Bridge Report on Kyoritsu Maintenance Issued: First Half FY3/13 Earnings
Investment Bridge, one of Japan's leading IR services companies, has released a “Bridge Report” on Kyoritsu Maintenance Co., Ltd. (TOKYO First Section: 9616) reviewing first half FY3/13 earnings results and full FY3/13 earnings estimates.
* During the first half FY3/13, sales and ordinary income rose by 8.0% and 18.5% year-over-year respectively.
* Kyoritsu has left its full year earnings estimates unchanged, and calls for sales and ordinary income to grow by 9.7% and 5.4% year-over-year respectively.
* Efforts to raise customer satisfaction through employee training, and increases in brand recognition have been successful in the establishment of a solid earnings structure of the hotel business.
Kyoritsu Maintenance is Japan's leading provider of dormitory services to students and employees, including consigned management of corporate dormitories and other facilities. The Company also operates a chain of business and resort hotels throughout Japan and expands this business into Korea and other overseas markets. In addition, Kyoritsu also conducts contracted services (office and residential building management), food services (restaurant and cafeteria operations and consigned facility management), and construction (development and construction of primarily dormitories and hotels) businesses.
Total sales rose by 8.0% year-over-year to JPY47.333 billion on the back of 16.4% and 1.7% year-over-year increases in the hotel and other business segments' sales to JPY19.7 and JPY12.2 billion respectively, and despite a decline in dormitory business sales of 0.4% to JPY19.9 billion due to increases in the number of residents moving into dormitories earlier than normal in March. While sales were slightly lower than estimates, operating income exceeded initial estimates of JPY3.38 billion by rising 8.1% year-over-year to JPY3.65 billion on the back of strong increases in hotel business segment operating income of 62.2% year-over-year, which helped to offset a 7.8% year-over-year decline in dormitory business segment operating income.
Despite the stronger than expected first half earnings, Kyoritsu decided to leave its outstanding estimates unchanged, and calls for sales and operating income to rise by 9.7% and 1.9% year-over-year to JPY100.0 and JPY6.13 billion respectively. The contribution from newly opened facilities will lead to growth in sales of both the dormitory and hotel business, and the PKP business and others are also expected to record higher sales. Increases in public utility expenses due to price hikes, strategic advertising to establish the Kyoritsu Maintenance brand, and higher system depreciation expenses are factors behind the relatively low growth expected for operating income. Furthermore, while first half operating income exceeded estimates by JPY273 million, these increases over estimates will be used for front loaded refurbishment of facilities in the hotel business.
To view the full report, please go to the website at the URL listed below. http://www.bridge-salon.jp/report_bridge/archives/eng/9616/20130125.html
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