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 the first quarter of our 45th term (three months ended June 2017), recording a year-on-year increase in net sales, operating profit, and net income of 1.9%, 23.2%, and 25.5%, respectively. Compared to forecasts, net sales was as planned, but profits exceeded forecasts due to cost cuts.

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 90.45% (+1.74p 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 Development Business, we concentrated orders in metropolitan areas such as Tokyo, and orders received reached 19.2 billion yen (+14.4% 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 paid a year-end dividend of 12 yen, totaling 22 yen per share for the previous fiscal year (since net income increased from forecasts due to tax adjustments, the dividend ratio was 28.3%, or 31.5% in terms of normal returns). In this fiscal year, we plan to pay a midterm dividend of 10 yen and a year-end dividend of 12 yen. Also, we have announced a share buyback program of 13 million shares or 8 billion yen maximum, and as of June 30, 2017, 26.3% is completed (in terms of yen).

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

August 2017
Eisei Miyama
President and CEO

President and CEO Eisei Miyama
President and CEO Eisei Miyama

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