Star Asia Investment (3468) Q2 2025 earnings summary

Executive summary

• FP17 cash DPU was ¥1,596, 5.0% above forecast, with hotel rents—led by Polaris-operated properties—the main upside driver.

• Asset size reached ¥276.5bn as of Sep. 6, 2024, after acquisitions and asset replacements; hotel share rose to 37.5%.

• H1 FY2025 operating revenue was ¥8,113mn, ordinary income ¥3,669mn and net income ¥3,668mn; each increased YoY.

Financial highlights

• FP17 lease business revenue was ¥8,048mn and NOI ¥6,026mn, respectively 1.9% and 3.1% above forecast; operating income was ¥4,338mn, ordinary income ¥3,669mn and net income ¥3,668mn.

• Hotel rent was ¥2,038mn, 8.6% above forecast; variable rent was ¥1,228mn, 15.1% above forecast.

• H1 rental revenue increased YoY to ¥7,636mn from ¥7,078mn; H1 included ¥65.8mn in real estate sale gains, versus ¥374.5mn in the prior period.

• FP17 FFO per unit was ¥1,982, 4.2% above forecast, and AFFO per unit was ¥1,656, 7.8% above forecast.

Outlook and guidance

• FP18 DPU is forecast at ¥1,538, including ¥37 from internal reserves; FP19 DPU is forecast at ¥1,553, including ¥33 from reserves.

• FP18/FP19 forecast net income is ¥4,035mn/¥4,086mn and lease revenue is ¥8,758mn/¥8,913mn.

• FP19 DPU of ¥1,553 is the stated lower limit from FP19 onward; the mid-term target is DPU of at least ¥1,600.

• Four hotels acquired in Aug. 2024 are expected to contribute for five months in FP18 and six months in FP19; forecasts use conservative assumptions given limited operating history.

• Growth priorities include hotel variable rents, leasing and potential expansion at Suroy Mall Chikushino, and residential and office rent gains; no office or residential rent increases are assumed in FP18/FP19 forecasts.