CHUDENKO Corporation (1941): FY2025 Results Summary — Record Net Sales and Operating Profit, Medium-Term Targets Raised

This article is based on publicly available IR materials and is not a recommendation to buy or sell any specific securities.

CHUDENKO Corporation, the Hiroshima-based general equipment engineering contractor of the Chugoku Electric Power group, reported higher revenue and higher operating and ordinary profit for FY2025 (the fiscal year ended March 31, 2026). Net sales rose to ¥227.8 billion and operating profit to ¥26.1 billion, both of which the company describes as record highs and both of which increased for the third consecutive fiscal year. Profit attributable to owners of parent declined to ¥18.4 billion, down for the first time in three fiscal years, due in part to a reactionary increase in income taxes following the decrease associated with the dissolution of an equity-method affiliate in the previous fiscal year. Alongside the results, the company raised the numerical targets of its Medium-Term Management Plan 2027 and the CHUDENKO Group 2030 Vision.

Consolidated Results (Full-Year Actual)

The company attributes the increase in net sales to steady progress on large-scale construction projects, including factory-related projects in the Chugoku Region, among other factors. Operating profit was supported by higher net sales as well as thorough cost management, improved construction efficiency, and company-wide efforts to further reduce costs. Gross profit margin improved to 19.7% from 17.5%. Figures in parentheses are profit margins.

Consolidated Performance (Billions of yen)	FY2025	FY2024	Change	YoY
Net Sales	227.8	221.8	5.9	103%
Gross profit	44.7 (19.7%)	38.9 (17.5%)	5.8	115%
Selling, general and administrative expenses	18.6	17.2	1.3	108%
Operating Profit	26.1 (11.5%)	21.6 (9.8%)	4.4	121%
Ordinary Profit	27.4 (12.1%)	23.4 (10.6%)	4.0	117%
Profit Attributable to Owners of Parent	18.4 (8.1%)	19.8 (9.0%)	-1.4	93%

The company breaks down the ¥-1.4 billion year-on-year change in profit attributable to owners of parent as follows: operating profit +¥4.4 billion, non-operating profit/loss -¥0.4 billion, extraordinary profit/loss +¥0.1 billion, and income taxes -¥5.6 billion. Non-operating items included an increase in interest income, dividends received and other items (¥0.5 billion) and an investment loss related to IAQ under the equity method (-¥1.2 billion). The income tax movement reflects a reactionary increase following the decrease associated with the dissolution of C&C Investment Corporation in the previous fiscal year (-¥4.4 billion).

Parent Results, Orders Received and Sector Breakdown

On a parent basis, orders received rose ¥37.2 billion year on year to ¥223.7 billion, which the company attributes to increases in factories, schools, hospitals and similar projects. Parent net sales rose ¥4.8 billion to ¥182.6 billion, mainly on offices and factories. Parent operating profit rose to ¥23.7 billion and ordinary profit to ¥26.3 billion, while net profit was ¥18.5 billion against ¥19.0 billion a year earlier.

Parent Performance (Billions of yen)	FY2025	FY2024	Ratio
Orders Received	223.7	186.5	120%
Net Sales	182.6	177.8	103%
Gross Profit	34.3 (18.8%)	28.4 (16.0%)	121%
Selling, General and Administrative Expenses	10.5	9.3	113%
Operating Profit	23.7 (13.0%)	19.1 (10.8%)	124%
Ordinary Profit	26.3 (14.4%)	21.5 (12.1%)	123%
Net Profit	18.5 (10.2%)	19.0 (10.7%)	97%

Net Sales by Sector, Parent (Billions of yen)	FY2025	FY2024
Indoor Electrical	94.7	90.2
Air-Conditioning Piping	35.1	34.5
Information Communication Equipment	9.0	12.9
Distribution Lines	33.5	30.8
Underground Power Lines for Transmission/Distribution	10.2	9.1
Total	182.6	177.8

Orders received by sector on a parent basis in FY2025 were Indoor Electrical ¥117.9 billion, Air-Conditioning Piping ¥51.3 billion, Information Communication Equipment ¥9.7 billion, Distribution Line ¥33.5 billion and Underground Power Line for Transmission/Distribution ¥11.2 billion. By region, parent orders received were ¥173.8 billion in the Chugoku Region and ¥49.8 billion in urban areas, while parent net sales were ¥152.9 billion in the Chugoku Region and ¥29.7 billion in urban areas. The share of urban areas in orders received moved from 18% in FY2022 to 22% in FY2025, while the share of urban areas in net sales moved from 21% in FY2022 to 16% in FY2025.

Order Backlog and Balance Sheet

The parent balance carried forward totaled ¥191.9 billion at the end of FY2025, up ¥41.0 billion year on year, which the company describes as a record high. The main components by sector were Indoor Electrical ¥122.0 billion and Air-Conditioning Piping ¥48.5 billion; by region, the Chugoku Region accounted for ¥122.6 billion and urban areas ¥69.2 billion. Within the General Work sector, of the ¥178.9 billion in orders received during the current period, 24%, or ¥42.7 billion, was recorded as net sales, and of the ¥138.6 billion balance carried forward from the beginning of the period, 69%, or ¥96.1 billion, was recorded as net sales; the company states that the ¥178.6 billion balance carried forward at the end of the fiscal year will contribute to net sales in FY2026 and beyond.

On the consolidated balance sheet, total assets were ¥317.8 billion as of March 31, 2026, up ¥23.9 billion, with current assets of ¥142.1 billion and non-current assets of ¥175.7 billion. Total liabilities were ¥69.9 billion and total net assets ¥247.8 billion, up ¥18.2 billion. The equity ratio was 76.9%, down 0.2 points. Cash flows from operating activities were ¥29.1 billion and cash flows from investing activities were -¥7.0 billion, giving free cash flow of ¥22.0 billion; cash flows from financing activities were -¥12.9 billion, and cash and cash equivalents at the end of the period were ¥43.6 billion.

FY2026 Forecast

The company expects a year-on-year increase in sales and profits for FY2026. Net sales are expected to increase by ¥12.3 billion for CHUDENKO parent and ¥4.8 billion for consolidated subsidiaries. Operating profit is expected to increase by ¥0.8 billion, driven by higher gross profit resulting from increased net sales, despite higher personnel expenses associated with human capital investment. Ordinary profit and profit attributable to owners of parent are expected to increase by ¥1.2 billion due to increased operating profit and other factors.

Consolidated Results (Billions of yen)	FY2025 Results	FY2026 Forecast	Change	Ratio
Sales	227.8	245.0	17.1	108%
Operating Profit	26.1 (11.5%)	27.0 (11.0%)	0.8	103%
Ordinary Profit	27.4 (12.1%)	29.5 (12.0%)	2.0	107%
Profit Attributable to Owners of Parent	18.4 (8.1%)	19.7 (8.0%)	1.2	107%

On a parent basis, orders received are expected to decrease by ¥13.7 billion to ¥210.0 billion, mainly due to decreased Indoor Electrical work and Air-Conditioning Piping work, while net sales are expected to increase by ¥12.3 billion to ¥195.0 billion, mainly due to increased Indoor Electrical work and Air-Conditioning Piping work.

Parent by Sector (Billions of yen)	Orders Received FY2025	Orders Received FY2026 Forecast	Net Sales FY2025	Net Sales FY2026 Forecast
Indoor Electrical	117.9	113.5	94.7	102.0
Air-Conditioning Piping	51.3	45.0	35.1	40.0
Information Communication Equipment	9.7	10.0	9.0	9.0
Distribution Line	33.5	32.5	33.5	32.5
Underground Power Line for Transmission/Distribution	11.2	9.0	10.2	11.5
Total	223.7	210.0	182.6	195.0

Shareholder Returns

The company has targeted a DOE of 3.0% since FY2025. The FY2025 planned annual dividend is ¥135 per share, equivalent to a DOE of 3.3% and a payout ratio of 39.5%. For FY2026 the company forecasts an annual dividend of ¥140 per share, a DOE of 3.2% and a payout ratio of 37.6%.

Item	FY2025 (Planned)	FY2026 (Forecast)
Annual dividend per share	¥135	¥140
DOE	3.3%	3.2%
Payout ratio	39.5%	37.6%

On share buybacks, the company acquired a total of 2 million shares for approximately ¥5 billion over the four years of the Medium-Term Management Plan 2024, and has established a share buyback framework of ¥18.0 billion for the three years of the Medium-Term Management Plan 2027. In FY2025, approximately 1.21 million shares were acquired for approximately ¥6.0 billion.

Medium-Term Management Plan 2027 and Capital Policy

The company states that FY2025 operating profit and ROE exceeded the numerical targets set for FY2027, the final year of the Medium-Term Management Plan 2027, and that FY2026 performance is also expected to exceed FY2025 results in light of the business environment and current order backlogs. It therefore revised the numerical targets of the Medium-Term Management Plan 2027 (FY2025-2027) and the CHUDENKO Group 2030 Vision. Figures in parentheses below represent changes from the values announced on April 28, 2025.

Metric	FY2025 Results	FY2026 Forecast	FY2027 Medium-Term Plan Target (Revised)	FY2030 Vision Target (Revised)
Net Sales (¥ billion)	227.8	245.0	260.0 (+20.0)	300.0 (+40.0)
Operating Profit (¥ billion)	26.1	27.0	28.0 (+5.0)	30.0 (+6.0)
ROE	7.9%	8.0%	8.5% or higher (+1.5P)	9.0% or higher (+2.0P)

On capital policy, the company plans to allocate ¥100.0 billion from business activities and the sale of cross-shareholdings over the three years of the Medium-Term Management Plan 2027: approximately ¥60.0 billion to growth investments (approximately ¥30 billion for strengthening business foundations including DX promotion, and approximately ¥30 billion for business expansion including environmental-related businesses) and approximately ¥40.0 billion to shareholder returns (approximately ¥22 billion in dividends targeting a DOE of 3.0%, and a share buyback framework of approximately ¥18 billion).

In its analysis of measures considering capital costs and share price, the company shows ROE of 3.1% in FY2021, -3.4% in FY2022, 3.9% in FY2023, 6.9% in FY2024 and 7.9% in FY2025, and PBR of 0.53 times, 0.59 times, 0.79 times, 0.79 times and 0.99 times over the same periods. It notes that FY2024 ROE excludes the impact of reduced income taxes arising from previously recorded investment losses treated as deductible expenses, and that the reported figure is 9.1%. Cost of capital for the most recent fiscal year is stated as 5%, calculated based on CAPM. The three stated directions for improving PBR are improving profitability, strengthening and enhancing capital policy, and strengthening IR activities.

Company Profile

CHUDENKO Corporation was established in September 1944 as Chugoku Electrical Construction Co., Ltd., is headquartered in Hiroshima City and is listed on the Prime Market of the Tokyo Stock Exchange. Capital is ¥3,481.9 million and the group has 16 consolidated subsidiaries, including operations in Malaysia, Singapore and Vietnam. Business activities cover general equipment engineering services, sales of electrical materials, insurance agency and leasing. As of the end of FY2025 the group had 4,697 employees on a consolidated basis and 3,465 at CHUDENKO parent, with total assets of ¥317.8 billion consolidated and ¥288.7 billion parent. The company operates 60 business offices in the Chugoku region, with a core structure of nine branch companies.

This article is an analysis based on publicly available information and is not a recommendation to buy or sell any specific securities. Investment decisions are your own responsibility.