidiary, incorporating marine construction capabilities to strengthen its overall civil engineering strength. With net sales of ¥2,089,091 million (FY2026, ending March 2026), it ranks among Japan's leading general contractors.

Business Model

The construction business is fundamentally an order-based model in which revenue is recognized according to construction progress from order receipt through construction and delivery. The order backlog for the next fiscal period (non-consolidated: civil engineering ¥1,054,248 million; building construction ¥2,286,568 million) serves as a leading indicator of future revenue. In the development business, the company secures a stable revenue source by accumulating rental income and gains on sale from self-owned real estate. Improvement in profitability at the time of order receipt and progress in price pass-through have made the improvement of the gross profit margin on completed construction contracts a key driver of revenue expansion.

Company Strengths

As of the end of March 2026, non-consolidated backlog stood at ¥1,054,248 million in civil engineering and ¥2,286,568 million in building construction, totaling ¥3,340,816 million. This includes large-scale projects such as the Shinjuku Station West Exit District Development Plan and the Yaesu 1-chome North District Redevelopment, securing a revenue base for approximately 2-3 years and providing high visibility into future performance.

Non-consolidated gross profit margin on completed building construction contracts improved significantly from 11.3% in FY2025 (ended March 2025) to 15.0% in FY2026 (ending March 2026). A reduction in unprofitable projects and thorough profitability management at the order-taking stage contributed to this improvement, with the building construction segment's operating income reaching ¥78,370 million, up 590.6% year on year. Progress in price pass-through, combined with the company's own profitability management efforts, boosted margins.

In September 2025, Toyo Construction became a wholly owned subsidiary, vertically integrating marine construction and offshore wind-related technologies with land-based civil engineering. Civil engineering segment revenue expanded to ¥720,226 million, up 8.5% year on year, with operating income increasing 9.1% to ¥95,557 million. Non-consolidated overseas orders also surged to ¥33,091 million (from ¥117 million in the prior period), significantly expanding the company's business scope.

ENVALITH's Perspective

For FY2026 (ending March 2026), consolidated operating profit of ¥187,973 million and ROE of 18.7% substantially exceeded the final-year targets of the medium-term management plan (2024-2026) (operating profit of approximately ¥120.0 billion and ROE of approximately 8.5%). On the other hand, the forecast for profit attributable to owners of parent for FY2027 (ending March 2027) is ¥151,000 million (down 11.2% year on year), reflecting downward pressure from the absence of extraordinary gains (gain on sale of investment securities) recorded in the prior period and increased financial expenses associated with higher interest-bearing debt. Operating profit is forecast to be roughly flat (¥188,000 million), and investors need to scrutinize the profit-decline structure below the ordinary profit line.

From FY2027 (ending March 2027), the company plans to raise its dividend payout ratio from the previous 30% to 40% (as a floor), with an annual dividend of ¥380 (up from ¥310 in the prior period). In the current fiscal year, the company also carried out share buybacks of ¥77,969 million, bringing the total return ratio to 67.3% (actual). The policy is to revise dividend forecasts upward based on the 40% payout ratio if performance exceeds expectations, and enhanced shareholder returns could serve as a continuing supportive factor for the share price. That said, continued attention is warranted regarding the balance between capital allocation and growth investments (such as the acquisition of Toyo Construction).

The lawsuit seeking to overturn the cease-and-desist order related to the Antimonopoly Act violation (concerning Chuo Shinkansen maglev line construction) was also dismissed by the Tokyo High Court, and in May 2025 the company filed a final appeal and petition for acceptance of final appeal with the Supreme Court. The final resolution of this legal risk remains uncertain, and the possibility of additional burdens such as surcharges remains. Additionally, following the acquisition of Toyo Construction, the balance of interest-bearing debt surged to ¥463.4 billion (up ¥147.9 billion year on year), and as an external risk factor, rising interest payments amid a rising interest rate environment (¥4,237 million in the current period versus ¥2,572 million in the prior period) increasingly pose a risk of pressuring earnings.

Growth Strategy

Building a new growth foundation through M&A, overseas expansion, and construction DX under TAISEI VISION 2030

In September 2025, Toyo Construction Co., Ltd. was made a wholly owned subsidiary at an acquisition cost of ¥131,684 million. The vertical integration of land-based and marine civil engineering capabilities has resulted in comprehensive civil engineering capabilities, contributing to both net sales and profit margin in the Civil Engineering Business. The company plans Civil Engineering Business net sales of ¥780.0 billion (up 14.7% year on year) for FY2027 (ending March 2027).

For fiscal 2026 (FY2027, ending March 2027), the company has set management targets of operating profit of ¥188.0 billion, net profit of ¥151.0 billion, and ROE of 15.4%. Results for FY2026 (ending March 2026) (operating profit of ¥187.9 billion, ROE of 18.7%) have already exceeded these targets, and the company expects to maintain target-level performance in the final year of the plan as well.

The company has set a target of reducing the balance of cross-shareholdings to below 20% of consolidated net assets by the end of fiscal 2026. The balance stood at ¥277.5 billion at the end of fiscal 2025 (28.0% of consolidated net assets). The policy is to allocate funds generated through sales to growth investments and shareholder returns, and the company recorded a gain on sale of investment securities of ¥54,656 million during the current period.

The overseas share of non-consolidated orders received expanded from 0.6% in the previous period to 2.2% in the current period (overseas orders received of ¥39,919 million, up 253.2% year on year). With the addition of Toyo Construction's overseas civil engineering track record, initial results are emerging from the accelerated overseas expansion set forth in TAISEI VISION 2030. The company plans non-consolidated overseas net sales of ¥30.0 billion for FY2027 (ending March 2027), up from ¥23.0 billion in the current period.

Last updated: July 19, 2026