This article takes a fact-based look at Toyo Engineering Corporation's business, financial performance and medium- to long-term growth opportunities, with a focus on the factors behind the stock's surge on rare-earth prospects.
Toyo Engineering Corporation is an integrated engineering company involved in the construction of plants for the petrochemical, oil, gas, power generation, chemicals and fertilizers sectors. In recent years, it is said to have also focused on decarbonization-related fields, including geothermal energy, fuel ammonia and sustainable aviation fuel (SAF). The company cites operations in 11 countries and 16 locations worldwide, and is reportedly pursuing a shift into non-EPC businesses.
The stock is said to have surged on expectations related to rare earths. The background is said to include reports in July 2025 of rare-earth test drilling off Minamitorishima, followed by reports in October that exploratory drilling had begun. Rare earths comprise 17 elements used in smartphones, EVs and wind turbines, and China's production share and related supply risks have been highlighted.
In response to carbon-neutral policies, growth in the medium-term management plan is expected in decarbonization-related fields, including fuel ammonia, SAF, waste-to-energy and biomass power generation. Japan's potential market size is cited as a cumulative ¥1.5 trillion for fuel ammonia and ¥3.6 trillion for SAF. Expanding demand for fertilizer, petrochemical and power-generation plants in emerging markets is also said to be a pillar of long-term growth, with the company's technology and expertise expected to be utilized.
Against the backdrop of rising demand in emerging markets, the company is shown to have a high revenue share in the Middle East and Africa by region, and plant projects are reportedly expected to grow alongside expanding infrastructure demand in Asia, the Middle East and Africa. For the fiscal year ended March 2025, revenue was ¥278.0 billion, up 6.6% year on year, while operating income fell 61.4% to ¥2.5 billion, reportedly due to a decline in the gross profit margin on completed construction contracts. For the fiscal year ending March 2026, the company forecasts revenue of ¥200.0 billion, down 28.1% year on year, and operating income of ¥1.5 billion, down 42.1%, while ordinary income is expected to remain flat and net income is expected to increase substantially.