ENVALITH
中外炉工業株式会社 logo

Chugai Ro Co., Ltd.

1964・Prime Market・Construction

Official website
中外炉工業株式会社 logo
Chugai Ro Co., Ltd.1964

Business

Chuo Kohan Industry (Chugairo Kogyo) is a specialized industrial furnace manufacturer founded in 1945, engaged in the design, manufacturing, construction, and sales of industrial furnaces, industrial machinery, environmental equipment, and combustion equipment, centered on "thermal technology." The business consists of three segments—Heat Treatment (heat treatment furnaces for automobiles, semiconductors, and batteries), Plant (heating furnaces and process lines for steel and non-ferrous metals), and Development (decarbonization, precision coating, and waste treatment)—in addition to an "Other" segment comprising seven domestic and overseas subsidiaries responsible for technical services and sales. Its main customers are domestic and overseas steel, automobile, battery, and semiconductor manufacturers, and the company operates globally with local subsidiaries in Taiwan, China, Thailand, Indonesia, and Mexico. Consolidated net sales for FY2026 (ending March 2026) were ¥37,332 million.

Business Model

An EPC-type business model that receives orders for custom-made industrial furnaces tailored to customers' manufacturing process requirements, handling design, manufacturing, construction, and trial operation on an integrated basis. Sales are recognized according to construction progress while building up the order backlog. After delivery, recurring revenue is secured through maintenance and technical services, and royalty income is also generated through technology licensing to companies in the U.S. and South Korea. The order backlog at the end of FY2026 (ending March 2026) remains at a high level of ¥37,699 million.

Company Strengths

The "Thermal Technology Creation Center" (Netsu Gijutsu Sozo Center), opened in November 2023 within the Sakai Plant, consists of three zones—the Combustion Zone, Functional Materials Zone, and Co-creation Space—and functions as a development hub for hydrogen/ammonia combustion technology and heat treatment technology for next-generation batteries. R&D expenses for FY2026 (ending March 2026) totaled ¥1,094 million. In February 2025, the company received the "Toyota Technology Development Excellence Award" from Toyota Motor Corporation for its hydrogen combustion afterburner furnace.

Consolidated order backlog at the end of FY2026 (ending March 2026) stood at ¥37,699 million (99.7% of the previous period), of which the Plant business accounted for a particularly substantial ¥22,123 million (113.9% of the previous period). The order backlog has accumulated to a level nearly equivalent to net sales, providing high visibility into sales recognition for the following period and beyond. Given the characteristics of the build-to-order business model, the order backlog functions as a leading indicator of future revenue.

The company earns royalty income through technology licensing agreements: an integrated catenary-type annealing furnace technology license to Surface Combustion, Inc. of the United States (commenced 1990, with continuing automatic renewals), and an industrial furnace-related technology license to Hanwha Corporation of South Korea (commenced 2018). Overseas operations comprise seven subsidiaries across Taiwan, China (two companies), Thailand, Indonesia, and Mexico, with the "Other" segment recording net sales of ¥8,025 million in FY2026 (ending March 2026).

ENVALITH's Perspective

Net income attributable to owners of parent for FY2026 (ending March 2026) increased 55.7% year on year to ¥4,668 million; however, proceeds from sales of investment securities on the consolidated statement of cash flows amounted to ¥3,729 million (with a gain on sale of ¥3,315 million), indicating a large one-time profit contribution. Operating profit was ¥2,879 million (up 5.3% year on year), a smaller increase, suggesting the growth rate is decelerating, and the underlying strength of the core business should be assessed separately from net income.

FY2026 (ending March 2026) revenue of ¥37,332 million has reached approximately 90% of the ¥41,500 million target for FY2027 (ending March 2027), indicating favorable progress. Externally, robust demand for battery and motor component manufacturing equipment for EVs and HVs, as well as decarbonization-related capital investment, is driving performance, but continued attention is warranted regarding risks that automakers' EV strategy revisions and fluctuations in the capital expenditure cycle could affect order trends.

On June 12, 2026, the cash flow statement in the financial results summary (kessan tanshin) was corrected. Due to an error in the aggregation method for lease liabilities, operating cash flow (¥6,259 million → ¥6,427 million), investing cash flow (¥2,684 million → ¥2,588 million), and financing cash flow (△¥2,569 million → △¥2,641 million) were revised; however, the period-end balance of cash and cash equivalents of ¥10,777 million remained unchanged, and there was no impact on profit or loss. Although the numerical impact is minor, the correction stemmed from an auditor's finding during the preparation of the securities report (yuho), and investors should continue to monitor the company's financial reporting control framework.

Growth Strategy

Aiming for net sales of ¥41,500 million in FY2027 (ending March 2027), centered on carbon-neutral technologies and the creation of new markets

Capturing demand for heat treatment equipment used in the manufacturing process of batteries (including all-solid-state batteries) and motor components for EVs and HVs. Positioned as a core growth driver of the Heat Treatment segment, the company is promoting the acquisition of new orders through joint development at the "Heat Technology Creation Center".

Through participation in the NEDO Green Innovation Fund Project (decarbonization of thermal processes in manufacturing), the company is promoting the development and commercialization of hydrogen and ammonia fuel technologies as well as electrification- and energy-saving-type equipment. Orders received in the Development segment surged 215.1% year on year (cumulative for 3Q of FY2026 (ending March 2026)), advancing the buildup of future sales.

Capturing demand for industrial furnaces from China's EV and automotive parts-related sector (e.g., motor core annealing furnaces) and from manufacturing industries in Asian countries such as Thailand and Indonesia. The company expects an increase in deliveries of high-value-added products (e.g., vacuum heat treatment furnaces) through overseas subsidiaries, as well as growth in demand for material procurement and technical services linked to orders received by the parent company.

Steadily converting into sales the order backlog (up 138.8% year on year at the end of FY2025 (ended March 2025)) built up from investments by domestic steelmakers in energy-saving continuous annealing equipment and continuous galvanizing lines, as well as from large-scale overseas orders for stainless steel bright annealing equipment, thereby supporting the achievement of the medium-term management plan targets.

Last updated: July 19, 2026