TOYOKOH Inc. (341A) Stock Price

Toyoko develops and provides high-value maintenance technologies to extend the lifespan of aging factory roofs, bridges, steel towers, and other infrastructure. The company operates two core service technologies: the SOSEI method for roof reinforcement and CoolLaser, a high-power laser system for removing paint coatings and rust.

The company's primary customers include manufacturers in automotive and electrical industries that own factories, distributors, infrastructure owners in railways and roads, private plant companies, construction firms, and equipment rental companies. Toyoko's revenue comes from two main sources: construction income from in-house SOSEI施工 projects and recurring revenue from CoolLaser equipment sales (approximately ¥100 million per unit), consumables, and maintenance contracts. The company performs some construction work in-house to ensure quality control and market introduction.

Breaking down the business: the SOSEI division offers a full-service solution using instant-hardening resin and insulation materials sprayed on-site to enhance roof strength and thermal insulation, with particular expertise in safety standards and tool development from workers' perspectives. The CoolLaser division removes salt and rust through evaporation to prevent re-deterioration and significantly reduces industrial waste; it is also well-suited for robotization. This division generates revenue from multiple sources including equipment sales, consumables, periodic maintenance contracts, and trial施工 projects.

The company aims for sustainable growth and long-term cash flow maximization. After making advance investments in research and development and equipment design, the company posted operating losses through March 2024. However, it launched the commercial CoolLaser model "G19-6000 Series" in February 2023 and is now shifting its revenue structure toward recurring income from equipment sales, rentals, and maintenance and consumables. Market conditions are favorable. Japan has 730,000 road bridges, with the proportion built over 50 years ago expected to increase from approximately 30% in 2020 to approximately 55% in 2030 and approximately 75% in 2040. While infrastructure maintenance costs are projected to rise from the current annual 5 trillion yen under reactive maintenance to approximately 12 trillion yen by 2048, estimates suggest preventive maintenance could limit costs to approximately 6 trillion yen by 2048. The company aims to capture this growing demand.

The company is making focused investments in both its SOSEI and CoolLaser businesses while differentiating each. SOSEI is a roof renovation method using instant-hardening resin and insulation materials, with strengths in quality control and field-oriented method development. Repeat business from existing customers accounts for approximately 80% of sales, making it a stable revenue source. CoolLaser removes salt and rust from surfaces to prevent re-deterioration and reduces temporary structures and dust processing, addressing labor shortages and cost reduction needs. It differentiates from existing methods by emphasizing compatibility with industrial waste reduction and robotization. Specific initiatives include joint development with raw material suppliers and co-creation with construction partners and sales companies.

The company is also focusing on new market development and business scaling. Domestically, it is building systems to capture unexpected inquiries by expanding sales agent networks, participating in trade shows, and increasing media coverage. For SOSEI, it is creating new applications for aging roofs through partnerships with solar panel installation companies. For international expansion, the company is selecting local partners for U.S. market entry, preparing for exports, and recruiting talent. It plans to expand recurring revenue by transitioning to an equipment sales and rental-focused business model. Financially, the company will secure a stable funding base by considering options including cash reserves, borrowing, and third-party capital increases.

The company positions continuous technological innovation as the core of its strategy. Following the completed G19-6000, it is developing new laser heads, smaller equipment, and application development for various markets. For SOSEI, it is jointly developing more functional and environmentally conscious raw materials with suppliers. On the human resources front, securing engineers and field staff is a priority. The company is strengthening recruitment partnerships and recruitment communications. Through these technology and talent investments, it aims to achieve labor efficiency improvements and long-term lifecycle cost reductions in the field.