TOKYO--(BUSINESS WIRE)--Investment Bridge, one of Japan’s leading independent investor relations services companies, has released a “Bridge Report” on Leopalace21 Corporation (TOKYO:8848) reviewing its earnings results for fiscal year March 2015 and earnings estimates for fiscal year March 2016.
Report Highlights
- Sales and operating income rose by 2.6% and 8.0% year-on-year during fiscal year March 2015, due in part to the strong earnings performance of the leasing business, and despite weakness in the construction business.
- Leopalace21’s estimates for fiscal year March 2016 call for sales and operating income to rise by 8.7% and 32.1% year-on-year respectively on the back of continued strength in the leasing business, a recovery in the construction business, and sales growth in all business segments.
- The actual amount has yet to be determined, but the potential for a reinstatement of dividends is high given the current favorable business environment and strong earnings.
- The Bridge Report calls attention to the underperformance of Leopalace21’s shares despite the favorable earnings and potential for a reinstatement of dividends, and the need for further positive developments for the shares to respond.
Leopalace21 Corporation conducts construction, leasing, and sales of apartments, condominiums, and other residential properties, in addition to operation of hotels and resorts, and elderly care services. Sales rose by 2.6% year-on-year to JPY483.1 billion during fiscal year March 2015 on the back of a 2.7% year-on-year increase in sales of the leasing business, and despite a 2.9% year-on-year decline in sales of the construction business. The higher sales and gross income were able to absorb increases in sales, general and administrative expenses and allowed operating income to rise by 8.0% year-on-year to JPY14.7 billion.
Compared with end March 2014, a JPY11.1 billion rise in machinery and equipment associated with the solar power electric power generation business contributed to a JPY20.8 billion increase in total assets to JPY308.2 billion. While these investments contributed to a significant increase in short term interest bearing liabilities, declines in long term liabilities and vacancy loss reserves contributed to a JPY0.7 billion decline in total liabilities to JPY181.8 billion. Net assets grew by JPY21.6 to JPY126.4 billion due in part to the increase in retained earnings. Consequent to these changes, equity ratio rose by 4.5% points to 41.0%.
Leopalace21’s fiscal year March 2016 earnings estimates call for sales to rise by 8.7% year-on-year to JPY525.0 billion on the back of favorable demand for leasing business services, a recovery in construction business, and growth in sales of all business segments. SG&A expense is expected to rise by 13.1% year-on-year, but the higher sales and subsequent 1.2% improvement in gross income margin are expected to absorb these higher expenses and allow operating income to rise by 32.1% year-on-year to JPY19.5 billion. And while the actual amount has yet to be determined, dividends are expected to be reinstated.
The Bridge Report recently released by Investment Bridge Co., Ltd. highlights the strong potential for a reinstatement of dividends given the current favorable earnings environment. At the same time, the Report points out that Leopalace21’s shares appear to have underperformed, with the lowest price to earnings valuation of its peer group. Consequently, further positive developments in terms of earnings may be required to get the market’s attention and rectify this disparity in valuations.
To view the full report, please go to the website at the URL listed below
http://www.bridge-salon.jp/report_bridge/archives/eng/8848/20150708.html
About Leopalace21 Corporation
Leopalace21 Corporation was
established in August 1973 and conducts construction, leasing, and sales
of apartments, condominiums, and residential housing, in addition to
development and operation of resort facilities, and the operation of
hotel business, broadband business, and elderly care business. The
Company was first listed on the JASDAQ Market in February 1989, and
moved its shares to the First Section of the Tokyo Stock Exchange in
March 2004. Its headquarters are currently located in Tokyo.
