NAKANO CORPORATION
1827・Standard Market・Construction
Business
Nakano Corporation is a general contractor with a history dating back to its founding in 1885. The group comprises the reporting company, 10 domestic subsidiaries, 5 overseas subsidiaries, and 5 affiliated companies. Within Japan, it undertakes building and civil engineering work, receiving orders from both public agencies and private-sector clients. Starting with its entry into Singapore in 1975, the company expanded into Southeast Asia (Singapore, Malaysia, Indonesia, Thailand, and Vietnam), where it handles construction of data centers, highly functional logistics facilities, and manufacturing sites, among others. It also operates a real estate leasing business (Japan and Malaysia) and a renewable energy business (solar and wind power), with the construction business accounting for approximately 99% of consolidated net sales. The company is listed on the Standard Market of the Tokyo Stock Exchange.
Business Model
The construction business follows an order-based, build-to-order model driven by negotiated contracts and competitive bidding, with revenue recognized upon completion of construction. Domestically, orders are received from both public agencies and private-sector clients, and the backlog of contracted construction (¥94,653 million on a non-consolidated basis for the submitting company) supports revenue in subsequent periods. Overseas, the company has secured large-scale projects such as data centers and logistics facilities through five bases in Southeast Asia. The real estate business generates stable cash flow from rental income and functions as a highly profitable segment with an operating margin of approximately 49%.
Company Strengths
Since its entry into Singapore in 1975, the company has progressively expanded into Malaysia, Indonesia, Thailand, and Vietnam, and now holds five local subsidiaries. This long-term accumulation of local footholds, customer base, and construction track record makes short-term imitation by competitors difficult, forming the foundation for achieving Southeast Asia construction business revenue of ¥61,054 million and operating profit of ¥2,447 million in FY2026 (ending March 2026).
The submitting company's non-consolidated backlog of construction work carried forward to the next period remains at a high level of ¥94,653 million (as of end of March 2026). On a consolidated basis, domestic orders received also stood at ¥86,546 million (up 9.8% year on year), with several large-scale projects (including some scheduled for completion in 2027) accumulating. This order backlog structurally underpins revenue for the following period and beyond, enhancing the visibility of business performance.
The real estate business (Japan) maintained operating profit of ¥675 million against revenue of ¥1,364 million, an operating margin of approximately 49%. It functions as a stable cash flow source that complements the risk of fluctuating construction profitability in the construction business, demonstrating high asset efficiency relative to segment assets of ¥14,267 million.
ENVALITH's Perspective
Performance Trend
Revenue bottomed out at ¥96,470 million in FY2022 (ended March 2022) and has since recovered to ¥138,071 million in FY2026 (ending March 2026), the highest level in the past five fiscal periods. Operating profit also improved sharply, from a loss of ¥840 million in FY2022 to ¥5,375 million, with the operating margin rising to 3.9% (from 3.0% in the prior period). The main driver was the doubling of revenue in the Southeast Asian construction business (from ¥28,023 million to ¥61,054 million) and a sharp recovery in profitability. External tailwinds included the weaker yen and expanding demand for data centers and logistics facilities in Southeast Asia. On the other hand, the company forecasts a decline in operating profit to ¥3,900 million for FY2027 (ending March 2027), and the decrease in the Southeast Asian order backlog is a leading indicator that raises concern.
Growth Strategy
Under Medium-Term Plan 86, the company is pursuing both improved domestic profitability and expansion of the Southeast Asian business as twin pillars of growth.
Strengthening responsiveness to foreign-affiliated clients and expanding operating areas and business domains. Capturing demand related to data centers, high-functionality logistics facilities, and manufacturing site relocations, achieving Southeast Asia net sales of ¥61,054 million and operating profit of ¥2,447 million in FY2026 (ending March 2026). However, orders received declined 30.2% year on year to ¥44,718 million, making order accumulation for the next fiscal year a challenge.
Promoting faster client response through strengthened technical capabilities, enhancing workforce capability through practical training, securing skilled labor through closer collaboration with partner companies, and strengthening cost competitiveness. Domestic construction segment operating profit for FY2026 (ending March 2026) decreased 14.9% year on year to ¥2,202 million, and addressing rising labor costs and persistently high material and equipment costs remains an ongoing challenge.
Policy to concretely execute M&A, DX promotion, and human capital investment aimed at business growth and improved profitability. Consolidated selling, general and administrative expenses for FY2026 (ending March 2026) increased 21.1% year on year to ¥9,070 million, reflecting a phase of upfront investment in personnel and IT. No specific M&A results have been disclosed at this time.
Stated policy to pursue various initiatives contributing to corporate value enhancement, including promotion of health management and improvement of CDP score. Specific numerical targets and progress toward achievement are not disclosed in the earnings report.
Last updated: July 19, 2026