Condo sales to boost FY3/28 profit growth; expecting revisions to MTP

Research evidence excerpt

Condo sales to boost FY3/28 profit growth; expecting revisions to MTP

sales scheduled for booking to

Absolute and TOPIX-relative share price rise substantially from 1,214 units in FY3/27 to approximately 1,600 units

in FY3/28. High-margin projects such as those in Osaki and in Kitanaka

Yokohama are also in the pipeline, and we have high conviction that they

will drive profit growth. For FY3/29, we forecast profit growth in the overseas

business, but we think it will take time for market expectations to build.

WATCH: Profitability improvement in overseas ops likely to take 2–3

years

The overseas business, part of the strategic investment segment, posted an

operating loss of ¥9.8b in FY3/26. Management targets a narrower loss of

¥6.5b in FY3/27 and a profit of ¥1.0b in FY3/28. Outstanding investmentsSenior Analyst Yoshihiro Hashimoto

+81 3 6202 8157 yoshihiro.hashimoto@mizuho- for the overseas business stood at around ¥330b at end-FY3/26, of which

sc.com around ¥230b was in the US. (Continued on page 2)

Click here for ESG on MEASURE: Reasoning for price objective of ¥1,400

our entire coverage Our price objective of ¥1,400 is derived from an EV/EBITDA of 10.0x

(previously 12.3x) on our FY3/27 estimates. We make no change to our

target EV/EBITDAs for individual businesses, but the higher share of property

disposal gains is the reason for the lower blended multiple. Our price

objective of ¥1,400 equates to a PBR of 0.8x on end-FY3/26 BPS adjusted

for unrealized gains from rental properties (after taxes) and a PER of

approximately 10x on our FY3/27 EPS estimate.

Consolidated results and forecasts Share Price: ¥1,349.5 (10 Jun) 52wks: H ¥1,598 L ¥1,001.5

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

(¥m ) (%) (¥m ) (%) (¥m ) (%) (¥m ) (%) (¥) (x) (x)