THE KINKI SHARYO CO., LTD.
7122・Standard Market・Transportation Equipment
Business
Kinki Sharyo Co., Ltd., founded in 1920, is a railway vehicle-specialized manufacturer headquartered in Higashi-Osaka City, Osaka Prefecture, and is a member of the Kintetsu Group. The company manufactures trains for major domestic railway operators including West Japan Railway Company and Kintetsu Corporation, and also expands into overseas markets such as the United States, Canada, and the Middle East, having received and executed large-scale orders for the Los Angeles County Metropolitan Transportation Authority and the Cairo Metro. The business consists of two segments: the Railway Vehicle-Related Business (approximately 97.7% of net sales) and the Real Estate Leasing Business (commercial facilities in Higashi-Osaka and Tokorozawa). The company has multiple local subsidiaries in the United States and Canada, which function as order-receiving and assembly bases for overseas projects.
Business Model
The Railway Vehicle-Related Business operates on a build-to-order basis, executing multi-year long-term projects from order receipt through delivery. The order backlog at the end of the fiscal year under review stood at a substantial ¥113,226 million, providing a structural underpinning for medium-term revenue. The Real Estate Leasing Business achieved an extremely high operating margin of 87.6%, functioning as a stable revenue source that complements fluctuations in the railway vehicle business's performance.
Company Strengths
The order backlog at the end of the fiscal year under review reached ¥113,226 million (96.0% year-on-year), including large-scale overseas projects such as trains for the Cairo Metro and trains for the Los Angeles County Metropolitan Transportation Authority. Orders received expanded significantly to ¥31,537 million (up 155.5% year-on-year), providing high visibility into revenue over multiple years.
Building on the business alliance agreement (concluded in 2012) with West Japan Railway Company, sales to this company in the fiscal year under review amounted to ¥9,431 million (25.4% of total sales), while sales to Kintetsu Railway amounted to ¥7,573 million (20.4% of total), with the top two customers accounting for approximately 46% of total sales. Including the relationship as a member of the Kintetsu Group, the company has built continuous business relationships with its major customers.
The Real Estate Leasing Business is a highly profitable segment, boasting an operating profit of ¥742 million on sales of ¥847 million, representing an operating margin of 87.6%. The company secures stable rental income centered on the Higashi-Osaka and Tokorozawa Commercial Facilities, demonstrating a portfolio effect that complements the earnings volatility of the make-to-order Railway Vehicle-Related Business.
ENVALITH's Perspective
Performance Trend
Looking at the performance trend over the past five fiscal years, revenue and operating profit peaked in FY2024 (ending March 2024) at revenue of ¥43,154 million and operating profit of ¥4,306 million, then plunged in FY2025 (ending March 2025) to revenue of ¥30,257 million and operating profit of ¥232 million. In FY2026 (ending March 2026), revenue entered a recovery trend at ¥37,100 million, but the company fell into an operating loss of ¥234 million. The main cause was a deterioration in the cost-of-sales ratio (90.2%), with external factors such as soaring raw material and energy prices and rising labor costs pushing up manufacturing costs. Operating cash flow improved significantly to ¥15,630 million, but this was mainly due to an increase in contract liabilities (advances received) of ¥14,489 million, and it should be noted that this merely reflects advance receipts corresponding to future revenue recognition. For FY2027 (ending March 2027), the company forecasts revenue of ¥53,000 million and operating profit of ¥100 million, with continued revenue growth expected, but a full-scale recovery in profit margins remains uncertain.
Growth Strategy
Steady execution of large-scale overseas orders already secured, combined with strengthening the profit structure through DX and manufacturing reforms.
By steadily executing already-secured large-scale overseas projects, including final assembly work on trains for the Cairo Metro and trains for the Los Angeles County Metropolitan Transportation Authority, the company aims to convert its order backlog of ¥113,226 million into sales and profit. This is the primary driver behind the projected sales of ¥53,000 million for FY2027 (ending March 2027).
The company is promoting a transformation of manufacturing through DX and improvements to manufacturing equipment, aiming to improve the cost of sales ratio. The cost of sales ratio deteriorated to 90.2% in FY2026 (ending March 2026), making cost reduction through manufacturing efficiency improvements key to earnings recovery. Cost containment through the use of renewable energy power is also being pursued in parallel.
To improve capital efficiency, the company is reducing its cross-shareholdings, recording a gain on sale of investment securities of ¥961 million in FY2026 (ending March 2026). Proceeds from the sale of ¥1,363 million were secured as cash and used to strengthen the financial base. The equity ratio declined to 49.3% (from 57.1% in the prior period), primarily due to an increase in total assets (mainly an increase in contract liabilities).
The company is capturing demand from domestic railway operators for new rolling stock, driven by requests for GX (green transformation) initiatives in the railway sector aimed at energy conservation and CO2 reduction. Overseas, it is pursuing business opportunities through new-build plans at railway operators with whom it has an established delivery track record, promoting order acquisition by proposing optimally specified vehicles that leverage its design and manufacturing technology capabilities. Orders received in FY2026 (ending March 2026) increased substantially to ¥31,537 million (up 155.5% year on year).
Last updated: July 19, 2026