1434.T

• Overall Financial Performance

  • Consolidated revenue hit an all-time high of 19.067 billion yen, up 28.8% YoY; operating profit hit an all-time high of 1.721 billion yen, up 50.6% YoY
  • ROA improved sharply to 9.6%, while ROE maintained a 15% level; equity ratio rose from 37.4% to 42.4%, and latest PBR exceeded 1.0x at 1.12
  • Consolidated order bookings reached 19.937 billion yen, and ex-real estate order backlog hit 10 billion yen, including large projects such as grid-scale storage facilities and defense facility renewal works
  • Operating cash flow increased 896 million yen YoY, closing cash and cash equivalents increased 700 million yen to 3.012 billion yen

• 3-Year Mid-Term Management Plan (2026-2028 August Fiscal Years)

  • Core vision: Achieve the 10-year JESCO VISION 2035 goal of becoming a "good company creating the future with stakeholders", target 15 billion yen market capitalization by the end of the mid-term plan, with slogan "Challenge & Innovation"
  • Long-term 2035 target: 50 billion yen revenue, 5 billion yen operating profit; 2028 end target: 25 billion yen revenue, 2.5 billion yen operating profit, 75.2% revenue contribution from domestic EPC, 10% operating margin, maintain ROE above 15%, reach 40% payout ratio
  • Three core pillars: (1) Business strategy centered on domestic EPC growth, expansion into high-growth areas and M&A, plus operational foundation strengthening; (2) Capital policy focused on maximizing growth investment and enhancing shareholder returns, maintaining ROE above capital cost, targeting sustained PBR above 1.0x; (3) ESG strategy focused on sustainable growth contributing to environment and social infrastructure, plus strengthened governance

• Segment Strategic Priorities

  • Domestic EPC: Target 1.5x revenue growth and 1.8x operating profit growth by 2028. Focus on expanding rooftop self-consumption solar, grid-scale storage facilities (target 1.9 billion yen revenue growth), electrical infrastructure for data centers and logistics warehouses (target 1.6 billion yen growth), and communication systems for disaster resilience and defense (target 1.8 billion yen growth). Plan 3 billion yen+ in M&A investment to acquire 2-3 firms over the mid-term, to secure skilled talent and expand domestic network. Shift from sub-contracting to main-contracting, with main-contract ratio for solar projects already rising from 50% (2024) to 60% (2025)
  • ASEAN EPC: Target return to profitability within the mid-term plan. Expand design/estimating to 300 staff and 650 million yen revenue, continue growing orders from Japanese clients, and train BIM engineers. Shift construction business to only low collection-risk orders from Japanese and Western firms, stop taking local Vietnamese client orders, and step up collection of outstanding receivables
  • Real Estate: Maintain stable 5 billion yen revenue and 800 million yen operating profit. Shift from pure flipping to value-add redevelopment: acquire underperforming properties, complete value-upgrades, secure rental income for a period, then sell for higher profit to maximize per-property returns, reinvest proceeds to grow the asset portfolio

• Operational Foundation and Human Capital

  • Prioritize safety as the top operational priority, strengthen talent recruitment/development, improve productivity via digital transformation, build strong relationships with partner contractors, maximize synergies across 5 domestic group companies
  • Hire 75+ new employees over 3 years, add 50+ new qualified certified personnel including foreign workers, target retention with improved compensation and engagement to keep turnover below 10%. Leverage web technology and generative AI to transform business processes
  • Structured program to recruit and train Vietnamese workers for domestic Japanese operations: partner with local Vietnamese universities to recruit candidates, train in Japanese language locally, then complete technical training at the company's Gunma training center, certify for Japanese work qualifications, and place into group operations

• ESG Strategy

  • Environment: Contribute to decarbonization via solar power construction, develop solar panel recycling capabilities, own forest assets for carbon offset, target 100% renewable energy for own electricity use
  • Social: Contribute to resilient society via renewal of aging social infrastructure, disaster risk reduction, and development of digital infrastructure
  • Governance: Strengthen corporate governance and enforce strict compliance standards

• 2026 August Fiscal Year consolidated guidance: 20 billion yen revenue (moderate growth from 2025), 1.8 billion yen operating profit, 1.1 billion yen net income attributable to parent shareholders. Order guidance is 20.5 billion yen (+2.8% YoY), order backlog guidance is 10.5 billion yen (+5% YoY)
• 2026 segment guidance: Domestic EPC targets 13.9 billion yen revenue and 1.501 billion yen operating profit (+10.8% YoY operating profit growth); ASEAN EPC targets 1.4 billion yen revenue with sharply reduced operating loss; Real Estate targets 47 billion yen revenue and 814 million yen operating profit, planning to sell approximately 2 properties to maintain stable earnings
• 2026 dividend guidance: 48 yen per share, up from 40 yen per share (including special dividend) in 2025
• Mid-term 2028 end guidance: Confirmed target of 25 billion yen consolidated revenue, 2.5 billion yen operating profit, with ROE maintained above 15% and payout ratio reaching 40% by 2028
• Capital allocation guidance: Allocate operating cash flow over the 3-year mid-term to M&A, operational base strengthening, and shareholder returns; direct cash inflows from real estate sales to new property acquisitions to grow the portfolio

1. Domestic EPC Segment: Revenue was 19.067 billion yen total consolidated, with domestic EPC revenue up 14.6% YoY, contributing 1.63 billion yen of the total 4.263 billion yen YoY consolidated revenue growth. Operating profit increased 38.2% YoY, driven by strong growth in renewable energy and communication system projects. Sub-segment performance: Solar power generation equipment +9.7% YoY, electrical equipment +4.2% YoY, communication systems +41.6% YoY. 2. ASEAN EPC Segment: The negative operating profit gap narrowed year-over-year, with an overall 186 million yen improvement in performance YoY. The design and estimating sub-segment saw growing orders from Japanese firms, while the construction sub-segment saw stagnant orders due to ongoing project suspensions/delays from Vietnamese regulatory restrictions on local construction and real estate firms. 3. Real Estate Segment: Revenue increased 109.5% YoY, contributing 2.539 billion yen of total consolidated revenue growth. Operating profit increased 6.3% YoY, with slower profit growth resulting from lapped high-margin property sales in the prior year. The segment sold 2 investment properties during the period, meeting performance expectations.

• Ongoing regulatory restrictions on construction and real estate in Vietnam have caused sustained project suspensions and delays for the ASEAN EPC construction segment, leading to stagnant orders and higher collection risk on local Vietnamese client projects
• The domestic electrical construction industry faces persistent labor shortages, which could constrain project execution capacity
• Rising real estate prices are expected to compress profit margins for the real estate segment, requiring a shift to value-add business models to maintain profit levels
• Growth of large-scale utility solar (mega-solar) in Japan faces market headwinds, requiring the company to focus on smaller-scale rooftop self-consumption solar to maintain growth
• ASEAN EPC still requires provisions for potential bad debt, constraining near-term profit improvement

Q: Can you elaborate on your plans for expanding grid-scale energy storage projects? / A: JESCO provides end-to-end services from planning, design, construction to operation and maintenance for engineering, trading and other clients, and has built strong trust from consistent delivery. The company already receives strong inquiry flow for new projects, with average project size of approximately 10 billion yen per project and a 2-3 year lead time from order to completion. Management will continue to expand the business through existing industry connections and referrals, and it remains a core priority growth area for the firm.

Q: The mid-term management plan has relatively aggressive numerical targets, what is your view on achievability? / A: The 2028 targets are derived directly from the 10-year 2035 vision of 50 billion yen revenue and 5 billion yen operating profit, with the 2028 targets set as the logical milestone toward that long-term goal. The plan was developed by the entire group, with bottom-up projections that account for market outlook, human resource capacity, and operational foundation investments, and the final aggregated bottom-up plan aligns almost exactly with the milestone 2028 target. Management believes the plan has solid underlying support and is highly achievable.