Star Asia Investment (3468) Q2 2024 earnings summary

Executive summary

• Jul. 2023 revenue was ¥6,946m, up 7.1% from Jan. 2023; net income rose 10.5% and DPU was ¥1,586.

• FP15 DPU was ¥1,586, ¥34 (+2.2%) above forecast; NAV per unit rose 0.9% to ¥62,824 from FP14.

• The August 2023 offering expanded asset size to ¥242.2bn, comprising 71 properties and 1 preferred equity investment.

• Portfolio occupancy reached 97.9%; net assets were ¥103.2bn and the equity ratio was 49.3%.

Financial highlights

• Lease business revenue was ¥6,503m; NOI was ¥4,521m, 1.6% above forecast, and operating income was ¥3,606m, 2.3% above forecast.

• Ordinary income and net income were each ¥3,073m, 3.0% above forecast; FFO/unit was ¥1,780 (+2.8%) and AFFO/unit ¥1,370 (+7.1%).

• Operating revenue was ¥6,946m, operating income ¥3,606m, ordinary income ¥3,073m and net income ¥3,073m; each rose 7.1%, 7.7%, 10.5% and 10.5%, respectively, from Jan. 2023.

• Net cash from operating activities was ¥5,107m; investing and financing activities used ¥2,492m and ¥2,866m, respectively; period-end cash was ¥11,787m.

Outlook and guidance

• Jan. 2024 forecast: revenue ¥7,892m, operating income ¥4,110m, ordinary and net income ¥3,296m, and DPU ¥1,513; includes ¥380m gain on August 2023 property sales.

• Jul. 2024 forecast: revenue ¥8,021m, operating income ¥4,159m, ordinary income ¥3,477m, net income ¥3,476m and DPU ¥1,520.

• FP16 and FP17 DPU forecasts are ¥1,513 and ¥1,520, including retained-earnings use of ¥124 and ¥55 per unit, respectively.

• FP18 guidance is ¥1,500/unit; adjusted cruising DPU is ¥1,538, including ¥37/unit from reserves, with hotel revenues assumed to improve toward 2H FP17.

• FY2026 mid-term targets are ¥300bn asset size, ~100 properties and DPU of at least ¥1,600; current cruising DPU guidance is ¥1,538.