TOKYO KEIKI INC.（7721）
When discussing the defense industry, large corporations such as Mitsubishi Heavy Industries and IHI often come to mind. However, lesser-known mid-sized companies also play a critical role. Tokyo Keiki, which is celebrating its 130th anniversary, is a low-profile yet highly successful long-established company that holds key technologies driving innovation, including solutions for countering drones (unmanned aerial vehicles).
Founded in 1896, the company was Japan’s first full-fledged instrument manufacturer, established to domestically produce marine equipment that had previously relied heavily on imports. For more than a century, it has cultivated proprietary technologies in the fields of measurement, recognition, and control.
Today, the company’s defense business is built on two core pillars: radar warning systems for aircraft and inertial navigation systems for ships and submarines. These are areas that require highly advanced technological expertise.
Unlike mass-produced products, these systems are manufactured by skilled engineers who continuously enhance performance through hands-on processes, creating high barriers to entry for competitors.
The company has delivered solid performance, supported by increased defense spending. For the fiscal year ended March 2026, consolidated net sales rose 6% year-on-year to JPY 61.186 billion, while operating profit increased 10% to a record high of JPY 5.362 billion.
Its share price has increased approximately sixfold over the past three years, and future growth is expected to align with the strengthening of Japan’s defense capabilities.
One area attracting particular attention is drones. Tokyo Keiki’s research and development efforts are not focused on the aircraft themselves; instead, the company is leveraging its core technologies in radar and inertial navigation, combined with advanced sensing technologies, to detect and neutralize drones.
A specific example is Doppler lidar. This advanced technology uses laser light to analyze wavelength shifts (the Doppler effect) in light scattered by dust and fine particles in the atmosphere, and is primarily used in meteorological observation. The company aims to apply this technology to develop systems capable of accurately distinguishing small drones from birds at long distances.
As research and development capabilities are a key driver of growth, Tokyo Keiki is actively recruiting engineers.
At the same time, for mid-sized defense-related companies, increased visibility can be a double-edged sword. As their advanced technologies become more widely recognized, the likelihood of acquisition by overseas companies or investment funds may increase.
It is difficult to predict the risks when a previously low-profile yet highly successful company gains greater prominence. As of the closing price on July 7, the company’s market capitalization stood at JPY 115.7 billion. In general, a larger market capitalization may reduce the likelihood of becoming an acquisition target.
