Tosei : Consolidated Financial Results for the First Six Months of the Fiscal Year Ending November 30, 2022







This English document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translation and the Japanese original, the Japanese original shall prevail. Tosei Corporation assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.

Consolidated Financial Results

for the First Six Months of the Fiscal Year Ending November 30, 2022

July 5, 2022

Company name: TOSEI CORPORATION

Stock listing:

TSE / SGX

Securities code number: 8923 / S2D

Representative: Seiichiro Yamaguchi, President and CEO

URL:

https://www.toseicorp.co.jp/english/

Contact:

Noboru Hirano, Director and CFO

Phone:

+81-3-5439-8807

Submission of Quarterly Securities Report (Shihanki-Houkokusho):

July 8, 2022 (scheduled)

Commencement of dividend payments:

Preparation of supplementary materials for quarterly financial results:

Yes

Holding of quarterly financial results meeting:

Yes (for institutional investors and analysts)

Note: All amounts are rounded down to the nearest million yen.

1. Consolidated Financial Results for the Six Months Ended May 31, 2022 (December 1, 2021 – May 31, 2022)

(1) Consolidated Operating Results (cumulative)

(Percentages indicate year-on-year changes)

Revenue

Operating profit

Profit before tax

Profit for the period

(¥ million)

(%)

(¥ million)

(%)

(¥ million)

(%)

(¥ million)

(%)

Six months ended

43,552

6.4

9,357

1.4

9,000

0.5

6,107

(0.3)

May 31, 2022

Six months ended

40,932

(9.1)

9,232

325.4

8,959

373.8

6,122

433.5

May 31, 2021

Profit attributable to

Total comprehensive

Basic earnings

Diluted earnings

owners of the parent

income for the period

per share

per share

(¥ million)

(%)

(¥ million)

(%)

(¥)

(¥)

Six months ended

6,107

(0.2)

6,222

(7.9)

128.56

128.46

May 31, 2022

Six months ended

6,120

433.3

6,754

130.06

129.90

May 31, 2021

(2) Consolidated Financial Position

Equity attributable to

Ratio of equity

Total assets

Total equity

attributable to owners of

owners of the parent

the parent to total assets

(¥ million)

(¥ million)

(¥ million)

(%)

As of

199,129

69,886

69,886

35.1

May 31, 2022

As of

195,010

65,958

65,958

33.8

November 30, 2021

2.

Dividends

Annual dividends per share

1Q-end

2Q-end

3Q-end

Year-end

Total

(¥)

(¥)

(¥)

(¥)

(¥)

Fiscal year ended November 30, 2021

0.00

38.00

38.00

Fiscal year ending November 30, 2022

0.00

Fiscal year ending November 30, 2022

47.00

47.00

(Forecast)

Note:

Revision to the most recently released dividend forecasts: No

3. Consolidated Earnings Forecasts for the Fiscal Year Ending November 30, 2022 (December 1, 2021 – November 30, 2022)

(Percentages indicate year-on-year changes)

Profit attributable to

Basic earnings

Revenue

Operating profit

Profit before tax

owners of the

per share

parent

(¥ million)

(%)

(¥ million)

(%)

(¥ million)

(%)

(¥ million)

(%)

(¥)

Fiscal year ending

80,000

29.6

12,762

16.4

12,000

16.5

7,954

18.3

166.47

November 30, 2022

Note: Revision to the most recently released earnings forecasts: No

  • Notes
    1. Changes in significant subsidiaries during the period
      (changes in specified subsidiaries resulting in changes in the scope of consolidation): No

Newly added: –Excluded: –

(2) Changes in accounting policies and changes in accounting estimates

(a) Changes in accounting policies required by IFRS:

No

  1. Changes in accounting policies due to other reasons: No

(c) Changes in accounting estimates:

No

(3) Number of issued shares (ordinary shares)

(a) Number of issued shares at the end of the period (including treasury shares)

As of May 31, 2022

48,683,800 shares

As of November 30, 2021

48,683,800 shares

(b) Number of treasury shares at the end of the period

As of May 31, 2022

1,353,722 shares

As of November 30, 2021

900,022 shares

(c) Average number of outstanding shares during the period (cumulative)

Six months ended May 31, 2022

47,504,621 shares

Six months ended May 31, 2021

47,058,545 shares

  • These consolidated Financial Results are not subject to quarterly review procedures by a certified public accountant or an audit corporation.
  • Proper use of earnings forecasts and other notes

The forward-looking statements, including outlook of future performance, contained in these materials are based on information currently available to the Company and on certain assumptions deemed to be reasonable by the Company. Actual performance and other results may differ substantially from these statements due to various factors. For the assumptions on which the earnings forecasts are based and cautions concerning the use thereof, please refer to “1. Qualitative Information on Quarterly Consolidated Financial Performance (3) Qualitative Information Regarding Consolidated Earnings Forecasts” on page 5 of the attached materials.

Contents of Attached Materials

1. Qualitative Information on Quarterly Consolidated Financial Performance…………………………………..

2

(1)

Qualitative Information Regarding Consolidated Operating Results………………………………………………..

2

(2)

Qualitative Information Regarding Consolidated Financial Positions ………………………………………………

4

(3)

Qualitative Information Regarding Consolidated Earnings Forecasts ………………………………………………

5

2. Matters Related to Summary Information (Notes) ………………………………………………………………………..

5

(1)

Changes in Significant Subsidiaries during the Period …………………………………………………………………..

5

(2)

Changes in Accounting Policies and Changes in Accounting Estimates …………………………………………..

5

(3)

Additional information………………………………………………………………………………………………………………

5

3. Condensed Quarterly Consolidated Financial Statements and notes………………………………………………

6

(1)

Condensed Quarterly Consolidated Statement of Financial Position………………………………………………..

6

(2)

Condensed Quarterly Consolidated Statement of Comprehensive Income ……………………………………….

7

(3)

Condensed Quarterly Consolidated Statement of Changes in Equity ……………………………………………….

8

(4)

Condensed Quarterly Consolidated Statement of Cash Flows…………………………………………………………

9

(5)

Notes on Going Concern Assumption………………………………………………………………………………………..

10

(6)

Notes on Condensed Quarterly Consolidated Financial Statements ……………………………………………….

10

(7)

Notes on Significant Subsequent Events…………………………………………………………………………………….

12

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1. Qualitative Information on Quarterly Consolidated Financial Performance

  1. Qualitative Information Regarding Consolidated Operating Results
  1. Recognition, analysis and contents for discussion of business environment and business performance

During the six months ended May 31, 2022, the Japanese economy showed signs of recovery, despite the lingering effects of COVID-19. Meanwhile, we are facing challenging circumstances including supply chain strains and soaring resource prices due to the Russian invasion of Ukraine as well as the rapid depreciation of the yen. It is necessary to monitor multiple factors such as the ensuing changes in the financial situation and the pressure on corporate earnings and domestic household finances.

In the real estate industry where Tosei Group operates, domestic real estate investments for the three months from January to March 2022 decreased 40% year on year to ¥730.4 billion. While the transaction volume dropped due to a decrease in large transactions and other factors, office investment demand is expected to grow as full-fledged,in-person work at the offices resumes. Furthermore, Japanese real estate with a high level of stability continues to be an attractive investment target, as seen in the increase in the percentage of investments into residential properties (according to a survey by a private research institute).

In the Tokyo metropolitan area condominium market, although the number of newly built units from January to April 2022 decreased 4.9% year on year to 8,333 units, the average contract rate for the first month exceeded 70%, maintaining the strong performance as previous fiscal year. In addition, in the Tokyo metropolitan area pre-owned condominium market, while the number of units contracted from January to April 2022 declined 15.7% year on year to 12,405 units, the market is booming, as evidenced by the rising trend in contract prices. In the build-for-sale detached house market, housing starts for the three months from January to March 2022 came to 13,000 units (up 7.8% year on year) (according to a survey by a private research institute).

Regarding construction costs for the four months from January to April 2022, average costs per tsubo

for steel reinforced concrete structure were ¥1,359 thousand (1 tsubo = 3.30 square meters) (an increase of 11.0% year on year), and average costs per tsubo for wooden structure were ¥575 thousand (an increase of 1.3% year on year). The rise in the price of building materials due to the military conflict between Russia and Ukraine, two major steel exporting countries, has begun to affect construction costs (according to a survey by the Ministry of Land, Infrastructure, Transportation and Tourism).

In the office leasing market of Tokyo’s five business wards, the average vacancy rate as of April 2022 was 6.4% (an increase of 0.7 percentage points year on year), and the average asking rent was ¥20,328 per tsubo (a decrease of ¥1,087 year on year), demonstrating a downward trend, although it seems to have bottomed out in certain areas. A massive supply of new office buildings is expected in 2023 and it remains necessary to continue monitoring the trends in supply and demand (according to a survey by a private research institute).

Meanwhile, the condominium leasing market remained robust and the average asking rent of apartments in the Tokyo metropolitan area as of April 2022 was ¥11,143 per tsubo (an increase of 3.1% year on year) and the average occupancy rate at condominiums held by J-REIT in the Tokyo Area as of January 31,

2022 was 96.1% (a decrease of 0.3 percentage points year on year). The rent of apartments for singles in the 23 wards of Tokyo, which had been falling in the previous fiscal year, appears to have bottomed out (according to a survey by a private research institute).

In the Tokyo metropolitan area’s logistics facility leasing market, leasable stock in April 2022 amounted to 7.65 million tsubo (an increase of 16.0% year on year). The vacancy rate was 3.0%. Although this was an increase from the level of 2.5% observed in January 2022, rent continues to gradually increase. Amid cases in which certain leasing projects are taking more time due to the oversupply against leasing demand, it remains necessary to continue monitoring the balance of supply and demand as new supplies are also expected going forward (according to a survey by a private research institute).

In the real estate fund market, the market scale continues to expand. J-REIT assets under management in April 2022 totaled ¥21.5 trillion (an increase of ¥0.8 trillion year on year) and assets under management in private placement funds totaled ¥24.1 trillion (as of December 31, 2021, an increase of ¥1.6 trillion year on year). Combining the two, the real estate securitization market scale grew to ¥45.6 trillion (according to a survey by a private research institute).

In the Tokyo business hotel market, in the three months from January to March 2022, the average guest room occupancy rate was 47.1% (33.5% in the same period of the previous fiscal year), and the total number of hotel guests in Tokyo encompassing all types of accommodation amounted to 11.04 million (an increase of 56.8% year on year). While the threat of COVID-19 continues to linger, expectations are high for the recovery of the hotel market with the uptick in foot traffic thanks to the easing of restrictions and as

2

the signs of increasing personal consumption become more evident (according to a survey by the Japan Tourism Agency).

Amid this operating environment, in the Fund and Consulting Business, the Group increased its balance of assets under management, while in the Revitalization Business and the Development Business, the Group proceeded with property sales and the acquisition of income-generating properties and various types of land for development as future sources of income.

As a result, consolidated revenue for the six months ended May 31, 2022 totaled ¥43,552 million (up 6.4% year on year), operating profit was ¥9,357 million (up 1.4%), profit before tax was ¥9,000 million (up 0.5%), and profit attributable to owners of the parent was ¥6,107 million (down 0.2%).

Performance by business segment is shown below.

From the three months ended February 28, 2022, the Company changed the name of its “Real Estate Securitization Business” (in Japanese. In English, the segment has been known as the “Revitalization Business” and remains the same) to the “Revitalization Business.” As this is merely a change of the segment name, there will be no impact on segment information.

Revitalization Business

During the six months ended May 31, 2022, the segment sold 28 properties it had renovated and 74 pre- owned condominium units, including Central Minami-Otsuka No.1 Building (Toshima-ku, Tokyo), NAC Building (Tachikawa-shi, Tokyo), Kazo Warehouse (Kazo-shi, Saitama).

During the six months ended May 31, 2022, it also acquired a total of 21 income-generating office buildings, apartments, three land lots and 75 pre-owned condominium units.

In addition, the Group reviewed the valuation of its income-generating properties, recording a reversal of Inventories valuation loss of ¥532 million.

As a result, revenue in this segment was ¥28,951 million (up 19.7% year on year) and the segment profit was ¥6,067 million (down 5.7%).

Development Business

During the six months ended May 31, 2022, the segment sold T’S BRIGHTIA Minami-Aoyama EAST (Minato-ku, Tokyo). In addition, the segment focused on the sale of detached houses, for which there was firm demand. The segment sold 45 detached houses at such properties as THE Palms Court Setagaya Hachimanyama (Setagaya-ku, Tokyo) and THE Palms Court Mitaka Rumie (Mitaka-shi, Tokyo).

During the six months ended May 31, 2022, it also acquired two land lots for rental apartment project, two land lots for rental wooden apartment project, one land lot for income-generating office building and land lots for 44 detached houses.

In addition, the Group reviewed the valuation of its income-generating properties, recording a reversal of inventories valuation loss of ¥73 million.

As a result, revenue in this segment was ¥5,056 million (down 44.1% year on year) and the segment profit was ¥797 million (down 34.2% year on year ).

Rental Business

During the six months ended May 31, 2022, while the segment sold 21 buildings of its inventory assets held for leasing purposes, it newly acquired 20 properties including income-generating office buildings and apartments. In addition, the segment made efforts to lease vacancies out following acquisitions and also focused on leasing activities for its holding non-current assets and inventory assets.

As a result, revenue in this segment was ¥2,884 million (up 4.5% year on year) and the segment profit was ¥1,446 million (down 0.0%).

Fund and Consulting Business

During the three months ended May 31, 2022, while ¥87,192 million was subtracted due mainly to property dispositions by funds, ¥312,166 million added due to new asset management contracts, from the balance of assets under management (Note) ¥1,420,867 million for the end of the previous fiscal year. The balance of assets under management as of May 31, 2022, was ¥1,645,841 million.

As a result, revenue in this segment was ¥2,709 million (up 19.3% year on year) and the segment profit

3

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Disclaimer

TOSEI Corporation published this content on 05 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 July 2022 06:32:08 UTC.

Publicnow 2022

All news about TOSEI CORPORATION

Sales 2022 77 900 M
572 M
572 M
Net income 2022 8 100 M
59,5 M
59,5 M
Net Debt 2022

P/E ratio 2022 6,91x
Yield 2022 3,99%
Capitalization 55 713 M
409 M
409 M
Capi. / Sales 2022 0,72x
Capi. / Sales 2023 0,63x
Nbr of Employees 638
Free-Float 56,6%



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Mean consensus BUY
Number of Analysts 0
Last Close Price 1 177,00
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