ENVALITH
東洋電機製造株式会社 logo

TOYO DENKI SEIZO K.K.

6505・Standard Market・Electric Appliances

Official website
東洋電機製造株式会社 logo
TOYO DENKI SEIZO K.K.6505

Business

Toyo Denki Seizo, founded in 1918, is an electrical equipment manufacturer with a history of over 100 years, originating from the domestic production of electrical equipment for railway rolling stock. As a group comprising 7 consolidated subsidiaries and 4 affiliated companies, it operates in three segments: the Transportation Systems Business (Electrical Equipment for Railway Rolling Stock, Power Storage Systems for Railways), the Industrial Systems Business (Automotive Test Systems, power generation systems, production and processing equipment), and the ICT Solutions Business (Station Operation Equipment Systems, Cloud-based Remote Monitoring Systems). Major customers include JR and private railway companies, Chinese high-speed rail operators, Indonesian State Railways (PT Industri Kereta Api), government agencies, telecommunications carriers, and financial institutions. The company has manufacturing and sales bases both domestically and overseas, with local subsidiaries in China, Thailand, and the United States.

Business Model

The business operates on a build-to-order production system, recognizing revenue while accumulating order backlog. Consolidated order backlog at the end of FY2025 (ending May 2025) remained at a high level of ¥41,154 million. The Transportation Systems Business, accounting for approximately 69% of net sales, is the core segment, generating continuous earnings across three layers: new rolling stock products, equipment upgrades, and maintenance parts. The Industrial Systems Business captures capital expenditure demand for automotive test systems and power generation systems, while the ICT Solutions Business complements profitability with a high segment profit margin of 29.9%.

Company Strengths

The company achieved ahead of schedule, in FY2025 (ending May 2025), the final targets for FY2026 (ending May 2026) set out in the "Medium-Term Management Plan 2026" (net sales of ¥40.0 billion, operating margin of 5%, ROE of 8%). It realized net sales of ¥40,539 million (up 26.1% year on year), an operating margin of 5.9%, and ROE of 8.0%, confirming the improvement in earnings quality in numerical terms.

Consolidated order backlog at the end of FY2025 (ending May 2025) remained at a high level of ¥41,154 million (down 0.5% year on year). Centered on the Transportation Systems Business's order backlog of ¥31,814 million, it functions as a leading indicator of sales in the made-to-order business model, providing a certain degree of stability to the earnings outlook for the following and subsequent periods.

Since its founding in 1918, the company has accumulated technology originating from the domestic production of electrical equipment for railway rolling stock. It has a track record in major Asian markets, including continued orders for maintenance parts for Chinese high-speed rail and a large-scale project for Indonesia (contributing ¥5,262 million to net sales in FY2025 (ending May 2025)). The company invested ¥1,064 million in research and development, promoting the continued development of power electronics and motor technology.

ENVALITH's Perspective

The company's forecast for FY2027 (ending May 2027) calls for net sales of ¥42,500 million (up 5.0% year on year), but operating profit of ¥2,600 million (down 16.4% year on year), a significant decline. Downward pressures include the reaction to the high level of Transportation Systems Business segment profit in FY2026 (ending May 2026), which rose 47.1% year on year to ¥5,316 million, expenses arising from the integration of the Transportation Systems Business into the ICT Solutions Business, and the emergence of costs related to responding to China's rare earth export restrictions. While the accumulation of the order backlog supports sales growth, maintaining and restoring the profit margin is the most important evaluation point for FY2027 (ending May 2027).

Cash flow from operating activities in FY2026 (ending May 2026) was ¥△826 million, a significant negative figure against net income of ¥2,976 million. The main causes were a decrease in trade payables of ¥2,825 million (electronically recorded obligations down ¥2,493 million year on year) and payment of corporate taxes of ¥1,324 million. Trade receivables and work in progress have also increased alongside the expansion of the order backlog, and the expansion of working capital continues. In FY2027 (ending May 2027), the repayment burden of long-term borrowings of ¥7,447 million (versus ¥4,622 million in the previous period) will also be added, so close attention should be paid to the trend in free cash flow.

Overseas railway sales in the Transportation Systems Business fell sharply to ¥6,506 million in FY2026 (ending May 2026) (versus ¥10,147 million in the previous period, down 35.9%). The main cause is said to be the reaction to a large-scale project for Indonesia in the previous period, but in terms of order intake, orders from overseas (excluding China) increased, raising expectations for a recovery in sales from the next period onward. On the other hand, orders from China as well as from JR have decreased, and geopolitical risks (tensions in Japan-China relations, rare earth export restrictions) remain a source of medium- to long-term uncertainty for overseas business. In terms of market environment, robust railway infrastructure investment in various countries is a tailwind, but attention should be paid to the risk of fluctuations in the timing of order intake and sales recognition for projects.

Growth Strategy

Under the new medium-term plan "Sustainable 2030," the company is accelerating transformation and growth centered on a capital alliance with JR East

Covering the period from FY2027 (ending May 2027) through FY2030 (ending May 2030), the company is pursuing four policies: "Growth Strategy," "Strengthening Profitability," "Strengthening BS Management," and "Structural Reform." Building on the financial foundation achieved under "Medium-Term Management Plan 2026," the company aims to realize "Challenge for Transformation and Acceleration of Growth" and become a sustainable corporate group.

With a disposal date of August 6, 2026, the company will dispose of 578,000 treasury shares (total disposal value of approximately ¥1,164 million) to JR East through a third-party allotment. The proceeds will be allocated to R&D for improving the efficiency of Electrical Equipment for Railway Rolling Stock and to the development of electrical equipment for next-generation Shinkansen, deepening technological development collaboration with JR East.

Effective June 1, 2026, the ICT Solutions Business was integrated into the Transportation Systems Business. By offering an integrated proposal combining onboard electrical equipment and Station Operation Equipment Systems in response to cashless and ticketless needs from railway and bus operators, the company aims to expand order-taking opportunities and improve profitability. Turning around the ICT business, which fell into the red due to the reversal of a large-scale order booked in the prior period, is an urgent priority.

In response to China's rare earth export restrictions, the company is promoting supply chain diversification and the development of rare-earth-free products. Efforts to secure a stable supply system are ongoing, and related costs are expected to arise going forward. Managing these response costs while expanding orders for Automotive Test Systems and emergency generators is a key challenge.

Last updated: July 17, 2026