Leasing ops solid; awaiting hike to dividend payout ratio

Research evidence excerpt

Leasing ops solid; awaiting hike to dividend payout ratio

37.5% in FY3/28 (¥30), and

Absolute and TOPIX-relative share price above 40% at 45.4% in FY3/29 (¥40).

WATCH: Impact of new lease accounting

New lease accounting standards are scheduled for introduction from FY3/28.

Under the new standards, sublease rents will be recorded on the balance

sheet as lease liabilities over several years, and a portion of cost of sales

will be reclassified as non-operating expenses on the income statement.

Among peers, Daito Trust Construction has disclosed estimates showing that

if it had adopted the new lease accounting in FY3/26, lease liabilities would

have increased by ¥2.313t and its shareholders' equity ratio would have

declined from 36.5% to 12.2%. As of end-FY3/26, rental housing units underSenior Analyst Yoshihiro Hashimoto

+81 3 6202 8157 yoshihiro.hashimoto@mizuho- management totaled 1.32m for Daito Trust Construction versus 540,000 for

sc.com Leopalace21, so we expect Leopalace21’s lease liabilities to be smaller. We

expect the company’s capital adequacy ratio to decline on the surface after Click here for ESG on the new standards are introduced, but we do not expect any negative impact our entire coverage on shareholder returns as the company will disclose the shareholders' equity

ratio under current accounting standards alongside the new figures.

MEASURE: Price objective based on FY3/27 PER of 9x

We derive our price objective by applying a PER of 9x to our FY3/27 EPS

forecast. Our target multiple is unchanged. Our price objective of ¥670

equates to a dividend yield of 4.5% based on our FY3/28 forecasts.

Consolidated results and forecasts Share Price: ¥613 (8 Jun) 52wks: H ¥809 L ¥579

Term Sales YoY OP YoY RP YoY NP YoY EPS PER EV/EBITDA