ENVALITH
南海化学株式会社 logo

Nankai Chemical industry Co., Ltd.

4040・Standard Market・Chemicals

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南海化学株式会社 logo
Nankai Chemical industry Co., Ltd.4040

Business

Nankai Chemical Industries is a long-established chemical products manufacturer founded in 1906, and listed on the Standard Market of the Tokyo Stock Exchange in April 2023. Under its corporate philosophy of "contributing to the creation of a global environment and a prosperous society through the Chemical Products Business," the company operates five businesses: Basic Chemicals (Chlor-Alkali Products) such as caustic soda and sodium hypochlorite; Functional Chemicals & Agri, including functional chemicals such as sodium acetate and glucosamine as well as the soil fumigant chloropicrin; Environmental Recycling (Waste Sulfuric Acid Recycling); and Various Salt Products, involving the processing and sale of Edible Salt (Sun-dried Salt). Its main customers are manufacturers in the chemical industry, steel, paper, food, and agriculture-related sectors, and it has built a supply network centered on the Kansai region. The group, which includes 3 consolidated subsidiaries and 2 equity-method affiliates, recorded net sales of ¥21,063 million in FY2026 (ending March 2026).

Business Model

The company's business model is based on the manufacture of caustic soda and other products via salt water electrolysis, leveraging its cost competitiveness from in-house production of raw materials such as sulfur and hydrogen. Because transportation costs significantly affect competitiveness given the nature of its products, the company has built a regionally focused sales structure centered on the Kansai area. In Environmental Recycling (Waste Sulfuric Acid Recycling), it operates a circular model that generates revenue from both waste disposal fees and sales of recycled sulfuric acid. In the Various Salt Products Business, imported crude salt is processed and sold for food and Anti-freezing Agent (Sodium Chloride-based) applications.

Company Strengths

The company possesses an integrated production system that enables in-house production of chlorine, hydrogen, and sulfur as by-products of caustic soda manufacturing. This internalizes raw material procurement costs, securing a cost advantage over competitors that rely on external procurement. In FY2026 (ending March 2026), cost of sales decreased 2.0% year on year to ¥15,083 million, reflecting the effects of price corrections and cost reductions.

The company has long operated the Environmental Recycling (Waste Sulfuric Acid Recycling) business based at the Seigan Plant, establishing a circular model of receiving, refining, and reselling waste sulfuric acid from petroleum refiners and others. In October 2023, it began recycling dechlorinated cement raw materials (dechlorination business) at the Tosa Plant, expanding its environmental recycling domain. The company has invested ¥276 million in R&D expenses and is developing technology to expand processing capabilities to sulfur-containing waste, including next-generation battery waste.

The company has independently developed a tablet-type product that solidifies liquid Chloropicrin, manufactured at the Tosa Plant, using a special method. This is a differentiated product that addresses farmers' needs for improved safety, and since its practical application for tobacco in 1948, its uses have expanded to vegetables, flowers, and other crops. The company continues promotional activities aimed at further expanding the range of applicable crops.

ENVALITH's Perspective

Of the ¥2,776 million in profit attributable to owners of parent for FY2026 (ending March 2026), the ¥2,519 million gain on sale of fixed assets recorded as extraordinary income made a major contribution, and operating profit of ¥1,700 million is closer to the actual underlying earning power of the core business. The FY2027 (ending March 2027) forecast projects a sharp decline in net income to ¥1,260 million (down 54.6% year on year), and investors need to appropriately assess the earnings level once the effect of the gain on sale disappears.

Cash flow from operating activities for FY2026 (ending March 2026) deteriorated to an outflow of ¥259 million (versus an inflow of ¥181 million in the previous fiscal year). The main causes were a ¥947 million increase in income tax payments and a ¥687 million increase in trade receivables. On the other hand, investing cash flow was an inflow of ¥2,872 million, driven by ¥4,106 million in proceeds from the sale of property, plant and equipment, meaning free cash flow has a structure dependent on asset sales. Recovery of the core business's cash-generating capability remains a challenge.

The Various Salt Products Business saw a sharp deterioration in FY2026 (ending March 2026), with net sales of ¥4,083 million (down 10.3% year on year) and segment profit of ¥308 million (down 14.2% year on year). The main cause was a decline in shipments of the Anti-freezing Agent (Sodium Chloride-based) due to a mild winter, and the structure in which performance is affected by uncontrollable external variables such as snowfall and temperature remains unchanged. Continued attention is needed to the impact on consolidated results from fluctuations in this segment, which accounts for approximately 19% of consolidated net sales.

Growth Strategy

Three pillars—strengthening the revenue base, expanding environmental recycling, and promoting sustainable management—toward the final year, FY2027 (ending March 2027)

Promoting a leaner, more efficient business structure through optimization of the business portfolio and operational efficiency improvements. Focusing on profitability-oriented sales centered on Basic Chemicals (Chlor-Alkali Products), while continuing to reduce manufacturing costs and SG&A expenses. The operating margin of 8.1% in FY2026 (ending March 2026) improved from 6.2% in the previous fiscal year, reflecting the effects of these initiatives in the figures.

Actively pursuing new customer acquisition in the Environmental Recycling (Waste Sulfuric Acid Recycling) business, while focusing on expanding the desalination business at the Tosa Plant, which began in October 2023. Also working to create new recycling businesses that leverage the company's own strengths. Segment profit for the Chemical Products Business as a whole is expanding, reaching ¥2,472 million in FY2026 (ending March 2026), up 17.3% year on year.

Strengthening a safe and secure sustainable production and sales system with BCP considerations in mind, and expanding human capital investment through talent development and DE&I initiatives. The company plans to also contribute to the revitalization of the regional economy through a strategic partnership with Kochi Butsuryu Co., Ltd., in which it made an equity investment executed in April 2026.

NC Kankyo was absorbed and merged effective April 1, 2025, and Fuji Amide Chemical completed liquidation on December 24, 2025. The completion of the real estate transfer significantly reduced interest-bearing debt, improving the equity ratio from 37.4% to 56.5%. The restructuring to concentrate group resources on core businesses has been completed.

Last updated: July 19, 2026