Message from the President

On behalf of Leopalace21, I would like to take this opportunity to convey my gratitude to our shareholders and investors for their continued support.

We recently announced the financial results of our 44th term (fiscal year ended March 2017), recording a year-on-year increase in net sales, operating profit, and net income of 1.8%, 8.6%, 3.9%, respectively.

In the Leasing Business, due in part to the Company capturing corporate dormitory demand which increased as employment rates improved, the average occupancy rate was 88.53% (+0.58p year-on-year). We will continue to expand tenant services such as the introduction of IoT in our apartments, aiming for stable profits led by occupancy improvement.

In the Construction Business, we concentrated orders in metropolitan areas such as Tokyo, and orders received reached 87.1 billion yen (+0.8% year-on-year). Although orders did not meet forecasts because of the rough battles against competitors in the metropolitan areas, the favorable environment has not changed, such as the revision of the inheritance tax act, and we will aim to expand our construction orders.

Also, we have announced a three-year mid-term management plan "Creative Evolution 2020," with a basic policy to "support continuous growth of core businesses in ways that further increase corporate value while constructing a base for growth areas."
In the core businesses, we will continue to concentrate apartment construction in the three major metropolitan areas, as well as diversify our construction lineup to include properties other than apartments. We will also concentrate our efforts in the Elderly Care Business and International Business, which are less exposed to the shrinking domestic population, and aim to be in the black in the next three years. Asset holdings will be reviewed with a view to enhancing asset and capital efficiency.

Concerning profit distribution to shareholders, we plan to pay a dividend of 22 yen per share (since net income increased from forecasts due to tax adjustments, the dividend ratio will be 28.3%, or 31.5% in terms of normal returns). We have adopted a total return ratio target in the fiscal year ending March 2020 of 50%. Share buybacks will be implemented while monitoring share price trends, and will be sourced by proceeds from asset sales.

Leopalace21 would like to request the continued support and encouragement of all our stakeholders.

May 2017
Eisei Miyama
President and CEO

President and CEO Eisei Miyama
President and CEO Eisei Miyama

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