Overview of the financial results of Japan Asia Investment Co., Ltd. <8518>

1. Overview of the interim financial results for the fiscal year ending March 2025

For the first half of the fiscal year ending March 2025 (on a fund consolidated basis), operating revenue increased by 12.9% year-on-year to 1,432 million yen, and operating profit was 68 million yen (compared to a loss of 239 million yen in the same period last year).

On a conventional consolidated basis, operating revenue increased by 55.8% year-on-year to 664 million yen, with operating loss of 61 million yen (compared to a loss of 535 million yen in the same period last year), ordinary loss of 64 million yen (compared to a loss of 558 million yen), and interim net loss attributable to parent company's shareholders of 67 million yen (compared to a loss of 560 million yen), indicating a reduction in the loss margin and improvement.

In terms of operating revenue, since the sale of relatively large unlisted stocks is scheduled for the latter half of the fiscal year, the first half focused on selling other unlisted stocks, while the recording of profits from the sale of a project (one logistics facility) significantly contributed to the increase in revenue.

On the profit and loss front, in addition to the increase in gains from sales, the reduction of evaluation losses and reserves led to a contraction in the loss margin, resulting in significant improvement.

On the other hand, regarding the financial status (on a conventional consolidated basis), there were changes associated with the third-party allocation of new shares (approximately 1 billion yen) conducted in June 2024. Total assets increased by 4.7% compared to the end of the previous fiscal year, expanding to 10,929 million yen due to increases in cash and deposits and investments in investment development projects (such as the acquisition of a group home for people with disabilities). Self-capital was also strengthened by the third-party allocation of new shares, increasing by 16.0% to 6,535 million yen, and the self-capital ratio improved to 59.8% (up from 54.0% at the end of the previous fiscal year). Interest-bearing debt decreased by 11.5% compared to the end of the previous fiscal year to 3,819 million yen, contributing to the improvement of financial soundness.

On June 28, 2024, new shares were issued through a third-party allocation with Governance Partners ASIA Investment Business Limited Partnership as the allottee. The amount of funds raised was approximately 1 billion yen (4,400 thousand shares issued).

The performance by business segment is as follows. Starting from the fiscal year ending March 2025, a new business policy has been adopted, redefining the business areas. The previous "Project Investment" and "Private Equity Investment" have been reclassified into three categories: "Investment Development Business (Real Asset Investment)" (almost corresponding to the former Project Investment), "Investment Management Business (Securities Investment)" (almost corresponding to the former Private Equity Investment), and "Fund Platform Business (Fund Administration)" (details will be provided later).

(1) Investment Development Business

Operating revenue was 398 million yen (18 million yen in the same period of the previous year), and total operating profit was 346 million yen (a loss of 79 million yen in the same period of the previous year). The gain from the sale of a logistics facility (one item) sold in March 2024 contributed to increased revenue and profit (profit turnaround). Although it takes time for the plant factory to turn a profit, improvements in losses appear to be progressing steadily.

※ Logistics facility in Atsugi City, Kanagawa Prefecture.

(2) Investment Management Business

Operating revenue was 189 million yen (336 million yen in the same period of the previous year), and total operating profit was 81 million yen (14 million yen in the same period of the previous year), resulting in decreased revenue but increased profit. Sales were focused mainly on unlisted stocks, but revenue decreased due to a reduction in the sale of listed stocks compared to the same period of the previous year. On the other hand, in terms of profits and losses, increased profit was secured due to the reduction of impairment losses and reserves.

※ In the same period of the previous year, impairment losses and reserves were preemptively recognized for securities with lowered expected recovery amounts due to the liquidation of funds in the China region.

(3) Fund Platform Business

The fund platform business is a contractual service for fund administration. It has traditionally been classified under "project investment" and "Private Equity" but has now become independent. Operating revenue is 76 million yen (71 million yen in the same period last year), and total operating profit is 76 million yen (71 million yen in the same period last year), showing stable trends.

2. Summary of the first half of the fiscal year ending March 2025

Transitioned to a new structure in June 2024, and announced a new medium-term management plan in August (details to follow), but the performance has had a quiet start. However, the projected performance for the fiscal year ending March 2025 is based on securing a baseline (minimum) through the sale of projects (such as group homes for people with disabilities), and an upside (maximum) through the sale of a relatively large amount of unlisted stocks, neither of which has been realized yet as of the first half. Nonetheless, in October 2024, a decision was made to transfer 16 group homes for people with disabilities utilizing social project bonds (providing investment opportunities with high social value to Institutions), which can be evaluated as a result of new initiatives. Also, the establishment of strategic business partnerships aimed at strengthening networks and know-how, along with third-party allocation of shares, has prepared the financial foundation, marking significant progress towards expanding the fund business that the company intends to pursue.

■ Main activity achievements

Significant achievements in utilizing social project bonds and signing strategic business partnerships.

1. Investment achievements, etc.

(1) Investment development business

Acquired new group homes for people with disabilities (7 units) and a rooftop solar power system with a Rechargeable Battery (1 unit), while selling an elderly facility (profit to be recorded in the second half). As a result, AUM increased to 16.8 billion yen (16 billion yen at the end of the previous term). As of the end of September 2024, the number of projects includes 12 mega-solar power projects (totaling 28.4 MW), 4 rooftop solar power systems with Rechargeable Batteries, 2 biomass power generation projects, 3 biogas power generation projects (including Operators), 1 Wind Power project, 30 group homes for people with disabilities, 1 plant factory, 4 logistics facilities, and 6 others.

(2) Investment Management Business

The total AUM of the funds managed and operated by the group's company decreased to 12,596 million yen across 7 funds as of the end of September 2024 (compared to 15,497 million yen across 8 funds at the end of the previous period), due to the liquidation of 2 funds and a reduction in 1 fund, while a new fund* was established.

* JAIC Wealth Fund 35 million yen.

2. Utilization of Social Project Bonds

In October 2024, the transfer of 16 group homes for people with disabilities was decided (performance will contribute in the latter half of the year). The transferee will be a limited liability company that raises funds from Institutions through the issuance of Social Project Bonds* backed by these group homes, as well as receiving investments from major leasing and real estate companies. Amidst the growing momentum for SDGs, there is value in connecting the funds of Institutions seeking high social investment opportunities with the funding needs in the support of disabled individuals, and it can be evaluated as an innovative initiative, serving as a significant impetus for future business expansion.

* Obtained credit ratings (BBB) and a second opinion on compliance with the Social Bond Framework from the Rating and Investment Information, Inc.

3. Conclusion of strategic business partnerships.

On August 28, 2024, business partnerships were respectively concluded with GNI Group <2160> (hereinafter, GNI) and Growth Partners Co., Ltd. The company aims to utilize external resources through these partnerships to attract funds not only from domestic but also from Overseas investors, thereby forming new funds and linking this to the realization of a growth strategy.

(1) GNI Group

GNI has a proven track record of successful drug development and growth as a pharmaceutical company, with its own sales network in China and other Regions. Through the GNI network, funds from domestic and Overseas investors are primarily invested in domestic companies via the company's funds, while also aiming to enhance the value of the invested companies by expanding their products into Overseas markets through GNI and its group companies.

(Written by Fisco Guest Analyst Ikuo Shibata)