“operating income margin of 3.5% and ROE of 20%”
- During the first half, Leopalace21's gross income rose by 18.0% despite a decline in sales of 1.4% due to improvements in occupancy rates in the leasing business and subsequent reversals in vacancy loss reserves, and reductions in selling, general and administrative costs.
- Full year estimates were left unchanged and call for 1.0% and 74.4% year-over-year increases in sales and operating income respectively.
- The Bridge Report also highlights the New Midterm Business Plan entitled "Creating Future" and its goal of "establishing foundations for future growth" and measures to realize large improvements profitability.
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.
During the first half of the current term, the Company's sales declined by 1.4% year-over-year to JPY219.9 billion but operating income recovered to JPY1.8 billion, compared with the operating loss JPY2.1 billion recorded during the previous first half. This improvement in profitability is attributed to improvements in occupancy rates and subsequent reversals from vacancy loss reserves, as well successful efforts to reduce administrative costs. Both sales and operating income exceeded outstanding estimates.
Despite this better than expected earnings performance in the first half, Leopalace21 maintains its outstanding earnings estimates for the full fiscal year to March 2013 and calls for sales and operating and net incomes are expected to rise by 1.0%, 74.4%, and 246.1% year-over-year to JPY463.9, JPY8.0, and JPY5.5 billion respectively.
The Bridge Report calls attention to the New Midterm Business Plan entitled "Creating Future" and measures designed to realize large improvements in profitability. This Plan covers the period from fiscal year March 2013 to 2015 and calls for "operating income margin of 3.5% and ROE of 20%" to be achieved in the final year of the plan. Furthermore, implementation of various measures including the sales of solar power generation and security systems, and expansion of offices in major metropolitan areas to raise occupancy rates are also called for. In addition, the Bridge Report calls attention to Leopalace21's ability to leverage its strengths in product and planning capabilities to capture growing demand for residential properties from single residents and for attended care services for elderly Japanese as important factors for the Company's intermediate term growth.
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Bridge Report is produced by Investment Bridge Co., Ltd. and provides accurate and objective information about the earnings, business strategies, and other information of publicly traded Japanese companies.