[Offshore Wind Power Related Stocks] Kanadevia (7004) vs Penta-Ocean Construction (1893) — A Thorough Comparison of Business Growth Potential

[Two Infrastructure Construction Companies — Former Hitachi Zosen of Environmental Plants vs. Marine Civil Engineering Giant Maricon]

Record Date: May 20, 2026

Note:

• Since both companies use Japanese GAAP, consolidated financial statements, and a March fiscal year-end, their financial periods are structured for easy comparison.

• While both companies are major players in infrastructure construction and plant business, their areas of expertise differ significantly. Kanadevia focuses on environmental plants such as waste-to-energy plants and decarbonization-related projects, while Penta-Ocean Construction is the largest marine civil engineering (Maricon) firm, developing port, offshore wind power, and defense-related facility construction.

• Both companies experienced significant performance fluctuations in the fiscal year ending March 2026: Kanadevia saw a 50% drop in net profit due to multiple instances of misconduct and technical issues at an overseas subsidiary, while Penta-Ocean Construction saw a contrasting result with a 178.4% increase in net profit following the completion of structural reforms.

• In terms of scale, Penta-Ocean Construction (sales of 794.3 billion yen) exceeds Kanadevia (sales of 645.2 billion yen), and Penta-Ocean's advantage in profitability is overwhelming (operating profit of 55.3 billion yen vs. 12.1 billion yen, a difference of approximately 4.6 times).

Author's Focus Points

• Attention Level: Kanadevia ★★☆☆☆ / Penta-Ocean Construction ★★★★☆

• The author is clearly very interested in Penta-Ocean Construction. The reasons are that it achieved a significant profit increase in the fiscal year ending March 2026 with operating profit up 154.9% and net profit up 178.4%, while also hitting a record-high order intake of 851.1 billion yen, placing it in a position where it can be judged to have broken away from being a 'perpetually undervalued construction stock,' along with multiple growth drivers such as offshore wind power, defense-related projects, and large-scale projects in Singapore, and a PER of approximately 16.9x, which is still a reasonable level relative to its earnings momentum. On the other hand, Kanadevia saw its performance pressured by multiple instances of misconduct, such as data falsification for marine engines, and technical issues at an overseas subsidiary (Switzerland), resulting in a 50% drop in net profit for the fiscal year ending March 2026. While it expects an 89% recovery for the fiscal year ending March 2027, a cautious view is necessary regarding whether structural reforms can be said to be complete. As an investment stance, Penta-Ocean Construction is positioned as 'structural reform complete x multiple growth drivers x dividend increase trend,' while Kanadevia is positioned as 'in the midst of reconstruction x long-term appeal of environmental themes.'

① Current Stock Price and Valuation Comparison

Kanadevia (7004, TSE Prime)

• Stock Price: Approx. 1,222 yen (as of May 2026)

• PER (Forecast): Approx. 40x (impact of sluggish performance)

• PBR (Actual): Approx. 1.14x

• ROE (Forecast): Low level

• Dividend Yield (Forecast): Approx. 2.08%

• Equity Ratio: Downward trend

• Market Capitalization: Approx. 204.2 billion yen

• Fiscal Year-End: March (Japanese GAAP, Consolidated)

• Annual Dividend: 25 yen for FY ending March 2026, 38 yen forecast for FY ending March 2027 (+13 yen increase)

• Former Company Name: Hitachi Zosen

Penta-Ocean Construction (1893, TSE Prime/NSE)

• Stock Price: Approx. 2,165 yen (as of May 2026)

• PER (Forecast): Approx. 16.9x

• PBR (Actual): Around 1x

• ROE (Actual): Improving trend

• Dividend Yield (Forecast): Approx. 2.2–2.4%

• Market Capitalization: Over approx. 200 billion yen

• Fiscal Year-End: March (Japanese GAAP, Consolidated)

• Annual Dividend: 48 yen for FY ending March 2026 (year-end dividend revised from 27 yen to 31 yen), 52 yen forecast for FY ending March 2027

② Comparison of Recent Financial Results

Kanadevia: Full-year results for FY ending March 2026 (announced May 12, 2026)

• Net Sales: 645.2 billion yen (+6% YoY, record high)

• Operating Profit: 12.1 billion yen (-55% YoY)

• Net Profit: 11.1 billion yen (-50% YoY)

• Main cause is deteriorating profitability in the Environmental segment

• Recorded 4.6 billion yen in extraordinary losses due to business restructuring and responses to inappropriate conduct, such as data falsification for marine engines

• Recorded expenses related to technical issues at a Swiss subsidiary

• Incurred additional construction costs after delivery for a domestic biomass power plant

Forecast for the fiscal year ending March 2027:

• Net sales: 640 billion yen (-1% year-on-year)

• Net profit: 21 billion yen (+89% year-on-year)

• Profitability improvement in the environmental business contributed

• Annual dividend: 38 yen (+13 yen increase)

History of inappropriate conduct at Kanadevia:

• Announced that unqualified welders were involved in bridge construction work

• Announced that there was data falsification for marine engines

• Recorded expenses related to follow-up observations and warranties

Penta-Ocean Construction: Full-year results for the fiscal year ending March 2026 (announced May 8, 2026)

• Net sales: 794.3 billion yen (+9.2% year-on-year)

• Operating profit: 55.3 billion yen (+154.9% year-on-year)

• Ordinary profit: 53.2 billion yen (+182.4% year-on-year)

• Net profit: 34.7 billion yen (+178.4% year-on-year)

• Orders received: 851.1 billion yen (record high)

• By segment: Significant profit increase in both domestic civil engineering and construction businesses due to smooth progress of large-scale projects and improved profitability

• Overseas construction business: 3.2 billion yen segment loss (significant improvement from the 15.6 billion yen loss in the previous fiscal year)

Forecast for the fiscal year ending March 2027:

• Net Sales: 818 billion yen (+3.0%)

• Operating Profit: 59 billion yen (+6.7%)

• Ordinary Profit: 54 billion yen

• Net Income: 35 billion yen

• Annual Dividend: 52 yen (+4 yen increase)

Announcements on May 8, 2026:

• Partial revision of the performance-linked stock compensation system accompanying the revision of the executive compensation system

• Decision to acquire treasury stock

• Introduction of an Employee Stock Ownership Trust (J-ESOP)

While both companies have market capitalizations in the 200 billion yen range, their earnings momentum is contrasting. Penta-Ocean Construction has seen significant profit growth and record-high orders, while Kanadevia has seen its profits halved due to numerous instances of misconduct and troubles at overseas subsidiaries.

③ Comparison of Business Structure and Mid-term Plans

Kanadevia
Business Segments:

• Environmental Division: Waste-to-energy incineration plants, waste treatment, biomass power plants, etc.

• Machinery & Infrastructure Division: Marine engines, bridge construction, industrial machinery, etc.

• Decarbonization Division: CO2 capture and utilization, hydrogen-related, green ammonia, etc.

Representative Services and Features:

• Top domestic market share in waste-to-energy incineration plants

• Waste-to-energy incineration plant projects overseas (Switzerland, Eastern Europe, Southeast Asia, etc.)

• Marine diesel engines

• Bridge construction (improving after unauthorized welding issues)

• Biomass power plant construction

• Decarbonization-related plants (methanation, CCS, etc.)

Strengths:

• Established in 1881, a long-standing company with 144 years of history

• One of the leading players in domestic waste-to-energy power plants

• Track record of securing overseas environmental plant projects

• Strategic shift toward the decarbonization sector (increase in decarbonization-related orders expected for the fiscal year ending March 2027)

• Market capitalization of approximately 200 billion yen

Challenges:

• Multiple instances of misconduct, including data falsification for marine engines and unauthorized welding in bridge construction

• Technical issues at a Swiss subsidiary

• Additional construction cost burdens for domestic biomass power plants

• Recording of 4.6 billion yen in extraordinary losses for the fiscal year ending March 2026

• Downward trend in equity ratio

• Increase in interest-bearing debt

• ROA level falling below the desirable benchmark of 5%

• Decline in operating profit margin (with some recent quarters turning negative)

• Brand penetration following the name change from Hitachi Zosen to Kanadevia

Medium-term Management Plan "Forward 25" (FY2023–):

• Sustainable growth of existing businesses

• Creation and expansion of growth businesses

• Promotion of sustainable management (enhancement of corporate value)

• Key measures: Profit improvement in the environmental sector, expansion of the decarbonization sector

Penta-Ocean Construction
business segments: