NAKAKITA SEISAKUSHO CO.,LTD.

Business Details

A single-segment company that manufactures and sells Automatic Control Valves, Butterfly Valves, and Remote Control Devices as its core products, primarily for the shipbuilding industry (marine use) and power generation plants and other facilities (land use). Direct sales (direct delivery to manufacturers) form the main sales channel. By region, domestic sales account for 83.3% of total revenue, with export revenue of ¥4,886 million (16.7% of total revenue). Since its founding in 1930, the company has operated as a "comprehensive fluid control manufacturer" through high-mix, low-volume production. In December 2024, the company made ACE VALVE CO., LTD. a subsidiary, expanding the scope of consolidation.

Recent Overview

Revenue up 23.1% and operating income up 34.9%, marking substantial growth in both sales and profit, with order backlog expanding to a record high level

In FY2026 (ending May 2026), the company achieved revenue of ¥29,254 million (up 23.1% year-on-year), operating income of ¥1,561 million (up 34.9%), and ordinary income of ¥2,265 million (up 56.5%), representing substantial growth in both sales and profit. Butterfly Valves drove growth in both revenue and orders received, expanding to 46.4% of total revenue. On the other hand, due to the reversal effect from a gain on sale of investment securities of ¥968 million (extraordinary income) recorded in the prior period, net income was ¥1,724 million, a slight decrease (down 0.3% year-on-year). The period-end order backlog stood at ¥27,444 million, an increase of ¥2,916 million from the start of the period, strengthening the foundation for revenue accumulation in the following period. For FY2027 (ending May 2027), the company forecasts revenue of ¥30,000 million, operating income of ¥1,450 million, and net income of ¥1,600 million, anticipating continued revenue growth but a decline in profit.

Key Products

Growth Drivers

• Improvement in demand for new shipbuilding, including next-generation fuel vessels, driven by increased maritime transport volume and replacement demand in the shipbuilding industry (sufficient order backlog secured at domestic and overseas shipyards)
• Expectations for medium- to long-term expansion of marine demand following the signing of a Japan-US shipbuilding cooperation memorandum and the government's formulation of a "Shipbuilding Industry Revitalization Roadmap"
• Development of products for next-generation fuel vessels, exemplified by the acquisition of orders for cryogenic Butterfly Valves for 40,000 m³ class liquefied hydrogen carriers
• Expansion of land-use related projects such as power generation plants, driven by increased electricity demand associated with data center construction due to generative AI demand
• Expansion of consolidation scope and strengthened overseas operations through the December 2024 subsidiarization of ACE VALVE CO., LTD.
• Focus on securing orders for repair and maintenance-related parts and development of proposal-based sales activities
• Enhanced foundation for revenue accumulation in future periods due to a period-end order backlog of ¥27,444 million (up 11.9% from the prior period end)

Risks

• Impact on orders and business performance from fluctuations in US trade policy (tariffs and trade regulations)
• Uncertainty in the shipping and shipbuilding markets due to rising geopolitical risks
• Risk of deteriorating cost ratio due to price increases and rising raw material costs (cost of sales ratio of 83.5% in FY2026, ending May 2026)
• Constraints on productivity improvement arising from the high-mix, low-volume production structure, and the need to address a declining working population
• Accounting estimation risks related to the valuation of goodwill and customer-related assets (provisional accounting treatment for goodwill related to the ACE VALVE acquisition has been finalized; goodwill balance of ¥325 million and customer-related assets of ¥422 million)
• Foreign exchange fluctuation risk (export revenue ratio of 16.7%)
• Risk of downside in performance if the forecasted decline in profit for FY2027 (ending May 2027) — a 7.1% decrease in operating income and 7.2% decrease in net income — is compounded by continued variability in orders received by product category (declines in orders for Automatic Control Valves and Remote Control Devices)
• Risk of deteriorating cash flow due to expanded capital expenditure (acquisition of tangible and intangible fixed assets of ¥2,281 million), with operating cash flow at an outflow of ¥290 million