Green Earth Institute Co., Ltd.

Business Details

The company's core technology is a non-growth-dependent bioprocess using corynebacterium, developing and providing technology to produce chemicals from biomass such as agricultural and food residues. The company does not own commercial production facilities itself, and operates four business models: Contract R&D Services (Stage 2), licensing, direct sales, and Technology Package. Its revenue pillars are national project contracts with NEDO as the main customer and R&D contracts with domestic and overseas partner companies. The company has set revenue expansion as its key management indicator and is pursuing a growth strategy based on pipeline expansion.

Recent Overview

Revenue was flat in the interim period, but operating loss expanded by ¥53 million year-on-year due to increased SG&A expenses

Revenue for H1 FY2026 (ending September 2026) (October 2025-March 2026) was ¥240 million (up 0.1% year-on-year), roughly flat, while SG&A expenses increased to ¥352 million (¥300 million in the prior-year period), causing operating loss to expand to ¥186 million (¥133 million in the prior-year period). Additionally, a newly incurred foreign exchange loss of ¥5,917 thousand brought the ordinary loss to ¥190 million. Deposits received increased by ¥633 million due to receipt of estimated capital expenditure amounts for the Biofoundry business, and acquisition of tangible fixed assets (including ¥429 million in construction in progress) advanced significantly. There is no change to the full-year earnings forecast (revenue of ¥1,035 million, net income of ¥146 million), and the fourth-quarter revenue concentration structure continues. There is no note regarding going concern assumptions.

Key Products

Growth Drivers

• Continued contracted work on NEDO national projects (Biofoundry business, Green Innovation Fund projects, Biomanufacturing Revolution Promotion project)
• Growing demand for conversion from petroleum-derived chemicals to biomass-derived chemicals (decarbonization and circular economy regulatory tightening)
• Expansion of Licensing & Product Sales (Stage 3) revenue (¥172 million in FY2025, ending September 2025, approximately 5x year-on-year)
• Maintaining and expanding total pipeline count (22 projects in FY2025, ending September 2025: 21 in Stage 2, 1 in Stage 3)
• Progress in geographic diversification driven by sales to China (¥54 million in FY2025, ending September 2025)
• Expansion of R&D and contracting capacity through progress in capital expenditure at the Biofoundry site (¥429 million in construction in progress)

Risks

• Risk of significant quarterly earnings volatility due to the fourth-quarter revenue concentration structure
• High dependence on NEDO, with earnings affected by the adoption and continuation of national projects
• Risk that interim operating loss has expanded year-on-year due to increased SG&A expenses (e.g., staff increases associated with business expansion)
• Risk of expanding accumulated deficit, with retained earnings carried forward at -¥1,281 million (end of H1 FY2026, ending September 2026)
• Risk that licensing and product sales revenue may not materialize if R&D outcomes fail to reach commercialization
• Risk of dependence on specific technologies and specific partner companies, and risk of intellectual property infringement or leakage
• Risk of foreign exchange fluctuations associated with overseas transactions, including the foreign exchange loss incurred in the current interim period (¥5,917 thousand)
• Risk that cash and cash equivalents decreased by ¥408 million from the prior fiscal year-end due to cash outflows associated with large-scale capital expenditure (acquisition of tangible fixed assets of ¥553 million)