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TOKYO

Investment Bridge, one of Japan’s leading independent IR services companies, has released a “Bridge Report” on Leopalace21 Corporation (TOKYO:8848) reviewing its earnings results for first half of fiscal year March 2015 and full year earnings estimates.

Report Highlights

• Sales rose by 0.6% year-on-year to JPY233.0 billion during the first half of fiscal year March 2015 on the back of growth in the main leasing business. Higher administrative expenses were absorbed by increases in gross income, allowing operating income to rise by 13.4% year-on-year.
• Leopalace21 maintained its outstanding full year earnings estimates and calls for sales to rise by 4.8% year-on-year to JPY493.5 billion on the back of gains in all business segment sales. Operating income is also expected to rise by 6.0% year-on-year to JPY14.5 billion despite higher administrative expenses arising from anticipatory investments.
• The Bridge Report calls attention to the change in business strategy with Leopalace21 focusing upon long term stability in earnings of the leasing business in place of maximizing the value of orders of the construction business.

Leopalace21 Corporation conducts construction, leasing, and sales of apartments, condominiums, and other residential properties, in addition to operation of hotels and resorts, and senior citizen care services. During the first half, sales rose by 0.6% year-on-year to JPY233.0 billion on the back of a 2.9% year-on-year increase in leasing business sales to JPY197.4 billion and despite a 19.0% year-on-year decline in construction business sales to JPY24.6 billion. Administrative expenses exceeded the previous first half, but higher gross income absorbed these expenses and allowed operating and ordinary incomes to rise by 13.4% and 26.8% year-on-year to JPY6.0 and JPY5.5 billion respectively. Sales of the elderly care, hotels, and other business segments also rose by 4.5%, 17.0%, and 105.6% year-on-year to JPY5.2, JPY4.2 and JPY1.4 billion respectively.

Total assets declined by JPY12.9 billion from the end of the previous fiscal year to JPY274.5 billion due in part to a large decline of over JPY12 billion in cash and equivalents. Current liabilities grew while noncurrent liabilities fell, causing total interest bearing liabilities to decline by a small margin to JPY31.3 billion. Net assets rose by JPY5.3 billion to JPY110.1 billion over the same period. Consequently, equity ratio rose by 3.6% points to 40.1%.

Leopalace21 maintained its existing earnings estimates without any changes, and calls for sales to rise by 4.8% year-on-year to JPY493.5 billion on the back of anticipated increases in sales of all business segments. Operating income is expected to rise by 6.0% year-on-year to JPY14.5 billion due to a 0.5% point increase in gross income margin and despite increases in administrative expenses arising from hiring of staff for the construction business. Leopalace21 hopes to reinstate dividend payments at an early stage.

The Bridge Report notes that occupancy rates need to be watched closely despite the lack of large changes in the operating environment, business deployment strategy, and earnings trends. Furthermore, the Report calls attention to the change in strategies being implemented with a shift in the Company’s focus from the maximization of construction business order values to securing of long term stability in earnings of the leasing business.

To view the full report, please go to the website at the URL listed below.
http://www.bridge-salon.jp/report_bridge/archives/eng/8848/20141226.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.