Daiki Axis Co.,Ltd.

Business Details

A comprehensive water treatment manufacturer that handles the development, manufacturing, construction, sales, and maintenance of septic tanks and industrial wastewater treatment systems in an integrated manner. Domestically, the company operates in household wastewater treatment, industrial wastewater treatment, groundwater-to-drinking-water conversion, and comprehensive building management. Overseas, it promotes the adoption of septic tanks primarily in Asian regions including India, Indonesia, Sri Lanka, China, and Bangladesh. The company positions the expansion of its stock business (maintenance and ESCO contracts) as a core strategy, aiming to build a stable earnings base. This segment accounts for approximately 51.7% of consolidated net sales in Q1 FY2026 (fiscal year ending December 2026), making it the largest segment.

Recent Overview

Lower sales and profit due to the drop-off of large-scale projects, though Maintenance and Groundwater-to-Drinking-Water businesses saw higher sales and profit

In Q1 FY2026 (fiscal year ending December 2026), sales were ¥6,864 million (down 0.9% year on year) and segment profit was ¥813 million (down 14.7% year on year), resulting in lower sales and profit. Domestic construction and sales were affected by the drop-off of several large-scale construction projects, mainly in industrial wastewater treatment, that had been recorded in the same period of the prior year. On the other hand, the maintenance business saw both sales and profit increase due to a steady rise in the number of contracts and the promotion of price pass-through. The groundwater-to-drinking-water business was also solid, with both new ESCO contracts and equipment sales performing well. Overseas, sales declined in India, Indonesia, and China due to the drop-off of large-scale projects, but in India, cost reductions from a review of manufacturing methods progressed, slightly improving the operating loss amount.

Key Products

Growth Drivers

• Steady increase in the number of domestic maintenance contracts and expansion of the stock business through the promotion of price pass-through to existing contract customers
• Steady increase in new groundwater-to-drinking-water ESCO contracts and growth in maintenance sales
• Expansion of new orders in the comprehensive building management business, driven by the increase in the number of DCM Group stores
• Progress in reducing material costs and improving production efficiency through a review of manufacturing methods and labor processes in India
• Establishment of an order-receiving system for factory wastewater treatment in Indonesia and strengthened sales to Japanese companies
• Start of local production in Bangladesh and efforts to secure government projects
• Efforts to promote the establishment of water quality regulations in various countries and to penetrate and strengthen the company's brand

Risks

• Performance fluctuations due to the irregular occurrence of large-scale domestic industrial wastewater treatment projects (the impact of the drop-off from the prior-year period has become apparent)
• Cost pressure from continued increases in procurement prices and outsourcing costs (risk of margin decline if price pass-through cannot keep pace)
• Risk of lower overseas sales due to the drop-off of large-scale projects in India, Indonesia, and China
• Deferred tax assets related to overseas subsidiaries' net operating loss carryforwards are not recognized, creating a risk of expanding losses if upfront investment continues
• Risk of suspension or delay of government projects due to political instability in Bangladesh
• Uncertainty regarding cost and capital expenditure incurred ahead of securing production efficiency in connection with the transition to a new manufacturing method in India
• Uncertainty in market development dependent on the state of water quality and environmental regulations in each country
• Risk of rising prices for product raw materials and equipment, and delivery delays, due to escalating tensions in the Middle East