|HOUSE DO Co, Ltd. (3457)|
HOUSE DO Co, Ltd.
1st section of TSE
Real estate business
President and CEO
Headquarters: 11F, Marunouchi Trust Tower North, 1-8-1 Marunouchi, Chiyoda-ku, Tokyo
Head Office: 670 Tearaimizu-cho, Nakagyo-ku, Kyoto-shi, Kyoto
End of June
* The share price is the closing price on October 3, 2017. The number of shares issued was taken from the brief financial report for the latest period. ROE is that for the previous term.
* The forecasted values were provided by the company.
This report provides the outlines of HOUSE DO Co., Ltd., the description of its mid-term managerial plan, and the earnings results, among others.
1-1 Corporate historyPresident and CEO Masahiro Ando started up Real Estate Brokerage Business in Apr. 1991 after the collapse of the Japanese economic bubble. He was surprised to see a lot of people buying houses while taking advantage of the drop in prices and low interest rates, while many real estate companies, which had been thriving, went into bankruptcy. Then, he became certain that "If you attend to your customers, you won't imperil your company."
Strongly doubting the situation in which services are company-oriented while they should be customer-oriented, such as the lack of transparency, he responded to the needs of customers appropriately, and offered a lot of information on property speedily, winning the trust of customers and then improving business results.
When he visited the U.S. to see the realty industry there, he was deeply impressed by a franchisee real estate broker conducting community-based business competing with large companies while caring about customers. He felt that doing this business in Japan is meaningful and valuable, because it would lead to the reform of the Japanese realty industry, and started developing a franchise chain for real estate brokerage in Japan.
In Feb. 2006, he launched Franchisee Business. When he approached real estate brokers, they were reluctant at first, but he gave careful instructions to personnel in other fields, including architecture and renovation, who have keen interests in real estate. His business was highly evaluated, partially because there were no companies that teach real estate practice, and the franchise chain grew healthily. In Jan. 2009, he established HOUSE DO Co., Ltd.
As its business expanded, its brand power was strengthened steadily, and HOUSEDO was listed in Mothers of Tokyo Stock Exchange in Mar. 2015. Moreover, the company moved its market from Mothers to 1st section of TSE in Dec. 2016.
1-2 Corporate philosophy and Visions.Its managerial policy, corporate philosophy, and brand philosophy are as follows.
All of them are based on President and CEO Ando's awareness and thoughts about the current Japanese realty industry.
The company concentrates on the increase of franchised stores for contributing to the proactive disclosure of real estate information to consumers and the promotion of House-Leaseback, Real Estate Finance, and reverse mortgage in cooperation with financial institutions to offer real estate solutions in the aged society.
1-3 Business Model and Growth StrategyStarting with the Franchisee Business and the brokerage of real estate at franchised stores, which are the core businesses of HOUSEDO, the company is expanding and strengthening housing-related services in the businesses of House-Leaseback, Real Estate Finance (real estate secured loans, insurance, etc.), Real Estate Buying and Selling, Renovation, etc.
The company operates unique businesses compared with other realty-related firms as a "real estate service provider" or "specialty store retailer of private label apparel (SPA) in the real estate sector" that can grasp the needs of customers and offer a variety of reliable, convenient services.
For further growth, the company has intensified the investment in the Steady-income businesses, including the Franchisee Business, the House-Leaseback Business, and the Real Estate Finance Business.
1-4 BusinessAs the reporting segments, the company expands 6 types of business, "Franchisee Business," "House-Leaseback Business," "Real Estate Finance Business," "Real Estate Buying and Selling Business," "Real Estate Brokerage Business," and "Housing and Renovation Business."
(1) Franchisee business
(Outline)HOUSEDO provides small and medium-sized real estate firms that require a brand or network and companies that plan to launch real estate distribution business with the know-how of real estate brokerage and trading (attracting customers, IT strategies, education and training and motivating employees etc.)
For the purpose of popularizing its brand throughout the market, the company has implemented brand strategies while featuring Mr. Atsuya Furuta, who is a former professional baseball player and coach and currently a baseball commentator, since Jul. 2013. HOUSEDO has been advertised actively via TV and radio commercials, signboards, flyers, the mass media, websites, etc., announcing consistent brand strategies. By superimposing Mr. Furuta's personality, working attitude, and sincerity onto the image of HOUSEDO, the company won the trust of customers, making them feel reliable.
By developing a nationwide chain, HOUSEDO aims to make real estate information open and create reliable, convenient contact points with customers under the corporate ethos.
Since its franchise system provides franchisees with a variety of methods for reeling in customers for increasing sales based on the experiences of its headquarters and directly managed stores and the practical know-how to educate personnel, even companies that have no experience of real estate brokerage can start the business, and so it is highly evaluated. Many companies from different industries became franchisees, accounting for 70%.
The royalties the company receives from franchisees are monthly fixed, without fluctuations.
Through these efforts, the company has developed close networks among the headquarters, directly managed stores, and franchisee stores.
The number of franchisee stores approximately doubled in the past 5 years. The company first aims to increase the number to 1,000 in Japan by 2025. Thereafter, the company aims to increase the number to 50,000 in Asia.
Provision of website systemsHOUSEDO offers practically useful systems that have been nurtured in business scenes since its inception, including the systems information provision, including online search, support for sales and business operation, and matching.
"DO NETWORK!," which is aimed at increasing and retaining customers efficiently and streamlining business operation to the maximum degree, is equipped with various functions for producing original flyers, managing property, customers, and sales staff to reduce the burden of routine work. In addition, the company started offering "10-second-Do! - Real Estate Assessment in 10 Seconds," the automatic assessment of real estate utilizing artificial intelligence (AI), and this is causing repercussions.
Training for franchisee storesAs for education, HOUSEDO carries out sales training, through which even inexperienced real-estate agents can learn the fundamentals and become competent sales people, and trains staff for IT-based sales activities, financial planning, and property assessment, to support franchisee stores in improving their business capabilities.
In training, the company utilizes "DO CHANNEL!," which has website-based learning functions/e-learning systems, in addition to group learning. This system has over 1,000 contents, and trainees can attend necessary courses online anytime.
After franchisee stores are opened, supervisors give appropriate instructions and regional study sessions are held regularly. Supervisors give strategic guidance for marketing, attracting customers, managing sales activity records and sales, reviewing store management, etc.
At "HOUSEDO FC Awards," which is attended by the staff of all franchisee stores, they share the corporate targets and goals of the next fiscal year and the latest information on real estate, and excellent stores are commended, for motivating employers and employees. At the session, they share the successful cases of nationwide franchisee stores each other, and brush up themselves through friendly competition.
(2) House-Leaseback Business(Outline)
HOUSEDO concentrates on House-Leaseback Business as one of the future core businesses.
President and CEO Ando came up with the concept that "you can keep living in your house even after selling it" and aired it by radio, causing greater repercussions than expected. Therefore, he started commercialization, and completed it in a few months.
(What is House-Leaseback?)"House-Leaseback" means a sales and leaseback system with which real estate owners can keep living in their houses in accordance with a lease contract with HOUSEDO after selling the houses to the company.
Going beyond the conventional purchase system, which only provided an option to "sell real estate," the company offers services under the concept of "utilizing real estate."
(Background of the growth of House-Leaseback Business, and the market environment)House-Leaseback Business is in demand for the following reasons:
For elderly people and inheritance-related needs
For seniors who wish to enjoy their lives in their dear old homes until their final days.
For seniors who wish that their children or grandchildren inherit their assets not in the form of real estate, but in cash before demise.
Needs for funds
For customers who do not wish to relocate to the outside of the school districts of their children.
For customers who face difficulty in repaying long-term loans.
For customers who want to buy a new house, but who cannot afford to make a down payment.
This system offers a significant advantage -they can continue their business using business assets while paying lease fees in accordance with lease contracts. This business category was named "Asset-Leaseback," and it was launched in Aug. 2015.
According to "Statistical Survey on Housing and Land 2013" (the Ministry of Internal Affairs and Communications), the number of households and the ratio of homeowners in Japan are as tabulated below.
As birthrate is declining and nuclear families are increasing, the necessity to own houses declines if there are no heirs or the number of family members is small. Accordingly, it is expected that more seniors will have cash for leading more affluent lives, and then the ways of living of elderly people will change considerably. The trend of such changes can be verified by the fact that 3 megabanks have recently started "reverse mortgage," which means that customers borrow money from financial institutions by pledging their houses and when they die, the financial institutions foreclose and sell the houses through auction, to recoup the money. It is expected to grow considerably like House-Leaseback Business.
(House-Leaseback Business of HOUSEDO)HOUSEDO, which launched House-Leaseback Business in 2013, excels at evaluating markets based on its assessment skills, which have nurtured for many years, selling products, and dealing with transactions with a nationwide network of stores.
This business is attractive to HOUSEDO in the following aspects:
It is possible to procure real estate at low cost.
Demand gets stronger in recession.
It is possible to hoard real estate for sale. (Actually, about one out of 100 stocks is sold every month.)
From procurement to sale, the company can earn at 3 stages: "commission at the time of purchase," "income from monthly rents," and "capital gain at the time of sale."
The total amount of houses for this business is 7.1 billion yen as of the end of Jun 2017, about 1.6 times the amount a year ago. The number of houses for this business is 513, about 2 times up from the previous year.
The Tokyo Metropolitan Area accounts for 42.3%, while the 3 major urban areas of Tokyo, Nagoya, and Osaka make up 91.6%.
In October, the company plans to expand its business to Kyushu area newly based in Hakata.
(3) Real Estate Finance BusinessHOUSEDO offers real estate secured loans to individuals and corporations so that they can procure funds by utilizing their real estate.
Some customers who inquired about House-Leaseback service can pledge their real estate, and some other customers do not need to dispose of their real estate for procuring necessary funds.
In addition, the company meets various needs for the funds for the trading between relatives or parents and children, whose trading price tends to become opaque making it difficult to receive loans from banks, the funds for purchasing a second house or real estate for investment, the funds for business operation, equipment investment of enterprises and real estate secured loans for customer with foreign nationality by offering real estate secured loans based on the appropriate, speedy evaluation with reference to the information on real estate around Japan, using HOUSEDO Chain.
As the business that complements House-Leaseback Business, it is expected to grow.
(4) Real Estate Buying and Selling Business
(Outline)HOUSEDO acquires real estate, adds value, and sells them to general customers and investors - the company buys, renovates, and sells used houses, builds and sells new housing, develops residential land, renovates and sells buildings for investment.
For procuring real estate, the company gathers information from its directly managed stores, franchisees, and "Project Partner System," which is a collaborative business with real estate agents.
Since HOUSEDO operates both the Real Estate Brokerage and Sales Businesses in an integrated manner, it has a good grasp of the needs from sellers and buyers, and owns contact points throughout Japan. Accordingly, it can procure and sell real estate while considering regional characteristics and demand.
Services for corporationsUnder the policy of "taking full advantage of good real estate information," HOUSEDO operates collaborative systems and business models with franchisee stores and real estate agents around Japan.
"JV Partner System" (joint purchase of real estate) is a new business model for purchasing and selling real estate by combining the information gleaned from directly-managed and franchisee stores and realty firms nationwide and HOUSEDO's financial power and sales capabilities.
Services for individuals and corporationsHOUSEDO directly buys real estate by utilizing nationwide networks with its directly managed and franchisee stores.
When requested by a customer, staff can visit the customer on that day, and suggest a price on the spot. This is one of the reasons why HOUSEDO is highly evaluated.
Assessed prices are suggested in three stages: "price for selling in about 3 months," "price for selling in about 1 month," and "price for immediate purchase" in brokerage.
Under the brand philosophy of making real estate information open , the company discloses the nearby cases by using "DO TOUCH! MAP," which is a system for disclosing information on real estate, so that general customers can trust the company and have transactions without anxiety.
Operation of storesHOUSEDO operates stores as "Store for buying houses and other real estate."
Its stores are operated also as annexes to Satellite Stores for Real Estate Brokerage Business, and suggest purchase prices, while selling real estate as brokers.
(5) Real Estate Brokerage Business
(Outline)In Real Estate Brokerage Business, HOUSEDO introduces not only "ready-built houses," "used houses," and "land," but also proposes the combinations of "land and new house construction," "used houses and renovation," "selling plans and relocation," etc. while accurately grasping the needs of customers.
Also for financial plans and insurance, the company gives proposals to customers from the early stage, and comprehensively supports customers in buying their houses without worry.
HOUSEDO aims to reform the Japanese realty industry drastically, and develop a new distribution system for housing, so that customers can move into their ideal houses according to their life stages. It hopes to transfer the initiative from the realty industry to customers who live in houses.
Accordingly, the company aims to establish a highly transparent, flexible distribution system for trading real estate without anxiety after understanding property, by disclosing information on real estate and delivering information within 24 hours after receiving an inquiry.
In detail, the company swiftly provides customers with the latest information on real estate with various methods, including the online media such as the Internet and websites, newspaper inserts, housing magazines, and the posting system for distributing flyers to each household around each store.
Website for retrieving real estateThe company operates "Housedo.com," which enables customers to search for the real estate managed by franchisee stores and directly managed stores throughout Japan, and "Do-search!," a realty search engine exclusively for each store.
"Housedo.com" is a portal site operated by the FC headquarters of HOUSEDO, which features recommendable houses in each area, around each railroad line, or in the vicinity of each station and finds desirable real estate based on the date of stores nationwide. It is aimed at introducing a wide array of houses to customers around Japan.
"Do-search!" enables customers to search for real estate managed by each store, and respective stores take the initiative in operating it. It is aimed at offering information to local customers swiftly based on community-based sales activities combining flyers, ads directly put into mailboxes, etc.
Operation of storesHOUSEDO brokers real estate deals via "Housing information mall," a roadside large-scale store, and "Satellite Store," a directly managed store specializing in sales and brokerage. The company not only introduces real estate, but also proposes renovation, financial plans, and insurance at the early stage, to offer one-stop services at the "Housing information mall".
(6) Renovation Business
(Outline)In the 21st century, the company set up the concept of "recology," which is coined by fusing "recycle" and "ecology," and aims to renovate housing for the coming 100 years. The company has a service menu for a broad range of customers and prices, including the repair for restoring used houses to their original states, the large-scale remodeling or renovation for adding new value, such as functions and design, after-sale maintenance, and minor remodeling for dealing with troubles.
As standard services, the company inspects houses and checks earthquake resistance, and has an enriched guarantee system (issuing a warranty for every construction work, offering a warranty for up to 10 years, taking out a liability insurance contract for up to 300 million yen, guaranteeing the operation of housing equipment for up to 10 years, and so on). These services allow customers to feel secure.
(Outline of services)
Operation of websitesIn addition to the portal site for all kinds of renovation services, the company operates a website for the remodeling of plumbing products, roofs, and outer walls.
Operation of storesHOUSEDO offers this service at Kyoto-Chuo Showroom, Kyoto-Kita Showroom, Ageo-Okegawa Showroom and Housing information mall, which is directly managed by the company.
1-5 Characteristics and strengths
(1) Ability to supervise franchisee storesWhat matters most to franchisee stores is "how to reel in many customers?" in Franchisee Business, which is the mainstay of HOUSEDO. President and CEO Ando insists that the ability to supervise the stores for attracting customers is the most significant strength of HOUSEDO.
The improvement of the ability to reel in customers means the practice of the corporate ethos since its inauguration: "Customers' needs can be satisfied by providing them with a lot of information swiftly." The provision of know-how via the online system "DO NETWORK!" and franchisee training is highly evaluated by franchisee stores, and considerably facilitates the growth of the franchise chain.
(2) Capabilities of local markets-based assessment and sale, and the ability to do business nationwideWith the goal of achieving "1,000 stores by 2025," the company is developing and expanding its franchise chain network. The remarkable strengths of HOUSEDO are the capabilities of local markets-based assessment and sale skills utilizing this network.
The company can exert these capabilities throughout Japan based on its competent network. This is competitive advantage.
In addition to the Franchisee Business, highly profitable the Steady-income businesses, including the House-Leaseback and Real Estate Finance Businesses, are forecasted to grow, keeping ROE high.
|The fiscal Year June 2017 Earnings Results|
Net Sales and profit decreased, as the Franchisee Business, etc. were healthy, but the sales of the Real Estate Buying and Selling Business, etc. decreased from the previous year. But both sales and profit exceeded the planned figures.Net sales were 16,848 million yen, down 2.5% year on year. The Franchisee Business, which is the mainstay of HOUSEDO, and the House-Leaseback Business, on which the company concentrates, were both healthy, but the sales of the Real Estate Buying and Selling Business and the Housing and Renovation Business decreased from the previous term. Gross profit grew 6.8% year on year to 6,572 million yen. Gross profit rate increased 3.4 points to 39.0%, due to the growth of the Steady-income businesses.
Operating income decreased 2.2% year on year to 1,249 million yen, as the costs for personnel, advertisement, etc. augmented because the company concentrated on the Steady-income businesses. Ordinary income dropped 6.7% year on year to 1,103 million yen. Both sales and profit exceeded the plan.
The annual dividend is to be 20 yen/share, which is composed of the initially estimated dividend of 17 yen/share and the dividend for commemorating the listing of the company: 3 yen/share.
As a result of the revision to the business management classification, the new classification of business segments was adopted in the first quarter of the term ended Jun. 2017, dividing the previous "Real Estate" segment into the "House-Leaseback" business and the "Real Estate Buying and Selling" business. Since the amount of assets of the "Real Estate Finance" business exceeded 10% of the total assets of all business segments, the "Real Estate Finance" business, which had been included in "Others," was defined as a new segment to be reported in the third quarter of the term ended Jun. 2017. Accordingly, the new business segments of the HOUSEDO group are "Franchisee," "House-Leaseback," "Real Estate Buying and Selling," "Real Estate Brokerage," "Housing and Renovation," and "Real Estate Finance." The results for the term ended Jun. 2016 were summarized and reported based on the new segments.
① Franchisee BusinessSales and profit increased.
As for the Franchisee Business, which is the mainstay of the Steady-income businesses, the number of new franchisee contracts has steadily increased to 144 and the total number of franchised stores is now 468, because the company promoted real estate firms in urban areas to become a franchisee, advertised its services through TV and radio commercials, etc., improved its reliability and corporate brand value through the market change to the first section of Tokyo Stock Exchange. Moreover, there are needs for the establishment of dual stores that are both satellite stores and stores specializing in buying houses and other real estate.
The number of newly opened stores is 110 and the total number of opened stores is 378, due to the effects of the establishment of a system in which supervisors support franchised stores and the enrichment of service contents.
② House-Leaseback BusinessSales grew, and the business moved into the black.
Inquiries and transactions increased due to the improvement in the popularity of services through advertisements using TV and radio commercials, etc. and the increase in reliability through the market change to the first section of Tokyo Stock Exchange.
Sales of 1.2 billion yen from the sale of 2 buildings for investment and 5 high-priced houses for leaseback were posted as a special factor. Even excluding this factor, sales grew 40%.
The average number of contracts increased from 18.9 in the previous term to 25.3. The number of pieces of real estate obtained increased 66 to 288. Selling 44 properties, the company earned sales of 1,713 million yen, including 800 million yen from the above mentioned 5 large transactions. The total number of properties owned is 513, and the total amount of properties owned (sum of acquisition prices, undepreciated) is 7,186 million yen.
③ Real Estate Finance BusinessSales grew considerably, and the business moved into the black.
The company cultivated sales channels by flexibly responding to various needs for funds from clients, by offering real estate secured loans utilizing the capability of assessing real estate, which is a strength of the HOUSEDO group. Operating this business for complementing the House-Leaseback Business, the company produced synergetic effects, concentrated on the cooperation with franchised stores, and actively collaborated with financial institutions.
The total number of real estate secured loans offered is 124, and the loan amount is 3,113 million yen. These results exceed the full-year goals: 42 and 420 million yen.
④ Real Estate Buying and Selling BusinessSales and profit decreased.
Sales and profit decreased from the previous term, because of the cut-off error of some transactions and the existence of large-scale transactions worth over 200 million yen.
The number of transactions decreased, because the company rigorously selected real estate for investment and high-priced property mainly in urban areas while considering risks.
As for the procurement of other products, the company strictly followed the policy for procuring real estate that can meet the needs of clients and intensified the procurement in the target areas of directly managed stores around the second quarter, changing from the prudent attitude at the beginning of the term, because the needs for low-priced yet high-quality used real estate are strong as mortgage rates remain extremely low.
Inventories grew 18.0% year on year to 5.8 billion yen.
⑤ Real Estate Brokerage BusinessSales and profit grew.
The number of brokerage transactions was 2,845, up 146 year on year. Actual demand remained favorable, partially because mortgage rates remained extremely low. The company strived to lead customers to directly managed stores through community-based posting strategies in addition to the ad strategies using websites and the media, such as newspapers, TV and radio commercials. Operating income rate rose 4.5% year on year to 20.1%, as its profitability improved thanks to the effects of listing in the first section of Tokyo Stock Exchange.
⑥ Housing and Renovation BusinessSales and profit decreased.
In the Renovation Business, the company aims to increase the orders for renovation while selling used housing based on the cooperation with the Real Estate Buying and Selling Business, and holds events titled "Renovation Festival" actively, to attract customers. The numbers of orders and deliveries decreased due to the temporary stagnation at the end of the previous term due to the postponement of the consumption tax hike.
Total liabilities augmented 6,768 million yen from the end of the previous term to 17,494 million yen, because the company increased the balance of short and long-term interest-bearing debts by 6,273 million yen from the end of the previous term for the purpose of increasing financing transactions in the Real Estate Finance Business and transactions in the House-Leaseback Business.
Net assets increased 609 million yen from the end of the previous term to 2,779 million yen, due to the rise in retained earnings, etc.
Consequently, equity ratio decreased 3.1% from 16.8% at the end of the previous term to 13.7%.
The deficits of investing CF augmented because purchase of property, plant and equipment increased, and the deficits of free CF also augmented.
The surplus of financing CF grew due to the rise in short and long-term debts. The cash position improved.
|Fiscal Year June 2018 Earnings Estimates|
Sales and profit are forecasted to rise, due to the growth of the Steady-income businesses.Sales are estimated to be 17,146 million yen, up 1.8% year on year. The Franchisee Business, which is the core business of HOUSEDO, is expected to keep growing. The sales of the House-Leaseback Business are forecasted to decline due to special factors in the previous term, but the sales of other segments are projected to rise.
Operating income is estimated to be 1,603 million yen, up 28.4% year on year. Profit is forecasted to grow by double digits, despite the investment in human resources, advertisement, etc. for expanding its business, thanks to the prosperity of the Steady-income businesses with a high profit rate.
The dividend amount is to be 27.00 yen/share, up 7 yen/share year on year. The estimated payout ratio is 25.0%.
① Franchisee BusinessSales and profit are estimated to grow.
The company will keep striving to increase the numbers of contracts and franchised stores.
With the synergy between the Real Estate Brokerage and Real Estate Buying and Selling Businesses, the company will dual stores of a "satellite shop" and a "store specializing in the purchase of houses and real estate."
It is estimated that the number of franchise contracts will be 573, up 105 year on year, and the number of newly opened stores is 457, up 79 year on year.
② House-Leaseback BusinessSales are forecasted to decrease, while profit is estimated to rise slightly.
Since the company sold 5 pieces of high-priced real estate and earned sales of 833 million yen and a profit of 132 million yen in the previous term, it is estimated that sales will decrease and profit will be unchanged, but if this is not taken into account, sales are projected to grow 40.1% year on year. Excluding the revenue from apartment buildings, the operating income of this business (unconsolidated) is projected to rise 47.9% year on year.
As needs are strong, the company will strengthen personnel and advertisement, to accelerate its growth.
It is forecasted that the average number of contracts will be 36.3, up 11 year on year, and the number of houses acquired will be 436, up 51.4% year on year. It is estimated that the total number of pieces of real estate owned is 863, up 68.2% year on year, and the total amount of real estate owned (sum of acquisition prices, undepreciated) is 11,907 million yen, up 65.7% year on year.
③ Real Estate Finance Business, etc.Sales and profit are projected to increase significantly.
Based on the cooperation with the House-Leaseback Business, the amount of real estate secured loans will increase.
It is forecasted that the number of loans offered will almost double to 207, the amount of loans offered will decrease slightly to 2.8 billion yen, and the balance of loans will be 5.4 billion yen, up 2.5 billion yen year on year.
④ Real Estate Buying and Selling BusinessSales and profit are estimated to grow.
Since actual demand is expected to remain favorable, the company will procure real estate actively in the target areas of directly managed stores.
While emphasizing turnover rate, the company plans to keep inventories at the level of 5 billion yen.
⑤ Real Estate Brokerage BusinessSales are forecasted to increase, but profit is estimated to decrease.
The company will open new stores in Okinawa and Aichi Prefectures.
The number of brokerage transactions is expected to keep growing steadily, thanks to the improvement of popularity, the increase of FC stores, etc. The number of transactions is estimated to grow 5.4% year on year to 2,881.
The company will keep transferring personnel to the Steady-income businesses, while pursuing synergetic effects with related businesses of purchase, renovation, fire insurance, mortgages, etc.
⑥ Housing and Renovation BusinessSales are forecasted to increase, but profit is estimated to decrease.
For the past several years, the numbers of orders and deliveries have been decreasing, but the number of orders is currently healthy, and so the numbers of orders and deliveries are expected to start increasing this term.
(3) Topics◎ Fund procurement by issuing preferred shares through the allocation of new shares to a third party
While setting the deadline for payment at Oct. 17, 2017, the company decided to procure 3 billion yen by issuing 300 type A preferred shares (10 million yen per share) to "UDS Corporate Mezzanine No. 4 Limited Partnership." (It is assumed that it will be approved at the 9th annual meeting of shareholders on Sep. 26, 2017.)
The payout ratio of this preferred share is 8.0%, and voting rights are not granted.
(Outline of the holders of the preferred shares)
The above mentioned limited partnership is financed by Development Bank of Japan Inc., Sumitomo Mitsui Banking Corporation, and Sumitomo Mitsui Finance and Leasing Co., Ltd.
Development Bank of Japan Inc., which highly evaluates the businesses and potentials of Sumitomo Mitsui Banking, which is the major financing bank of HOUSEDO, and the HOUSEDO group, selected the above limited partnership, which is an unlimited liability partner, as the recipient of the preferred shares.
The company recognizes that the acquisition of preferred shares is, in principle, conducted as mid-term investment.
(Purposes of fund procurement)
For strengthening and expanding the House-Leaseback and Real Estate Finance Businesses, which will be the mainstay of the company, the company will strive to stabilize the financial base by increasing its equity capital and expand its fund procurement capacity.
Then, equity ratio is estimated to rise 10.5% from 13.7% at the end of the previous term to 24.2% at the end of Jun. 2018.
|Regarding the mid-term management plan|
◎ Growth strategiesThe company will make efforts to shift from "labor-intensive revenue" from the Real Estate Brokerage, Real Estate Buying and Selling, and Housing and Renovation Businesses to "Steady-income" from the Franchisee, House-Leaseback, and Real Estate Finance Businesses.
Profit is forecasted to grow over 20% this term and the following term. In the term ending Jun. 2019, the company aims to achieve an ordinary income rate of over 10% by reducing the ratio of the Buying and Selling Business and growing the Steady-income businesses.
For the term ending Jun. 2018, the structural shift will keep progressing, and it is forecasted that total sales will be unchanged from the previous term, but operating income will grow about 30%, and the Steady-income businesses will account for 68.6% of operating income.
We would like to pay attention to how much the company will be able to exceed the forecast this term, too.
|<Reference: Regarding corporate governance>|
◎ Corporate Governance ReportThe company submitted the latest corporate governance report on Sep.27, 2017.
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