Leopalace21 (8848) Q1 2024 earnings summary

Executive summary

• Q1 FY2025 net sales rose 2.4% YoY to JPY 108.917 billion, operating profit increased 35.0% to JPY 10.289 billion and net income grew 47.4% to JPY 9.767 billion; both profit figures were the highest Q1 levels since the global financial crisis.

• Higher average unit rents and controlled cost of sales improved profitability despite lower occupancy.

• The equity ratio rose 3.9 percentage points QoQ to 35.1%, while shareholder returns continued.

Financial highlights

• Gross profit increased 18.4% YoY to JPY 21.398 billion, with gross margin rising to 19.6% from 17.0%.

• EBITDA rose 25.2% to JPY 11.216 billion; recurring profit increased 49.5% to JPY 10.244 billion.

• EPS was JPY 30.75, up 52.7% YoY and JPY 8.40 above plan; comprehensive income was JPY 11.470 billion, up 64.8%.

• Operating margin increased to 9.4% from 7.2%; recurring profit margin rose to 9.4% from 6.4%.

Outlook and guidance

• FY2024 guidance maintained: net sales JPY 428.6 billion, operating profit JPY 26.6 billion, recurring profit JPY 24.9 billion and net income JPY 14.5 billion.

• Full-year occupancy targets are 87.00% average and 90.00% at year-end; planned rent growth is 0.2% for new contracts and 2.5% for occupied units.

• Annual dividend forecast remains JPY 10 per share, with JPY 5 at interim and year-end.

• Targeting year-end 2024 to eliminate obvious construction defects and establish a framework to resume development business.