ENVALITH
国際計測器株式会社 logo

KOKUSAI CO., LTD.

7722・Standard Market・Precision Instruments

Official website
国際計測器株式会社 logo
KOKUSAI CO., LTD.7722

Business

KOKUSAI CO., LTD. is a specialized manufacturer of measuring and testing instruments that manufactures and sells Balancing Machines (dynamic balance testing machines), Electric Servo Motor Type Testing Machines, Material Testing Machines, Automatic Shaft Straightening Machines, and other products, based on vibration measurement technology. Its main customers span the automotive parts and tire manufacturers as the core, extending to the home appliance, OA, railway, and electric power industries. Domestically, KOKUSAI CO., LTD. (the parent company) and Toshin Kogyo Co., Ltd. (specializing in material testing machines) serve as the core of manufacturing and development, and the company conducts global operations through overseas subsidiaries in the United States, South Korea, China, Germany, and Thailand. In FY2026 (ending March 2026), the overseas sales ratio reached 71.0%, reflecting an international business foundation centered on the Asian market.

Business Model

The company adopts a made-to-order business model tailored to customers' quality control and R&D needs. With Balancing Machine as its core product, it manufactures Electric Servo Motor Type Testing Machines, Material Testing Machines (Tensile, Compression, Torsion Testing Machines), and other equipment at domestic and overseas production bases, and sells them through direct sales and distributors. After-sales service and maintenance following product sales also constitute part of its revenue sources. The order backlog for FY2026 (ending March 2026) stood at ¥13,617 million (up 3.2% from the previous fiscal year-end), reflecting a structure in which the order backlog underpins sales in subsequent periods.

Company Strengths

Balancing Machine is the company's core product, accounting for 64.9% (¥9,699 million) of net sales in FY2026 (ending March 2026). The Tire Uniformity and Balance Combined Testing Machine (UB Machine) has a strong sales track record both domestically and internationally. The company has also succeeded in developing the High-Speed Inline Combined Testing Machine (H-UB Machine), and the KOKUSAI brand is recognized in Japan, Asia, the United States, and Europe.

The company independently developed the world's first Electric Servo Motor Type Testing Machine, replacing conventional hydraulic control, and has already obtained a patent for it. The product offers energy savings, low cost, and reduced environmental impact, with the product lineup expanded to over 30 types. The Flat Load Tire Comprehensive Testing Machine and the Railway Wheel Adhesion Force Measuring Device have won the Top 10 New Products Award sponsored by The Nikkan Kogyo Shimbun, demonstrating that the company's technological superiority has also been recognized by third-party organizations.

The company has five overseas subsidiaries—in the United States (KOKUSAI INC.), South Korea (KOREA KOKUSAI), China (Gaoji Kokusai Instruments (Shanghai)), Germany (KOKUSAI Europe), and Thailand (Thai Kokusai)—and has established local production, sales, and service structures. The Korean subsidiary also functions as a production base for the entire group, and in China the company operates five sales locations (Tianjin, Changchun, Qingdao, Wuhan, and Shenzhen). The overseas sales ratio reached 71.0% in FY2026 (ending March 2026).

ENVALITH's Perspective

In FY2026 (ending March 2026), the company achieved a second consecutive year of significant profit growth, with net sales of ¥14,948 million (up 13.2% year on year), operating profit of ¥2,085 million (up 72.2%), and net income of ¥1,496 million (up 59.1%). Meanwhile, the forecast for FY2027 (ending March 2027) anticipates a decline in both revenue and profit, with net sales of ¥14,000 million (down 6.3% year on year) and operating profit of ¥1,600 million (down 23.3%). The company cites raw material price surges and supply chain disruption risks stemming from the US-Iran conflict as the main factors, and the forecast appears to be based on conservative assumptions. Given the high level of the order backlog (¥13,618 million), there may be greater room for upside surprise than downside risk.

The structure in which Balancing Machine accounts for approximately 65% of net sales and major customers remain concentrated among tire manufacturers in China and Southeast Asia has not changed. The U.S. Segment (KOKUSAI INC.) fell into an ordinary loss of ¥103 million in FY2026 (ending March 2026) due to increased cost of sales, and the China Segment (Gaoji Kokusai Instruments (Shanghai) Co., Ltd.) also recorded an ordinary loss of ¥10 million, leaving profitability challenges. The structure in which geopolitical risks (US-China friction, US-Iran conflict) and currency fluctuations (yen depreciation/dollar appreciation, RMB fluctuation) directly affect performance means that the high degree of dependence on the external environment could act as a factor suppressing the stock's valuation.

The Electric Servo Motor Type Testing Machine recorded sales of ¥2,527 million in FY2026 (ending March 2026), with sales expansion progressing across multiple industries. However, the segment-specific profit margin for this product alone is not disclosed, making it difficult to grasp the actual state of its profit contribution, which remains a challenge. On the dividend front, the company paid a dividend of ¥35 per share (payout ratio of 31.5%) in FY2026 (ending March 2026) and plans ¥40 per share (forecast payout ratio of 53.9%) for FY2027 (ending March 2027). While the company has set a target total return ratio of 50%, it has also indicated a policy of strengthening internal reserves due to the US-Iran situation, and the balance between shareholder returns and financial soundness will be worth watching.

Growth Strategy

Expanding global share in tire-related testing machines and broadening sales of Electric Servo Motor Type Testing Machines across multiple industries as twin growth drivers

Centered on UB machines for production lines destined for tire manufacturers in China and Southeast Asia, the company is capturing capital investment demand from Japanese and Chinese companies expanding overseas (Europe, Southeast Asia). In FY2026 (ended March 2026), orders received for Balancing Machines reached ¥10,050 million (up 13.1% year on year), and the order backlog stood at ¥10,267 million (up 4.2%), maintaining a high level.

By emphasizing energy-saving and low-cost characteristics, the company is expanding sales across multiple industries including automotive, railway, distribution, home appliances, universities, and research institutes. In FY2026 (ended March 2026), sales exceeded ¥2.5 billion. Through improvements in precision and functionality and enhanced added value in energy-saving performance, the company will also promote expansion into the North American and European markets.

Against a backdrop of increasing orders for Creep Testing Equipment and Corrosion Environment Testing Equipment destined for the electric power industry, Toshin Kogyo Co., Ltd.'s net sales in FY2026 (ended March 2026) reached ¥950 million (up 292.7% year on year), achieving a turnaround to profitability with ordinary income of ¥325 million. The company will continue capturing demand for material testing related to carbon neutrality and sustain its contribution to earnings.

As a profit distribution policy, the company aims to achieve a total payout ratio of 50%, and plans to pay a dividend of ¥40 per share in FY2027 (ending March 2027) (projected payout ratio of 53.9%). At the same time, in light of geopolitical risks such as the U.S.-Iran situation, the company also intends to strengthen its internal reserves. It will enhance shareholder returns while maintaining an equity ratio of 60.0% (as of the end of FY2026 (ended March 2026)).

Last updated: July 19, 2026