■ Long-term Growth Strategy

AND Do Holdings <3457> formulated a medium-term management plan for three years with the final year ending in June 2025, aiming to enhance corporate value through further growth and development. In addition to the franchise business, house leaseback business, and financial business that have been actively invested in, the real estate transaction business was positioned as a growth-enhancing business, with a growth strategy focusing on (1) further expansion of growth-enhancing business, (2) deepening of "real estate x financial" services, and (3) promoting higher profitability. Regarding the performance for June 2025, the company expects 70 billion yen in revenue, 4 billion yen in operating profit, 4 billion yen in ordinary profit, and net income attributable to the parent company's shareholders of 2.64 billion yen. With respect to revenue, the real estate transaction business is expected to significantly surpass the assumptions of the medium-term management plan, resulting in a substantial exceedance of the target value. Furthermore, regarding ordinary profit and net income attributable to the parent company's shareholders, it is also expected to reach the target value. However, due to the significant growth in the top line, the ordinary profit margin is expected to slightly fall short of the target.

The company aims to expand its revenue to 900-100 billion yen and ordinary profit to 60-70 billion yen by June 2029 as part of its growth vision from the fiscal year ending June 2026. Even during the upcoming medium-term management plan period (to be announced upon the completion of the fiscal year ending June 2025), the company is prepared to accelerate growth, with a focus on enhancing growth in the franchise business, house leaseback business, financial business, and real estate transaction business.

(1) Further expansion of growth-enhancing business

In addition to further growth in the franchise business, house leaseback business, and financial business that have been actively invested in, the company aims to maintain the real estate transaction business as a source of revenue, targeting a 25.2% revenue growth rate (compared to June 2022) and a 35.7% ordinary profit growth rate in the June 2025 period. If the initial expectations are met, the revenue growth rate is expected to be 69.1% and the ordinary profit growth rate is expected to be 35.7%.

a) Franchise Business

By strengthening development in the metropolitan area, the company has aimed to achieve revenue of 4.18 billion yen in the June 2025 period (a 23.4% increase compared to June 2022), operating profit of 2.9 billion yen (a 26.0% increase), and a cumulative total of 865 franchise stores (an increase of 182 stores compared to the end of the June 2022 period).

b) House Leaseback Business

By deploying personnel and advertising expenses to accelerate business expansion, we have been aiming for a revenue of 21.42 billion yen in the June 2025 period (+47.4% compared to June 2022), an operating profit of 2.83 billion yen (+64.8% YoY), targeting 1,440 annual purchase contracts (an increase of 350 contracts from June 2022), and 150 monthly purchase contract units. The projected revenue and operating profit for the June 2025 period are 26,528 million yen and 3,250 million yen respectively, exceeding the planned values for both revenue and operating profit. Although the number of purchase contracts is expected to fall below the planned value, this is due to the emphasis on the robust real estate trading business, with the business environment itself being favorable. Going forward, the plan is to expand the number of transactions while maintaining a balance with the real estate trading business.

c) Financial Business

Continuing to focus on the reverse mortgage guarantee business. By actively seeking new partnerships with financial institutions and promoting both existing partnership financial institutions and new customer acquisition, we have been aiming for a revenue of 1.41 billion yen in the June 2025 period (+83.8% compared to June 2022), operating profit of 0.6 billion yen (+338.0% YoY), and a cumulative guarantee balance of reverse mortgages of 50.6 billion yen (+474.7% compared to June 2022), targeting 100 partnership financial institutions. Comparing to the mid-term management plan, although the pace of performance expansion has slowed slightly, the performance of the reverse mortgage guarantee business is continuously growing. The plan is to accelerate the accumulation of guarantee balances by continuing to develop partnership financial institutions, mainly in the Tokyo metropolitan area.

d) Real Estate Trading Business

By maintaining the turnover ratio of assets and enhancing commodity inventory through strengthened purchases, we have been aiming for a revenue of 20.76 billion yen in the June 2025 period (+12.6% compared to June 2022), an operating profit of 1.8 billion yen (+6.4% YoY), and a shelf inventory balance of 14 billion yen (13.2% decrease compared to June 2022). For this business, all planned values for revenue, operating profit, and shelf inventory balance have been achieved by June 2024. The proactive increase in purchases resulting in a faster accumulation of shelf inventory balance than planned, combined with the successful sale of large properties purchased at attractive prices during the pandemic and the growth in housing-related real estate sales that the company focuses on, has led to reaching the target one year ahead. Going forward, by strengthening purchases and actively promoting sales while focusing on turnover ratio, we aim to improve capital efficiency and pursue performance growth.

(2) Deepening the 'Real Estate x Financial' Services

Integrating financial services and real estate business to enhance synergy and aim for further business expansion. Specifically, constructing a revenue acquisition scheme for real estate disposal in the reverse mortgage guarantee business, and promoting the exploration of customer needs such as distressed housing loan recipients. Additionally, strengthening the synergy between the entry (fund needs) and exit (real estate disposal) in other real estate businesses. In terms of reverse mortgage guarantee, the disposal of real estate has gradually begun, with achievements in house leaseback buyouts and general mediation sales.

(3) Accelerating the Facilitation of High-Profit Structure

By promoting operational efficiency through DX adoption, expanding investments in growth-enhancing businesses, and optimizing the business portfolio, we aim to accelerate the transition to a high-profit structure. We are focusing on the highly profitable used purchase and resale business, which we believe contributes to the improvement of the company's profitability.

Regarding the Flow Business, we have set a flat plan as it is a non-core business. The Real Estate Distribution Business has been working towards the goal of achieving revenue of 204 billion yen in the June 2025 period (12.2% decrease compared to the June 2022 period) and an operating profit of 64 billion yen (12.3% decrease). The Reform Business has been progressing towards the target of revenue of 270 billion yen (1.6% increase) and operating profit of 23 billion yen (17.9% increase).

In addition to the above growth strategy, the company will continue to focus on management that is mindful of the cost of capital and stock prices. Although the company's ROE is around 15%, the impact of increased financial leverage is significant. Therefore, the company's focus is on increasing the operating profit margin and total asset turnover ratio. By enhancing the operating profit margin through the expansion of financial business performance and operational efficiency driven by DX adoption, as well as increasing the total asset turnover ratio through accelerated sales with attention to inventory turnover, we aim to improve capital profitability.

(Written by FISCO Guest Analyst Yoichiro Shimizu)