ENVALITH
関東電化工業株式会社 logo

KANTO DENKA KOGYO CO.,LTD.

4047・Prime Market・Chemicals

Official website
関東電化工業株式会社 logo
KANTO DENKA KOGYO CO.,LTD.4047

Business

Kanto Denka Kogyo is a chemical manufacturer founded in 1938, possessing "electrolysis," "fluorination," "chlorination," and "organic/inorganic synthesis" as core technologies. Its business is organized into five segments: Specialty Chemicals Business (specialty gases and battery materials), Basic Chemicals Business (inorganic and organic chemicals), Iron-based Products Business (photocopier carriers and iron oxide), Trading Business, and Engineering & Construction Business. In the Specialty Chemicals Business, which accounts for approximately 80% of net sales, the company supplies semiconductor specialty gases such as nitrogen trifluoride and tungsten hexafluoride to major semiconductor manufacturers including Samsung Electronics (22.0% of net sales) and Kioxia (18.9%), and also develops lithium-ion secondary battery materials such as Lithium Hexafluorophosphate. In addition to its domestic Shibukawa and Mizushima plants, the company has manufacturing and sales subsidiaries in South Korea, Taiwan, and China, establishing a globally stable supply system.

Business Model

Building on its proprietary hydrofluoric acid electrolysis technology, the company manufactures high-purity specialty chemicals for semiconductor and battery applications and generates earnings through direct sales to major semiconductor and battery manufacturers. The business structure expands earnings through two levers: increasing sales volume and price revisions (price negotiations). In addition, royalty income from technology licensing agreements for battery material manufacturing technology (with MEXICHEM FLUOR INC. and others) serves as another revenue source. Within the group, the Engineering & Construction Business and the Trading Business support in-house manufacturing and sales, forming a vertically integrated model that enhances earnings efficiency across the group as a whole.

Company Strengths

The company's annual securities report states that it possesses world-class manufacturing capability and quality in Specialty Gases for Semiconductors such as Nitrogen Trifluoride, Tungsten Hexafluoride, and KSG-14. Continued large-scale transactions with world-leading semiconductor manufacturers Samsung Electronics (¥14,394 million) and Kioxia (¥12,342 million) serve as evidence of this quality and supply capability, with the two companies together accounting for approximately 40.9% of net sales.

The company has accumulated fluorine-related technology for over 50 years since establishing its proprietary hydrofluoric acid electrolysis technology in 1970. For new gases such as KSG-14 and KSG-5, it has built a patent network forming high entry barriers, with R&D investment of ¥2,304 million in the current period. In April 2024, a new research building was completed at the Mizushima district, and R&D activities also began at the Korean site in November 2023.

In addition to the domestic Shibukawa and Mizushima plants, the company has established Kanto Denka Fine Products Korea Co., Ltd. (manufacturing and R&D) and Kanto Denka Korea Co., Ltd. (sales) in Korea, Taiwan Kanto Denka Kasei Co., Ltd. (sales) in Taiwan, and Xuancheng Keditech Technology Co., Ltd. (manufacturing) and Keditech (Shanghai) Trading Co., Ltd. (sales and procurement) in China, building a stable supply system through diversification of manufacturing sites.

ENVALITH's Perspective

The company's forecast for FY2027 (ending March 2026) is extremely bullish, projecting net sales of ¥95,000 million (up 45.3% year on year) and operating profit of ¥10,000 million (up 82.5% year on year). While expanding semiconductor demand driven by the spread of generative AI serves as a tailwind, there remain numerous uncertain factors, including progress in normalizing Nitrogen Trifluoride production following the Shibukawa Plant fire, geopolitical risks stemming from U.S. trade policy, and instability in raw material procurement. Whether the cumulative first-half forecast (net sales of ¥42,200 million and operating profit of ¥5,300 million) is achieved will be an important checkpoint for gauging the reliability of the full-year outlook.

Although sales volume of Nitrogen Trifluoride declined due to the fire accident at the Shibukawa Plant in August 2025, resulting in an extraordinary loss of ¥1,030 million, ordinary income reached ¥6,629 million (up 47.1% year on year). While the contribution from foreign exchange gains of ¥1,291 million (versus ¥26 million in the prior period) was significant, the effect of price revisions for Tungsten Hexafluoride and Lithium Hexafluorophosphate, along with increased sales volume, drove the improvement in underlying earnings. The completion of the restoration of the Nitrogen Trifluoride manufacturing plant is an important precondition for revenue growth in FY2027 (ending March 2026).

The structural customer concentration risk, with Samsung Electronics and Kioxia together accounting for approximately 41% of consolidated net sales, remains unchanged. In addition, the medium-term management plan "Dominate 1000" originally aimed to achieve net sales of ¥100,000 million in FY2024, but this target was not met, resulting in a two-year extension of the final year. The actual result of ¥65,400 million for FY2026 (ending March 2025) remains at only about 65% of the target level. If the FY2027 (ending March 2026) forecast of ¥95,000 million is achieved, the company will move significantly closer to the target, but the balance between maintaining a dividend payout ratio policy of 30% or higher and continuing capital expenditures also warrants ongoing attention.

Growth Strategy

Extended execution of "Dominate 1000" centered on expansion of the Specialty Chemicals Business, ROIC-focused management, and business portfolio reform

Continuing to drive increases in sales volume of Tungsten Hexafluoride, KSG-14, and Lithium Hexafluorophosphate (Battery Materials) together with price revision effects. In FY2027 (ending March 2027), the company aims for net sales of ¥95,000 million through higher sales volumes of specialty chemical products and price revision effects on certain products. Expanding semiconductor demand driven by the spread of generative AI is functioning as an external tailwind.

Sales volume of Nitrogen Trifluoride declined due to the fire at the Shibukawa Plant that occurred in August 2025, but restoration of the manufacturing plant has been completed and operations resumed following approval from the relevant authorities. Safety measures (addition of indicator lights, enhanced identification labeling, review of equipment operations) and the assignment of dedicated safety personnel, along with KDK-SS activities, have been implemented to thoroughly prevent recurrence.

ROIC has been introduced as a management indicator that reflects awareness of cost of capital, improving capital efficiency in conjunction with business portfolio reform. The company continues to reduce policy-holding shares, though investment securities increased from ¥8,181 million in the previous fiscal year to ¥12,184 million (mainly due to expansion of valuation gains), requiring confirmation of consistency with the reduction policy.

Under the November 2023 revision of the medium-term management plan, the target dividend payout ratio guideline was raised from 20% to 30% or more. The company plans to continue its policy of dividend increases, with an annual dividend of ¥20 for FY2026 (ending March 2026) (payout ratio of 30.3%) and ¥36 for FY2027 (ending March 2027) (forecast payout ratio of 30.4%). The company aims to enhance corporate value while maintaining a balance between strengthening shareholder returns and continuing capital expenditure.

Last updated: July 19, 2026