ENVALITH
株式会社エフオン logo

EF-ON INC.

9514・Standard Market・Electric Power & Gas

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株式会社エフオン logo
EF-ON INC.9514

Business

eFon Co., Ltd. was established in 1997 as Japan's first company specializing exclusively in the ESCO business, and has since grown into a comprehensive energy service company. It currently operates three segments: the Energy-Saving Support Services Business, the Green Energy Business, and the Electricity Retail Business. Its core operations center on woody biomass power generation fueled by domestically sourced wood chips, operating five power plants: eFon Hita, Shirakawa, Bungo-Ono, Mibu, and Shingu. Through its Forestry Business (approximately 4,800 hectares nationwide), the company works to raise its fuel self-sufficiency rate, while directly selling the low-environmental-impact electricity it generates to corporate customers through its Electricity Retail Business—forming a vertically integrated business structure. The company is listed on the Standard Market of the Tokyo Stock Exchange.

Business Model

The bulk of revenue comes from the Green Energy Business (net sales to external customers of ¥13,855 million), with electricity sales at fixed or premium prices under the FIT/FIP system forming the base of stable earnings. The Forestry Business maintains the afforestation, forest management, and timber production cycle, reducing fuel costs through in-house production. In the Electricity Retail Business (net sales to external customers of ¥3,539 million), FIT/FIP-sourced electricity from Group power plants is combined with traceable non-fossil fuel certificates and sold to corporate customers as Green Electricity Sales Service, monetizing environmental added value. The Energy-Saving Support Services Business (net sales of ¥204 million) provides integrated support for customers' energy-saving and renewable energy adoption through ESCO services.

Company Strengths

The company owns and operates five woody biomass power plants: F-ON Hita, Shirakawa, Bungo-Ono, Mibu, and Shingu. Power generation output for the fiscal year under review reached 560,846 MWh. Through a mutual cooperation system among multiple power plants, the company has promoted the sharing and accumulation of maintenance information, and has achieved a track record of significantly reducing group-wide maintenance costs through two consecutive years of operation at the F-ON Hita power plant.

The Forestry Business secures approximately 4,800 hectares of managed forest land nationwide (equivalent to about 1,000 Tokyo Domes) and employs 85 people across the division. The company maintains a cycle of afforestation, forest management, and timber production, and achieves reduced fuel procurement costs and stable supply by internally processing timber unsuitable for lumber use as fuel for woody biomass power generation. The company is promoting in-house processing of unutilized wood chips at the Bungo-Ono, Mibu, and Shingu power plants, which are equipped with chip processing facilities.

Sales in the Electricity Retail Business increased 61.9% year on year to ¥3,604 million (¥3,539 million to external customers), and segment profit increased 1,881.5% year on year to ¥130 million, achieving profitability. The differentiation strategy of combining FIT/FIP electricity from the group's power plants with traceable non-fossil fuel certificates to offer the Green Electricity Sales Service has proven successful, leading to a substantial buildup of electricity sales contracts in April 2025.

ENVALITH's Perspective

Cumulative ordinary income of ¥3,150 million (up 339.3% year on year) and net income of ¥2,206 million (up 311.2% year on year) for the first three quarters of FY2026 (ending June 2026) represent a substantial increase on the surface, but the main driver was a derivative valuation gain of ¥2,455 million recorded under non-operating income. Meanwhile, core-business operating income declined 10.2% year on year to ¥810 million, as an increase in cost of sales (maintenance costs, ash disposal costs, Forestry Business personnel costs, etc.) weighed on profit. It should be noted that the valuation gain reflects mark-to-market valuation for a period that has not yet arrived, and carries the risk of reversal depending on future market prices.

The company has not revised its full-year earnings forecast (net sales of ¥19,500 million, operating income of ¥1,400 million, ordinary income of ¥900 million, net income of ¥630 million), but cumulative ordinary income of ¥3,150 million and net income of ¥2,206 million through the third quarter already substantially exceed the full-year forecast. This is presumed to be because the derivative valuation gain is not incorporated into the full-year forecast. Depending on electricity futures price movements in the fourth quarter, the valuation gain could fluctuate, leaving high uncertainty as to the full-year outcome.

As of the end of March 2026, long-term borrowings (including the current portion due within one year) stood at ¥20,953 million, accounting for approximately 45% of total assets of ¥46,373 million, indicating that financial leverage remains high. On the other hand, the accumulation of net income increased net assets to ¥20,718 million (up ¥2,033 million from the end of the previous fiscal year), improving the equity ratio to 44.7% (from 41.9% at the end of the previous fiscal year). While the risk of breaching financial covenants on the syndicated loan has decreased, the structural pressure on earnings from rising interest expenses (¥235 million cumulative through 3Q) amid a rising interest rate environment (an external factor) remains unchanged.

Growth Strategy

Deepening the vertically integrated renewable energy business through sustained high plant utilization, expansion of the forestry business, and growth in electricity retail

Fuel procurement improvements at the F-On Shingu Power Plant (achieving a 18.7% year-on-year increase in sold/transmitted power volume) continued, raising group-wide transmitted electricity volume by approximately 20% year on year. Strengthening resilience against individual risks such as lightning strikes and unplanned outages remains a challenge.

Expansion of logging personnel and introduction of operational equipment/machinery proceeded, substantially increasing raw material production volume by 29.6% year on year. However, profitability fell short of the intended level due to increases in personnel expenses, depreciation, and equipment maintenance costs. Improving cost efficiency alongside scale expansion is the next challenge.

Based on sales contracts secured in October 2025, revenue was substantially expanded by 78.0% year on year to ¥4,296 million, achieving profitability (segment profit of ¥171 million). A risk-hedging framework using electricity futures derivatives has also been established to address the increase in fixed-rate contracts.

In addition to stable revenue from existing ongoing projects, internal sales were substantially recorded due to the completion of customer equipment renewal work and newly installed equipment construction at group companies. Cumulative segment revenue for the third quarter of the fiscal year reached ¥897 million (up 547.0% year on year), and segment profit reached ¥34 million (up 85.1% year on year), achieving both revenue and profit growth.

Last updated: July 17, 2026