Accumulating high-margin operations & maintenance contracts

Research evidence excerpt

Accumulating high-margin operations & maintenance contracts

Global Markets Research

17 June 2026Takuma

6013.T 6013 JP / EQUITY: JAPAN MACHINERY

RatingAccumulating high-margin operations &

Remains Buymaintenance contracts

Target price

Increased from 3,300 JPY 4,200Waste treatment facilities are aging

Closing price JPY 3,530We reiterate our Buy rating on expected growth in high-margin operations & 16 June 2026

maintenance contracts

Orders and order backlog at the mainstay domestic environment and energy segment hit Implied upside +19.0%

all-time highs in 26/3. More than half of the order backlog (Figure3) is under operations &

maintenance (O&M) contracts that generate regular cash flow, and we think that could be

a factor that leads to the company committing to a total payout ratio of 100% in its

medium-term business plan. Takuma's business model revolves around long-term stable Relative performance chart

cash flow generation (see our 28 June 2024 report Takuma), and we assume a total

payout ratio of around 100%. We use a DCF model to obtain our target price of ¥4,200,

and we reiterate our Buy rating.

Facilities increasingly showing their age (Figure2)

General waste treatment facilities in Japan, which are public infrastructure, are aging, and

the Ministry of the Environment (MOE) has secured its highest budget in 20 years (Figure

1) for local governments that operate these facilities. Sometimes the budget does not

cover all facilities that need to be upgraded, and there has been an increase in work to

upgrade key facilities aimed at extending their lifespans as well as large-scale repair work.

In addition to full-fledged rebuilds and new construction, the company stands to benefit

from an increase in partial upgrade and repair work.

Source: LSEG, Nomura

26/3 Q4 orders