■Future Outlook LeTech <3497> expects an increase in sales and ordinary income of more than 20%, with sales of 2.14 billion yen (+33.8% YoY), operating income of 150 million yen (+7.7% YoY), ordinary income of 100 million yen (+21.7% YoY), and net income of 1.03 billion yen (-11.4% YoY) for the July 2024 term, and has maintained its initial forecast (announced in September 2023).

Performance outlook for the fiscal year ending June 2025

Regarding the consolidated performance of And Do Holdings <3457> for the fiscal year ending June 2025, it is expected to achieve a 3.6% increase in revenue to 70,000 million yen compared to the previous year, an 11.5% increase in operating profit to 4,000 million yen, a 15.7% increase in ordinary profit to 4,000 million yen, and a 6.6% increase in net income attributable to the parent company's shareholders to 2,640 million yen. The fiscal year ending June 2025 marks the final year of the medium-term management plan. The aim is to continue expanding performance focusing on growth-enhancing businesses, achieve the highest performance update for the third consecutive period, and strive to achieve the medium-term management plan targets. With regards to ordinary profit, it is anticipated that the growth rate will exceed that of the fiscal year ending June 2024 due to the expected decrease in interest payments following the peak of interest-bearing debt and the recovery of investment income of the anonymous association that decreased due to one-off factors in the fiscal year ending June 2024.

In terms of segment outlook, it is expected that all segments except non-core businesses will achieve increased revenue and profit. Particularly, the real estate trading business is expected to continue driving growth. In the financial business, while the impact of the reduction in real estate secured loans has stabilized, efforts are being made to transition to increased revenue and profit through the accumulation and acceleration of the guarantee balance of reverse mortgages. In particular, with the growth of high-profit reverse mortgages, it is expected that the operating profit of this segment will increase rapidly.

(1) Franchise Business

The franchise business is expected to achieve a 6.6% increase in revenue to 3,450 million yen compared to the previous year, and an expected 9.4% increase in operating profit to 2,200 million yen. Amidst the increasing number of cumulative franchise stores, investments in personnel and promotions will continue, accelerating the expansion of store numbers mainly in the capital area and urban areas. Currently, there is a trend of an increasing number of multiple store openings by existing owners. By strengthening personnel for franchise development and promoting store openings of existing owners, the policy is to efficiently expand the number of stores. Specific targets include an increase of 70 stores to 777 cumulative franchise stores compared to the previous year-end, and an increase of 66 stores to 709 cumulative new stores.

(2) House Leaseback Business

The sales of the House Leaseback Business are expected to increase by 1.7% to 26,528 million yen compared to the previous year, with an expected 1.3% increase in operating profit to 3,250 million yen. Amidst strong market demand, while considering the balance with the real estate trading business, the aim is to steadily increase the number of purchase agreement contracts. The full-year goals include aiming for a 14.1% increase to 1,320 purchase agreement contracts and a 11.0% increase to 1,300 acquired properties compared to the previous year. By focusing on expanding the number of properties handled, it is anticipated that the total holding amount will increase by 9.1% to 9,283 million yen. For this business, synergies are also being created between businesses, such as purchasing properties guaranteed by reverse mortgages. While demonstrating synergy with other businesses, the goal is to steadily expand both the total property holdings and performance.

(3) Financial Business

The revenue of the financial business is expected to increase by 27.5% to 6.27 billion yen compared to the previous year, with operating profit expected to increase by 128.2% to 2.4 billion yen. Currently, the impact of the reduction in real estate collateral loans has reached a plateau, and the reverse mortgage guarantee business is also performing well. By accelerating the accumulation of reverse mortgage guarantee balance, the company aims to achieve revenue and profit growth. The company plans to continue expanding its partnerships with financial institutions, mainly focusing on financial institutions in Tokyo. By proactively cultivating relationships with Tokyo financial institutions, the company aims to efficiently increase the guarantee balance and expand the cumulative guarantee balance by 62.8% to 33.937 billion yen compared to the previous year. It is reported that the new guarantee amount for the fourth quarter of the fiscal year ending June 2024 has increased to about 1 billion yen per month. The progress of cultivating relationships with Tokyo financial institutions is also going smoothly, and the company sees an increase in guarantee balance as guarantee cases in the Tokyo metropolitan area accumulate.

(4) Real Estate Trading Business

The revenue of the real estate trading business is expected to increase by 5.4% to 363 billion yen compared to the previous year, with operating profit expected to increase by 19.4% to 28.5 billion yen. The company plans to expand its performance by strengthening the procurement of residential real estate while enhancing earnings stability and predictability. Although the growth in topline and profits is expected to decrease compared to the fiscal year ending June 2024 due to the reduction in the impact of large-scale projects, the business itself is expected to continue to perform well. The company aims to accelerate the pace of procurement while continuing to expand its sales force, aiming for further growth. The company will also continue to focus on the resale of second-hand properties. Despite uncertain factors such as rising interest rates, the company plans to address them by thoroughly procuring relatively low-risk real estate, such as properties near train stations. The company will conduct business activities while focusing on strengthening procurement, maintaining asset efficiency, and financial soundness, promoting the sale of inventory with an emphasis on turnover. It is expected that the abundant inventory will be sequentially commercialized, leading to steady business expansion.

(5) Real Estate Distribution Business

The revenue of the real estate distribution business is expected to decrease by 6.7% to 15.44 billion yen compared to the previous year, with operating profit expected to decrease by 10.0% to 5.2 billion yen. While leveraging group synergy as the starting point of a one-stop service, the company plans to supply talent to growth-enhancing businesses such as house leaseback and real estate trading, leading to a decrease in revenue and profit.

(6) Renovation Business

The revenue of the renovation business is expected to decrease by 6.5% to 22.81 billion yen compared to the previous year, with operating profit expected to decrease by 14.6% to 2 billion yen. While focusing resources on growth-enhancing businesses, the company expects a performance level similar to the previous year for this business, which is one of the non-core businesses.

(Written by FISCO Guest Analyst Yoichiro Shimizu)