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&Do Holdings

&Do Holdings 3457

And Doホールディングス
&Do Holdings Co.,Ltd.
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17F, Marunouchi Trust Tower North 1-8-1 Marunouchi, Chiyoda-ku, Tokyo, 100-0005, Japan
https://www.housedo.co.jp/
03-5220-5003
Summary
&Do Holdings focuses on one-stop housing services ranging from real estate sales, brokerage, and renovation to House-Leaseback and real estate finance (real estate-secured loans, reverse mortgage guarantees) via franchised outlets across Japan.
Real Estate Management & DevelopmentInsurance
Key dates
2018-07-02
Coverage initiation
Full Report
2022-05-13
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Executive summary

Business overview

&Do Holdings Co., Ltd. (name changed on January 1, 2022, in tandem with transition to a holding company structure) is an independent real estate service company combining fintech and real estate services to develop and offer unique services and products. The company focuses on one-stop housing services ranging from real estate sales, brokerage, and renovation to House-Leaseback and real estate finance (real estate secured loans, reverse mortgage guarantees) via franchised outlets across Japan. The company is transitioning its focus from one-time revenue businesses that are labor-intensive (Real Estate Selling and Buying, Real Estate Brokerage, and Renovation) to growth-driving businesses (Franchisee, House-Leaseback, and Real Estate Finance). The latter accounted for 44.9% of revenue and 66.7% of operating profit (before adjustments) in FY06/21.

The company says Japan’s aging society presents opportunities. It has developed several methods for helping seniors liquidize their properties. Such approaches include House-Leaseback (homeowners sell their homes for cash but continue to live in them under lease agreements), real estate secured loans that leverage the company’s nationwide appraisal and sales capabilities, and reverse mortgage guarantee services based on alliances with regional financial institutions.

The company explains its aim is to combine fintech and real estate services, leveraging its sales and appraisal capabilities and reputation earned through community-focused customer development via the nationwide Franchisee business. The company openly shares real estate information with customers, and took an early lead ahead of other real estate agents in finding and cultivating customers for one-stop housing services.

Earnings trends

In FY06/21, revenue was JPY39.0bn (+18.7% YoY), operating profit JPY2.6bn (+36.7% YoY), recurring profit JPY2.5bn (+46.4% YoY), and net income attributable to owners of the parent JPY1.6bn (+56.9% YoY). In the Franchisee business, the company had 702 total franchisee contracts. It held 339 properties in the House-Leaseback business, with a total value of JPY4.6bn. The number of purchase-leaseback contracts was 903 (+36.8% YoY), real estate secured loans outstanding in the Finance business were JPY9.7bn, and reverse mortgage guarantees outstanding were JPY5.3bn. The company’s stable and profitable growth-driving businesses grew steadily. At the same time, revenue and profit rose in all one-time revenue businesses, but this growth was particularly notable in the Real Estate Buying and Selling business, where vigorous housing demand boosted both revenue and operating profit to levels that exceeded the ranges projected by the company.

The full-year FY06/22 company forecast has been published in ranges, as was its forecast for FY06/21. The company forecasts revenue of JPY39.1–44.4bn (+0.2–13.8% YoY), operating profit of JPY3.0–3.7bn (+14.8–41.9% YoY), recurring profit of JPY2.8–3.5bn (+11.4–39.2% YoY), and net income attributable to owners of the parent of JPY1.8–2.3bn (+14.3–42.9% YoY). The company anticipates that impact from the COVID-19 pandemic will be minimal but recognizes that the current situation still requires caution and therefore made the decision to release its projections in the form of ranges. The lower limits of these ranges are conservative estimates that assume current conditions will continue, while the upper limits assume that economic activity will recover and company initiatives will prove effective.

On August 13, 2019, the company announced a new medium-term management plan through FY06/22. On February 10, 2021, the company revised its targets for the final year of the management plan to provide for targets in ranges. The revised targets for the final year of the management plan are revenue of JPY38.2–41.0bn, operating profit of JPY3.1–3.8bn, recurring profit of JPY2.8–3.5bn, and net income of JPY1.8–2.3bn. (The company has revised revenue and operating profit projections in its FY06/22 forecast.) The company made these revisions to take account of the effect of the COVID-19 pandemic on each business, such as the stagnation in cooperation with financial institutions in the reverse mortgage guarantee business, which has been a medium-term growth driver. The company also comprehensively considered investment in human resources, advertising, and system-related matters, with a view to establishing a base that can respond to changes in the external environment. Despite changes to the target figures for the final year of the management plan, the basic policy has not changed. Under the new medium-term management plan, the company still aims to build a sustainable growth model based on growth-driving businesses (recurring revenue businesses) centered on House-Leaseback with a focus on reverse mortgage guarantees as the next pillar of growth-driving businesses.

Strengths and weaknesses

The company has three key strengths: (1) the ability to develop unique services that combine real estate, finance, and IT to resolve the problems of an aging society; (2) a lineup of businesses that attract customers and provide convenient one-stop housing services; and (3) a nationwide network with a solid reputation providing community-focused sales and appraisal capabilities. The company’s weaknesses are: (1) a high reliance on loans to fuel rapid growth; (2) low barriers to entry and high dependence on real estate prices; and (3) personnel shortage following rapid growth.

Key financial data


Income statementFY06/13FY06/14FY06/15FY06/16FY06/17FY06/18FY06/19FY06/20FY06/21FY06/22
(JPYmn)Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.
Revenue8,25213,31014,57317,27616,84822,51831,54632,87939,03839,100–44,438
YoY-61.3%9.5%18.5%-2.5%33.7%40.1%4.2%18.7%0.2–13.8%
Gross profit3,6034,9374,9956,1536,5738,64211,15711,64612,914
YoY-37.0%1.2%23.2%6.8%31.5%29.1%4.4%10.9%
Gross profit margin43.7%37.1%34.3%35.6%39.0%38.4%35.4%35.4%33.1%
Operating profit1802776171,2771,2492,1163,1571,8932,5892,973–3,673
YoY-53.7%122.8%107.0%-2.2%69.4%49.2%-40.0%36.7%14.8–41.9%
Operating profit margin2.2%2.1%4.2%7.4%7.4%9.4%10.0%5.8%6.6%
Recurring profit1122055131,1821,1031,9093,0031,7172,5142,800–3,500
YoY-82.1%150.6%130.4%-6.7%73.0%57.3%-42.8%46.4%11.4–39.2%
Recurring profit margin1.4%1.5%3.5%6.8%6.5%8.5%9.5%5.2%6.4%
Net income801563537417381,2802,0061,0311,6171,848–2,310
YoY-93.5%127.0%109.9%-0.5%73.4%56.8%-48.6%56.9%14.3–42.9%
Net margin1.0%1.2%2.4%4.3%4.4%5.7%6.4%3.1%4.1%
Per-share data (JPY)
Shares issued (year-end '000) --16,78616,94816,99619,38719,43619,49119,556
EPS25.111.324.344.243.574.9103.452.982.994.50–118.13
EPS (fully diluted)--24.043.242.672.2100.051.981.6
Dividend per share--35.016.020.045.037.019.030.0
Payout ratio--72.0%18.1%23.0%30.0%35.8%35.9%36.2%
Book value per share-11.742.685.8127.9163.4498.5577.84592.27656.34
Balance sheet (JPYmn)
Cash and cash equivalents5354491,0022,0023,1303,69412,44419,27516,820
Total current assets1,9143,4225,5907,39412,21316,33828,35241,50539,271
Tangible fixed assets4,5132,5852,3535,2087,73013,08110,1739,18413,742
Investments and other assets1821871832212741,1061,7402,6563,303
Intangible assets466176735796122898991
Total assets6,6556,2558,20212,89520,27330,62140,38754,24357,306
Notes and accounts payable588593503404374547697474552
Interest-bearing debt (short-term)1,4452,0672,5824,1798,2567,25815,11718,33116,503
Total current liabilities4,3775,8376,94810,18218,32710,06018,44221,43220,860
Interest-bearing debt (long-term)2,9981,6602,0773,8436,0308,3588,16719,46121,765
Total fixed liabilities3,2921,9002,3964,7237,42310,87510,68121,23223,569
Total liabilities6,2245,6696,76210,72617,49420,93529,12342,66444,429
Total net assets4305861,4392,1692,7799,68611,26411,57912,877
Total liabilities and net assets6,6556,2558,20212,89520,27330,62140,38754,24357,306
Total interest-bearing debt4,4433,7274,6608,02214,28515,61623,28437,79238,268
Interest-bearing debt ratio-635.8%323.8%369.9%514.6%161.5%206.7%325.8%297.2%
Cash flow statement (JPYmn)
Cash flows from operating activities-41,4713451,430-9572,9209,2965,02112,697
Cash flows from investing activities-750-871-1,162-3,789-4,106-6,369-7,806-11,434-15,289
Cash flows from financing activities741-7241,4063,3516,1334,0727,25812,745136
Financial ratios
ROA (RP-based)2.7%3.2%7.1%11.2%6.7%7.5%8.5%3.6%4.5%
ROE-57.4%34.9%41.1%29.8%20.6%19.2%9.1%13.2%
Equity ratio-9.4%17.6%16.8%13.7%31.6%27.8%21.3%21.4%
Per-employee data (JPYmn)
Number of employees391437421423439534621783838
Average number of temporary employees65209169185170194173206209
Sales per employee (incl. temporary employees)18.120.624.728.427.730.939.733.237.3
Recurring profit per employee (incl. temp. employees)0.20.30.91.91.82.63.81.72.4
Capital expenditures, other (JPYmn)
Capital expenditures7688981,1673,7724,0084,7957,2569,72214,457
Depreciation and goodwill amortization150152119155228329447508552
Source: Shared Research based on company data
Note: Per-share data is adjusted for stock splits. On July 1, 2018, the company executed a two-for-one stock split and per-share data for previous periods have been adjusted accordingly. Note that DPS figures for periods before FY06/18 are actual dividend amounts before the stock split.
Note: Figures may differ from company materials due to differences in rounding methods.
Earnings by segment
FY06/15FY06/16FY06/17FY06/18FY06/19FY06/20FY06/21
(JPYmn)Cons.Cons.Cons.Cons.Cons.Cons.Cons.
Revenue14,57317,27616,84822,51831,54632,87939,038
YoY-18.5%-2.5%33.7%40.1%4.2%23.5%
Growth-driving (recurring revenue) businesses2,7683,0325,2498,74717,64819,19317,787
YoY-9.5%73.1%66.6%101.8%8.8%-7.3%
% of total18.4%17.2%30.6%38.3%55.4%57.6%44.9%
Franchisee business1,5061,8802,2202,4962,8332,9653,335
YoY-24.8%18.1%12.4%13.5%4.7%12.5%
% of total10.0%10.7%12.9%10.9%8.9%8.9%8.4%
House-Leaseback business1,2621,1282,8075,72214,00215,21913,357
YoY--10.6%148.9%103.8%144.7%8.7%-12.2%
% of total8.4%6.4%16.3%25.1%43.9%45.7%33.7%
Financing0242215298111,0081,095
YoY--824.3%138.9%53.3%24.3%8.6%
% of total0.0%0.1%1.3%2.3%2.5%3.0%2.8%
One-time revenue businesses12,20014,54611,91514,07514,19914,06321,796
YoY-19.2%-18.1%18.1%0.9%-1.0%55.0%
% of total81.1%82.6%69.4%61.7%44.5%42.2%55.1%
Real Estate Buying and Selling business6,1098,9507,1128,9099,0407,10814,625
YoY-46.5%-20.5%25.3%1.5%-21.4%105.7%
% of total40.6%50.8%41.4%39.0%28.4%21.3%36.9%
Real Estate Brokerage business1,8081,7231,8602,0752,0592,2532,311
YoY--4.7%7.9%11.6%-0.8%9.4%2.6%
% of total12.0%9.8%10.8%9.1%6.5%6.8%5.8%
Renovation business4,2823,8732,9443,0903,1002,6322,716
YoY--9.6%-24.0%5.0%0.3%-15.1%3.2%
% of total28.5%22.0%17.1%13.5%9.7%7.9%6.9%
Koyama Construction Group-----2,0712,142
YoY------3.4%
% of total-----6.2%9.9%
Other683210-311411
YoY--53.5%-67.5%---55.3%-22.0%
% of total0.5%0.2%0.1%-0.1%0.0%0.0%
Adjustments-463-334-327-300-330-449-554
Operating profit6171,2771,2492,1163,1571,8932,589
YoY-107.0%-2.2%69.4%49.2%-40.0%36.7%
Operating profit margin4.2%7.4%7.4%9.4%10.0%5.8%6.6%
Growth-driving (recurring revenue) businesses8841,0881,7092,3943,7703,7993,956
YoY-23.0%57.0%40.1%57.5%0.8%4.1%
Operating profit margin31.9%35.9%32.5%27.4%21.4%19.8%22.2%
Franchisee business8311,1111,3051,4811,6781,8022,226
YoY-33.6%17.5%13.5%13.3%7.4%23.5%
Operating profit margin55.2%59.1%58.8%59.3%59.2%60.8%66.7%
House-Leaseback business53-83317702,0751,9801,653
YoY---132.7%169.5%-4.6%-16.5%
Operating profit margin4.2%-11.8%13.5%14.8%13.0%12.4%
Financing0-1473143171876
YoY---95.8%-88.2%3.7%334.1%
Operating profit margin0.0%-32.9%27.0%2.1%1.7%7.0%
One-time revenue businesses8201,4521,0091,5961,5801,1341,978
YoY-77.0%-30.5%58.2%-1.0%-28.3%74.5%
Operating profit margin6.7%10.0%8.5%11.3%11.1%8.1%9.1%
Real Estate Buying and Selling business4299024238287793401,082
YoY-110.3%-53.2%95.9%-5.9%-56.3%217.9%
Operating profit margin7.0%10.1%5.9%9.3%8.6%4.8%7.4%
Real Estate Brokerage business265268373478492575596
YoY-1.4%39.1%28.0%2.8%16.9%3.8%
Operating profit margin14.6%15.6%20.1%23.0%23.9%25.5%25.8%
Renovation business126281213290310116172
YoY-122.3%-24.3%36.4%6.9%-62.7%48.3%
Operating profit margin3.0%7.3%7.2%9.4%10.0%4.4%6.3%
Koyama Construction Group-----103128
YoY------24.6%
Operating profit margin-----5.0%16.7%
Other-136-18--27-11-5
YoY-------
Operating profit margin-18.5%-----
Adjustments-1,075-1,268-1,451-1,823-2,166-3,029-3,339
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Segment revenue includes internal sales and transfers. 

Recent updates

Partnership with Fukushima Bank in the reverse mortgage guarantee business, a first for Japan's Tohoku area

2022-05-10

On May 9, 2022, &Do Holdings Co., Ltd. announced that its consolidated subsidiary Financial Do Co., Ltd. has formed a partnership with Fukushima Bank, Ltd. (TSE Standard: 8562), and that it will evaluate real estate collateral and guarantee the bank's "Fukugin Reverse Mortgage Loans," which it began offering on May 2, 2022.

This is the group's first partnership in the Tohoku area for its real estate collateral evaluation and loan guarantee business.

Partnership with Tokyo Bay ShinkinBank in the reverse mortgage guarantee business

2022-04-28

On April 27, 2022, &Do Holdings Co., Ltd. announced a partnership with Tokyo Bay Shinkin Bank in the reverse mortgage guarantee business.

The company announced that consolidated subsidiary Financial Do Co., Ltd. has partnered with Tokyo Bay Shinkin Bank (Ichikawa, Chiba Prefecture; unlisted) to evaluate real estate collateral and provide loan guarantees for the reverse mortgage loan "Koharu Biyori" that the bank will begin offering in late May 2022 (planned).

Tokyo Bay Shinkin Bank is a regional financial institution with 27 branches primarily located in Ichikawa, Chiba Prefecture. &Do Holdings and Financial Do aim to grow the reverse mortgage guarantee business by forming partnerships with many financial institutions.

Partnership with Shizuoka Bank in the reverse mortgage guarantee business

2022-04-11

On April 8, 2022, &Do Holdings Co., Ltd. announced a partnership with the Shizuoka Bank, Ltd. in the reverse mortgage guarantee business. 

The company announced that on the same day, its consolidated subsidiary Financial Do Co., Ltd. formed a partnership with the Shizuoka Bank (TSE Prime: 8355). Under the partnership, Financial Do will evaluate real estate collateral and provide debt guarantee services for the bank's Shizukin Reverse Mortgage Kagayaki. 

The company entered into a business alliance with the Shizuoka Bank for the referral of House-Leaseback customers in January 2022. Through this partnership in reverse mortgage guarantee business, the company will support the bank in the latter's provision of reverse mortgage products.

Formulation of a new medium-term management plan

2022-04-01

On March 31, 2022, &Do Holdings Co., Ltd. announced the formulation of a new medium-term management plan.

The company announced that it had formulated a three-year medium-term management plan with the goal of increasing corporate value through further growth and development. To that end, it aims to establish a highly profitable framework through additional expansion of growth-driving businesses and the cultivation of services that fulfill both financial and real estate-related needs.

The company has revised performance targets for FY06/22, the final year of the current medium-term management plan (announced in August 2019), due primarily to impact from the global spread of the COVID-19 pandemic. Then, in light of steady growth of the Franchisee, House-Leaseback, and Finance businesses, which it positions as growth-driving businesses, the company announced the new three-year medium-term plan.

In the new plan, the company set out three growth strategies: further expansion of the growth-driving businesses, cultivation of services that combine real estate and finance, and promotion of the transition to a highly profitable earnings structure. For the final year of the plan, FY06/25, the company targets revenue of JPY51.8bn (CAGR of 7.3% from FY06/21 to FY06/25), operating profit of JPY4.2bn (12.7%), recurring profit of JPY4.0bn (12.3%), net income of JPY2.6bn (13.1%), and recurring profit margin of 7.7% (+1.3pp versus FY06/21). Shared Research plans to report on the details of the plan after interviews with the company.

Partnership with Showa Shinkin Bank in the reverse mortgage guarantee business

2022-03-31

On March 31, 2022, &Do Holdings Co., Ltd. announced a partnership with the Showa Shinkin Bank in the reverse mortgage guarantee business.

The company announced that on the same day, its consolidated subsidiary Financial Do Co., Ltd. entered into a business partnership with the Showa Shinkin Bank (Setagaya-ku, Tokyo; unlisted). Financial Do will evaluate real estate collateral and provide debt guarantee services for the bank's "Showa Reverse Mortgage" loan products scheduled for launch in mid-May 2022.

Through this partnership, Financial Do will support Showa Shinkin's reverse mortgage initiatives by providing debt guarantees based on appropriate and timely evaluations of real estate collateral as a guarantee company.

Bulk acquisition of real estate in the House-Leaseback business

2022-03-29

On March 28, 2022, &Do Holdings Co., Ltd. announced the bulk acquisition of real estate in the House-Leaseback business.

The company announced that in order to expand the House-Leaseback business, it acquired real estate properties in collaboration with Will Gates Investment Co., Ltd. (unlisted; headquartered in Tokyo), a company that commercializes and resells condominium assets. The acquired properties were owned for the purpose of sale and lease by SAF Inc. (unlisted; headquartered in Tokyo), a condominium management subsidiary of Okuraya Jutaku Inc. (unlisted; headquartered in Tokyo) that acquires and manages investment condominiums, mainly in the Tokyo metropolitan area.

The acquired properties comprise 100 compartmentalized ownership buildings, mainly in the Tokyo metropolitan area. The acquisition price was JPY1.9bn (excluding tax), and the acquisition date was March 25, 2022.

Business alliance with Kanagawa Bank for the referral of House-Leaseback customers

2022-03-15

On March 15, 2022, &Do Holdings Co., Ltd. announced a business alliance with Kanagawa Bank, Ltd. regarding the referral of House-Leaseback and other customers.

On the same day, the company announced the formation of a business alliance with Kanagawa Bank (unlisted; headquartered in Yokohama, Kanagawa Prefecture) for the referral of customers with House-Leaseback and other financing needs.

Consolidated subsidiary Financial Do Co., Ltd. entered into a reverse mortgage guarantee business partnership with Kanagawa Bank in February 2019. The company entered into this latest business alliance in consideration of the initiatives Kanagawa Bank is implementing under its medium-term business plan, and senior citizens' increasing and diversifying needs for funds.

Trends and outlook

Quarterly trends and results

Earnings (cumulative)FY06/20FY06/21FY06/22FY06/22
(JPYmn)Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3FY Est.
Revenue6,06214,51422,95532,8797,52418,73525,35239,03811,07122,29129,16139,100–44,438
YoY-0.3%14.5%6.4%4.2%24.1%29.1%10.4%18.7%47.1%19.0%15.0%0.2~13.8%
Gross profit2,4835,4078,37711,6462,7556,3218,85612,9143,4767,1749,911
YoY7.9%13.4%8.6%4.4%11.0%16.9%5.7%10.9%26.2%13.5%11.9%
Gross profit margin41.0%37.3%36.5%35.4%36.6%33.7%34.9%33.1%31.4%32.2%34.0%
SG&A expenses2,4464,8807,2359,7532,4405,0807,59010,3252,6845,3838,008
YoY33.6%32.6%24.9%21.9%-0.2%4.1%4.9%5.9%10.0%6.0%5.5%
SG&A ratio40.3%33.6%31.5%29.7%32.4%27.1%29.9%26.4%24.2%24.1%27.5%
Operating profit385271,1421,8933161,2411,2662,5897921,7921,9032,973–3,673
YoY-92.0%-51.6%-40.4%-40.0%741.0%135.3%10.9%36.7%150.8%44.4%50.3%14.8~41.9%
Operating profit margin0.6%3.6%5.0%5.8%4.2%6.6%5.0%6.6%7.2%8.0%6.5%
Recurring profit354621,0561,7172571,1901,1762,5147051,7471,8262,800–3,500
YoY-91.8%-55.1%-41.2%-42.8%634.5%157.6%11.4%46.4%174.2%46.9%55.3%11.4~39.2%
Recurring profit margin0.6%3.2%4.6%5.2%3.4%6.3%4.6%6.4%6.4%7.8%6.3%
Net income attributable to owners of the parent12876441,0311527857711,6174151,1701,1921,848–2,310
YoY-99.8%-60.4%-48.6%-48.6%19,427.7%173.2%19.9%56.9%172.7%49.0%54.5%14.3~42.9%
Net margin0.0%2.0%2.8%3.1%2.0%4.2%3.0%4.1%3.7%5.2%4.1%
Earnings (quarterly)FY06/20FY06/21FY06/22
(JPYmn)Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3
Revenue6,0628,4538,4419,9237,52411,2116,61713,68611,07111,2206,870
YoY-0.3%28.2%-5.1%-0.6%24.1%32.6%-21.6%37.9%47.1%0.1%3.8%
Gross profit2,4832,9242,9703,2692,7553,5662,5344,0583,4763,6982,737
YoY7.9%18.5%1.0%-5.2%11.0%21.9%-14.7%24.2%26.2%3.7%8.0%
Gross profit margin41.0%34.6%35.2%32.9%36.6%31.8%38.3%29.7%31.4%33.0%39.8%
SG&A expenses2,4462,4352,3552,5172,4402,6412,5092,7352,6842,6992,625
YoY33.6%31.6%11.3%14.1%-0.2%8.5%6.5%8.7%10.0%2.2%4.6%
SG&A ratio40.3%28.8%27.9%25.4%32.4%23.6%37.9%20.0%24.2%24.1%38.2%
Operating profit38490615751316925251,323792999112
YoY-92.0%-20.8%-25.6%-39.4%741.0%88.8%-95.9%76.1%150.8%8.0%344.9%
Operating profit margin0.6%5.8%7.3%7.6%4.2%8.3%0.4%9.7%7.2%8.9%1.6%
Recurring profit35427594661257933-141,3387051,04278
YoY-91.8%-28.7%-22.6%-45.3%634.5%118.5%-102.4%174.2%11.8%-
Recurring profit margin0.6%5.0%7.0%6.7%3.4%8.3%-9.8%6.4%9.3%1.1%
Net income attributable to owners of the parent1286356387152633-1384541575522
YoY-99.8%-30.2%-32.3%-48.7%19,427.7%120.8%-118.4%172.7%19.3%-
Net margin0.0%3.4%4.2%3.9%2.0%5.6%-6.2%3.7%6.7%0.3%
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Quarterly revenue 
Source: Shared Research based on company data
Quarterly operating profit
Source: Shared Research based on company data
(Cumulative; JPYmn)FY06/20FY06/21FY06/22
(JPYmn)Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3Q1–Q4Q1Q1–Q2Q1–Q3
Revenue6,06214,51422,95532,8797,52418,73525,35239,03811,07122,29129,161
YoY-0.3%14.5%6.4%4.2%24.1%29.1%10.4%18.7%47.1%19.0%15.0%
Growth-driving (recurring revenue) businesses2,7687,84112,93919,1922,2058,17910,41717,7872,1648,49011,866
YoY-2.9%35.4%17.3%8.8%-20.3%4.3%-19.5%-7.3%-1.9%3.8%13.9%
% of total45.0%53.4%55.8%57.6%28.9%43.2%40.5%44.9%19.3%37.5%40.0%
Franchisee business6811,4572,2052,9658201,6322,4453,3358711,7412,597
YoY-5.8%3.2%5.1%4.7%20.5%12.0%10.9%12.5%6.2%6.7%6.2%
% of total11.1%9.9%9.5%8.9%10.7%8.6%9.5%8.4%7.8%7.7%8.7%
House-Leaseback business1,8835,9379,99715,2191,1095,9877,12913,3571,0626,3028,661
YoY-3.1%49.6%19.7%8.7%-41.1%0.8%-28.7%-12.2%-4.2%5.3%21.5%
% of total30.6%40.5%43.1%45.7%14.5%31.6%27.7%33.7%9.5%27.9%29.2%
Finance business2044467371,0082765618421,095231447609
YoY10.8%8.9%28.5%24.3%35.1%25.8%14.2%8.6%-16.5%-20.4%-27.7%
% of total3.3%3.0%3.2%3.0%3.6%3.0%3.3%2.8%2.1%2.0%2.1%
One-time revenue businesses3,3766,82110,25814,0635,43010,76515,31821,7959,06414,13517,818
YoY2.7%-2.3%-4.1%-1.0%60.9%57.8%49.3%55.0%66.9%31.3%16.3%
% of total54.9%46.5%44.2%42.2%71.1%56.8%59.5%55.0%80.7%62.5%60.0%
Real Estate Buying and Selling business1,6833,2825,1047,1083,5447,03411,52414,6257,57210,93514,156
YoY-19.8%-25.3%-26.1%-21.4%110.5%114.3%125.8%105.7%113.7%55.5%22.8%
% of total27.4%22.4%22.0%21.3%46.4%37.1%44.8%36.9%67.4%48.3%47.7%
Real Estate Brokerage business6231,0961,6492,2535591,1041,8152,3115971,1551,771
YoY26.3%13.7%9.6%9.4%-10.2%0.7%10.0%2.6%6.9%4.6%-2.4%
% of total10.1%7.5%7.1%6.8%7.3%5.8%7.0%5.8%5.3%5.1%6.0%
Renovation business8371,5192,0382,6325711,4001,9792,7166211,3531,891
YoY20.6%-6.2%-10.7%-15.1%-31.8%-7.9%-2.9%3.2%8.8%-3.3%-4.5%
% of total13.6%10.4%8.8%7.9%7.5%7.4%7.7%6.9%5.5%6.0%6.4%
Koyama Construction Group2329241,4672,0717571,2282,142274693
YoY----225.7%32.9%3.4%-63.8%-43.5%
% of total3.8%6.3%6.3%6.2%9.9%6.5%5.4%2.4%3.1%
Other48111401511123
YoY-6.8%-57.6%-51.6%-55.3%-87.9%-84.9%-51.3%-22.0%153.7%95.5%-41.5%
% of total0.1%0.1%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%0.0%
Adjustments-86-155-253-449-111-211-388-554-158-337-526
Operating profit385271,1421,8933161,2411,2662,5897921,7921,903
YoY-92.0%-51.6%-40.4%-40.0%741.0%135.3%10.8%36.7%150.8%44.4%50.3%
Operating profit margin0.6%3.6%5.0%5.8%4.2%6.6%5.0%6.6%7.2%8.0%6.5%
Growth-driving (recurring revenue) businesses4921,4582,5333,7995681,8872,4313,9566192,0602,807
YoY-29.4%5.0%7.3%0.8%15.3%29.4%-4.1%4.1%9.1%9.2%15.5%
Operating profit margin17.8%18.6%19.6%19.8%25.7%23.1%23.3%22.2%28.6%24.3%23.7%
Franchisee business3988461,3031,8025571,0821,6182,2266051,1831,770
YoY-9.9%2.5%6.5%7.4%39.7%27.9%24.2%23.5%8.7%9.4%9.4%
Operating profit margin58.5%58.1%59.1%60.8%67.9%66.3%66.1%66.7%69.4%68.0%68.2%
House-Leaseback business1626791,2451,980-147497191,653-23784910
YoY-33.4%37.4%13.6%-4.6%-10.4%-42.3%-16.5%-4.7%26.6%
Operating profit margin8.6%11.4%12.5%13.0%-12.5%10.1%12.4%-12.4%10.5%
Finance business-68-67-1418255595763792127
YoY---3.7%---334.1%46.7%66.5%34.4%
Operating profit margin---1.9%1.7%9.0%9.8%11.2%7.0%15.9%20.6%20.9%
One-time revenue businesses3756058381,1345769941,2811,9781,1711,6211,959
YoY28.6%-17.3%-28.4%-28.3%53.6%64.3%53.0%74.5%103.4%63.1%52.9%
Operating profit margin11.1%8.9%8.2%8.1%10.6%9.2%8.4%9.1%12.9%11.5%11.0%
Real Estate Buying and Selling business941612323402795258181,0829641,2011,324
YoY-37.1%-55.5%-60.0%-56.3%197.4%226.4%252.8%217.9%246.0%128.7%61.9%
Operating profit margin5.6%4.9%4.5%4.8%7.9%7.5%7.1%7.4%12.7%11.0%9.4%
Real Estate Brokerage business194241389575154245365596209359523
YoY100.4%28.1%6.3%16.9%-20.7%1.6%-6.2%3.8%35.6%46.8%43.1%
Operating profit margin31.2%22.0%23.6%25.5%27.6%22.2%20.1%25.8%35.0%31.1%29.5%
Renovation business941201021161793981722593113
YoY107.0%-34.3%-54.6%-62.7%-82.2%-22.3%-3.5%48.3%51.4%0.1%14.7%
Operating profit margin11.3%7.9%5.0%4.4%2.9%6.6%5.0%6.3%4.1%6.9%6.0%
Koyama Construction Group-784115103126131128-27-32
YoY-----56.5%24.6%--
Operating profit margin-9.1%7.8%5.0%16.7%10.7%6.0%--
Other0-7-7-11-4-7-6-5-4-8-10
YoY-----------
Operating profit margin-----------
Adjustments-830-1,528-2,222-3,029-823-1,632-2,439-3,339-993-1,881-2,853
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Segment revenue includes internal sales and transfers.
Note: Some of the actual figures are revised retroactively.
(Quarterly; JPYmn)FY06/20FY06/21FY06/22
Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3
Revenue6,0628,4538,4419,9237,52411,2116,61713,68611,07111,2206,870
YoY-0.3%28.2%-5.1%-0.6%24.1%32.6%-21.6%37.9%47.1%0.1%3.8%
Growth-driving (recurring revenue) businesses2,7685,0725,0986,3182,2055,9742,2377,3702,1646,3263,376
YoY-2.9%72.4%-2.6%-4.6%-20.3%17.8%-56.1%16.7%-1.9%5.9%50.9%
% of total45.0%59.5%59.7%62.4%28.9%52.8%32.9%53.2%19.3%55.5%47.8%
Franchisee business681777748760820811814890871870856
YoY-5.8%12.5%9.1%3.4%20.5%4.5%8.8%17.1%6.2%7.2%5.1%
% of total11.1%9.1%8.8%7.5%10.7%7.2%12.0%6.4%7.8%7.6%12.1%
House-Leaseback business1,8834,0544,0605,2171,1094,8781,1436,2281,0625,2402,358
YoY-3.1%100.1%-7.4%-7.6%-41.1%20.3%-71.9%19.4%-4.2%7.4%106.4%
% of total30.6%47.6%47.5%51.6%14.5%43.1%16.8%45.0%9.5%46.0%33.4%
Finance business204242291341276285280253231216162
YoY10.8%7.3%77.7%43.5%35.1%18.0%-3.5%-25.9%-16.5%-24.2%-42.3%
% of total3.3%2.8%3.4%3.4%3.6%2.5%4.1%1.8%2.1%1.9%2.3%
One-time revenue businesses3,3763,4463,4373,7995,4305,3355,7816,4779,0644,6524,376
YoY2.7%-6.7%-7.5%8.4%60.9%54.8%68.2%70.5%66.9%-12.8%-24.3%
% of total54.9%40.4%40.2%37.5%71.1%47.2%85.1%46.8%80.7%40.8%62.0%
Real Estate Buying and Selling business1,6831,5981,8221,9953,5443,4904,4903,1017,5723,3633,221
YoY-19.8%-30.4%-27.5%-6.4%110.5%118.4%146.4%55.4%113.7%-3.6%-28.3%
% of total27.4%18.8%21.3%19.7%46.4%30.9%66.1%22.4%67.4%29.5%45.6%
Real Estate Brokerage business623474553604559545711497597558616
YoY26.3%0.5%2.2%8.9%-10.2%15.1%28.5%-17.7%6.9%2.3%-13.3%
% of total10.1%5.6%6.5%6.0%7.3%4.8%10.5%3.6%5.3%4.9%8.7%
Renovation business837682518594571829580737621732538
YoY20.6%-26.3%-21.8%-27.3%-31.8%21.5%11.9%24.1%8.8%-11.7%-7.2%
% of total13.6%8.0%6.1%5.9%7.5%7.3%8.5%5.3%5.5%6.4%7.6%
Koyama Construction Group2326925436067574722,142274420
YoY----225.7%-31.8%253.6%-63.8%-11.0%
% of total3.8%8.1%6.4%6.0%9.9%4.2%15.5%2.4%3.7%
Other44330145111
YoY-6.8%-72.8%-26.2%-65.2%-87.9%-81.8%30.7%88.6%153.7%55.6%-80.1%
% of total0.1%0.0%0.0%0.0%0.0%0.0%0.1%0.0%0.0%0.0%0.0%
Adjustments-86-69-97-196-111-100-177-166-158-179-189
Operating profit38490615751316925251,323792999112
YoY-92.0%-20.8%-25.6%-39.5%741.0%88.8%-95.9%76.2%150.8%8.0%344.9%
Operating profit margin0.6%5.8%7.3%7.6%4.2%8.3%0.4%9.7%7.2%8.9%1.6%
Growth-driving (recurring revenue) businesses4929651,0761,2665681,3195441,5256191,441748
YoY-29.4%39.7%10.5%-10.1%15.3%36.6%-49.4%20.5%9.1%9.2%37.4%
Operating profit margin17.8%19.0%21.1%20.0%25.7%22.1%24.3%20.7%28.6%22.8%22.1%
Franchisee business398448456499557525536609605578587
YoY-9.9%16.9%14.8%9.6%39.7%17.3%17.3%22.0%8.7%10.1%9.6%
Operating profit margin58.5%57.6%61.0%65.6%67.9%64.7%65.8%68.4%69.4%66.5%68.6%
House-Leaseback business162517566723-14764-31935-23807125
YoY-33.4%106.2%-5.9%-26.2%-47.8%-29.3%-5.7%-
Operating profit margin8.6%12.7%13.9%13.9%-15.7%-15.0%-15.4%5.3%
Finance business-6815344253039-18375535
YoY---310.6%--2,588.2%-26.2%-46.7%82.8%-10.7%
Operating profit margin--18.3%12.8%9.0%10.6%14.0%-7.3%15.9%25.6%21.7%
One-time revenue businesses3752302332945764184196971,171455306
YoY28.6%-47.7%-47.0%-28.4%53.6%81.7%79.9%137.1%103.4%8.8%-26.9%
Operating profit margin11.1%6.7%6.8%7.7%10.6%7.8%7.2%10.8%12.9%9.8%7.0%
Real Estate Buying and Selling business946771105279247293264964237123
YoY-37.1%-68.4%-67.4%-47.5%197.4%266.7%312.8%152.2%246.0%-3.9%-58.1%
Operating profit margin5.6%4.2%3.9%5.3%7.9%7.1%6.5%8.5%12.7%7.0%3.8%
Real Estate Brokerage business1944614918615490121231209150164
YoY100.4%-49.0%-16.7%48.0%-20.7%94.9%-18.9%24.6%35.6%65.9%35.6%
Operating profit margin31.2%9.8%26.9%30.8%27.6%16.6%17.0%46.6%35.0%26.9%26.5%
Renovation business9425-18141776673256820
YoY107.0%-81.4%--84.0%-82.2%200.4%-131.8%437.1%51.4%-11.2%258.2%
Operating profit margin11.3%3.7%-2.3%2.9%9.2%1.0%9.9%4.1%9.2%3.7%
Koyama Construction Group-79131-101265128-27-5
YoY------94.7%---
Operating profit margin-13.2%5.7%--1.0%---
Other0-70-3-4-311-4-4-2
YoY-----------
Operating profit margin-------18.6%---
Adjustments-830-698-693-805-823-809-808-900-993-887-972
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Segment revenue includes internal sales and transfers.
Note: Some of the actual figures are revised retroactively.
Franchised stores (FY06/21)
Satellite real estate brokerProperty purchase specialist storeHousing information mallRENT DoTotal
Franchisee stores54587224658
Directly operated stores9163533
Total554103529691
Source: Shared Research based on company data
FY06/12FY06/13FY06/14FY06/15FY06/16FY06/17FY06/18FY06/19FY06/20FY06/21*
Total contracts241254269312377468543602643702
Openings180208235265317378441497556616
Source: Shared Research based on company data
Total value and number of properties held in the House-Leaseback business
FY06/20FY06/21FY06/22
(JPYmn)Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3
Total properties held (value)6,2745,7575,3003,4104,9244,3426,8154,6856,6905,9089,866
Total properties held (homes)397343330217338285486339541448685
Source: Shared Research based on company data (value of total properties held is sum of values at time of acquisition (unamortized).
Real estate secured loans outstanding
FY06/20FY06/21FY06/22
(JPYmn)Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3
Real estate secured loans outstanding8,5479,97311,00511,04511,09010,3989,9069,7448,2975,8345,220
Source: Shared Research based on company data
Total number and value of reverse mortgage guarantees outstanding
FY06/20FY06/21FY06/22
(JPYmn)Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3
Total no. of guarantees263290333362386430478562641687760
Total guarantee outstanding2,9183,1103,3473,4003,5603,9494,5015,3436,6937,1797,975
Source: Shared Research based on company data

Cumulative Q3 FY06/22 results (out May 12, 2022)

Summary

Cumulative Q3 FY06/22 results (July 2021–March 2022)
  • Revenue: JPY29.2bn (+15.0% YoY)
  • Operating profit: JPY1.9bn (+50.3% YoY)
  • Recurring profit: JPY1.8bn (+55.3% YoY)
  • Net income attributable to owners of the parent: JPY1.2bn (+54.5% YoY) 
Business environment

It remains unclear when economic activities in Japan will return to normal in the face of the sixth wave of COVID-19, and uncertainties are mounting amid emerging geopolitical risks and rising resource prices. In the real estate industry, business conditions were favorable and demand for housing remained solid, supported by the Bank of Japan’s ongoing monetary easing policies.

Company strategy

In accordance with its medium-term management plan, which concludes at the end of FY06/22, the company continued its active investment in growth-driving businesses and focused on shifting toward a sustainable growth model that leverages the foundations previously established by the company. The company’s focus on the three main businesses is as follows.

Franchisee business: The company aims to increase the number of franchised stores and improve services.

House-Leaseback business: The company aims to grow earnings by generating capital gains (through securitization of properties and other means) and further growth in the number of purchase-leaseback contracts.

Finance business: The company stepped up efforts associated with the real estate and finance packages (which utilize real estate to address a variety of financing needs) offered under its reverse mortgage guarantee business through partnerships with financial institutions.

Overview by segment

Following is a segment summary for cumulative Q3 FY06/22 (July 2021–March 2022). The company reclassified its business segments in FY06/22 accompanying its shift to a holding company structure. Businesses of the former Koyama Construction group were reallocated to three segments according to their activities, namely the House-Leaseback, Real Estate Buying and Selling, and Real Estate Brokerage businesses.

Franchisee business
  • Segment revenue (including internal sales and transfer between segments; same below): JPY2.6bn (+6.2% YoY)
  • Operating profit: JPY1.2bn (+9.4% YoY) 
Overview

The company rolled out aggressive advertising campaigns. In addition, it worked to raise its profile, improve the value of its corporate brand, and heighten its trustworthiness through growth in its store count. As a result, inquiries from companies looking at becoming franchisees grew. In addition to allocating more supervisors to provide follow-up support for franchisees, the company developed various new services and expanded the number of business partners. It grew franchisee count in its priority Kanto area.

  • Network: 86 new franchisee contracts, for a cumulative total of 691 franchised outlets (688 in cumulative Q3 FY06/21)
  • The company opened 89 franchised outlets for a cumulative total of 621 (607). 
House-Leaseback business
  • Segment revenue: JPY8.7bn (+21.5% YoY)
  • Operating profit: JPY910mn (+26.6% YoY) 
Overview

The number of inquiries and properties handled stayed firm, as the company continued to spend heavily on advertising and invest in personnel in a bid to expand its business. From Q3, some former Koyama Construction group operations were included in this segment.

  • Contracts: 787 purchase-leaseback contracts (651 in cumulative Q3 FY06/21)
  • Property holdings: Cumulative total of 685 properties, operating as rental properties (company receives rental revenue)
  • Capital gains: 404 properties sold, including resale, disposals, and sales to funds; revenue of JPY7.2bn 
Finance business
  • Segment revenue: JPY609mn (-27.7% YoY)
  • Operating profit: JPY127mn (+34.4% YoY) 
Overview

Leveraging the assessment capabilities of its nationwide network, which is a strength characterizing its corporate group, the company focused on initiatives associated with real estate and finance packages that meet the financial needs of customers through the use of real estate properties. It also collaborated with financial institutions and conducted activities aimed at developing relationships with new partner financial institutions.

  • Number of real estate secured loans in effect: 91 (129 in cumulative Q3 FY06/21)
  • Real estate secured loans outstanding: JPY5.2bn (JPY9.9bn)
  • Number of new reverse mortgage guarantees: 235 (128)
  • Reverse mortgage guarantees outstanding: JPY8.0bn (JPY4.5bn) 
One-time revenue businesses
Real Estate Buying and Selling

Segment revenue was JPY14.2bn (+22.8% YoY), and operating profit was JPY1.3bn (+61.9% YoY).

Real estate transactions: 415 transactions (524 in cumulative Q3 FY06/21). Collaborating with directly operated brokerage stores, the company kept a close eye on customer needs and was proactive in purchasing. With ongoing ultra-low interest rates on mortgages, demand among consumers for house purchases remained firm. 

Real Estate Brokerage

Segment revenue was JPY1.8bn (-2.4% YoY), and operating profit was JPY523mn (+43.1% YoY).

Brokerage: Comprises real estate sale and purchase brokerage. While underlying demand remained strong due to ongoing ultra-low interest rates on mortgages, the company reallocated employees to focus businesses and consolidated some stores. As a result, the number of properties brokered fell to 2,195 (2,496 in cumulative Q3 FY06/21).

Renovation

Segment revenue was JPY1.9bn (-4.5% YoY), and operating profit was JPY113mn (+14.7% YoY).

The segment had 1,398 contracts in cumulative Q3 FY06/22 (1,407 in cumulative Q3 FY06/21) and 1,304 delivered (completed) renovations (1,335).

Other

Segment revenue was JPY3mn (-41.5% YoY), and the company recorded an operating loss of JPY10mn (loss of JPY6mn in cumulative Q3 FY06/21).

Full-year forecast for FY06/22

FY06/20FY06/21FY06/22
(JPYmn)1H Act.2H Act.FY Act.1H Act.2H Act.FY Act.1H Act.FY Est.
Revenue14,51418,36432,87918,73520,30339,03822,29139,100–44,438
YoY90.8%44.9%4.2%9.3%39.9%18.7%19.0%0.2–13.8%
Operating profit5271,3661,8931,2411,3482,5891,7922,973–3,673
YoY-32.9%25.4%-40.0%-22.6%155.6%36.7%44.4%14.8–41.9%
Operating profit margin3.6%7.4%5.8%6.6%6.6%6.6%8.0%
Recurring profit4621,2551,7171,1901,3252,5141,7472,800–3,500
YoY-35.6%22.1%-42.8%-15.0%186.8%46.4%46.9%11.4–39.2%
Recurring profit margin3.2%6.8%5.2%6.3%6.5%6.4%7.8%
Net income2877431,0317858321,6171,1701,848–2,310
YoY-46.5%2.5%-48.6%-14.7%189.7%56.9%49.0%14.3–42.9%
Net margin2.0%4.0%3.1%4.2%4.1%4.1%5.2%
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods. 
Full-year forecast for FY06/22

The full-year FY06/22 company forecast has been published in ranges, as was its forecast for FY06/21. The company forecasts revenue of JPY39.1–44.4bn (+0.2–13.8% YoY), operating profit of JPY3.0–3.7bn (+14.8–41.9% YoY), recurring profit of JPY2.8–3.5bn (+11.4–39.2% YoY), and net income attributable to owners of the parent of JPY1.8–2.3bn (+14.3–42.9% YoY). The company anticipates that impact from the COVID-19 pandemic will be minimal but recognizes that the current situation still requires caution and therefore made the decision to release its projections in the form of ranges. The lower limits of these ranges are conservative estimates that assume current conditions will continue, while the upper limits assume that economic activity will recover and company initiatives will prove effective. The company left its full-year FY06/22 forecast unchanged when reporting Q3 results (albeit with revisions to segment-level revenue and operating profit estimates). 

Forecasts by segment

From Q3, businesses conducted by the Koyama Construction group were reclassified depending on the type of operation under the House-Leaseback business (businesses generating JPY379mn in revenue and JPY35mn in operating profit reclassified), Real Estate Buying and Selling business (JPY2.6bn in revenue and JPY146mn in operating profit), and Real Estate Brokerage business (JPY80mn in revenue and JPY7mn in operating profit), respectively. 

Franchisee (no changes as of Q3 )
  • Revenue of JPY3.6bn (+6.8% YoY), operating profit of JPY2.4bn (+8.2% YoY)
  • Total franchisee contracts: 767 (702 in FY06/21)
  • Franchised outlet openings: 676 (616) 
House-Leaseback (changes in Q2; no changes in Q3)
  • Revenue of JPY16.3–17.6bn (+22.2–31.8% YoY), operating profit of JPY2.1–2.4bn (+29.2–43.4% YoY)
  • Number of contracts: 1,073–1,140 (903 in FY06/21)
  • Number of properties purchased: 993–1,060 (801)
  • Total properties held: 527–532 (339)
  • Total value of properties held: JPY6.3–6.4bn (JPY4.6bn) 
Finance (no changes as of Q3)
  • Revenue of JPY952mn–1.0bn (-13.0% to -7.5% YoY), operating profit of JPY100–160mn (+31.4–110.6% YoY)
  • Number of real estate secured loans in effect: 180 (167 in FY06/21)
  • Real estate secured loans outstanding: JPY7.6bn (JPY9.7bn)
  • Number of reverse mortgage guarantees: 675–878 (221)
  • Reverse mortgage guarantees outstanding: JPY10.7–12.8bn (JPY5.3bn)

Real Estate Buying and Selling (changes in Q2; no changes in Q3)
  • Revenue of JPY13.4–17.5bn (-8.0% to +19.5% YoY), operating profit of JPY1.0–1.4bn (-6.9% to +30.4% YoY)
  • Number of transactions: 544–774 (710 in FY06/21) 
Real Estate Brokerage (changes in Q2; no changes in Q3)
  • Revenue of JPY2.4bn (+4.6% YoY), operating profit of JPY631mn (+5.8% YoY)
  • Number of brokered properties: 2,998 (3,163 in FY06/21) 
Renovation (no changes as of Q3)
  • Revenue of JPY3.0bn (+9.4% YoY), operating profit of JPY236mn (+37.7% YoY)
  • Renovation contracts: 1,924 (1,836 in FY06/21)
Adjustments (changes in Q2; no changes in Q3)
  • Revenue: -JPY615mn, operating profit: -JPY3.5bn
Final year of the medium-term management plan

FY06/22 marks the final year of the company’s medium-term management plan. The company views FY06/22 as a period for laying the groundwork for future growth. In tandem with a change in name in January 2022, the company is working on reforms to its business structure, and Shared Research believes that in FY06/22 the company needs to focus on these reforms by appropriately allocating resources within the group, in addition to its effort to grow profit in the near term.

Historical forecast accuracy
Results vs. Initial Est.FY06/13FY06/14FY06/15FY06/16FY06/17FY06/18FY06/19FY06/20FY06/21
(JPYmn)Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.Cons.
Revenue (Initial Est.)---16,35516,32217,14627,49937,22133,976–37,532
Operating profit (Results)8,25213,31014,57317,27616,84822,51831,54632,87939,038
Results vs. Initial Est.---5.6%3.2%31.3%14.7%-11.7%-
Operating profit (Initial Est.)---9241,2471,6033,2463,5212,713–3,512
Operating profit (Results)1802776171,2771,2492,1163,1571,8932,589
Results vs. Initial Est.---38.2%0.2%32.0%-2.8%-46.2%-
Recurring profit (Initial Est.)---8041,1001,4003,0003,3002,500–3,300
Recurring profit (Results)1122055131,1821,1031,9093,0031,7172,514
Results vs. Initial Est.---47.1%0.3%36.3%0.1%-48.0%-
Net income (Initial Est.)---5237159201,9832,1781,650–2,178
Net income (Results)801563537417381,2802,0061,0311,617
Results vs. Initial Est.---41.7%3.2%39.1%1.2%-52.7%-
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods. 

Medium-term management plan

Previous medium-term management plan (FY06/17–FY06/19)

The company’s previous medium-term management plan spanning from FY06/17 to FY06/19 was announced on August 22, 2016. The plan called for an acceleration in the ongoing transition from labor-intensive one-time revenue businesses (Real Estate Selling and Buying, Real Estate Brokerage, Renovation) to growth-driving businesses (Franchisee, House-Leaseback). Specifically, it aimed to (1) refocus its real estate operations by, for example, drastically reducing contracts for new custom-built housing, (2) deploy management and other human resources to the Real Estate Finance business to develop it into a third core business, (3) forge business alliances with other companies, and (4) accelerate the start of new businesses through M&A. Through the change in earnings structure toward growth-driving businesses, the company looked to faster transition to businesses less susceptible to swings in the real estate market.

When the company released its Q3 FY06/18 results, it substantially revised up its forecasts for FY06/18 and FY06/19, the final year of the medium-term management plan. However, FY06/19 results ultimately surpassed even the revised forecasts, mainly thanks to growth in growth-driving businesses, which had been a focus area for the company. Growth-driving businesses—Franchisee, House-Leaseback, and Real Estate Finance—accounted for 70.8% of operating profit in FY06/19, up from 43.4% in FY06/16.

Review of previous medium-term plan
FY06/17FY06/18FY06/19
(JPYmn)Est.Act.% of Est.Est.Act.% of Est.Est.Act.% of Est.
Revenue16,32216,848103%15,08722,518149%16,21531,546195%
Operating profit1,2471,249100%1,5242,116139%1,9093,157165%
Recurring profit1,1001,103100%1,4001,909136%1,7003,003177%
Recurring profit margin6.7%6.5%-9.3%8.5%-10.5%9.5%-
Source: Shared Research based on company data
Note: The plan was announced on August 22, 2016. 

New medium-term management plan (FY06/20–FY06/22) as announced on August 13, 2019

On August 13, 2019, the company unveiled a new medium-term management plan spanning from FY06/20 to FY06/22. The new plan targets ongoing expansion in growth-driving businesses centered on the House-Leaseback business, which grew sharply under the previous medium-term plan. It aims to develop the Finance business—especially the reverse mortgage guarantee business—into a new earnings driver, and thus strengthen foundations for growth-driving businesses.

The company plans to implement the following five initiatives during the period covered by its new medium-term management plan. Each of these is expected to expand growth-driving businesses. The main objectives of these initiatives are as follows: (1) continue to expand the House-Leaseback business (which enjoyed sharp growth in FY06/19), (2) strengthen collaboration with financial institutions, and (3) expand the reverse mortgage guarantee business by leveraging the real estate data held by the company.

  1. Bolster procurement in the House-Leaseback business
  2. Strengthen reverse mortgage guarantee and asset-leaseback guarantee businesses
  3. Increase the number of franchisees
  4. Koyama Construction group
  5. Thai business 

Revised final-year targets (as of February 10, 2021) in the new medium-term management plan (FY06/20–FY06/22)

Moving into 2020, the real estate business environment the company operates in was severely disrupted by the global COVID-19 pandemic. Although FY06/20 marked the first year of its medium-term management plan, the company was forced to review the plan at an early stage, and the review took time because the pandemic showed no signs of coming to an end in FY06/21. On February 10, 2021, the company revised targets for the final year of its previously announced new medium-term management plan (FY06/20–FY06/22).

Performance has been recovering since the state of emergency declaration issued in response to the COVID-19 pandemic was lifted in May 2020, and genuine demand has been stable thanks to ongoing ultra-low interest rates on mortgages. Accordingly, the company has made no changes to the fundamental policy of its medium-term management plan (expand earnings through ongoing active investment in growth-driving businesses). However, for the reasons indicated below, the company made the decision to revise numerical targets (for FY06/22) in its new medium-term management plan out of consideration for impact from the COVID-19 pandemic.

The first reason for these revisions was temporary stagnation in partnerships and new initiatives within the reverse mortgage guarantee business (viewed by the company as a future growth driver) that occurred as financial institutions responded to the COVID-19 pandemic. As a second reason, the company mentioned comprehensive reconsideration of the residual effects of impact from the COVID-19 pandemic on all of its businesses and of its investment in human resources, advertising, and IT systems, which it conducts in response to changes in external and business environments.

Revised new medium-term management plan (announced on February 10, 2021)
Source: Shared Research based on company data
Note: These figures (including FY06/21 forecast) are from the time when the plan was announced. 

Medium- to long-term numerical targets

The company’s medium- to long-term management targets call for raising total franchisee stores in the Franchisee business in Japan to 1,000 in 2025 (the company also has a vision for 50,000 franchisees in Asia). The company regards productivity per employee as a key management indicator. Since FY06/15, revenue and recurring profit per employee have trended upward each year (except for a decline in FY06/17 in response to strong growth in the previous year). The company continues to focus on high-margin growth-driving businesses from FY06/18, aiming for recurring profit margin of 20%. The company says raising ROE through financial leveraging is not part of its management stance.

Capital policy

The company raised around JPY5.9bn by issuing and selling new shares through public offering in June 2018, and spent about JPY3.0bn to acquire class A preferred stock, which was bought back and retired on June 25, 2018. The company is spending part of the remainder to purchase properties in the House-Leaseback business in FY06/19.

The purchase and retirement of class A preferred stock will eliminate the need to pay preferred dividends. As a result, the company plans to channel retained earnings toward growth investments. The company also aims to reduce the possibility of future share dilution from preferred stock being converted to common stock. By raising capital through public offering, the company plans to strengthen its financial base, which should boost its credit standing and elicit further capital collaboration with financial institutions. The company thinks this will also help increase the number of affiliated financial institutions in the reverse mortgage guarantee business, which the company plans to strengthen and expand in FY06/20. In addition to bolstering the financial base, the raised capital will be used to support future business development.

Shareholder returns

The company’s core policy is to pay dividends from surplus once a year. However, the Articles of Incorporation stipulate that the company may award interim dividends as provided in Article 454-5 of Japan’s Companies Act. The Board of Directors decides interim dividends, while year-end dividends are determined at the annual general shareholders’ meeting. The company has been growing, and strengthening its financial base has been a key issue. The company considers shareholder returns to be a management priority, and pays steady and continuous dividends accordingly. It essentially targets a payout ratio of 30% or higher, including during the period covered by the medium-term management plan.

On February 10, 2021, the company decided that, from the perspective of the fair return of profit, it would be appropriate to return profit directly through dividends, and accordingly decided to abolish its shareholder benefit program. The program will be abolished after providing the last set of shareholder benefits to the shareholders listed or recorded on the company’s register of shareholders and who hold one unit (100 shares) or more of the company shares at end-June 2022.

Business

Business description

Main sources of revenue

The company focuses on one-stop housing services ranging from real estate sales, brokerage, and renovation to House-Leaseback and finance (real estate secured loans, reverse mortgage guarantees) via franchised outlets across Japan. In FY06/21, the company had seven reporting segments, divided by business strategy into four labor-intensive businesses (Real Estate Buying and Selling, Real Estate Brokerage, Renovation, and Koyama Constrution Group segments), and three growth-driving businesses (Franchisee, House-Leaseback, and Finance segments) that are less susceptible to fluctuations in the real estate market. The company has continued to shift its earnings model toward growth-driving businesses from the standpoint of business stability and growth potential.

Business opportunities

The company says Japan’s aging society presents opportunities, and it has developed several methods to help seniors liquidize their properties. Methods include House-Leaseback (homeowners sell their homes for cash but continue to live in them under lease agreements), real estate secured loans, and reverse mortgage guarantee services based on alliances with regional financial institutions.

Customer development

The company explains its aim is to combine fintech and real estate services, leveraging its sales and appraisal capabilities and reputation earned through community-focused customer development via the nationwide Franchisee business. The company openly shares real estate information with customers and took an early lead in finding and cultivating customers for one-stop housing services. This early-mover advantage has made it difficult even for larger companies to enter this area.

Vision

The company’s vision is to build a local network of customer-centric stores that offer all real estate related services. Its near-term goal is to expand its franchisee network in Japan to 1,000 franchised stores by 2025 (from 702 as of end-June 2021) and establish a nationwide reputation as a leading company. Its mission is to develop an open platform through the release of real estate information and change the insular nature of the real estate industry through a customer-centric approach.

One-stop provider of housing services

The company’s franchised stores and directly operated stores across Japan are its main contact point with customers and function as one-stop shops that cater to the various real estate needs. Especially for seniors with rising cash needs due to loans, inheritances, longer lifespans, nursing care, medical care, and insurance, solutions that help raise the liquidity of real estate have been welcomed as a highly convenient service. While local real estate companies often lack the expertise to offer one-stop services, at major real estate companies various services are handled by different divisions, which makes them hard to use for seniors. The company, on the other hand, uses synergies between its businesses to offer one-stop services.

Developing real estate services

Shared Research believes that the company’s business is a type of specialty store retailer of private label apparel (SPA). The company also refers to itself as a real estate tech company or a real estate services company. As seen in the apparel industry, SPAs are involved in all processes from product manufacturing (development) to sales and retail. Through vertical integration of everything from planning to manufacturing and sales, this business model enables reduction of redundancies between processes and rapid response to consumer needs. By developing its own products and openly providing information on other products and the market, the company has been able to gauge customer needs, and has successively developed convenient services such as House-Leaseback and the real estate finance services.

Business fields: Business model and synergies
Source: Company data
One-stop provider of housing services