5290.T

• Market Tailwinds from National Policy

  • The Japanese government has approved the First National Resilience Implementation Mid-term Plan, allocating over 20 trillion yen for infrastructure projects from 2026 to 2030, a large increase from the previous 15 trillion yen plan. The plan sets mandatory targets to reach 100% completion for flood control measures by 2028 and 100% inspection/rehabilitation for large aging sewer pipes by 2030, creating strong demand for the company's core products.
  • Growing public and policy focus on aging infrastructure after the Yashio City road collapse accident has accelerated demand for the company's inspection and maintenance services.

• Strategic Product Positioning

  • The company proactively shifted its product development to flood control and rainwater management solutions ahead of policy shifts, and currently holds the top market share for key products including the M.V.P. System underground rainwater storage tank, Es-Hole prefabricated manholes, and the SJ-BOX seismic-resistant box culvert.
  • To enter the fast-growing large-scale underground tunnel regulation pond market, the company completed the acquisition of IKK (formerly IHI Construction Materials), a leading manufacturer of tunnel segment components. IKK's cost-competitive water pressure-resistant synthetic segments will be combined with Vertex's existing sales network to capture new large-scale project opportunities.

• Disaster Prevention and Maintenance Capability Expansion

  • The company is building a new sediment barrier testing facility in Nishiwaki, Hyogo to validate debris flow prevention product performance, with plans to open it for joint research with public infrastructure operators and academic institutions.
  • Vertex has built a unique end-to-end infrastructure maintenance capability, from concrete inspection and diagnosis to maintenance and repair, that sets it apart from other concrete product manufacturers. It is currently developing next-generation inspection technologies (including underwater non-destructive concrete strength testing) in partnership with academic institutions to address unmet industry needs for aging sewer inspection.

• Full-year FY2026 (ending March 2026) guidance is maintained at 41.0 billion yen in consolidated revenue, 6.35 billion yen in operating profit, 6.5 billion yen in ordinary profit, and 4.29 billion yen in net income. Management confirms it expects full-year revenue and profit growth, after absorbing the impact of lower large project volume from the prior year's Kyushu region projects.
  • A full-year plan revision will be announced after goodwill and purchase accounting for the IKK acquisition is finalized, currently under review as part of post-merger integration.
  • Dividend guidance is maintained: a 32.5 yen per share full-year dividend, a 2.5 yen increase year-over-year, consistent with the company's target 30% payout ratio and 50%+ total shareholder return target.
  • The 3rd Mid-term Management Plan targets are maintained: 50.0 billion yen revenue, 6.5 billion yen operating profit, and 14% ROE by FY2027 (ending March 2027).
  • The company has started formal preparations to apply for a listing transfer to the Tokyo Stock Exchange Prime Market, to improve its share price liquidity and valuation.

1. Concrete Segment: Revenue of 13.054 billion yen, +1.8% year-over-year; Segment profit of 2.519 billion yen, +7.1% year-over-year; Revenue contribution: 74% of total consolidated revenue. 2. Pile Segment: Revenue of 1.224 billion yen, -37.9% year-over-year; Reported a segment loss of 243 million yen, a 243 million yen year-over-year decrease in profit; Revenue contribution: 7% of total consolidated revenue. 3. Slope Disaster Prevention Segment: Revenue of 1.787 billion yen, +16.1% year-over-year; Segment profit of 537 million yen, +20.3% year-over-year; Revenue contribution: 10% of total consolidated revenue. 4. Other Segment: Revenue of 1.587 billion yen, -5.1% year-over-year; Segment profit of 385 million yen, +2.5% year-over-year; Revenue contribution: 9% of total consolidated revenue.

• The Pile segment faced significant headwinds from US tariff impacts that led to cancellation and delay of private construction projects in its core Hokuriku, Chubu, and Kansai markets, resulting in a 37.9% revenue decline and a 243 million yen operating loss in the first half.
  • Fluctuations in public works project ordering can create year-over-year volatility in near-term earnings, though management notes it focuses on cumulative mid-term performance and does not see this as a material structural risk.
  • Existing infrastructure inspection technologies have well-documented limitations that require industry-wide innovation to address, and the company's next-generation technology development is still in early stages with no guarantee of successful commercialization.
  • Post-merger integration of the newly acquired IKK is still ongoing, and the final impact of the acquisition on the mid-term plan and full-year financial results is not yet finalized.

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