ENVALITH
株式会社弘電社 logo

The Kodensha, Co., Ltd.

1948・Standard Market・Construction

Official website
株式会社弘電社 logo
The Kodensha, Co., Ltd.1948

Business

Kodensha Co., Ltd. was founded in 1910 and incorporated in 1917, and is a subsidiary of Mitsubishi Electric Corporation as well as an electrical equipment construction group listed on the TSE Standard Market. In its core electrical equipment construction business, the company designs, constructs, and undertakes indoor wiring work, transmission line work, power generation and substation work, communication work, and air-conditioning work, with major clients including leading general contractors, private companies, and government agencies, including the Mitsubishi Electric Group. In its product sales business, the company purchases and sells general-purpose electrical equipment, industrial electronic equipment, and heating/cooling and housing equipment manufactured by Mitsubishi Electric, acting as an agency. The company has as consolidated subsidiaries Kodenkoji Co., Ltd., which handles construction work, and Kodensha Kiden Kotei (Beijing) Co., Ltd., which handles design and cost estimation work. Consolidated net sales for FY2026 (ending March 2026) reached ¥44,234 million.

Business Model

The electrical facility construction business, accounting for approximately 80% of revenue, operates on a contract-based model spanning order receipt, construction, and completion, with a high proportion of negotiated (sole-source) orders (56.3% for indoor wiring construction, 75.2% for other construction), providing a stable order base. Orders from Mitsubishi Electric account for 38.5% of completed construction revenue. The product sales business operates on a procurement-and-sales model based on an agency agreement with Mitsubishi Electric, enhancing added value through integrated proposals combined with the construction business. The carried-forward construction backlog for the next period, ¥49,409 million, secures visibility of future sales.

Company Strengths

Order backlog for the next fiscal period as of the end of March 2026 reached ¥49,409 million (up 9.2% from ¥45,239 million at the end of the previous period), including large-scale, long-term projects such as the Shinjuku Station West Exit District Development Project (scheduled for completion in March 2030) and the MUFG Head Office Building Project (scheduled for completion in October 2030). As a result, a substantial portion of revenue for subsequent periods has already been secured, providing high predictability of business performance.

Mitsubishi Electric Corporation is a parent company that made a capital investment in 1951, and maintains a close business relationship covering both construction work and product sales. Sales to Mitsubishi Electric in FY2026 (ending March 2026) amounted to ¥13,427 million (30.3% of total sales), a significant increase from ¥7,848 million (19.9%) in the previous period. The agency agreement has continued since 1984, forming a stable foundation for orders and procurement.

In FY2026 (ending March 2026), the ratio of negotiated (sole-source) orders by order type rose in both categories: indoor wiring construction reached 56.3% (up from 52.1% in the previous period), and other construction work reached 75.2% (up from 71.0% in the previous period). Negotiated orders are based on direct designation by customers, functioning as a company-specific competitive advantage that reflects accumulated technical capability, construction quality, and trust-based relationships.

ENVALITH's Perspective

For FY2026 (ending March 2026), the company achieved net sales of ¥44,234 million (up 12.7% year on year), operating profit of ¥3,893 million (up 26.4%), and net income attributable to owners of parent of ¥2,832 million (up 3.5%), marking five consecutive years of revenue growth and record-high profit. The operating margin improved further to 8.8% from 7.8% in the prior period, confirming that this is not merely a benefit from market conditions but a structural improvement in profitability, which deserves recognition. On the other hand, the fact that net income growth (+3.5%) was limited compared to operating profit growth warrants close attention to trends in tax burden and extraordinary gains/losses.

The business structure's high dependence on the Mitsubishi Electric Group carries the inherent risk that performance is linked to the group's capital expenditure trends. As an external factor, the current environment of sustained high levels of private-sector capital investment serves as a tailwind, but there is a risk of concentrated declines in orders in the event of a change in group policy or an economic downturn. Trends in the ratio of sole-source (tokumei) contracts should be continuously monitored as a leading indicator of changes in the competitive environment.

Following the correction to the earnings report (kessan tanshin) dated May 21, 2026, the revenue disaggregation for the electrical equipment construction segment was revised. After the correction, revenue from goods and services transferred over a period of time (such as under the percentage-of-completion method) was changed to ¥29,216 million (from ¥21,144 million before correction), while revenue from goods and services transferred at a point in time was changed to ¥6,258 million (from ¥14,330 million before correction). There is no change to key financial figures such as total net sales, profit, and assets, and there is no impact on business performance; however, it was reconfirmed in practice that the proportion of application of the percentage-of-completion method is high.

Growth Strategy

Under Phase 1 of the Medium-Term Management Plan, the company is simultaneously pursuing operating profit exceeding ¥3.0 billion, growth investment, and shareholder returns.

Core target of Medium-Term Management Plan Phase 1 (FY2024–FY2026). Achieved operating profit of ¥3,893 million in FY2026 (ended March 2026), exceeding the target level. Strengthened earnings power through a three-pronged approach of price optimization, cost reduction, and order expansion.

Acquired all shares of Toshin Electric Industry Co., Ltd. (Toshin Denki Kogyo) in December 2024 to strengthen construction and technical capabilities. In response to talent shortages and recruitment competition, the company aims to mitigate the risk of rising subcontracting costs by insourcing operations. Continues to be promoted as a priority measure under the medium-term plan.

Under Phase 1 of the Medium-Term Management Plan, the company's policy is to allocate cash generated from earnings growth to both growth investments (M&A and capital expenditure) and shareholder returns. Pursuing a financial strategy that leverages total company assets of ¥17,882 million (mainly surplus fund investments and investment securities).

Last updated: July 19, 2026