F3/27 1Q Results: Continue to Expect Strong Construction Order Margins and Higher Building Margins to Drive Earnings Growth

研报英文原文证据摘录

Not for redistribution without written consent of Morgan Stanley

M

Update

August 7, 2026 03:37 PM GMT

Morgan Stanley MUFG Securities Co., Ltd.+

Kumagai Gumi (1861) | Japan

Ryo Yagi

Equity Analyst

F3/27 1Q Results: Continue to

Expect Strong Construction

Order Margins and Higher

Building Margins to Drive

Earnings Growth

Kumagai Gumi (1861.T, 1861 JT)

Construction | Japan

Stock Rating

Industry View

Price target

Shr price, close (Aug 7, 2026)

Mkt cap, curr, basic (bn)

Avg daily trading value (bn)

Overweight

Attractive

¥2,250

¥1,388

¥235.8

¥1.6

AlphaSignals Earnings Reaction

Unchanged

Modest shortfall

Largely unchanged

Impact to our thesis

Financial results versus consensus

Direction of next 12-month

consensus EPS

Source: Company data, Morgan Stanley Research

Key Takeaways

OP was ¥2.9bn (+42.2% YoY), below consensus of ¥4.1bn and our ¥3.7bn

forecast.

Versus our forecast, both civil engineering and building construction segments were

weaker than expected. In civil engineering, parent gross margin came in below

expectations as contributions from change orders and additional work were weaker

than anticipated in 1Q. In building construction, lower revenue was the primary

factor. While 1Q OP missed our forecast, our view remains that earnings growth

should accelerate ahead because: (1) we continue to expect civil engineering margins

to exceed company assumptions through additional work awards from 2Q onward;

and (2) the weakness in building revenue appears to reflect the timing of revenue

recognition rather than project delays. We thus expect progress against company

plans to improve from 2Q onward. We also continue to expect construction building

margins to exceed company assumptions.

Parent orders totaled ¥64.1bn (+3.7% YoY), with civil engineering orders up 108%

and building construction orders down 42%. While progress toward the full-year

building-order target is currently low, management indicated that around 80% of

the planned orders are backed by highly probable projects, suggesting the full-year

target remains achievable.

Construction order profitability continued to improve, rising just under 3ppt YoY.

…