TESS Holdings Co., Ltd. (5074) Stock Price

Tes Holdings is a holding company that operates in the renewable energy and energy efficiency sectors, with Tes Engineering as its core business. The company operates two main business pillars: an engineering business that provides design, procurement, and construction (EPC) services for energy plants and utility facilities, and an energy supply business that includes power plant ownership and operation, power sales, operations and maintenance (O&M), retail electricity supply, and biomass fuel supply.

The company's primary customers span a wide range of industries including manufacturing, hospitals, and commercial facilities. It addresses customer needs for environmental compliance, energy efficiency, and energy cost reduction. Revenue is structured to combine both project-based income (flow) from EPC work and recurring operational income (stock) from power generation sales, O&M services, and electricity retail.

The business encompasses two technical areas: energy efficiency solutions including cogeneration and fuel conversion, as well as EPC for various utility facilities; and renewable energy equipment EPC for solar and biomass installations. On the energy supply side, the company operates power plants using FIT and FIP schemes, develops on-site power supply solutions (PPA), and has achieved scale with approximately 1,033 O&M service contracts at a 94% renewal rate, and 51 on-site PPA customers totaling approximately 57.8 MW in capacity (as of June 2025).

The company is pursuing higher profitability and enhanced corporate value by 2030 under its medium-term management plan "TX2030 TESS Transformation 2030" (2025–2030). Specific numerical targets for the fiscal year ending June 2030 include gross profit of 21.5 billion yen, operating profit of 13.4 billion yen, ROE of 11.7%, and ROIC of 5.7%. The company prioritizes growth investments, shareholder returns, and ESG-driven management. Near-term targets for 2027 include gross profit of 13.2 billion yen and operating profit of 6.4 billion yen, with plans to expand recurring revenue while improving capital efficiency (ROE/ROIC).

Key investment areas include large-scale battery storage development for the grid, converting feed-in tariff (FIT) solar projects to market-linked premium schemes (FIP) with battery integration, sustainable biomass fuel supply, and energy efficiency and renewable energy solutions (solar, cogeneration, etc.). The company differentiates itself through end-to-end service delivery—from engineering, procurement, and construction (EPC) to operations and maintenance (O&M)—and leverages on-site demand management expertise to ensure continuous power supply. Current performance includes approximately 1,033 O&M contracts with a 94% retention rate and 51 on-site power purchase agreements (PPAs) totaling approximately 57.8 MW, which will serve as the foundation for expanding recurring revenue.

The company is simultaneously expanding into new markets domestically and internationally. Domestically, it plans to increase cumulative grid battery storage capacity to 700 MW by 2030 through capacity markets, demand adjustment markets, and long-term decarbonization power auctions, while promoting FIP conversion with battery integration in regions like Kyushu where curtailment is increasing. Internationally, its Indonesian subsidiary is developing large-scale biomass fuel production technology and fuel sales, with a target to increase annual biomass fuel supply to 500,000 tons by 2030. Additionally, the company aims to capture customer outsourcing demand and expand its stock business, including power plant ownership, electricity sales, O&M services, and demand management.

The company actively pursues technological innovation using its proprietary energy management platform "TESS WebView" to implement optimal control through ICT and IoT. It is strengthening automation and online control for renewable energy curtailment management, and plans to enhance market value through battery charge-discharge optimization and improved forecasting accuracy. The company also invests in research and development for low-cost, large-scale biomass fuel production, establishes local procurement systems for fuel conversion and supply, and applies technology to new areas including fuel, storage, hydrogen, and geothermal energy. It expands its technological foundation through collaboration with human resources and external partners.