Daito Trust Construction

Research evidence excerpt

Daito Trust Construction

Global Markets Research

2 July 2026Daito Trust Construction

1878.T 1878 JP / EQUITY: JAPAN HOUSING & REAL ESTATE

RatingJune apartment construction orders down 39% Remains Neutral

Target price

28/3 will be year one of new medium-term business plan and moves to Reduced from 3,710 JPY 3,570

put operating lease assets on balance sheet

Closing price JPY 3,122We lower our target price, retain our Neutral rating 2 July 2026

Daito Trust Construction announced KPIs for June on 2 July. Apartment construction

Implied upside +14.3%orders fell 39% y-y in June. Orders were down 22% y-y in Apr–Jun. Apartment-related

operations look to have been weak overall, with lackluster investor sentiment at the

apartment development business, which acquires land, builds apartments, and sells them

to investors. The company plans to make up lost ground from July by hiking rents in order

Relative performance chartto boost yields for apartment owners and by providing more incentives to its marketing

staff. We expect the majority of orders won in June to be reflected in earnings from 28/3

onwards. We retain our earnings forecasts for 28/3 onwards on the view that orders will be

able to make up for lost ground. We roll forward the base year for our target price

calculation by one year to 28/3 and calculate a new target price of ¥3,570. We retain our

target price calculation methodology, applying a 10% premium to the average P/E of 10x

for housing-related companies under our coverage to reflect the company's pursuit of high

ROE of 20%.

Focusing on size of investment and speed of turnover at real estate development

business

Apartment construction operations have been shifting from suburban areas to urban areas

with rising populations.