Outlook for J Lease (7187) For the 2025 fiscal year, it is expected that sales revenue will increase by 22.6% YoY to 16,210 million yen, operating profit will increase by 7.8% YoY to 2,810 million yen, ordinary profit will increase by 7.6% YoY to 2,810 million yen, and net income attributable to parent company shareholders will increase by 5.6% YoY to 1,890 million yen, all of which are expected to be record highs for both sales revenue and profits. Regarding sales revenue, it is assumed that it will have a high growth rate due to the increase in the number of new customers and the increase in continuation guarantee fee income from existing contracts, as well as the Avis group's integration. As for rental guarantee for residential purposes, it is expected that the demand for institutional guarantee will continue to increase due to factors such as the increase in demand for moving and foreign workers, and the change in risk-averse awareness of real estate owners. The company has been investing in stores and human resources to expand its market share, which is relatively low in major metropolitan areas (3-5%), and share expansion is also expected for the 2025 fiscal year. Additionally, regarding rental guarantee for business purposes, the expansion of demand for institutional guarantee is expected due to changes in customer risk awareness. Furthermore, Avis was integrated into the group in April 2024, expanding the business area. Avis's sales revenue forecast for the 2025 fiscal year is 1.18 billion yen. We believe that, in the favorable external environment of the industry, our company is achieving growth that exceeds industry performance, and we expect to exceed our sales targets as usual.

2025 fiscal year performance is expected to update the record high for both sales revenue and profits, with a sales revenue increase of 22.6% YoY to 16,210 million yen, operating profit increase of 7.8% YoY to 2,810 million yen, ordinary profit increase of 7.6% YoY to 2,810 million yen, and net income attributable to parent company shareholders increase of 5.6% YoY to 1,890 million yen.

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Operating profit margin is expected to decline slightly to 17.3% (from 19.7% in the previous period), but it is expected to increase steadily by 7.8% YoY in terms of profit. The reason for the decline in profit margin is due to the impact on the payment status of customer rent due to factors such as current inflation and the decline in subsidies related to COVID-19, which has led to an increase in substitutionary payment advances. This trend, however, is expected to lead to an increase in institutional guarantee needs on the part of the lessors, expanding business opportunities, and increasing profit amounts through growth effects. We expect the default occurrence rate (6.5% forecast) and recovery rate of substitutionary payment (96.6% forecast) to worsen slightly from the previous period, approaching the levels before COVID-19. We believe that our profit forecast is somewhat conservative, and we expect to exceed our performance forecast, taking into account subsidiaries' performance related to IT and synergies, among other things.

(Written by FISCO Guest Analyst, Hideo Kakuta)