Performance outlook. For the fiscal year ending December 2024, consolidated business revenue is expected to be 1,280 million yen (+12.0% YoY), operating profit is expected to be 740 million yen (-8.2% YoY), pre-tax profit is expected to be 820 million yen (-16.1% YoY), and net income attributable to owners of the parent company is expected to be 640 million yen (-60.8% YoY). The initial performance forecast for J Trust <8508> is extremely conservative. For operating revenue, we plan to achieve the highest ever update due to stable revenue in the Japanese financial industry, an expected increase in interest revenue due to increased loan amounts in banking business in Southeast Asia, and the strengthening of our revenue base through the results of our M&A activities. Regarding operating profit, while it is unclear if there will be an extreme decline in our financial business in South Korea and Mongolia, and banking business in Southeast Asia due to the implementation of the standard interest rate cut, we have made provisions for credit loss reserves in preparation for the worsening business environment, and we expect to recover our performance. However, due to the negative effects such as the decline in negative goodwill arising from the absorption merger of Mirainovate in the real estate business recognized in the fiscal year ending December 2023, we expect a decrease in performance. We plan to achieve an increase in profit in the fiscal year ending December 2024 with operating profit based on actual strengths, excluding negative goodwill arising. Regarding net income attributable to owners of the parent company, we had a deferred tax liability refund due to the absorption merger of Nexus Bank in the fiscal year ending December 2023, but it is expected to result in a significant decline in the fiscal year ending December 2024 due to further increases in corporate income tax expenses.
1. Performance forecast for the February 2025 term.
DD Group <3073> forecasts a continued trend of increasing sales and profits, with a 3.8% increase in revenue to 38,470 million yen compared to the previous period, a 7.9% increase in operating profit to 350 million yen, a 7.6% increase in ordinary profit to 337 million yen, and a 27.4% decrease in net income attributable to shareholders to 248 million yen, due to the tax effect accounting backlash in the previous period.
The assumed same-store sales (average) for the "Food and Amusement Business" is expected to increase by 102.1% compared to the previous period, due to the full recovery from the COVID-19 pandemic and various measures. For the "Hotel and Real Estate Business", initial costs related to the renewal opening of the "3S HOTEL ATSUGI", which was rebranded on March 15, 2024, are expected to occur, but the resolution of costs related to the renovation work (rental costs and construction costs during the renovation period) is assumed.
Even on the profit and loss side, we expect significant increases in operating profit due to the growth of same-store sales and the effects of reducing cost increases and break-even points. The operating margin is also expected to improve to 9.1% (from 8.7% in the previous period).
Based on the recovery of the previous period's performance (especially in the fourth quarter) and the current economic situation, we see that the company's performance forecast is easily achievable. Same-store sales (monthly) in March, when the company started, is also on track with a 111.3% increase compared to the same period last year. The rebranding of "3S HOTEL ATSUGI" is also expected to increase sales and profits. However, the somewhat unsatisfactory impression of the top line growth is mainly due to the end of the COVID-19 recovery in addition to having reduced new store openings in recent years. The plan for opening new stores in the 2025 February period is limited to four stores, and it is expected that the company will continue to prioritize the transition to a muscular earnings structure and financial improvement. On the other hand, it should be noted that the increased profitability is a positive point, and going forward, the balance between top-line growth and profits is a point of focus. On the strategic side, we should also pay attention to innovative moves unique to the company, such as the development of new business formats that lead to the creation of brand value and the strengthening of group management power through DX promotion, including collaboration with Google Cloud.
Our view on the company's performance forecast is that it is easily achievable based on the recovery of the previous period's performance (especially in the fourth quarter) and the current economic situation. Same-store sales (monthly) in March, when the company started, is also on track with a 111.3% increase compared to the same period last year. The rebranding of "3S HOTEL ATSUGI" is also expected to increase sales and profits.
(Written by Fisco Guest Analyst Ikuo Shibata)