ENVALITH
株式会社カドス・コーポレーション logo

Cados Corporation

211A・Standard Market・Construction

Official website
株式会社カドス・コーポレーション logo
Cados Corporation211A

Business

Kados Corporation is a construction and real estate company headquartered in Yamaguchi City, Yamaguchi Prefecture, founded in 1999 (originally a sole proprietorship established in 1998). Under its proprietary business model called the "Kados LAN System," the company matches landowners with tenant companies (national chains such as drugstores, restaurants, and convenience stores), providing total production services from land-use proposals through design, construction, and tenant recruitment. The company operates two segments: the Construction segment (net sales of ¥5,884 million) and the Real Estate segment (net sales of ¥1,704 million). It listed on the Standard Market of the Tokyo Stock Exchange in July 2024. It has a cumulative track record of 553 completed new construction projects, primarily in Yamaguchi and Hiroshima, and manages relationships with 303 landowners of constructed properties.

Business Model

In the construction business, the company's 'Kados LAN System' obtains land-use consent from landowners and then introduces/matches them with tenant companies, enabling negotiated (sole-source) order acquisition while avoiding price competition with competitors. In the real estate business, in cases where matching does not materialize, the company leases or acquires the land and buildings itself and subleases them to tenants, generating long-term stable rental income (FY2025 (ended July 2025): building rental ¥931 million, land rental ¥268 million). By creating composite projects that combine both businesses, the company has formed a cyclical demand structure of construction orders → real estate leasing → renewed construction orders after the lease term expires.

Company Strengths

By approaching landowners in advance, the company has established a unique model for securing exclusive orders from tenant companies. In FY2025 (ended July 2025), national chain-related sales accounted for ¥5,256 million (89.3%) of construction business revenue, and the cumulative track record of 553 projects across 173 brands serves as an asset that can also be leveraged in sales activities in new areas.

The company has accumulated real estate leasing projects derived from sales activities in the construction business, holding 97 leased properties at the end of FY2025 (ended July 2025), an increase of 4 properties year on year. The gross profit margin of the real estate business remains at a level significantly higher than that of the construction business, with rental income supporting stable cash flow (operating cash flow of ¥786 million).

In FY2025 (ended July 2025), the company achieved an equity ratio of 55.8% and a return on equity of 15.6%. While making early repayments on long-term borrowings (a decrease of ¥796 million), it recorded net income of ¥658 million (up 62.4% year on year), and gross profit margin also improved from 19.4% to 21.0%. The company has achieved both financial soundness and profitability simultaneously.

ENVALITH's Perspective

For the first nine months of FY2026 (ending July 2026), cumulative net sales were ¥3,903 million (down 30.2% year-on-year), and operating profit sharply decelerated to ¥258 million (down 64.6% year-on-year). The main cause was the construction business, where the order backlog at the start of the period declined by ¥538 million year-on-year, compounded by a shift in construction start timing to the fourth quarter and beyond. The full-year earnings forecast was revised downward (announced June 12, 2026) to net sales of ¥6,000 million (down 20.9% year-on-year), operating profit of ¥480 million (down 48.8% year-on-year), and net income of ¥320 million (down 51.4% year-on-year). The progress rate for the nine-month cumulative period remained limited at 65.1% of net sales, 53.8% of operating profit, and 56.0% of net income, and the execution of the ¥2,602 million in construction work carried over to the fourth quarter will be key to achieving the full-year targets.

The real estate business remained solid, with net sales of ¥950 million (up 1.8% year-on-year) supported by increased rental income from newly acquired properties, underpinning the majority of company-wide profit amid the sharp slowdown in the construction business. On the other hand, the construction business has a structure where performance is heavily influenced by the timing of large-project construction starts and the level of the order backlog, and the impact on sales and profit is significant when the order backlog declines year-on-year, as in the current period. Externally, elevated construction material prices and rising labor costs due to a shortage of skilled workers continue, and maintaining profitability through appropriate contract pricing remains an ongoing challenge.

The annual dividend forecast for FY2026 (ending July 2026) has been maintained at ¥180 (an increase of ¥30 from ¥150 in the previous fiscal year), representing a payout ratio of approximately 56.6% against the forecast earnings per share of ¥317.81. In addition, the construction work carried over to the fourth quarter has accumulated significantly to ¥2,602 million (up 107.9% year-on-year), raising the possibility that fourth-quarter net sales could exceed those of the same period last year. However, against the full-year net income forecast of ¥320 million, only ¥179 million had been achieved through the nine-month cumulative period, meaning that net income of at least ¥141 million must be recorded in the fourth quarter alone, with the smooth completion of construction work as a prerequisite.

Growth Strategy

Aiming for net sales of ¥10 billion through expansion of the sales area into the Sanyo corridor and northern Kyushu, the Kado Town rollout, and the accumulation of real estate properties

The company is promoting continued acquisition of sole-source orders, targeting national chains with strong store-opening appetite—drugstores, food supermarkets, home appliance retailers, restaurants, etc.—centered on the rollout of "Kado Town," a suburban complex commercial facility format. In FY2026 (ending July 2026), the construction backlog carried over to Q4 has accumulated to ¥2,602 million (up 107.9% year on year), with the start of construction on large-scale projects concentrated in Q4.

The company aims to geographically expand order acquisition opportunities by extending its sales area beyond Yamaguchi and Hiroshima to areas around Okayama and Fukuoka, and by strengthening business alliances with local real estate companies. Even amid an environment of persistently high construction material prices, the company continues to pursue order-taking activities with an emphasis on profitability through appropriate contract pricing.

The company continues to acquire new buildings and land as income-generating properties, strengthening its stable earnings base through the accumulation of real estate rental income. As of the end of Q3 of FY2026 (ending July 2026), property, plant and equipment increased by ¥570 million compared to the end of the previous fiscal year (including a ¥207 million increase in land), reflecting ongoing property acquisitions. Real estate business net sales rose a solid 1.8% year on year to ¥950 million.

The company aims to maintain profit margins by setting appropriate contract prices that reflect persistently high construction costs, while also working to level construction schedules with an awareness of safe and smooth project progress, prioritizing requests from clients. For the cumulative nine months of Q3 FY2026 (ending July 2026), the gross profit margin stood at 19.1%, down from 21.8% in the same period of the previous year, making strengthened cost management a key challenge.

Last updated: July 17, 2026