Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Recent updates
Announcement of acquisition of fixed assets (software) by a consolidated subsidiary
2021-11-15
On November 12, 2021, Apaman Co., Ltd. announced earnings results for Full-year FY09/21; see the results section for details.
On the same day, the company announced that its subsidiary, Apaman Network Co., Ltd. had resolved to completely overhaul its core system, AOS (Apamanshop Operation System).
AOS is the core system provided by Apaman Network to Apamanshop member companies in the Technology business. AOS provides comprehensive support for all operations related to rental brokerage, including property management, as well as customer management and performance management.
Apaman Network is developing Next Generation AOS (acquisition price: JPY2.1bn), which is a completely updated version of AOS, and will start making it available to Apamanshop member companies by the spring of 2022.
Announcement concerning the recording of non-operating expenses, extraordinary profit and extraordinary loss
2021-09-28
APAMAN has announced it is recording non-operating expenses and an extraordinary loss.
The company will record non-operating expenses and extraordinary losses in FY09/2021.
Details of non-operating expenses and extraordinary losses
The company will record non-operating expenses of JPY100mn and extraordinary losses of JPY463mn based on a review of its ability to recover loans to business partners and the asset value of stocks in light of the deterioration of its business partners' financial situation due to prolonged restrictions on economic activities in response to the COVID-19 pandemic. The company will also record an extraordinary loss of JPY128mn for impairment to the value of interior finishings of overseas coworking facilities due to low occupancy rates.
Outlook
APAMAN has left its previous full-year forecast unchanged. In addition to non-operating expenses and extraordinary losses, there will be also be an extraordinary profit (JPY1.4bn) and corporation tax/corporation tax adjustments (JPY291mn) as described below. The company is currently examining other factors, including the fact that a previously expected gain on the sale of shares in other subsidiaries and affiliates, will not occur during FY09/2021. The company will promptly disclose any revisions to its earnings forecasts as necessary in future.
APAMAN Co., Ltd. announced the recording of an extraordinary gain following the completion of the sale of investment securities (off-floor trading (ToSTNeT-1)).
As disclosed in August 2021, the company sold some of the investment securities held by its consolidated subsidiary, Apaman Network Co., Ltd., and will record an extraordinary gain in FY09/2021.
Details of the sale of shares
Shares sold: 12.0mn shares (14.26% of shares in issue) of SystemSoft Corporation (Securities code: 7527)
Method of sale: Off-floor trading (ToSTNeT-1)
Profit on sale: JPY1.4bn
Period of sale: Q4 FY09/21 (July - September, 2021)
As of August 2021, the number of shares to be sold was set at 12.3mn shares. However, after 12mn shares were sold, the sale of the remaining 0.3mn shares was cancelled.
Outlook
In FY09/21, the company plans to record an extraordinary profit of JPY1.4bn on the sale of shares in an affiliate and JPY291 mn in corporation taxes and corporation tax adjustments associated with this sale.
After the sale, the company's shareholding in SystemSoft Corporation will be 24.42%. SystemSoft Corporation is expected to remain as an equity method affiliate.
Trends and outlook
Quarterly trends and results
Cumulative performance
FY09/20
FY09/21
FY09/21
(JPYmn)
Q1
Q1–Q2
Q1–Q3
Q1–Q4
Q1
Q1–Q2
Q1–Q3
Q1–Q4
% of Est.
FY Est.
Sales
10,630
22,055
33,020
44,119
11,100
22,582
33,699
44,419
99.8%
44,500
YoY
-5.8%
-6.0%
-6.9%
-4.0%
4.4%
2.4%
2.1%
0.7%
0.9%
Gross profit
2,331
4,415
7,025
9,678
2,526
4,998
7,724
10,385
YoY
-11.9%
-23.4%
-23.6%
-16.8%
8.4%
13.2%
10.0%
7.3%
Gross profit margin
21.9%
20.0%
21.3%
21.9%
22.8%
22.1%
22.9%
23.4%
SG&A expenses
2,298
4,489
6,568
8,837
2,381
4,570
6,786
9,029
YoY
-7.0%
-9.1%
-9.9%
-7.8%
3.6%
1.8%
3.3%
2.2%
SG&A ratio
21.6%
20.4%
19.9%
20.0%
21.5%
20.2%
20.1%
20.3%
Operating profit
33
-73
457
840
144
428
938
1,356
75.3%
1,800
YoY
-81.4%
-
-76.1%
-59.1%
336.4%
-
105.3%
61.4%
114.3%
Operating profit margin
0.3%
-
1.4%
1.9%
1.3%
1.9%
2.8%
3.1%
4.0%
Recurring profit
-198
-532
-154
8
55
324
672
795
79.5%
1,000
YoY
-
-
-
-98.9%
-
-
-
-
-
Recurring profit margin
-
-
-
0.0%
0.5%
1.4%
2.0%
1.8%
2.2%
Net income
-325
-822
-900
166
-122
29
83
602
109.5%
550
YoY
-
-
-
-39.0%
-
-
-
262.7%
231.3%
Net margin
-
-
-
0.4%
-
0.1%
0.2%
1.4%
1.2%
Quarterly performance
FY09/20
FY09/21
(JPYmn)
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Sales
10,630
11,425
10,965
11,099
11,100
11,482
11,117
10,720
YoY
-5.8%
-6.2%
-8.7%
6.2%
4.4%
0.5%
1.4%
-3.4%
Gross profit
2,331
2,084
2,610
2,653
2,526
2,472
2,726
2,661
YoY
-11.9%
-33.1%
-24.1%
8.9%
8.4%
18.6%
4.4%
0.3%
Gross profit margin
21.9%
18.2%
23.8%
23.9%
22.8%
21.5%
24.5%
24.8%
SG&A expenses
2,298
2,191
2,079
2,269
2,381
2,189
2,216
2,243
YoY
-7.0%
-11.2%
-11.5%
-1.1%
3.6%
-0.1%
6.6%
-1.1%
SG&A ratio
21.6%
19.2%
19.0%
20.4%
21.5%
19.1%
19.9%
20.9%
Operating profit
33
-106
530
383
144
284
510
418
YoY
-81.4%
-
-51.4%
169.7%
336.4%
-
-3.8%
9.1%
Operating profit margin
0.3%
-
4.8%
3.5%
1.3%
2.5%
4.6%
3.9%
Recurring profit
-198
-334
378
162
55
269
348
123
YoY
-
-
-62.5%
-
-
-
-7.9%
-24.1%
Recurring profit margin
-
-
3.4%
1.5%
0.5%
2.3%
3.1%
1.1%
Net income
-325
-497
-78
1,066
-122
151
54
519
YoY
-
-
-
420.0%
-
-
-
-51.3%
Net margin
-
-
-
9.6%
-
1.3%
0.5%
4.8%
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Performance by segment (cumulative)
Cumulative
FY09/20
FY09/21
(JPYmn)
Q1
Q1–Q2
Q1–Q3
Q1–Q4
Q1
Q1–Q2
Q1–Q3
Q1–Q4
Sales
10,630
22,055
33,020
44,119
11,100
22,582
33,699
44,419
YoY
-5.8%
-6.0%
-6.9%
-4.0%
4.4%
2.4%
2.1%
0.7%
Platform
8,236
17,175
25,910
34,822
8,695
17,948
27,024
35,738
YoY
-8.7%
-8.5%
-6.1%
-2.6%
5.6%
4.5%
4.3%
2.6%
Technology
1,963
4,038
5,817
7,573
1,878
3,913
5,798
7,601
YoY
0.9%
-3.5%
-6.2%
-6.1%
-4.3%
-3.1%
-0.3%
0.4%
Other
709
1,391
2,081
2,760
760
1,179
1,534
1,934
YoY
3.8%
9.9%
-24.0%
-24.9%
7.2%
-15.2%
-26.3%
-29.9%
Adjustments
-279
-550
-790
-1,038
-234
-459
-658
-855
Gross profit
2,331
4,415
7,025
9,678
2,526
4,998
7,724
10,385
YoY
-11.9%
-23.4%
-23.6%
-16.8%
8.4%
13.2%
10.0%
7.3%
Gross profit margin
21.9%
20.0%
21.3%
21.9%
22.8%
22.1%
22.9%
23.4%
Platform
1,895
4,384
6,456
8,639
2,093
4,616
6,965
9,256
YoY
-17.3%
-16.1%
-13.4%
-7.9%
10.4%
5.3%
7.9%
7.1%
Gross profit margin
23.0%
25.5%
24.9%
24.8%
24.1%
25.7%
25.8%
25.9%
Technology
466
534
1,141
1,761
499
640
1,265
1,825
YoY
-17.8%
-44.9%
-31.7%
-22.9%
7.1%
19.9%
10.9%
3.6%
Gross profit margin
23.7%
13.2%
19.6%
23.3%
26.6%
16.4%
21.8%
24.0%
SG&A expenses
2,298
4,489
6,568
8,837
2,381
4,570
6,786
9,029
YoY
-7.0%
-9.1%
-9.9%
-7.8%
3.6%
1.8%
3.3%
2.2%
Platform
1,736
3,422
5,035
6,820
1,831
3,658
5,476
7,262
YoY
-11.4%
-14.9%
-14.2%
-9.6%
5.5%
6.9%
8.8%
6.5%
Technology
251
498
672
914
246
453
672
906
YoY
2.9%
5.7%
-11.6%
-10.5%
-2.0%
-9.0%
0.0%
-0.9%
Operating profit
33
-73
457
840
144
428
938
1,356
YoY
-81.4%
-
-76.1%
-59.1%
336.4%
-
105.3%
61.4%
Operating profit margin
0.3%
-
1.4%
1.9%
1.3%
1.9%
2.8%
3.1%
Platform
159
962
1,421
1,819
262
958
1,489
1,994
YoY
-52.1%
-20.1%
-10.6%
-1.0%
64.8%
-0.4%
4.8%
9.6%
Operating profit margin
1.9%
5.6%
5.5%
5.2%
3.0%
5.3%
5.5%
5.6%
Technology
215
36
469
847
253
187
593
919
YoY
-33.4%
-92.8%
-48.5%
-32.9%
17.7%
419.4%
26.4%
8.5%
Operating profit margin
11.0%
0.9%
8.1%
11.2%
13.5%
4.8%
10.2%
12.1%
Other
-138
-706
-908
-1,106
-193
-364
-631
-859
YoY
-
-
-
-
-
-
-
-
Adjustments
-202
-365
-524
-720
-178
-353
-513
-698
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company revised its segment classifications in Q2 FY09/21 (January–March 2021), folding the Sharing Economy segment (fabbit and parking lot businesses) into the Other segment. In January 2021, equity-method affiliate SystemSoft Corporation absorbed consolidated subsidiary fabbit Co., Ltd., resulting in the removal of fabbit from Sharing Economy segment results. The Cloud Technology segment was also renamed simply Technology to clarify the company’s focus not only on cloud services but also on general technical services such as robotic process automation (RPA) and online systems management. Figures in the above table are based on the new segment classifications.
Performance by segment (quarterly)
Quarterly
FY09/20
FY09/21
(JPYmn)
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Sales
10,630
11,425
10,965
11,099
11,100
11,482
11,117
10,720
YoY
-5.8%
-6.2%
-8.7%
6.2%
4.4%
0.5%
1.4%
-3.4%
Platform
8,236
8,939
8,735
8,912
8,695
9,253
9,076
8,714
YoY
-8.7%
-8.2%
-1.1%
9.3%
5.6%
3.5%
3.9%
-2.2%
Technology
1,963
2,075
1,779
1,756
1,878
2,035
1,885
1,803
YoY
0.9%
-7.3%
-11.8%
-5.9%
-4.3%
-1.9%
6.0%
2.7%
Other
709
682
690
679
760
419
355
400
YoY
3.8%
17.0%
-53.1%
-27.7%
7.2%
-38.6%
-48.6%
-41.1%
Gross profit
2,331
2,084
2,610
2,653
2,526
2,472
2,726
2,661
YoY
-11.9%
-33.1%
-24.1%
8.9%
8.4%
18.6%
4.4%
0.3%
Gross profit margin
21.9%
18.2%
23.8%
23.9%
22.8%
21.5%
24.5%
24.8%
Platform
1,895
2,489
2,072
2,183
2,093
2,523
2,349
2,291
YoY
-17.3%
-15.2%
-7.2%
13.5%
10.4%
1.4%
13.4%
4.9%
Gross profit margin
23.0%
27.8%
23.7%
24.5%
24.1%
27.3%
25.9%
26.3%
Technology
466
68
607
620
499
141
625
560
YoY
-17.8%
-83.1%
-13.5%
1.1%
7.1%
107.4%
3.0%
-9.7%
Gross profit margin
23.7%
3.3%
34.1%
35.3%
26.6%
6.9%
33.2%
31.1%
SG&A expenses
2,298
2,191
2,079
2,269
2,381
2,189
2,216
2,243
YoY
-7.0%
-11.2%
-11.5%
-1.1%
3.6%
-0.1%
6.6%
-1.1%
Platform
1,736
1,686
1,613
1,785
1,831
1,827
1,818
1,786
YoY
-11.4%
-18.3%
-12.7%
6.6%
5.5%
8.4%
12.7%
0.1%
Technology
251
247
174
242
246
207
219
234
YoY
2.9%
8.8%
-39.8%
-7.3%
-2.0%
-16.2%
25.9%
-3.3%
Operating profit
33
-106
530
383
144
284
510
418
YoY
-81.4%
-
-51.4%
169.7%
336.4%
-
-3.8%
9.1%
Operating profit margin
0.3%
-
4.8%
3.5%
1.3%
2.5%
4.6%
3.9%
Platform
159
803
459
398
262
696
531
505
YoY
-52.1%
-7.9%
19.2%
60.5%
64.8%
-13.3%
15.7%
26.9%
Operating profit margin
1.9%
9.0%
5.3%
4.5%
3.0%
7.5%
5.9%
5.8%
Technology
215
-179
433
378
253
-66
406
326
YoY
-33.4%
-
4.8%
7.4%
17.7%
-
-6.2%
-13.8%
Operating profit margin
11.0%
-
24.3%
21.5%
13.5%
-
21.5%
18.1%
Other
-138
-568
-202
-198
-193
-171
-267
-228
YoY
-
-
-
-
-
-
-
-
Adjustments
-202
-163
-159
-196
-178
-175
-160
-185
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company revised its segment classifications in Q2 FY09/21 (January–March 2021), folding the Sharing Economy segment (fabbit and parking lot businesses) into the Other segment. In January 2021, equity-method affiliate SystemSoft Corporation absorbed consolidated subsidiary fabbit Co., Ltd., resulting in the removal of fabbit from Sharing Economy segment results. The Cloud Technology segment was also renamed simply Technology to clarify the company’s focus not only on cloud services but also on general technical services such as robotic process automation (RPA) and online systems management. Figures in the above table are based on the new segment classifications.
Full-year FY09/21 results
Sales: JPY44.4bn (+0.7% YoY)
Operating profit: JPY1.4bn (+61.4% YoY)
Recurring profit: JPY795mn (profit of JPY8.0mn in FY09/20)
Net income attributable to owners of the parent: JPY602mn (+262.7% YoY)
Sales growth was mainly driven by the Platform segment.
Operating profit grew YoY. Gross profit was JPY10.4bn
(+7.3% YoY). SG&A expenses rose 2.2% YoY to JPY9.0bn, but this was
more than offset by the rise in gross profit. Profit rose in all segments.
Gross profit was boosted by higher sales
and GPM in the Platform segment as well as higher GPM in the Technology
segment. Recurring gross profit was JPY7.5bn (+1.5% YoY) and non-recurring
gross profit was JPY2.9bn (+25.5% YoY).
Recurring gross profit
refers to gross profit generated from rental property management and subleasing
in the Platform segment, the Technology segment, and fabbit co-working space usage fees. On the other hand,
non-recurring gross profit refers to gross profit generated from rental
brokerage commissions in the Platform segment, fabbit-related consultant fees, and sales of operational investment securities.
Factors that increased operating profit
Higher gross profit in the Platform segment: JPY617mn
Higher gross profit in the Technology segment: JPY63mn
Lower adjustments (increase in gross profit): JPY183mn
Factors that pushed down operating profit
Lower gross profit in other businesses: JPY156mn
Higher SG&A expenses: JPY191mn
Recurring profit rose YoY. In addition to higher operating profit, the non-operating income and expenses gap narrowed to -JPY561mn (-JPY832mn in FY09/20). Equity-method investment gains came to JPY113mn (versus a JPY175mn loss in FY09/20).
The company recorded YoY growth in net income attributable to owners of the parent.
Performance by segment is outlined below.
The company revised its segment classifications in Q2 FY09/21 (January–March 2021), folding the Sharing Economy segment (fabbit and parking lot businesses) into the Other segment. In January 2021, equity-method affiliate SystemSoft Corporation absorbed consolidated subsidiary fabbit Co., Ltd., resulting in the removal of fabbit from Sharing Economy segment results. The Cloud Technology segment was also renamed simply Technology to clarify the company’s focus not only on cloud services but also on general technical services such as robotic process automation (RPA) and online systems management. The following segment comparisons are based on the company’s new segment classifications.
Platform
Sales: JPY35.7bn (+2.6% YoY)
Gross profit: JPY9.3bn (+7.1% YoY)
Gross profit margin: 25.9% (+1.1pp YoY)
Operating profit: JPY2.0bn (+9.6% YoY)
The number of units under management was 91,421 (-1.4%, -1,255 units YoY). Despite some gains in the number of units due to M&A, these increases were easily offset by declines resulting from changes in ownership among other factors.
The number of directly managed stores was 68 (down four YoY). The company promoted conversion of directly managed stores into franchise stores by supporting employees who wished to become independent business owners.
Gross profit of ancillary products such as emergency services and rent guarantees was JPY1.5bn (-2.5% YoY).
In the leased company housing business, the company had 61 contracts with corporate clients.
Technology
Sales: JPY7.6bn (-0.4% YoY)
Gross profit: JPY1.8bn (+3.6% YoY)
Gross profit margin: 24.0% (+0.8pp YoY)
Operating profit: JPY919mn (+8.5% YoY)
In FY09/20, the company supported its franchise store owners by lowering advertising fees and royalties, but some of these support measures ended in FY09/21.
Other
Sales: JPY1.9bn (-29.9% YoY)
Operating loss: JPY859mn (loss of JPY1.1bn in FY09/20)
The number of coin-operated parking spaces (contract basis) totaled 4,320 (+6.6%, +269 spaces YoY).
Full-year company forecast
Full-year company forecast for FY09/22
Company forecasts (JPYmn)
FY09/21
FY09/22
1H Act.
2H Act.
FY Act.
FY Est.
Sales
22,582
21,837
44,419
45,000
YoY
2.4%
-1.0%
0.7%
1.3%
Cost of sales
17,583
16,450
34,033
Gross profit
4,998
5,387
10,385
YoY
13.2%
2.4%
7.3%
Gross profit margin
22.1%
24.7%
23.4%
SG&A expenses
4,570
4,459
9,029
SG&A ratio
1.8%
2.6%
2.2%
Operating profit
428
928
1,356
1,800
YoY
-
1.6%
61.4%
32.7%
Operating profit margin
-
4.2%
3.1%
4.0%
Recurring profit
324
471
795
1,000
YoY
-
-12.8%
-
25.8%
Recurring profit margin
-
2.2%
1.8%
2.2%
Net income
29
573
602
200
YoY
-
-42.0%
262.7%
-66.8%
Source: Shared Research, based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
For FY09/22, Apaman forecasts consolidated sales of JPY45.0bn (+1.3% YoY), operating profit of JPY1.8bn (+32.7% YoY), recurring profit of JPY1.0bn (+25.8% YoY), and net income attributable to owners of the parent of JPY200mn (-66.8% YoY).
In the Platform business, the company aims to enhance operational efficiency through digitalization and increase the number of units under management by winning more management contracts. It also intends to focus on expanding the leased company housing business. In the Technology business, the company plans to promote and expand its digital transformation (DX) services.
Medium- to long-term outlook
As of December 2020, the company had not released a medium-term management plan.
Starting in FY09/18, the company reorganized its business segments as Cloud Technology, Platform, and Sharing Economy, and has been focusing on providing services built around technology. The company had planned to focus particularly on the Sharing Economy segment while striving to generate JPY10.0bn each in sales from coworking spaces, minpaku (vacation rental facilities), parking, and bicycle sharing services for total segment sales of JPY40.0bn. However, the company sold a portion of its shares in equity method affiliate Grandouce Inc., which had been responsible for its minpaku business, in September 2019 and made the decision to withdraw from this business. In addition, equity method affiliate SystemSoft Corporation absorbed consolidated subsidiary fabbit, which operates the company’s coworking facilities, in January 2021, and the company plans to remove the latter from its list of consolidated subsidiaries. Following these changes, the company will focus on its Cloud Technology and Platform segments.
During its financial results briefing for FY09/20, the company identified “expansion of online operations” and “growth in recurring revenue” as current priorities. By concentrating on these priorities, the company aims to achieve a profit structure that will be resistant to impact from the COVID-19 pandemic and business conditions.
Expansion of online operations
Under a set of initiatives called “Online First,” the company is striving to expand its online operations by implementing online customer service, explanations, and contracting services, as well as shared electronic keys for apartments (details below). Meanwhile, the company is promoting the adoption of AI-based customer support, automated rental management, and automated rental brokerage services.
Online customer service, explanations, and contracting services
Online customer service: Using a variety of online tools, customers will be able to receive room introductions and referrals from store staff via the Internet without having to pay visits to physical stores.
Online previews: Customers will be able to preview rental properties by connecting to tablets and smartphones carried on site by store staff.
Online explanations: Customers will be able receive online explanations regarding important matters prior to concluding contracts and without meeting staff face to face.
Contracting by mail: Customers will be able to send and receive rental agreements, disclosure statements, and other application forms, receive room keys, and conduct other correspondence via physical mail.
“Selkey” shared electronic keys for apartments: Since July 2020, the company has been installing Selkey shared electronic apartment key systems provided by Seltech (unlisted) at properties under its management. Installing Selkey systems at properties will allow customers wishing to preview apartments to receive temporarily usable keys through their smartphones. These systems will eliminate the need for the company to physically hand apartment keys to apartment previewers and will allow the company to automate management operations, including key return and preview history administration.
Growth in recurring revenue
The company is planning to expand its recurring revenue by securing more rental units under management and increasing its leased company housing.
Securing more rental units under management
As of September 2020, the company had 92,676 rental units under management (+4,706 properties YoY). Included below are two simulations under which the company adds 10,000 units under management per year: In the first, the company expands its sales staff. In the second, it increases its number of units under management through M&A.
Increasing units under management through the company’s own sales and marketing
If the company uses its own sales team to acquire 10,000 units under management per year, it will require 50 sales personnel. In this case, the company will be potentially able to achieve JPY20mn in operating profit for every group of 1,000 units under management. Even if the company encounters a factor that reduces its units already under management by about one percent annually, it maintains that it is capable of generating profit by the third year after beginning to establish its sales structure (during the first year, it projects a loss of JPY200mn due to upfront costs such as labor costs). Under this simulation, the company estimates that it can achieve operating profit of JPY570mn by the fifth year after beginning to establish its sales system and operating profit of JPY1.5bn by the 10th.
Simulation of operating profit achieved through an increase in unit under management
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
Units under management
10,000
19,900
29,700
39,400
49,000
58,500
67,900
77,200
86,400
95,500
Operating profit (JPYmn)
-200
-10
190
380
570
760
950
1,130
1,310
1,490
Source: Shared Research based on company data
Notes: All figures are simulated estimates.
These estimates assume a yearly increase of 10,000 units under management and an annual one-percent decline in previously held units under management.
Increasing units under management through M&A
The company indicates that if it increases its number of units under management through M&A, it can potentially achieve JPY18mn in operating profit for each group of 1,000 units. Even if the company encounters a factor that lowers units under management by about one percent annually, the company estimates it can generate operating profit of JPY180mn in the first year, JPY530mn in the third year, JPY870mn in the fifth year, and JPY1.7bn in the 10th year.
Simulation of operating profit achieved by increasing units under management through M&A
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
Units under management
10,000
19,900
29,700
39,400
49,000
58,500
67,900
77,200
86,400
95,500
Operating profit (JPYmn)
180
350
530
700
870
1,040
1,210
1,380
1,540
1,700
Source: Shared Research based on company data
Notes: All figures are simulated estimates.
These estimates assume a yearly increase of 10,000 units under management and an annual one-percent decline in previously held units under management.
Increase in leased company housing
The company is aiming to increase its number of leased company housing units over the medium term. “Leased company housing” refers to rental properties that companies lease from realtors and subsequently rent out to employees while collecting only a portion of the rent from these personnel. Through the leased company housing system under employee benefit programs, companies provide low-cost accommodations to their staff.
Leased company housing: Some Japanese companies adopt systems through which they pay portions of their employees’ housing costs (housing allowances) under their employee benefit programs. Under Japanese tax law, housing allowances are considered to be portions of employee salaries and are taxed accordingly. Companies that pay housing allowances for their employees also incur higher social insurance premiums. Companies adopting leased company housing systems can effectively (though not officially) issue housing allowances by collecting portions of rent from employees that are less expensive than rents in the surrounding market, with the difference serving as employee support. Under this system, employee salaries do not change, so both the taxes incurred by the employee and the social insurance premiums paid by the company remain the same.
The company provides a large volume of rental brokerage services, through which it finds rental properties for company employees; as of December 2020, the company had formed rental brokerage partnerships with about 10,000 companies. However, at the same point in time, it was providing nearly no services related to leased company housing.
Through its leased company housing business, the company leases rental properties from their owners for use as corporate housing and subleases them to companies. Earnings generated through the company’s rental brokerage services consist primarily of rental brokerage fees. Through leased company housing services, Apaman can continuously generate earnings by collecting rent from companies on an ongoing basis; the difference between rent it collects from other companies and the rent it pays to the owners of the leased company housing properties becomes the company’s profit.
The company has not released its plans for its leased company housing business, but it appears to be modeling this business after the leased company housing business operated by Relo Group, Inc. In FY03/20, Relo Group’s leased company housing business generated sales of JPY185.8bn (+10.2% YoY) and operating profit of JPY5.6bn (-0.3% YoY) while reporting 195,849 leased company housing units under management (+11.4% YoY).
Business
Main business segments
Until FY09/17, the company had four main segments: Brokerage, Property Management, Principal Investment and Fund Management, and Other. The core segments were Brokerage (apartment and condominium rental brokerage) and Property Management (rental property management).
Business segments in operation through FY09/17
Business segment
Business details
Brokerage
Rental property brokerage at directly managed and franchise stores
Property Management
Rental property management and sublease
Principal Investment and Fund Management
Management of the company’s real estate including funds
Earnings by segment under segment classifications in place during FY09/17 and earlier
Segment sales and operating profit
FY09/11
FY09/12
FY09/13
FY09/14
FY09/15
FY09/16
FY09/17
(JPYmn)
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Sales
42,583
38,616
36,642
36,655
37,270
37,383
40,262
YoY
-10.0%
-9.3%
-5.1%
0.0%
1.7%
0.3%
7.7%
Brokerage
8,158
9,577
10,464
11,088
11,321
11,455
12,059
YoY
-0.3%
17.4%
9.3%
6.0%
2.1%
1.2%
5.3%
% of total
19.2%
24.8%
28.6%
30.2%
30.4%
30.6%
30.0%
Property Management
27,889
26,075
24,413
23,642
23,658
23,845
25,869
YoY
-6.5%
-6.5%
-6.4%
-3.2%
0.1%
0.8%
8.5%
% of total
65.5%
67.5%
66.6%
64.5%
63.5%
63.8%
64.3%
Principal Investment and Fund Management
3,714
2,496
1,932
1,836
1,938
1,851
1,860
Other
1,971
1,633
451
686
1,156
1,260
1,491
Eliminations or company-wide (adjustments)
-1,219
-1,165
-619
-597
-805
-1,029
-1,019
Operating profit
2,187
2,316
2,310
2,108
2,407
2,489
2,556
YoY
30.7%
5.9%
-0.3%
-8.7%
14.2%
3.4%
2.7%
Operating profit margin
5.1%
6.0%
6.3%
5.8%
6.5%
6.7%
6.3%
Brokerage
1,802
1,770
1,989
2,050
2,086
1,918
1,841
YoY
92.7%
-1.8%
12.4%
3.1%
1.8%
-8.1%
-4.0%
Operating profit margin
22.1%
18.5%
19.0%
18.5%
18.4%
16.7%
15.3%
% of total
62.0%
61.8%
63.7%
68.1%
63.2%
57.4%
54.1%
Property Management
851
1,009
1,061
1,044
1,300
1,395
1,575
YoY
27.0%
18.6%
5.2%
-1.6%
24.5%
7.3%
12.9%
Operating profit margin
3.1%
3.9%
4.3%
4.4%
5.5%
5.9%
6.1%
% of total
29.3%
35.2%
34.0%
34.7%
39.4%
41.8%
46.3%
Principal Investment and Fund Management
215
114
112
-8
121
58
65
Other
40
-29
-39
-77
-206
-32
-80
Eliminations or company-wide (adjustments)
-870
-549
-812
-900
-895
-850
-845
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Operating profit ratios represent the ratios against the sum of each segment’s operating profit prior to adjustments and deductions.
Note: Principal Investment and Fund Management figures for FY09/10 and prior years are the sum of Principal Investment and Fund Management businesses.
In FY09/18, the company restructured its main segments into the Platform, Cloud Technology, and Sharing Economy segments and has been promoting the provision of technology-based services.
Business segments in operation from FY09/18
Business segment
Business details
Platform
・Rental real estate management and subleasing: Conducts rental management on behalf of the owners of apartments and condominiums (property owners) or leases whole properties from property owners and serves as the landlord in renting to tenants
・Rental brokerage: Directly managed stores provide brokerage services for rental properties
・Related services: Offers ancillary products and services to property owners, tenants, and franchise stores
Cloud Technology
Provides franchise stores with the Apamanshop Operation System (AOS) and other systems, as well as branding and information services
Sharing Economy
Management of coin-operated parking, etc.
Earnings by segment under the segment classifications in place from FY09/18 onward
Segment sales and operating profit
FY09/17
FY09/18
FY09/19
FY09/20
(JPYmn)
Cons.
Cons.
Cons.
Cons.
Sales
40,262
41,682
45,934
44,119
YoY
7.7%
3.5%
10.2%
-4.0%
Platform
31,280
33,306
35,660
34,757
YoY
-
6.5%
7.1%
-2.5%
% of total
77.7%
79.9%
77.6%
78.8%
Cloud technology
5,972
6,180
6,933
6,737
YoY
-
3.5%
12.2%
-2.8%
% of total
14.8%
14.8%
15.1%
15.3%
Sharing Economy
1,109
1,302
2,852
2,237
YoY
-
17.4%
119.0%
-21.6%
% of total
2.8%
3.1%
6.2%
5.1%
Other
1,899
892
487
386
YoY
-
-53.0%
-45.4%
-20.7%
% of total
4.7%
2.1%
1.1%
0.9%
Operating profit
2,556
1,626
2,055
840
YoY
2.7%
-36.4%
26.4%
-59.1%
Operating profit margin
6.3%
3.9%
4.5%
1.9%
Platform
2,200
1,973
1,837
1,819
YoY
-
-10.3%
-6.9%
-1.0%
Operating profit margin
7.0%
5.9%
5.2%
5.2%
% of total
68.5%
85.3%
60.2%
116.6%
Cloud technology
1,084
1,147
1,263
847
YoY
-
5.8%
10.1%
-32.9%
Operating profit margin
18.2%
18.6%
18.2%
12.6%
% of total
33.7%
49.6%
41.4%
54.3%
Sharing Economy
28
-462
352
-720
YoY
-
-
-
-
Operating profit margin
2.5%
-
12.3%
-
% of total
0.9%
-
11.5%
-
Other
-100
-345
-398
-386
Adjustments
-657
-687
-999
-720
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: % of total segment profit represents the ratio versus the simple total of operating profit for the corresponding segment, before adjustments.
Platform
The Platform segment accounted for 78.8% of consolidated sales and generated operating profit of JPY1.8bn in FY09/20 (consolidated operating profit was JPY840mn), making it the company’s core segment. This segment includes rental property management and subleasing, rental brokerage (Apamanshop), and ancillary and related services for rental apartments and condominiums. Of the total segment sales in FY09/20, Shared Research estimates that the rental property management and subleasing accounted for about 90% and the rental brokerage business operated by directly operated stores for about 10%.
Rental property management and subleasing
Rental property management services: Apaman manages rental apartments and condominiums on behalf of their owners. Rental property management entails screening prospective tenants, executing rental contracts, renewing contracts, collecting rent, dealing with tenant complaints, dealing with vacant properties, renovating rooms, conserving buildings, and maintenance.
Subleasing services: The company leases apartments and condominiums from their owners and then rents them to tenants.
Earnings structure for rental management and subleasing (old Property Management segment)
The chief source of revenues from rental management is fees from property owners for management services. Earnings are in proportion to the number of managed units and are not affected by occupancy rates.
The chief source of revenues from subleasing services is rent collected from tenants of the apartments and condominiums offered by the company (see Business model for details). Earnings depend on the number of managed units, rent amounts, and occupancy rates. The subleasing business is obligated to pay fixed monthly rents to owners regardless of whether or not units are occupied, or how much rent is received from tenants. For this reason, profits from subleasing operations are the difference between the rent revenue received from tenants and the fixed rents paid to property owners, so they are sensitive to the occupancy rate of subleased units.
Source: Shared Research based on company data
Apaman has not provided a breakdown of the Platform segment’s sales, but revenue from the rental management and subleasing businesses can be easily estimated by multiplying the number of units under management by sales per unit using figures from previous years. In FY09/20, the company had 92,676 units under management (versus 87,970 in FY09/19). The company reported JPY364mn in sales per 1,000 units under management for FY09/17 but has not reported this metric in subsequent years.
Old Property Management segment earnings
FY09/11
FY09/12
FY09/13
FY09/14
FY09/15
FY09/16
FY09/17
(JPYmn)
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Sales
-
-
23,831
23,642
23,658
23,845
25,869
YoY
-
-
-
-0.8%
0.1%
0.8%
8.5%
Subleasing
-
-
17,713
17,539
17,498
17,383
18,257
YoY
-
-
-
-1.0%
-0.2%
-0.7%
5.0%
Rental management
-
-
6,118
6,102
6,161
6,462
7,612
YoY
-
-
-
-0.3%
1.0%
4.9%
17.8%
Operating profit
-
-
1,061
1,044
1,300
1,395
1,575
YoY
-
-
-
-1.6%
24.5%
7.3%
12.9%
Operating profit margin
-
-
4.5%
4.4%
5.5%
5.9%
6.1%
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The figures for FY09/13 were obtained after segment transfers of the parking and SOHO businesses.
Rental management and subleasing (old Property Management segment) unit count
FY09/11
FY09/12
FY09/13
FY09/14
FY09/15
FY09/16
FY09/17
FY09/18
FY09/19
FY09/20
Units under management
65,077
58,870
59,619
60,426
63,492
70,041
71,458
90,198
87,970
92,676
YoY
-4.4%
-9.5%
1.3%
1.4%
5.1%
10.3%
2.0%
26.2%
-2.5%
5.3%
Rental management
34,895
30,373
31,846
32,867
35,851
41,302
42,600
-
-
-
YoY
-4.7%
-13.0%
4.8%
3.2%
9.1%
15.2%
3.1%
-
-
-
Subleasing
30,182
28,497
27,773
27,559
27,641
28,739
28,858
-
-
-
YoY
-3.9%
-5.6%
-2.5%
-0.8%
0.3%
4.0%
0.4%
-
-
-
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Old Property Management segment sales and operating profit per 1,000 units (JPYmn)
FY09/11
FY09/12
FY09/13
FY09/14
FY09/15
FY09/16
FY09/17
Sales per 1,000 units (JPYmn)
-
-
397
395
382
359
364
YoY
-
-
-
-0.5%
-3.3%
-6.0%
1.4%
Operating profit per 1,000 units (JPYmn)
-
-
17.7
17.4
21.0
20.9
22.2
YoY
-
-
-
-1.7%
20.7%
-0.5%
6.2%
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Rental brokerage services
Here, the company offers rental brokerage and basic property management services for owners and tenants, with most of the properties located in the greater Tokyo area, Fukuoka Prefecture, and Hokkaido. It renders these services through its directly managed Apamanshop stores (72 in operation as of end-September 2020 versus 92 as of end-September 2019).
The chief source of revenues from rental brokerage services is brokerage commissions (equivalent to up to 1.1x a month’s rent for the land or building in question) received when a new tenant moves in. With regard to simple management services, Apaman conducts schedule management and renovation after tenants vacate on behalf of property owners, gaining revenues in return, including renewal fees and payment for renovation construction.
The Real Estate Brokerage Act in Japan caps the maximum brokerage fee for rental contracts at one month of the property’s rent plus consumption tax.
Historically in Japan, the word “brokerage” refers to brokering in real estate transactions, but Apamanshop specializes in brokering residential rental properties. Apamanshop initially developed its rental brokerage business through its franchise network (rental brokerages with which it had franchise contracts). Since 2006, the company has operated directly managed stores without cannibalizing its franchisees.
Apaman does not provide a breakdown of the Platform segment’s sales, but the subsegment’s sales can be calculated by multiplying the number of directly managed stores by sales per store. The company reported sales per directly managed store (domestic) of JPY51.5mn in FY09/17, when it had 108 stores, but has not disclosed this metric since then.
Directly managed store earnings per unit (domestic)
FY09/11
FY09/12
FY09/13
FY09/14
FY09/15
FY09/16
FY09/17
(JPY'000)
Sales
54,577
57,487
62,186
57,533
56,100
50,800
51,500
YoY
1.5%
5.3%
8.2%
-7.5%
-2.5%
-9.4%
1.4%
Operating profit
13,475
16,275
17,728
12,919
12,200
9,000
9,000
YoY
20.3%
20.8%
8.9%
-27.1%
-5.6%
-26.2%
0.0%
Operating profit margin
24.7%
28.3%
28.5%
22.5%
21.7%
17.7%
17.5%
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Sales and operating profit per store were obtained by averaging out the earnings of open stores during each financial year.
Related services
In this subsegment, the company offers tenants entering apartments or condominiums a range of services and products.
The company offers tenants various optional service packages when they sign rental contracts. Since 2010, Apaman has expanded the offering to include low-priced appliances and furniture sets working with electronics retailers. It also started providing a wide range of other services and products, such as renters insurance and 24-hour assistance services, fire extinguishers, and optional intermediary collection services for electricity, gas, telephone, public television (NHK), and cable TV charges.
The large number of branches in the Apamanshop network gives the company superior buying power. The company further differentiates itself with its broad service menu. Tenants benefit from the company’s one-stop-shopping model. Property owners benefit from higher occupancy rates. The company acts as a broker of these services.
Apaman does not provide a breakdown of the Platform segment’s sales, but does disclose gross profit figures for ancillary products, reporting total gross profit from ancillary products of JPY1.5bn (-20.6% YoY) for FY09/20.
Synergy of Brokerage and Property Management businesses
The Brokerage and Property Management segments are mutually dependent. The Brokerage segment receives income for every signed contract, which also creates a steady flow of income for the Property Management segment (a recurring-revenue model). Accordingly, the Property Management business relies on rental units under management, making the company’s ability to increase occupancy rates (i.e., brokerage power) vital.
To increase the number of brokered units, Apaman must enhance its ability to find potential tenants and raise its rental-contract completion rates (number of tenants divided by number of potential tenants). To find potential tenants, the company conducts various promotional campaigns. To raise contract-completion rates, however, the company must offer prime rental units. To avoid competing with other brokers for prime units, the company must ensure that it already has prime units under management (which other brokers cannot touch).
Through its associated services, the company could potentially raise the appeal of its rental properties by making them more convenient for tenants.
The company could stabilize the operation by increasing the number of units under management. Brokerage business is a “one-time revenue business” as the company receives brokerage fees per contract. On the other hand, Property Management business is “recurring-revenue business,” which provides recurring income per contract.
Cloud Technology
The Cloud Technology segment accounted for 15.3% of consolidated sales and 54.3% of operating profit in FY09/20. In Cloud Technology, Apaman provides primarily franchise stores (1,049 stores as of the end of September 2017) with the Apamanshop Operation System (AOS) and other systems, as well as branding and information services.
Apamanshop branch
apamanshop.com website
Source: Shared Research based on company data
The segment’s main sources of revenues are system usage fee, system installation fees, internet advertising fees, and franchise fees from franchise stores.
This segment’s earnings can be simply expressed as the result of multiplying the number of franchise stores by sales per store. In FY09/17, sales by franchise stores came to JPY7.3bn; the number of stores was 1,041 and sales per franchise store were JPY7.0mn (calculated by Shared Research based on company data). The company has not disclosed either the number of franchise stores or sales per franchise store for subsequent years but, since there has not be a major change in the number of franchise stores, Shared Research has been led to believe that sales to franchise stores is roughly the same as segment sales.
At the heart of the Apamanshop group’s business is a proprietary real estate information network that enables efficient accumulation and use of information connecting franchisees and directly managed stores across the country, as well as property owners and tenants.
According to the company, its strengths are in combining this information network with the ability to design and manage marketing campaigns to drive the tenant traffic, attract landlords, and sell various option services and products to the customer. Early on in its existence, Apamanshop used relevant celebrities of the moment and has used Internet-based video and website events to boost its name recognition.
AS System
This subsegment manages a rental-brokerage franchise network under the Apamanshop brand. It offers franchise stores several types of services—training, branding, and information provision—under the umbrella name Apamanshop (AS) System.
Training Services include bimonthly conferences for franchise representatives, office heads, and local staff in each prefecture. The company also has full-time operatives in each region—Staff Operation Field Counselors, or OFCs—who regularly visit franchise offices.
Branding Services dovetails nationwide advertising and local advertising campaigns to raise the profile of the Apamanshop brand. The nationwide advertising campaigns involve popular celebrities as brand ambassadors. The company also has around 1,000 separate websites designed to appeal to students, businesses, property owners, and particular regions, such as Hokkaido and Kyushu; the sites are also tailored for PCs, smartphones, and tablets for more precise customer segmentation.
Information Services offers bimonthly meetings in eight areas nationwide, delivering franchisees the latest information on sales rankings, compliance, and other topics. Additionally, the company regularly provides its franchises with information about sales rankings, best practices, and legal and compliance issues, as well as market data.
Information infrastructure services
In this subsegment, the company offers Apamanshop Operation System (AOS) to franchisees, a centralized information that allows driving better efficiency across the entire franchisee network.
The AOS, together with the Apamanshop Property Management System (APS), is the core of the Apamanshop Total System (ATS) that the company makes available to its franchise stores.
The AOS supports the rental brokerage service by creating a database of information that was traditionally paper-based: rents, photographs, customers, business results, and staff activity plans. The database also helps clients rank properties by rent, distance to train stations, square footage, and so on. Currently, 25mn rental units are in the system.
The APS is management software that works with AOS to centralize data related to all the participants of the property rental process: tenants, owners, renovators, builders, and others. According to the company, this boosts the productivity of franchisees by centralizing and standardizing information related to building management and tenant management, contracts, cash management, and vacancies.
Reference: franchise contracts
The “Apamanshop Network Franchise Contract” governs the company’s franchisees. The company works with standard franchisees and “J” franchisees, which receive management guidance. The majority of the company’s franchisees are standard franchisees.
The company offers franchise stores several types of services—training, branding, and information provision—under the umbrella name AS System, for which franchisees pay a usage fee. There are also shared advertising costs, primarily for television commercials. Total Media Pack expenses are related to all forms of advertising the company conducts and include a partial contribution toward the cost of operating its core Apamanshop Online System (AOS). (In addition, expenses paid for listing properties on the Internet include some expenses related to the operation of the AOS.)
Although there are differences depending on geographic area and the type of franchise, the company receives an average of about JPY7mn a year from each franchise store (Shared Research estimate based on actual data reported for FY09/17).
Franchise contracts were two-year contracts (renewable every two years), required the use of standardized shop names, covered specific territories, and included a lump-sum termination clause that allowed a franchisee to exit the contract in return for payment of remaining Apamanshop (AS) system-usage fees. (See Franchise rental brokerage services for details of Apamanshop systems.)
Franchise contracts
General payment structure for franchisees
J-FC payment structure
Basic initial fee
Franchise fees
Differs by region; JPY1–3mn (ex. tax) for new franchisees, JPY250,000–750,000 per store for additions at existing franchisees (ex. tax)
JPY1.5mn per store (ex. tax) for new franchisees, and JPY1.0mn per store (ex. tax) for additions at existing franchisees
Advertising assistance fees
JPY100,000 (ex. tax) per store for new franchisees, JPY50,000 (ex. tax) per store for existing franchisees
Basic monthly fee
AS System usage fees (equal to royalty payments)
Basically, monthly fee of JPY70,000 per franchisee (ex. tax)
Basically, monthly fee of 3% of gross profit per store (ex. tax)
Advertising fees
Differs by region; monthly fee of JPY10,000–120,000 per store (ex. tax)
Total Media Pack fee
Differs by region; monthly fee of JPY65,000–90,000 per store (ex. tax)
Expenses for online property listing
Pay-as-you-go system, billed based on the number of responses to property listing
Running cost for Information Magazine Publishing System
Regions publishing the magazine are billed separately
Source: Shared Research based on company data
Sharing Economy
In FY09/20, the Sharing Economy segment accounted for 5.1% of total sales and produced an operating loss of JPY720mn. This segment involves the operation of coworking spaces and coin-operated parking facilities. In FY09/20, coworking spaces accounted for about 60% of segment sales, while coin-operated parking accounted for about 40%.
Coworking spaces
Consolidated subsidiary fabbit Co., Ltd. is the central actor responsible for operating this business, through which Apaman leases offices from property owners and offers private rooms, fixed (reserved) seats, or free (non-reserved) seats as co-working spaces to entrepreneurs and other users, with a focus on startups (Equity method affiliate SystemSoft Corporation absorbed fabbit in January 2021, and the company plans to remove the latter from its list of consolidated subsidiaries).
For example, fabbit Otemachi (Otemachi, Chiyoda-ku, Tokyo) offers, as co-working spaces, private rooms at JPY96,000/month, fixed seats at JPY48,000/month, and free seats at JPY16,000/month. Apaman generates earnings from usage fees for co-working spaces. The main costs incurred by the company are reception personnel costs and the rent paid to building space owners (property owners).
At end FY09/20, the company had 11,137 members and a total of 46 co-working spaces (including directly managed spaces, franchise spaces, and spaces in which the company has invested) versus 45 at end FY09/19.
Parking
In this business, the company leases land or parking lots from property owners while providing rent guarantees, and rents the space out as hourly parking spots. Its earnings are equivalent to the annual earnings per parking spot multiplied by the number of spots operated. The main cost incurred by the company is the rent paid to parking space owners (property owners).
As of end FY09/20, Apaman operated 4,051 parking spaces (up from 3,589 at end FY09/19).
Profitability snapshot and financial ratios
Profit margins
FY09/11
FY09/12
FY09/13
FY09/14
FY09/15
FY09/16
FY09/17
FY09/18
FY09/19
FY09/20
(JPYmn)
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Cons.
Gross profit
10,634
10,034
9,914
10,221
10,907
10,965
11,806
11,309
11,637
9,678
Gross profit margin
25.0%
26.0%
27.1%
27.9%
29.3%
29.3%
29.3%
27.1%
25.3%
21.9%
Operating profit
2,187
2,316
2,310
2,108
2,407
2,489
2,556
1,626
2,055
840
Operating profit margin
5.1%
6.0%
6.3%
5.8%
6.5%
6.7%
6.3%
3.9%
4.5%
1.9%
EBITDA
3,964
3,952
3,947
3,785
4,140
4,310
4,401
3,218
3,662
2,429
EBITDA margin
9.3%
10.2%
10.8%
10.3%
11.1%
11.5%
10.9%
7.7%
8.0%
5.5%
Net margin
-
0.2%
6.0%
4.0%
-9.8%
4.4%
3.2%
-2.6%
0.6%
0.4%
Financial ratios
ROA (RP-based)
1.3%
2.5%
2.7%
2.9%
3.7%
4.8%
4.7%
2.2%
2.1%
0.0%
ROE
-42.9%
1.4%
28.2%
15.9%
-62.8%
55.0%
26.1%
-20.7%
6.0%
3.8%
Total asset turnover
0.64
0.71
0.71
0.74
0.81
0.87
0.94
1.05
1.32
1.29
Working capital (JPYmn)
618
883
711
758
817
716
128
668
861
1,253
Current ratio
115.9%
50.4%
100.8%
92.8%
80.7%
93.7%
93.0%
143.4%
147.9%
161.3%
OCF / Current liabilities
0.08
0.22
0.19
0.37
0.37
0.41
0.30
0.07
0.14
0.02
Net debt / Equity
478.1%
413.5%
309.7%
270.9%
1,418.8%
586.8%
387.0%
264.0%
209.2%
273.9%
OCF / Total liabilities
0.0
0.1
0.1
0.1
0.1
0.1
0.1
0.0
0.0
0.0
Cash conversion cycle (days)
8.0
4.1
5.1
4.2
4.3
3.8
-0.8
-0.5
3.5
6.5
Change in working capital
-1,360
265
-172
47
59
-101
-588
540
193
392
Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Strengths and weaknesses
Strengths
Best-in-class network and track record in rental brokerage: Apaman has built one of the leading domestic rental agency networks, and its strong track record in winning the trust of landlords across Japan helped the company sustain growth in number of properties under management. That in turn is allowing it to offer new additional services for the benefit of tenants, landlords, and particularly franchisees. Strong marketing and sophisticated IT system complement the offering, further boosting Apaman’s appeal.
Low risk in rental management, subleasing, and rental brokerage businesses (Platform segment): Apaman’s core businesses—rental management, subleasing, and rental brokerage—have relatively low risk because, in general, they do not require significant capex, property on the balance sheet, or any physical inventory, all the while generating strong and stable cash flows.
Weaknesses
Balance sheet still weak after failed property investment foray: The balance sheet has deteriorated because Apaman attempted to grow non-core businesses and made some aggressive (and, in hindsight, unfavorable) acquisitions. Since FY09/08, the company has been reducing interest-bearing debt, and had achieved an equity ratio of 20.0% as of the end of September 2014. However, due to the impact of tax reforms and the acquisition and cancellation of class A preferred shares in FY09/15, the equity ratio dropped to 4.5% in FY09/15. As of end FY09/20, the equity ratio was 12.2% and the debt-to-equity ratio stood at 4.7×, which underscores its weak finances.
Intense competition: The rental brokerage business has extremely low barriers to entry, and there are a large number of competitors, both large and small. Maintaining and boosting market share in the present environment requires substantial marketing spending, which we believe puts pressure on profitability.
Group companies
As of end FY09/20, the company had the following major consolidated subsidiaries (stake in parentheses):
Apaman Property Co., Ltd. (99.0%): Primarily brokers rental properties through directly run stores and manages rental properties
Apaman Network Co., Ltd. (99.0%): Apamanshop-brand franchise rental brokerage business
In addition, the following company is a main equity-method affiliate of Apaman:
SystemSoft Corporation (35.1%): Systems consulting, development, maintenance, and operation.
Market and value chain
Market overview
Internal migrants (nationwide and 21 major cities)
Key financial data
Note: Figures may differ from company materials due to differences in rounding methods.
Recent updates
Announcement of acquisition of fixed assets (software) by a consolidated subsidiary
On November 12, 2021, Apaman Co., Ltd. announced earnings results for Full-year FY09/21; see the results section for details.
On the same day, the company announced that its subsidiary, Apaman Network Co., Ltd. had resolved to completely overhaul its core system, AOS (Apamanshop Operation System).
AOS is the core system provided by Apaman Network to Apamanshop member companies in the Technology business. AOS provides comprehensive support for all operations related to rental brokerage, including property management, as well as customer management and performance management.
Apaman Network is developing Next Generation AOS (acquisition price: JPY2.1bn), which is a completely updated version of AOS, and will start making it available to Apamanshop member companies by the spring of 2022.
Announcement concerning the recording of non-operating expenses, extraordinary profit and extraordinary loss
APAMAN has announced it is recording non-operating expenses and an extraordinary loss.
The company will record non-operating expenses and extraordinary losses in FY09/2021.
Details of non-operating expenses and extraordinary losses
The company will record non-operating expenses of JPY100mn and extraordinary losses of JPY463mn based on a review of its ability to recover loans to business partners and the asset value of stocks in light of the deterioration of its business partners' financial situation due to prolonged restrictions on economic activities in response to the COVID-19 pandemic. The company will also record an extraordinary loss of JPY128mn for impairment to the value of interior finishings of overseas coworking facilities due to low occupancy rates.
Outlook
APAMAN has left its previous full-year forecast unchanged. In addition to non-operating expenses and extraordinary losses, there will be also be an extraordinary profit (JPY1.4bn) and corporation tax/corporation tax adjustments (JPY291mn) as described below. The company is currently examining other factors, including the fact that a previously expected gain on the sale of shares in other subsidiaries and affiliates, will not occur during FY09/2021. The company will promptly disclose any revisions to its earnings forecasts as necessary in future.
APAMAN Co., Ltd. announced the recording of an extraordinary gain following the completion of the sale of investment securities (off-floor trading (ToSTNeT-1)).
As disclosed in August 2021, the company sold some of the investment securities held by its consolidated subsidiary, Apaman Network Co., Ltd., and will record an extraordinary gain in FY09/2021.
Details of the sale of shares
Shares sold: 12.0mn shares (14.26% of shares in issue) of SystemSoft Corporation (Securities code: 7527)
Method of sale: Off-floor trading (ToSTNeT-1)
Profit on sale: JPY1.4bn
Period of sale: Q4 FY09/21 (July - September, 2021)
As of August 2021, the number of shares to be sold was set at 12.3mn shares. However, after 12mn shares were sold, the sale of the remaining 0.3mn shares was cancelled.
Outlook
In FY09/21, the company plans to record an extraordinary profit of JPY1.4bn on the sale of shares in an affiliate and JPY291 mn in corporation taxes and corporation tax adjustments associated with this sale.
After the sale, the company's shareholding in SystemSoft Corporation will be 24.42%. SystemSoft Corporation is expected to remain as an equity method affiliate.
Trends and outlook
Quarterly trends and results
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company revised its segment classifications in Q2 FY09/21 (January–March 2021), folding the Sharing Economy segment (fabbit and parking lot businesses) into the Other segment. In January 2021, equity-method affiliate SystemSoft Corporation absorbed consolidated subsidiary fabbit Co., Ltd., resulting in the removal of fabbit from Sharing Economy segment results. The Cloud Technology segment was also renamed simply Technology to clarify the company’s focus not only on cloud services but also on general technical services such as robotic process automation (RPA) and online systems management. Figures in the above table are based on the new segment classifications.
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company revised its segment classifications in Q2 FY09/21 (January–March 2021), folding the Sharing Economy segment (fabbit and parking lot businesses) into the Other segment. In January 2021, equity-method affiliate SystemSoft Corporation absorbed consolidated subsidiary fabbit Co., Ltd., resulting in the removal of fabbit from Sharing Economy segment results. The Cloud Technology segment was also renamed simply Technology to clarify the company’s focus not only on cloud services but also on general technical services such as robotic process automation (RPA) and online systems management. Figures in the above table are based on the new segment classifications.
Full-year FY09/21 results
Sales growth was mainly driven by the Platform segment.
Operating profit grew YoY. Gross profit was JPY10.4bn (+7.3% YoY). SG&A expenses rose 2.2% YoY to JPY9.0bn, but this was more than offset by the rise in gross profit. Profit rose in all segments.
Gross profit was boosted by higher sales and GPM in the Platform segment as well as higher GPM in the Technology segment. Recurring gross profit was JPY7.5bn (+1.5% YoY) and non-recurring gross profit was JPY2.9bn (+25.5% YoY).
Recurring gross profit refers to gross profit generated from rental property management and subleasing in the Platform segment, the Technology segment, and fabbit co-working space usage fees. On the other hand, non-recurring gross profit refers to gross profit generated from rental brokerage commissions in the Platform segment, fabbit-related consultant fees, and sales of operational investment securities.
Factors that increased operating profit
Factors that pushed down operating profit
Recurring profit rose YoY. In addition to higher operating profit, the non-operating income and expenses gap narrowed to -JPY561mn (-JPY832mn in FY09/20). Equity-method investment gains came to JPY113mn (versus a JPY175mn loss in FY09/20).
The company recorded YoY growth in net income attributable to owners of the parent.
Performance by segment is outlined below.
The company revised its segment classifications in Q2 FY09/21 (January–March 2021), folding the Sharing Economy segment (fabbit and parking lot businesses) into the Other segment. In January 2021, equity-method affiliate SystemSoft Corporation absorbed consolidated subsidiary fabbit Co., Ltd., resulting in the removal of fabbit from Sharing Economy segment results. The Cloud Technology segment was also renamed simply Technology to clarify the company’s focus not only on cloud services but also on general technical services such as robotic process automation (RPA) and online systems management. The following segment comparisons are based on the company’s new segment classifications.
Platform
The number of units under management was 91,421 (-1.4%, -1,255 units YoY). Despite some gains in the number of units due to M&A, these increases were easily offset by declines resulting from changes in ownership among other factors.
The number of directly managed stores was 68 (down four YoY). The company promoted conversion of directly managed stores into franchise stores by supporting employees who wished to become independent business owners.
Gross profit of ancillary products such as emergency services and rent guarantees was JPY1.5bn (-2.5% YoY).
In the leased company housing business, the company had 61 contracts with corporate clients.
Technology
In FY09/20, the company supported its franchise store owners by lowering advertising fees and royalties, but some of these support measures ended in FY09/21.
Other
The number of coin-operated parking spaces (contract basis) totaled 4,320 (+6.6%, +269 spaces YoY).
Full-year company forecast
Note: Figures may differ from company materials due to differences in rounding methods.
For FY09/22, Apaman forecasts consolidated sales of JPY45.0bn (+1.3% YoY), operating profit of JPY1.8bn (+32.7% YoY), recurring profit of JPY1.0bn (+25.8% YoY), and net income attributable to owners of the parent of JPY200mn (-66.8% YoY).
In the Platform business, the company aims to enhance operational efficiency through digitalization and increase the number of units under management by winning more management contracts. It also intends to focus on expanding the leased company housing business. In the Technology business, the company plans to promote and expand its digital transformation (DX) services.
Medium- to long-term outlook
As of December 2020, the company had not released a medium-term management plan.
Starting in FY09/18, the company reorganized its business segments as Cloud Technology, Platform, and Sharing Economy, and has been focusing on providing services built around technology. The company had planned to focus particularly on the Sharing Economy segment while striving to generate JPY10.0bn each in sales from coworking spaces, minpaku (vacation rental facilities), parking, and bicycle sharing services for total segment sales of JPY40.0bn. However, the company sold a portion of its shares in equity method affiliate Grandouce Inc., which had been responsible for its minpaku business, in September 2019 and made the decision to withdraw from this business. In addition, equity method affiliate SystemSoft Corporation absorbed consolidated subsidiary fabbit, which operates the company’s coworking facilities, in January 2021, and the company plans to remove the latter from its list of consolidated subsidiaries. Following these changes, the company will focus on its Cloud Technology and Platform segments.
During its financial results briefing for FY09/20, the company identified “expansion of online operations” and “growth in recurring revenue” as current priorities. By concentrating on these priorities, the company aims to achieve a profit structure that will be resistant to impact from the COVID-19 pandemic and business conditions.
Expansion of online operations
Under a set of initiatives called “Online First,” the company is striving to expand its online operations by implementing online customer service, explanations, and contracting services, as well as shared electronic keys for apartments (details below). Meanwhile, the company is promoting the adoption of AI-based customer support, automated rental management, and automated rental brokerage services.
Online customer service, explanations, and contracting services
“Selkey” shared electronic keys for apartments: Since July 2020, the company has been installing Selkey shared electronic apartment key systems provided by Seltech (unlisted) at properties under its management. Installing Selkey systems at properties will allow customers wishing to preview apartments to receive temporarily usable keys through their smartphones. These systems will eliminate the need for the company to physically hand apartment keys to apartment previewers and will allow the company to automate management operations, including key return and preview history administration.
Growth in recurring revenue
The company is planning to expand its recurring revenue by securing more rental units under management and increasing its leased company housing.
Securing more rental units under management
As of September 2020, the company had 92,676 rental units under management (+4,706 properties YoY). Included below are two simulations under which the company adds 10,000 units under management per year: In the first, the company expands its sales staff. In the second, it increases its number of units under management through M&A.
Increasing units under management through the company’s own sales and marketing
If the company uses its own sales team to acquire 10,000 units under management per year, it will require 50 sales personnel. In this case, the company will be potentially able to achieve JPY20mn in operating profit for every group of 1,000 units under management. Even if the company encounters a factor that reduces its units already under management by about one percent annually, it maintains that it is capable of generating profit by the third year after beginning to establish its sales structure (during the first year, it projects a loss of JPY200mn due to upfront costs such as labor costs). Under this simulation, the company estimates that it can achieve operating profit of JPY570mn by the fifth year after beginning to establish its sales system and operating profit of JPY1.5bn by the 10th.
Notes: All figures are simulated estimates.
These estimates assume a yearly increase of 10,000 units under management and an annual one-percent decline in previously held units under management.
Increasing units under management through M&A
The company indicates that if it increases its number of units under management through M&A, it can potentially achieve JPY18mn in operating profit for each group of 1,000 units. Even if the company encounters a factor that lowers units under management by about one percent annually, the company estimates it can generate operating profit of JPY180mn in the first year, JPY530mn in the third year, JPY870mn in the fifth year, and JPY1.7bn in the 10th year.
Notes: All figures are simulated estimates.
These estimates assume a yearly increase of 10,000 units under management and an annual one-percent decline in previously held units under management.
Increase in leased company housing
The company is aiming to increase its number of leased company housing units over the medium term. “Leased company housing” refers to rental properties that companies lease from realtors and subsequently rent out to employees while collecting only a portion of the rent from these personnel. Through the leased company housing system under employee benefit programs, companies provide low-cost accommodations to their staff.
The company provides a large volume of rental brokerage services, through which it finds rental properties for company employees; as of December 2020, the company had formed rental brokerage partnerships with about 10,000 companies. However, at the same point in time, it was providing nearly no services related to leased company housing.
Through its leased company housing business, the company leases rental properties from their owners for use as corporate housing and subleases them to companies. Earnings generated through the company’s rental brokerage services consist primarily of rental brokerage fees. Through leased company housing services, Apaman can continuously generate earnings by collecting rent from companies on an ongoing basis; the difference between rent it collects from other companies and the rent it pays to the owners of the leased company housing properties becomes the company’s profit.
The company has not released its plans for its leased company housing business, but it appears to be modeling this business after the leased company housing business operated by Relo Group, Inc. In FY03/20, Relo Group’s leased company housing business generated sales of JPY185.8bn (+10.2% YoY) and operating profit of JPY5.6bn (-0.3% YoY) while reporting 195,849 leased company housing units under management (+11.4% YoY).
Business
Main business segments
Until FY09/17, the company had four main segments: Brokerage, Property Management, Principal Investment and Fund Management, and Other. The core segments were Brokerage (apartment and condominium rental brokerage) and Property Management (rental property management).
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Operating profit ratios represent the ratios against the sum of each segment’s operating profit prior to adjustments and deductions.
Note: Principal Investment and Fund Management figures for FY09/10 and prior years are the sum of Principal Investment and Fund Management businesses.
In FY09/18, the company restructured its main segments into the Platform, Cloud Technology, and Sharing Economy segments and has been promoting the provision of technology-based services.
・Rental brokerage: Directly managed stores provide brokerage services for rental properties
・Related services: Offers ancillary products and services to property owners, tenants, and franchise stores
Note: Figures may differ from company materials due to differences in rounding methods.
Note: % of total segment profit represents the ratio versus the simple total of operating profit for the corresponding segment, before adjustments.
Platform
The Platform segment accounted for 78.8% of consolidated sales and generated operating profit of JPY1.8bn in FY09/20 (consolidated operating profit was JPY840mn), making it the company’s core segment. This segment includes rental property management and subleasing, rental brokerage (Apamanshop), and ancillary and related services for rental apartments and condominiums. Of the total segment sales in FY09/20, Shared Research estimates that the rental property management and subleasing accounted for about 90% and the rental brokerage business operated by directly operated stores for about 10%.
Rental property management and subleasing
Rental property management services: Apaman manages rental apartments and condominiums on behalf of their owners. Rental property management entails screening prospective tenants, executing rental contracts, renewing contracts, collecting rent, dealing with tenant complaints, dealing with vacant properties, renovating rooms, conserving buildings, and maintenance.
Subleasing services: The company leases apartments and condominiums from their owners and then rents them to tenants.
Earnings structure for rental management and subleasing (old Property Management segment)
The chief source of revenues from rental management is fees from property owners for management services. Earnings are in proportion to the number of managed units and are not affected by occupancy rates.
The chief source of revenues from subleasing services is rent collected from tenants of the apartments and condominiums offered by the company (see Business model for details). Earnings depend on the number of managed units, rent amounts, and occupancy rates. The subleasing business is obligated to pay fixed monthly rents to owners regardless of whether or not units are occupied, or how much rent is received from tenants. For this reason, profits from subleasing operations are the difference between the rent revenue received from tenants and the fixed rents paid to property owners, so they are sensitive to the occupancy rate of subleased units.
Apaman has not provided a breakdown of the Platform segment’s sales, but revenue from the rental management and subleasing businesses can be easily estimated by multiplying the number of units under management by sales per unit using figures from previous years. In FY09/20, the company had 92,676 units under management (versus 87,970 in FY09/19). The company reported JPY364mn in sales per 1,000 units under management for FY09/17 but has not reported this metric in subsequent years.
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The figures for FY09/13 were obtained after segment transfers of the parking and SOHO businesses.
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Figures may differ from company materials due to differences in rounding methods.
Rental brokerage services
Here, the company offers rental brokerage and basic property management services for owners and tenants, with most of the properties located in the greater Tokyo area, Fukuoka Prefecture, and Hokkaido. It renders these services through its directly managed Apamanshop stores (72 in operation as of end-September 2020 versus 92 as of end-September 2019).
The chief source of revenues from rental brokerage services is brokerage commissions (equivalent to up to 1.1x a month’s rent for the land or building in question) received when a new tenant moves in. With regard to simple management services, Apaman conducts schedule management and renovation after tenants vacate on behalf of property owners, gaining revenues in return, including renewal fees and payment for renovation construction.
Historically in Japan, the word “brokerage” refers to brokering in real estate transactions, but Apamanshop specializes in brokering residential rental properties. Apamanshop initially developed its rental brokerage business through its franchise network (rental brokerages with which it had franchise contracts). Since 2006, the company has operated directly managed stores without cannibalizing its franchisees.
Apaman does not provide a breakdown of the Platform segment’s sales, but the subsegment’s sales can be calculated by multiplying the number of directly managed stores by sales per store. The company reported sales per directly managed store (domestic) of JPY51.5mn in FY09/17, when it had 108 stores, but has not disclosed this metric since then.
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Sales and operating profit per store were obtained by averaging out the earnings of open stores during each financial year.
Related services
In this subsegment, the company offers tenants entering apartments or condominiums a range of services and products.
The company offers tenants various optional service packages when they sign rental contracts. Since 2010, Apaman has expanded the offering to include low-priced appliances and furniture sets working with electronics retailers. It also started providing a wide range of other services and products, such as renters insurance and 24-hour assistance services, fire extinguishers, and optional intermediary collection services for electricity, gas, telephone, public television (NHK), and cable TV charges.
The large number of branches in the Apamanshop network gives the company superior buying power. The company further differentiates itself with its broad service menu. Tenants benefit from the company’s one-stop-shopping model. Property owners benefit from higher occupancy rates. The company acts as a broker of these services.
Apaman does not provide a breakdown of the Platform segment’s sales, but does disclose gross profit figures for ancillary products, reporting total gross profit from ancillary products of JPY1.5bn (-20.6% YoY) for FY09/20.
Cloud Technology
The Cloud Technology segment accounted for 15.3% of consolidated sales and 54.3% of operating profit in FY09/20. In Cloud Technology, Apaman provides primarily franchise stores (1,049 stores as of the end of September 2017) with the Apamanshop Operation System (AOS) and other systems, as well as branding and information services.
The segment’s main sources of revenues are system usage fee, system installation fees, internet advertising fees, and franchise fees from franchise stores.
This segment’s earnings can be simply expressed as the result of multiplying the number of franchise stores by sales per store. In FY09/17, sales by franchise stores came to JPY7.3bn; the number of stores was 1,041 and sales per franchise store were JPY7.0mn (calculated by Shared Research based on company data). The company has not disclosed either the number of franchise stores or sales per franchise store for subsequent years but, since there has not be a major change in the number of franchise stores, Shared Research has been led to believe that sales to franchise stores is roughly the same as segment sales.
At the heart of the Apamanshop group’s business is a proprietary real estate information network that enables efficient accumulation and use of information connecting franchisees and directly managed stores across the country, as well as property owners and tenants.
According to the company, its strengths are in combining this information network with the ability to design and manage marketing campaigns to drive the tenant traffic, attract landlords, and sell various option services and products to the customer. Early on in its existence, Apamanshop used relevant celebrities of the moment and has used Internet-based video and website events to boost its name recognition.
AS System
This subsegment manages a rental-brokerage franchise network under the Apamanshop brand. It offers franchise stores several types of services—training, branding, and information provision—under the umbrella name Apamanshop (AS) System.
Training Services include bimonthly conferences for franchise representatives, office heads, and local staff in each prefecture. The company also has full-time operatives in each region—Staff Operation Field Counselors, or OFCs—who regularly visit franchise offices.
Branding Services dovetails nationwide advertising and local advertising campaigns to raise the profile of the Apamanshop brand. The nationwide advertising campaigns involve popular celebrities as brand ambassadors. The company also has around 1,000 separate websites designed to appeal to students, businesses, property owners, and particular regions, such as Hokkaido and Kyushu; the sites are also tailored for PCs, smartphones, and tablets for more precise customer segmentation.
Information Services offers bimonthly meetings in eight areas nationwide, delivering franchisees the latest information on sales rankings, compliance, and other topics. Additionally, the company regularly provides its franchises with information about sales rankings, best practices, and legal and compliance issues, as well as market data.
Information infrastructure services
In this subsegment, the company offers Apamanshop Operation System (AOS) to franchisees, a centralized information that allows driving better efficiency across the entire franchisee network.
The AOS, together with the Apamanshop Property Management System (APS), is the core of the Apamanshop Total System (ATS) that the company makes available to its franchise stores.
The AOS supports the rental brokerage service by creating a database of information that was traditionally paper-based: rents, photographs, customers, business results, and staff activity plans. The database also helps clients rank properties by rent, distance to train stations, square footage, and so on. Currently, 25mn rental units are in the system.
The APS is management software that works with AOS to centralize data related to all the participants of the property rental process: tenants, owners, renovators, builders, and others. According to the company, this boosts the productivity of franchisees by centralizing and standardizing information related to building management and tenant management, contracts, cash management, and vacancies.
Reference: franchise contracts
The “Apamanshop Network Franchise Contract” governs the company’s franchisees. The company works with standard franchisees and “J” franchisees, which receive management guidance. The majority of the company’s franchisees are standard franchisees.
The company offers franchise stores several types of services—training, branding, and information provision—under the umbrella name AS System, for which franchisees pay a usage fee. There are also shared advertising costs, primarily for television commercials. Total Media Pack expenses are related to all forms of advertising the company conducts and include a partial contribution toward the cost of operating its core Apamanshop Online System (AOS). (In addition, expenses paid for listing properties on the Internet include some expenses related to the operation of the AOS.)
Although there are differences depending on geographic area and the type of franchise, the company receives an average of about JPY7mn a year from each franchise store (Shared Research estimate based on actual data reported for FY09/17).
Sharing Economy
In FY09/20, the Sharing Economy segment accounted for 5.1% of total sales and produced an operating loss of JPY720mn. This segment involves the operation of coworking spaces and coin-operated parking facilities. In FY09/20, coworking spaces accounted for about 60% of segment sales, while coin-operated parking accounted for about 40%.
Coworking spaces
Consolidated subsidiary fabbit Co., Ltd. is the central actor responsible for operating this business, through which Apaman leases offices from property owners and offers private rooms, fixed (reserved) seats, or free (non-reserved) seats as co-working spaces to entrepreneurs and other users, with a focus on startups (Equity method affiliate SystemSoft Corporation absorbed fabbit in January 2021, and the company plans to remove the latter from its list of consolidated subsidiaries).
For example, fabbit Otemachi (Otemachi, Chiyoda-ku, Tokyo) offers, as co-working spaces, private rooms at JPY96,000/month, fixed seats at JPY48,000/month, and free seats at JPY16,000/month. Apaman generates earnings from usage fees for co-working spaces. The main costs incurred by the company are reception personnel costs and the rent paid to building space owners (property owners).
At end FY09/20, the company had 11,137 members and a total of 46 co-working spaces (including directly managed spaces, franchise spaces, and spaces in which the company has invested) versus 45 at end FY09/19.
Parking
In this business, the company leases land or parking lots from property owners while providing rent guarantees, and rents the space out as hourly parking spots. Its earnings are equivalent to the annual earnings per parking spot multiplied by the number of spots operated. The main cost incurred by the company is the rent paid to parking space owners (property owners).
As of end FY09/20, Apaman operated 4,051 parking spaces (up from 3,589 at end FY09/19).
Profitability snapshot and financial ratios
Note: Figures may differ from company materials due to differences in rounding methods.
Strengths and weaknesses
Strengths
Best-in-class network and track record in rental brokerage: Apaman has built one of the leading domestic rental agency networks, and its strong track record in winning the trust of landlords across Japan helped the company sustain growth in number of properties under management. That in turn is allowing it to offer new additional services for the benefit of tenants, landlords, and particularly franchisees. Strong marketing and sophisticated IT system complement the offering, further boosting Apaman’s appeal.
Low risk in rental management, subleasing, and rental brokerage businesses (Platform segment): Apaman’s core businesses—rental management, subleasing, and rental brokerage—have relatively low risk because, in general, they do not require significant capex, property on the balance sheet, or any physical inventory, all the while generating strong and stable cash flows.
Weaknesses
Balance sheet still weak after failed property investment foray: The balance sheet has deteriorated because Apaman attempted to grow non-core businesses and made some aggressive (and, in hindsight, unfavorable) acquisitions. Since FY09/08, the company has been reducing interest-bearing debt, and had achieved an equity ratio of 20.0% as of the end of September 2014. However, due to the impact of tax reforms and the acquisition and cancellation of class A preferred shares in FY09/15, the equity ratio dropped to 4.5% in FY09/15. As of end FY09/20, the equity ratio was 12.2% and the debt-to-equity ratio stood at 4.7×, which underscores its weak finances.
Intense competition: The rental brokerage business has extremely low barriers to entry, and there are a large number of competitors, both large and small. Maintaining and boosting market share in the present environment requires substantial marketing spending, which we believe puts pressure on profitability.
Group companies
As of end FY09/20, the company had the following major consolidated subsidiaries (stake in parentheses):
In addition, the following company is a main equity-method affiliate of Apaman:
Market and value chain
Market overview