ENVALITH
虹技株式会社 logo

KOGI CORPORATION

5603・Standard Market・Iron & Steel

Official website
虹技株式会社 logo
KOGI CORPORATION5603

Business

Koki Company Limited is a materials manufacturer founded in 1916 and headquartered in Himeji City, Hyogo Prefecture. Its core business is the Casting Field, which manufactures and sells Steel Rolling Rolls, Molds (for Forging/Special Steel), Automotive Press Die Castings, Dense Bar (Continuous Cast Iron Bar), and other products. This segment accounts for approximately 89% of sales composition. In addition to domestic plants (Himeji East and West Plants), the company also expands overseas through two joint venture subsidiaries in Tianjin and Nantong, China. As remaining businesses, the company operates environment-related equipment and civil engineering contracting (Environment Field – Environmental Engineering) and friction materials for automobiles, railways, and industrial machinery (Environment Field – Functional Materials), under the slogan "Koki: Castings and the Environment." Major customers span a wide range, including domestic electric furnace and blast furnace manufacturers, domestic and overseas automakers, and industrial machinery manufacturers related to shipbuilding, aerospace, and energy.

Business Model

In the core Casting Field, the company produces molds, rolls, and Large Industrial Machinery Castings to order, while handling some Dense Bar (Continuous Cast Iron Bar) and Small Castings through forecast-based production to secure a stable utilization rate. Correcting product sales prices (cost pass-through) together with cost reduction and productivity improvement forms the twin pillars of earnings improvement. The Environmental Engineering segment supplements earnings through contracts for large-scale public works, while the Functional Materials segment does so through the diverse applications of KC Metal Fiber. Capital expenditure funds are procured through long-term borrowings and working capital through short-term borrowings, supplemented by internal funds.

Company Strengths

According to the company's securities report, the continuous cast iron bar "Dense Bar" has continuously expanded its product lineup and maintained/improved quality since production began in 1967, and holds the industry's top share. The extensive manufacturing track record and depth of product lineup built up over many years make imitation by competitors difficult, forming the foundation for securing stable sales both domestically and overseas.

The company possesses the capability to manufacture highly complex, large-scale castings by leveraging full-mold casting technology cultivated over many years. It has introduced the latest flow-thermal-stress coupled analysis (casting CAE) and sand mold 3D printers to ensure high-accuracy quality assurance and shorten development lead times. This directly contributes to winning orders for large machine tool castings destined for overseas aerospace and energy-related applications.

The equity ratio as of the end of FY2026 (ending March 2026) remained stable at 43.2% (42.6% in the previous period), with total net assets reaching ¥19,352 million. The company has concluded specified loan commitment line agreements totaling ¥8,500 million with 10 financial institutions, securing an unused borrowing balance of ¥3,600 million. It has also not breached the financial covenants of its syndicated loan to date, maintaining financial flexibility.

ENVALITH's Perspective

Operating profit for FY2026 (ending March 2026) fell sharply to ¥618 million (down from ¥1,116 million in the prior period). The main causes were a decline in demand for Automotive Press Die Castings (due to postponement/cancellation of new vehicle development plans by domestic automakers), weak demand for semiconductor manufacturing equipment (at subsidiary Koguchi Alloy Casting Co., Ltd.), and an increase in selling, general and administrative expenses (from ¥3,196 million to ¥3,413 million). The disappearance of one-off factors recorded in the prior period—insurance proceeds received of ¥207 million and disaster losses of ¥249 million—also weighed on the profit level. The forecast operating profit of ¥640 million for FY2027 (ending March 2027) represents only a 3.4% increase year-on-year, suggesting that a full-fledged earnings recovery will take time.

Cash flow from operating activities for FY2026 (ending March 2026) sharply decreased to ¥881 million from ¥4,807 million in the prior period. The main causes were an increase in trade receivables and contract assets of ¥878 million and a decrease in trade payables of ¥211 million. Meanwhile, expenditure on acquisition of tangible fixed assets increased to ¥1,565 million (from ¥1,050 million in the prior period), pushing free cash flow effectively into negative territory. The balance of cash and cash equivalents at period-end decreased to ¥2,418 million (from ¥3,158 million in the prior period), while short-term borrowings increased to ¥7,183 million (from ¥6,422 million in the prior period).

The earnings forecast for FY2027 (ending March 2027) projects revenue of ¥27,480 million (up 7.0% YoY) and operating profit of ¥640 million (up 3.4% YoY), representing increased revenue and profit. However, ordinary profit is forecast at ¥570 million (down 14.8% YoY) and profit attributable to owners of parent at ¥400 million (down 15.0% YoY), indicating a decline in the bottom line. The dividend per share has been reduced from ¥50 to ¥40 (payout ratio of 32.8%). Amid continued uncertainty from external factors such as U.S. trade policy, Middle East tensions, and rising prices, the reduction in shareholder returns could have a negative impact on investor sentiment.

Growth Strategy

Under the 8th Medium-Term 3-Year Plan "Finding Kai," the company is advancing three key priorities: labor-saving investment, decarbonization, and human resource development

Labor-saving has been positioned as a key priority under the 8th Medium-Term 3-Year Plan, with capital expenditure being actively increased. Expenditure on acquisition of tangible fixed assets in FY2026 (ending March 2026) rose to ¥1,565 million (from ¥1,050 million in the previous fiscal year), aiming to strengthen the profit structure through automation and efficiency improvements in production lines.

Decarbonization has been positioned as a key priority, promoting the receipt of orders for and progress of construction on large-scale projects in the Environmental Engineering segment. In FY2026 (ending March 2026), progress on a large-scale construction project in Kaifu-gun, Tokushima Prefecture led to increased revenue of ¥2,056 million (up from ¥1,893 million in the previous fiscal year); however, the segment loss widened to ¥89 million (from a loss of ¥44 million in the previous fiscal year), and achieving profitability remains an ongoing challenge.

"Human resource development and technical (skills) transfer, enhancement of employee training, and implementation of transfer programs" has been set as a key priority under the 8th Medium-Term 3-Year Plan. Through the transfer of skills from experienced technicians and the development of next-generation personnel, the company aims to maintain and enhance its manufacturing competitiveness over the medium to long term.

To address rising costs of raw materials, electricity, and other inputs, the company continues to promote corrections to product selling prices. In FY2026 (ending March 2026), cost of sales decreased to ¥21,656 million (from ¥22,003 million in the previous fiscal year); however, due to an increase in selling, general and administrative expenses, the operating margin declined to 2.4% (from 4.2% in the previous fiscal year), indicating that the effect of price pass-through remained limited.

Last updated: July 19, 2026