Investment Bridge Announces Investment Opinion: Bridge Report on Leopalace21
Issued: FY3/14 Profits Rise by Large Margin on Back, Continued Earnings
Growth Expected in FY3/15
NOTE TO EDITORS: The following is an investment opinion issued by Investment
TOKYO -- July 4, 2014
Investment Bridge, one of Japan’s leading independent IR services companies,
has released a “Bridge Report” on Leopalace21 Corporation (TOKYO:8848)
reviewing its fiscal year March 2014 earnings results and its estimates for
fiscal year March 2015.
*Sales rose by 3.7% year-over-year to JPY471.0 billion in fiscal year March
2014 on the back of strength in the construction business. Higher gross
income absorbed increases in expenses and allowed operating income to rise
by a large 84.4% year-over-year to JPY13.6 billion.
*Leopalace21 estimates call for fiscal year March 2015 sales and operating
income to rise by 4.8% and 6.0% year-over-year to JPY493.5 and JPY14.5
billion respectively on the back of increases in sales of all business
*The Bridge Report highlights the recent increase in occupancy rates
through a focus upon construction of “new housing” in “major metropolitan
regions,” and subsequent improvements in profitability. The Report also
cites Leopalace21’s strategy of cultivating demand to replace the aging
housing supply in the major metropolitan regions as part of Leopalace21’s
new Mid-term Business Plan “EXPANDING VALUE.”
Leopalace21 Corporation conducts construction, leasing, and sales of
apartments, condominiums, and other residential properties, in addition to
operation of hotels and resorts, and senior citizen care services. During
fiscal year March 2014, sales rose by 3.7% year-over-year to JPY471.0 billion
on the back of a 0.5% and 18.3% year-over-year increases in sales of the
leasing and construction businesses to JPY388.7 and JPY63.1 billion.
Improvements in gross profitability offset a higher than expected increases in
administrative expenses and allowed operating income to rise by a large 84.4%
year-over-year to JPY13.6 billion. A decline in foreign exchange translation
gains recorded during fiscal year March 2013 limited ordinary income to only a
small margin of growth, while booking of deferred tax assets allowed net
income to rise by double digits.
A public offering allowed cash and equivalents and total assets to increase by
JPY18.0 and JPY25.8 billion to JPY74.7 and JPY287.4 billion respectively from
the previous term end. Net assets also rose by JPY46.7 to JPY104.8 billion on
the back of an increase in shareholder equity. Consequently, equity ratio rose
by a large 14.3% point margin to 36.5%.
Leopalace21 estimates call for sales and operating income to rise by 4.8% and
6.0% year-over-year to JPY493.5 and JPY14.5 billion in the fiscal year March
2015 due to their outlook for increases in sales of all business segments, and
the ability of higher gross income to absorb increases in labor costs,
depreciation, and administrative expenses. The disappearance of corporate tax
adjustments recorded during fiscal year March 2014 is expected to contribute
to a 21.2% year-over-year decline in net income.
The Bridge Report also calls attention to Leopalace21’s success in raising
occupancy rates in its main leasing business by focusing upon construction of
“new housing” in the “major metropolitan regions” where demand for housing
remains strong. Compared with the overall occupancy rate of 87.5% recorded at
end March 2014, occupancy rates of properties less than three years of age
stood at 96.8%, and that of properties constructed within three years in the
Tokyo, Saitama, and Kanagawa regions boasted of even higher occupancy rates of
98.1%, 98.1% and 97.0% respectively. Another factor highlighted by the Report
is how quickly Leopalace21 can cultivate latent demand to replace the aging
housing supply in the major metropolitan and Tokyo regions, while protecting
its earnings from negative fluctuations in the economy.
About Leopalace21 Corporation
Leopalace21 Corporation was established in August 1973 and conducts
construction, leasing, and sales of apartments, condominiums, and residential
housing, in addition to development and operation of resort facilities, and
the operation of hotel business, broadband business, and elderly care
business. The Company was first listed on the JASDAQ Market in February 1989,
and moved its shares to the First Section of the Tokyo Stock Exchange in March
2004. Its headquarters are currently located in Tokyo.
Investment Bridge Co., Ltd.
Kaoru Hosaka for Leopalace21 Corporation
+81-3-5842-5765 (Japanese correspondence only)
Leopalace21@cyber-ir.co.jp (English and Japanese correspondence)
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