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. Fiscal year-end March 2025 Performance estimate
Fuyo General Lease <8424> expects a decline in profits due to the drop in special factors from the previous year, with a 0.1% decrease in operating profit to 60 billion yen, a 3.4% decrease in recurring profit to 66 billion yen, and a 4.7% decrease in net income attributable to parent company shareholders to 45 billion yen. However, looking at recurring profit (based on actual value) excluding special factors, it is expected to increase by 2.5% and continue to be profitable. In addition, it is assumed that the mid-term management plan, which is entering its third year, will hit the upper limit of the interim target for recurring profit (64 billion yen to 66 billion yen), indicating that it is progressing smoothly.
Assuming the impact of the rise in domestic interest rates in the second half of the fiscal year, all businesses, including the successful ones such as 'Energy Environment,' 'Real Estate,' and 'Aircraft,' as well as 'Healthcare,' which is showing a delay in progress, are expected to accumulate assets in a balanced manner. In addition, the growth of 'BPO/ICT,' which has been expanding demand (non-asset revenue growth), is also expected to contribute to improving profitability.
ROA is expected to remain high due to asset control that emphasizes profitability and the expansion of non-asset revenue.
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.
Although caution is still required for the uncertain external environment, such as unstable international situations and rising domestic interest rates, it is seen that the company's performance forecast is sufficiently achievable, considering that high-profit assets such as 'Real Estate,' 'Aircraft,' and 'Energy Environment' have been accumulated. Also, while a decline is expected, it does not necessarily indicate a decline in performance. It is necessary to pay attention to the fact that the trend of increasing profits continues when viewed based on actual values, in order not to make a mistake in investment judgment. From a medium to long-term perspective, we should pay attention to 'Energy Environment,' 'BPO/ICT,' and 'Healthcare' in the AT field, aiming for accelerated growth that captures market trends. In the 'Energy Environment,' efforts to expand global business through strengthened partnerships with powerful partners and to follow new areas such as secondary energy are necessary domestically. As for 'BPO/ICT,' in addition to expanding demand for business efficiency and work style reform, there are expectations for capturing new demand and improving profitability by utilizing DX and AI. In addition, with regard to 'Healthcare,' which is showing a delay in progress, the recovery of finance needs, which had been stagnant, and its timing are likely to be the key points for catching up.
(Written by Fisco Guest Analyst Ikuo Shibata)