Daiichi Kensetsu Corporation (1799) AI Stock Analysis

• Market Cap: ¥83.89B
• Dividend Yield: 3.55%
• Average Volume (3M): 13.31K
• Price to Earnings (P/E): 12.3
• Beta (1Y): 0.67
• Revenue Growth: 8.02%
• EPS Growth: 64.54%
• Country: JP
• Employees: 903
• Sector: Industrials
• Sector Strength: 72
• Industry: Engineering & Construction
• EPS (TTM): 77.16
• Shares Outstanding: 20,858,492
• 10 Day Avg. Volume: 13,640
• 30 Day Avg. Volume: 13,310
• PEG Ratio: 0.10
• Price to Book (P/B): 0.69
• Price to Sales (P/S): 0.85
• P/FCF Ratio: 20.34
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 74 Outperform
• Price Target: ¥4,446.00 ▲(20.16% Upside)
• Action: Reiterated Date: 03/05/26
• Date: Action: Reiterated 03/05/26

The score is driven primarily by strong financial strength—especially improved FY2025 profitability and an effectively debt-free balance sheet—tempered by uneven cash-flow conversion and volatility. Valuation is supportive (P/E ~12.33; ~3.27% yield), while technical signals are neutral overall.

Positive Factors

FY2025 margin expansion

Material margin expansion in FY2025 reflects improved project economics and operating leverage across the contracting business. Sustained higher EBIT and net margins support durable earnings power, better absorbing cost swings and enhancing ability to invest in bid competitiveness and project execution.

Effectively debt-free balance sheet

An effectively debt-free capital structure provides durable financial flexibility in a cyclical construction sector, lowering refinancing and interest-rate risk. It permits opportunistic bidding, slower reliance on external financing for working-capital swings, and preserves capacity for capex or dividends.

Improving returns and revenue growth

ROE improvement alongside an 8.8% revenue increase in FY2025 signals improving capital efficiency and business momentum. Rising returns indicate the firm is converting incremental revenue into profit more effectively, supporting reinvestment capacity and sustainable earnings growth over coming quarters.

Negative Factors

Weak free-cash-flow conversion

Material decline in free cash flow and low conversion versus net income point to working-capital swings or increased investment needs. Persistent weak FCF constrains internal funding for projects, dividends, or buybacks and raises reliance on careful cash management despite low debt.

Historic cash-flow volatility

Repeated periods of negative operating and free cash flow highlight structural volatility tied to project timing and milestone receipts. This episodic cash stress can force short-term liquidity measures, complicate multi-project execution, and weaken predictability of capital allocation over 2-6 months.

Cyclicality of revenues and results

Revenue and profit sensitivity to project cycles and demand means performance can swing materially across years. This cyclicality hinders consistent margin progression and makes forecasting and backlog management more challenging, increasing execution risk during softer construction markets.

Daiichi Kensetsu Corporation Business Overview & Revenue Model

Company Description

Daiichi Kensetsu Corporation provides contract work services for civil engineering, architecture, and railway construction in Japan. The company also offers planning, design, surveying, supervision, inspection, and consulting services for civil engineering, architecture, and railway construction. In addition, it manufactures and sells materials for civil engineering, architecture, and railway construction; and buys and sells, exchanges, leases, mediates, and manages real estate properties, as well as provides non-life insurance agency services. Daiichi Kensetsu Corporation was founded in 1942 and is headquartered in Niigata, Japan.

How the Company Makes Money

Daiichi Kensetsu Corporation generates revenue through multiple streams primarily related to its construction and engineering operations. The company earns income by undertaking construction contracts for both public infrastructure projects and private sector developments. These contracts often involve the design, planning, and execution of large-scale projects such as roads, bridges, and commercial buildings. Additionally, the company may engage in real estate development activities, where it acquires land, develops properties, and sells or leases them for a profit. Partnerships with government entities and private companies play a significant role in securing contracts and projects, which are key drivers of the company's revenue. Furthermore, maintenance and renovation services for existing structures add to the revenue streams by providing ongoing income beyond initial construction phases.

Daiichi Kensetsu Corporation Financial Statement Overview

Summary

Strong FY2025 profitability and margin expansion (net margin ~9.0% vs ~5.2%; EBIT margin ~13.0% vs ~7.0%) and an exceptionally conservative balance sheet with effectively no debt support a high score. The key offset is cash-flow volatility and weaker recent free-cash-flow conversion (FY2025 FCF ~41% of net income; FCF down ~46.8% YoY).

Income Statement

Profitability and growth improved meaningfully in FY2025: revenue rose 8.8% and margins expanded sharply (net margin ~9.0% vs ~5.2% in FY2024; EBIT margin ~13.0% vs ~7.0%). This reflects strong operating leverage and better project economics. Offsetting this, results have been somewhat cyclical over the period (including a revenue decline in FY2022), suggesting sensitivity to project timing and construction demand.

Balance Sheet

The balance sheet is exceptionally conservative with effectively no debt (debt-to-equity ~0.0 across recent years), providing strong financial flexibility and lower refinancing risk—particularly valuable in a cyclical Engineering & Construction backdrop. Returns are solid and improving (return on equity ~7.3% in FY2025 vs ~4.0% in FY2024), though still not consistently high enough to be considered best-in-class, indicating room to further enhance capital efficiency.

Cash Flow

Cash generation is positive in the last two years, but conversion is mixed. In FY2025, operating cash flow was ~¥6.0B and free cash flow ~¥2.4B, yet free cash flow fell ~46.8% year over year and free cash flow covered only ~41% of net income—suggesting working-capital swings and/or higher investment needs. Historical volatility is a key concern, with negative operating and free cash flow in FY2023 (and also negative in FY2020), even though FY2022 was very strong.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	53.30B	58.01B	53.99B	47.37B	42.75B	54.95B
Gross Profit	7.49B	10.90B	7.05B	6.75B	5.83B	8.45B
EBITDA	6.52B	9.55B	6.01B	5.93B	5.85B	7.17B
Net Income	3.08B	5.24B	2.79B	2.64B	2.60B	3.72B
Balance Sheet
Total Assets	78.00B	83.94B	82.60B	75.55B	73.10B	76.21B
Cash, Cash Equivalents and Short-Term Investments	14.74B	17.66B	18.02B	16.48B	24.85B	17.76B
Total Debt	454.42M	0.00	0.00	1.06M	3.59M	6.12M
Total Liabilities	9.86B	12.28B	13.26B	9.04B	7.69B	12.03B
Stockholders Equity	68.14B	71.66B	69.34B	66.51B	65.40B	64.18B
Cash Flow
Free Cash Flow	4.56B	2.42B	3.21B	-4.72B	7.78B	-1.30B
Operating Cash Flow	4.56B	5.98B	5.37B	-400.29M	10.46B	2.95B
Investing Cash Flow	0.00	-3.80B	-2.27B	-6.12B	-2.32B	-3.86B
Financing Cash Flow	0.00	-2.84B	-1.17B	-1.95B	-954.68M	-799.75M

Daiichi Kensetsu Corporation Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 3700.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:1799, the sentiment is Neutral. The current price of 3700 is below the 20-day moving average (MA) of 4213.75, below the 50-day MA of 4007.50, and above the 200-day MA of 3420.51, indicating a neutral trend. The MACD of 60.25 indicates Positive momentum. The RSI at 49.68 is Neutral, neither overbought nor oversold. The STOCH value of 31.98 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:1799.

Daiichi Kensetsu Corporation Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
1921	80 Outperform	¥65.13B	26.09	―	0.79%	-8.53%	-83.61%
1976	80 Outperform	¥89.35B	9.63	―	3.46%	-3.62%	9.37%
1799	74 Outperform	¥83.89B	12.33	―	3.55%	8.02%	64.54%
9621	73 Outperform	¥86.88B	12.54	―	1.25%	2.61%	-13.38%
1882	70 Outperform	¥92.27B	12.57	―	8.02%	2.51%	4.02%
1815	64 Neutral	¥68.58B	-149.33	―	2.73%	-3.59%	49.34%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%