■Performance Trends
1. Financial Summary for the Fiscal Year Ending March 31, 2024
Sun Frontier Real Estate ＜8934＞'s financial results for the fiscal year ended 2024/3 were sales of 79,868 million yen (down 3.5% from the previous fiscal year), operating income of 17,600 million yen (up 18.1% from the same period), ordinary income of 17,374 million yen (up 18.0% from the same period), and net income attributable to parent company shareholders of 11,917 million yen (up 2.6% from the same period). Operating income, ordinary income, and net income attributable to parent company shareholders both hit record highs, and the ordinary profit margin remained at a high level of 21.8%. Sales and administration expenses increased compared to the previous fiscal year due to human capital investment including training, system investment, etc., but it is as planned.
Looking at changes in the company's earnings forecast (ordinary profit) achievement rate, we believe that results continue to exceed initial forecasts even in an environment of rapid change, including the COVID-19 pandemic, and that a sincere attitude of rewarding internal and external stakeholders should be highly appreciated.
2. Business Trends by Segment
(1) Real estate rehabilitation business
The real estate rehabilitation business had net sales of 51,027 million yen (up 1.9% from the previous fiscal year) and segment profit of 15,602 million yen (up 1.7% from the same period). The number of sales was 25 (2 in New York, 1 small real estate ownership product), and the initial plan for the fiscal year was completed. As for segment profit margins, it has maintained a high level of 30%, and the cap rate (return yield) of sold properties has also secured a 4% level. The average business period, which indicates the period from purchase to commercialization, was 705 days (up 52 days from the previous fiscal year), and the average business period excluding newly built properties and long-term owned properties was 625 days (down 28 days from the same period). Along with efforts to shorten the business period, we are continuing to work on strengthening procurement, and it is our policy to achieve high capital efficiency through operations that are particular about the business period. The annual purchase price of the property was 50,748 million yen, a record high of 17,888 million yen, an increase of 17,888 million yen from the previous fiscal year. We are planning to purchase 55,000 million yen, which is even higher for the fiscal year ending 2025/3. Also, sales of real estate small-lot ownership products are progressing steadily, and the cumulative number of investors reached 470 at the end of the 2024/3 fiscal year.
(2) Real estate service business
The real estate services business had net sales of 10,497 million yen (up 18.7% from the previous fiscal year) and segment profit of 5,612 million yen (up 14.8% from the same period). The rental conference room business with expanded new bases, the property management business which increased the number of management contract buildings, and the leasing management business, which opened new stores, led business results and achieved record high profits. In the property management business, sales and profit increased due to an increase in the number of management contract buildings, and in the building maintenance business, sales and profit declined due to factors such as a decrease in disinfection work, cancellation of unprofitable sites, etc. In the leasing management business, in rental brokerage, there was an increase in sales and profit due to an increase in the number of rental brokerage cases for tenants in managed contract properties. In terms of trading brokerage, although there was a decline in reaction from large-scale projects brokered in the previous fiscal year, it remained steady. Also, in the rental conference room business, along with continued high operation due to a recovery in demand, an increase in the number of operating floors due to opening and floor expansion contributed to an increase in sales and profit. In the delinquent rent guarantee business, credit guarantee, which is the main business, remained steady due to renewal of existing customers and acquisition of new customers.
(3) Hotel and tourism business
The hotel and tourism business had net sales of 16,977 million yen (down 26.1% from the previous fiscal year) and segment profit of 4,369 million yen (up 153.9% from the same period). In the hotel development business, even though sales declined due to the reaction of the sale of 2 buildings in the previous fiscal year, profit increased due to the sale of 1 building in the first quarter. Currently, land acquisition is progressing in Hakone Town, Lake Kawaguchi, etc., and development projects are progressing steadily in other regions as well. In the hotel management business, occupancy rates and guest room unit prices rose due to an expansion in travel demand and a recovery in inbound traffic, resulting in a significant increase in sales and profit.
(4) Other businesses
Other businesses had sales of 2,409 million yen (up 34.8% year on year) and segment profit of 301 million yen (up 6.4% year on year). In the construction business, orders increased at group subsidiaries, and construction progressed smoothly, resulting in an increase in sales and profit. In the overseas development business, construction of “HIYORI Aqua Tower,” which is the second project of a new condominium project in Vietnam, is scheduled to begin in the first half of the fiscal year ending 2025/3. Also, in 2023/10, SF Human Support was established for the purpose of employment support for foreigners with specific skills, etc. Starting with employment support within the company's group (Sun Frontier Hotel Management Co., Ltd., SF Engineering Co., Ltd.), it gradually expanded to foreign recruitment support/training projects etc. at host companies, and the goal is for 100 foreign workers to work per year after 2 years. We believe that this business not only contributes to solving social issues such as employment support for foreigners with specific skills, etc., but also contributes to securing human resources and sustainable growth in the company's group business.
3. financial status
Total assets at the end of the 2024/3 fiscal year were 188,661 million yen, up 36,141 million yen from the end of the previous fiscal year. Cash and deposits increased 5,851 million yen due to 10,000 million yen raised through the issuance of convertible corporate bonds with stock acquisition rights and fund recovery from property sales. Also, in addition to the purchase and construction of replanned properties, inventory assets increased by 26,687 million yen due to the acquisition of land for condominium construction in Vietnam, etc.
Total liabilities increased 25,690 million yen from the end of the previous fiscal year to 94,244 million yen. As for interest-bearing debt, it increased by 23,878 million yen to 79,540 million yen due to loans associated with property purchases. Short-term loans increased by 12 million yen, long-term loans scheduled to be repaid within 1 year by 6,765 million yen, corporate bonds by 9,999 million yen, and long-term loans by 7,102 million yen due to the issuance of corporate bonds with convertible stock acquisition rights.
Total net assets increased 10,450 million yen from the end of the previous fiscal year to 94,416 million yen. Net income attributable to parent company shareholders increased due to accumulated net income of 11,917 million yen, etc. The capital adequacy ratio is 48.0%, down 4.9 points from the same period, and it maintains a high level while actively investing. We believe that financial soundness is rock-solid and there are no short-term concerns.
(Written by FISCO Guest Analyst Ryoji Mogi)