erex Co.,Ltd.

Business Details

Under the 2030 vision of "becoming a pioneer of the new era of electricity with renewable energy at its core," the company operates four integrated businesses: the Fuel Business, Power Generation Business, Trading Business, and Electricity Retail Business. Domestically, it operates electricity retail for corporate and individual customers, biomass power generation, and procurement/external sales of fuels such as PKS and wood pellets. Overseas, it is advancing the construction and operation of renewable energy power plants in Vietnam and Cambodia, expanding its decarbonization business with an eye toward JCM credit creation.

Recent Overview

Revenue declined slightly, but operating profit and profit attributable to owners of the parent increased significantly; cash flow deteriorated amid expanded overseas investment

For the full year of FY2026 (ending March 2026), revenue was ¥169,170 million (down 1.2% year on year), a slight decline. However, factors such as the reversal effect from the previous period's Itoigawa power plant impairment and purchase commitment valuation allowance, electricity derivative valuation gains, and increased external sales in the Fuel Business contributed to a significant increase in profit, with operating profit of ¥7,518 million (up 5.3% year on year) and profit attributable to owners of the parent of ¥5,332 million (up 151.7% year on year). On the other hand, expanded overseas investment—including ¥13,566 million in property, plant and equipment acquisitions and ¥4,310 million in loans—resulted in investing cash flow of negative ¥15,525 million (up 180.6% year on year in outflow), and operating cash flow also fell sharply to ¥1,888 million (down 90.3% year on year). Cash balance declined to ¥27,569 million. The earnings forecast for FY2027 (ending March 2027) remains undetermined due to numerous uncertainties, while the company plans an annual dividend of ¥22.00.

Key Products

Growth Drivers

• Increased electricity sales volume in the high-voltage segment of the Electricity Retail Business through expanded sales of market-linked plans and strengthened new agency and direct sales channels (high-voltage electricity sales volume up 21.4% year on year in FY2026, ending March 2026)
• Significant growth in revenue and profit in the Fuel Business driven by lower PKS procurement prices and increased external sales to other companies' biomass power plants
• Contribution to overseas power generation earnings from the commercial operation start of the Hau Giang biomass power plant in Vietnam in April 2025
• Expansion of the future earnings base through EPC progress toward the end-of-FY2027 operation start of two biomass power plants in northern Vietnam
• Strengthened new customer acquisition in low-voltage electricity retail (268 thousand supply contracts in FY2026, ending March 2026, up 8.9% year on year)
• Diversification of Fuel Business earnings through shipments from the Tuyen Quang wood pellet plant in Vietnam (production started March 2025) to other domestic companies
• New business development based on the memorandum of understanding signed in April 2026 with Vinacomin Power Holdings toward commercializing a coal-fired biomass co-firing business
• Diversification of the overseas power generation portfolio through the scheduled completion and operation start of the Cambodia hydroelectric power plant in June 2026
• Creation of a new revenue source through the carbon credit business utilizing the GX-ETS market (starting April 2026)
• Improvement in financial income/expenses due to yen depreciation (financial income of ¥1,466 million, up ¥913 million year on year) and the turn to profit in share of profit of equity-method investments (¥483 million)

Risks

• Decline in sales unit prices and pressure on gross profit margin due to prolonged low levels in electricity market prices (JEPX) (gross profit margin of 11.5% in FY2026, ending March 2026, down from 12.0% in the previous fiscal year)
• Risk of fluctuations in procurement prices and supply stability for biomass fuels (PKS, wood pellets)
• Risk of construction delays, cost overruns, and country risk in overseas power generation projects (Vietnam, Cambodia)
• Risk of rising financial leverage due to increased interest-bearing debt (interest coverage ratio sharply declined from 23.4x to 2.7x)
• Risk of tight cash flow due to a substantial decrease in operating cash flow (from ¥19,495 million to ¥1,888 million) combined with expanded investment
• Risk of sudden fluctuations in fuel and electricity prices due to geopolitical risks such as the situation in the Middle East
• Risk of decreased power generation volume at domestic biomass power plants due to curtailment instructions
• Foreign exchange risk (foreign-currency-denominated transactions related to fuel procurement and overseas business)
• Risk of lower utilization rates of power generation assets depending on electricity market conditions, including the continued suspension of the Itoigawa power plant
• Risk of continued low utilization rates at overseas power plants and factories (overseas business utilization remained low during the period and affected earnings)
• Risk of profit pressure from increased selling, general and administrative expenses (from ¥10,894 million to ¥13,453 million, up 23.5%)
• High uncertainty in earnings outlook given that the earnings forecast for FY2027 (ending March 2027) remains undetermined