Performance trends of Polaris Holdings <3010>

3. Performance outlook for the year ending March 2025

Revenue for the full year ending March 2025 is expected to be 2.0078 billion yen (10.9% decrease year on year), operating profit 189.1 billion yen (44.1% decrease year on year), ordinary profit 131.5 billion yen (49.6% decrease year on year), and net income attributable to parent company shareholders 147.3 billion yen (55.3% decrease year on year). Although sales and profits have decreased, the previous period included revenues from real estate sales, whereas the main business for the same period only in hotel business, which is the main business of the same company, has significantly increased its revenues and profits.

Regarding the business environment for the full year ending March 2025, we expect the hotel market to continue growing mainly in city centers across the country and to recover to pre-corona levels in other areas. In our own operated hotels, we believe there is significant room for improvement in average room rates and occupancy rates. In particular, for the five new hotels that opened in the previous period, we expect significant performance contributions from the entire year in this period. Our overseas hotel business is also recovering smoothly, and we expect our newly built flagship hotel in Manila, which opened in March 2024, to contribute to profits in our overseas business. Regarding real estate business, we expect no sales during the current progress period, even though there were about 8 billion yen in sales in the previous period. When comparing net sales (excluding the impact of real estate sales) directly, 2023 full year sales were 1,454.5 million yen, which is expected to increase by 38.0% year on year in the full year ending March 2025.

We also expect steady growth in operating profit. Although we anticipate increases in utility bills, personnel costs, and other expenses, we plan to absorb them and achieve significant growth in sales. The number of hotels and the density of operated hotels in each region have also increased, and we can expect cost optimization effects through efficient personnel deployment. The changes in operating structure that we implemented in the previous period (transitioning from an operating contract model to a fixed+variable rent model and a fixed rent model, among others) will also have a positive effect on profitability during the period of expanding demand. When comparing net operating profit (excluding the impact of real estate sales) directly, the planned increases in operating profit are significant, from 133.5 million yen in 2023 to 189.1 million yen in the full year ending March 2025, a 41.6% increase year on year. We believe that these represent a convincing growth plan based on the current favorable business environment and our track record of business revitalization.

(Written by FISCO Guest Analyst, Hideo Kakuta)