ENVALITH
株式会社電算 logo

DENSAN CO.,LTD.

3640・Standard Market・Information & Communication

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株式会社電算 logo
DENSAN CO.,LTD.3640

Business

Densan Co., Ltd. was founded in 1966 and is headquartered in Nagano City, Nagano Prefecture, and is listed on the TSE Standard Market as an independent information services company. The company operates its information processing business across two segments: the Public Sector and the Industrial Sector. In the Public Sector, it provides one-stop total solutions centered on the Comprehensive Administrative Information System "Reams" to approximately 450 local governments nationwide. In the Industrial Sector, it develops software, provides systems, and offers data center services, among other services, for private companies, financial institutions, and medical and welfare institutions. Together with its consolidated subsidiary TMR Systems Co., Ltd., the company provides a consistent range of services from evaluation consulting to system design, development, maintenance, and operation.

Business Model

The company sells its in-house developed package systems, including its core product "Reams," to local governments and private companies, and generates recurring revenue through post-installation maintenance and operation services, responses to legal and regulatory changes, and equipment replacement. The business consists of four segments: Information Processing & Communication Services (14.5%), Software Development & System Provision Services (36.3%), System Equipment Sales, etc. (26.5%), and Other Related Services (22.7%). Cloud and housing services utilizing the company's own data centers also function as a stock-type business.

Company Strengths

Comprehensive Administrative Information System "Reams" is an in-house developed package with approximately 40 years of development and operation track record, supporting over 30 types of operations. In FY2026 (ending March 2026), the company completed the standard-compliant migration for all 168 planned municipalities, achieving Public Sector sales of ¥22,529 million and operating profit of ¥5,764 million. Because it is developed in-house, the system can respond quickly to frequent legal and regulatory revisions, resulting in high switching costs for customers.

The company is the only listed information and communication service company headquartered in Nagano Prefecture, with a track record of transactions with approximately 450 local governments centered on the Koshin'etsu region. In addition to its network of head office, 6 branch offices, and 4 support service centers, it has built a sales structure in collaboration with partner companies nationwide. In FY2026 (ending March 2026), sales within Nagano and Niigata Prefectures reached ¥20,822 million (74.9% of total sales), forming a strong, community-based customer base.

The company's proprietary data center, completed in 2003, features a seismic-isolation structure capable of withstanding earthquakes of magnitude 7 and a 24-hour, 365-day manned monitoring system. It has obtained multiple certifications, including ISMS certification (for the data center and Nagano head office), ISMS Cloud Security certification (ISO/IEC 27017), Privacy Mark, and ISO9001. In FY2026 (ending March 2026), the interest coverage ratio stood at 221.6x, reflecting a high level of financial soundness.

ENVALITH's Perspective

FY2026 (ending March 2026) net sales of ¥27,987 million and operating profit of ¥6,296 million were the result of a concentration of one-off large-scale demand, namely the completion of migration to the standard-compliant version of "Reams" for 168 organizations. The company's forecast for FY2027 (ending March 2026) projects net sales of ¥23,500 million (down 16.0% year on year) and operating profit of ¥2,465 million (down 60.9% year on year), anticipating a sharp reversal decline, and the sustainability of the peak profit level is low. New customer development targeting organizations subject to the dedicated migration support system will be key to the next growth cycle, but its scale and timing remain uncertain.

In FY2026 (ending March 2026), Public Sector net sales were ¥22,529 million, accounting for 80.5% of total sales. While government DX investment is expected to continue as an external factor under the government's "Priority Plan for Realizing a Digital Society," dependence on local government budget constraints and policy change risk remains high. The Industrial Sector remained limited at ¥5,458 million (19.5%), indicating that portfolio diversification is still a work in progress. The structural challenge of regional concentration risk also persists, with approximately 71% of net sales concentrated in Nagano and Niigata prefectures.

In FY2026 (ending March 2026), the company spent ¥808 million on share buybacks (treasury shares outstanding at fiscal year-end: 287,535 shares) and strengthened shareholder returns with an annual dividend of ¥140 (including a ¥60 commemorative dividend) and a payout ratio of 17.6%. Meanwhile, the medium-term investment burden continues with next-generation "Reams" product development (total of ¥2,984 million, scheduled for completion in March 2029). The forecast dividend for FY2027 (ending March 2026) of ¥100 (payout ratio of 32.6%) represents a substantive increase on an ordinary dividend basis, but the company is entering a phase where its ability to sustain returns at the profit level following the falloff of exceptional demand will be tested.

Growth Strategy

Aiming for growth centered on four pillars to rebuild the revenue base after the special demand period: cultivating designated migration-support organizations, developing the next-generation Reams product, expanding the Industrial Sector, and boosting sales of AI products

Actively promoting proposal activities toward municipalities that have not yet migrated, including organizations subject to the designated migration-support system for which the government extended the deadline to the end of FY2030. In FY2026 (ending March 2026), the order backlog for the Public Sector reached ¥12,892 million (up 2.0% year on year), confirming a certain level of accumulation.

Continuing development of the next-generation product for the flagship "Reams" offering. Total investment of ¥2,984 million, scheduled for completion in March 2029. Aims to maintain competitiveness and capture replacement demand from existing customers after the standardization migration.

Four companies are currently preparing to launch operations using the Lease Business Package. Continuing to pursue replacement and new installations of systems for medical and welfare institutions and production management systems. Data Center Services acquired 6 new client companies in FY2026 (ending March 2026). Also considering offering container-based virtualization.

The AI Visual Inspection System "Observe AI" was provided to one company in FY2026 (ending March 2026). Development has begun on features enabling AI to support and automate AI model creation and improvement work, aiming to strengthen product competitiveness.

Deploying Municipal DX Promotion Solutions such as no-write counters and resident information apps to realize "Municipal Counter DX." Also advancing and expanding administrative work outsourcing across multiple organizations. Aims to boost revenue through additional proposals to existing customers following the standardization migration.

As a new business initiative in the Industrial Sector, considering labor-saving and business automation utilizing service robots and AI, with an eye toward commercialization in FY2026. Aims to develop this as a solution addressing social issues such as labor shortages and operational efficiency improvement.

Last updated: July 19, 2026