First Read: Mitsui Fudosan "Additional shareholder returns expected" (Buy)

Research evidence excerpt

First Read: Mitsui Fudosan "Additional shareholder returns expected" (Buy)

¥427.1bn, while business profit guidance is ¥450.0bn, up ¥4.9bn (+1.1%) yoy. With the 03/29E 143.3 143.3 0 127.3

Middle East situation so far having no specific impact on hotels or housing sales, the

Kazufumi Takeuchi

company has not factored it into its earnings forecast for the current fiscal year, but Analyst

based on management’s somewhat conservative assumptions, expected profit growth is kazufumi.takeuchi@ubs.com

limited. The expected decline in domestic housing profit of ¥47.0bn due to factors such +81-3-5208 6269

as the drop off from the aforementioned Mita Garden Hills delivery, and large hotel

Jimmy Qiu

opening costs of ¥3.5bn are expected be offset by ¥63.8bn on an increase in commercial Analyst

real estate divestment gains (including a rebound from overseas valuation losses of jimmy.qiu@ubs.com

approximately ¥15.0bn recorded in the previous fiscal year) and ¥6.0bn on income gains +852-3712 4827

from like-for-like domestic commercial real estate properties. At this stage, even when

including the ¥40bn share buyback announced on 13 May, ROE would likely decline by

0.2ppt yoy to around 8.5%, just meeting the mid-term plan target (details). However,

based on the current plan, the total payout ratio would remain at around 48%, below

the company’s policy of minimum 50%, suggesting that additional share buybacks are

likely to be announced at a later date. Looking ahead, we believe the company may

begin more serious discussions on bringing forward the timing for achieving various

medium-term KPIs targeted for around FY3/31 or revising those targets upward.

Valuation: rating Buy

Our ¥2,120 PT is based on estimated after-tax NAV of ¥2,279 per share, using the