Tosei : Script of FY2022 Financial Results Presentation held on January 12, 2023

Tosei Corporation

Script of FY2022 Financial Results Presentation held on January 12, 2023 (Q&A session included)

Event Summary

[Company Name]	Tosei Corporation
[Company ID]	8923-QCODE
[Event Language]	JPN
[Event Type]	Earnings Announcement
[Event Name]	FY2022 Financial Results Presentation
[Fiscal Period]	FY2022 Annual
[Date]	January 12, 2023
[Number of Pages]	35
[Time]	16:00 - 16:57
	(Total: 57 minutes, Presentation: 50 minutes, Q&A: 7 minutes)
[Venue]	Webcast
[Venue Size]
[Participants]
[Number of Speakers]	2
	Seiichiro Yamaguchi	President and CEO
	Noboru Hirano	Director, Senior Executive Officer, Chief of
		Administrative Division
[Analyst Names] *	Atsuro Takemura	Morgan Stanley MUFG Securities

*Analysts that SCRIPTS Asia was able to identify from the audio who spoke during Q&A.

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Presentation

Hirano: My name is Hirano, Senior Managing Executive Officer. First of all, I would like to provide an overview of our financial results for the fiscal year ended November 2022.

Please see the bottom right on page four of the presentation materials. I would like to explain the page of financial highlights for the fiscal year ended November 2022.

As indicated in the top line, for the fiscal year ended November 2022, revenue was JPY70.9 billion, up 14.9% YoY. Profit before tax was JPY12.7 billion, up 23.8% YoY. Profit for the year was JPY8.6 billion, up 28% YoY. We were able to post record-high figures for both revenue and profit.

Also, there is a graph of profit for the year in the middle of the bottom row of the graph.

ROE is indicated by a broken line in it. The ROE for the fiscal year ended November 2022 was 12.5%, an increase of 1.7 percentage points from the end of the previous fiscal year.

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Continuing on page six, we move on to the page titled revitalization business. I will explain each of the six segments in turn.

The first is the revitalization business on page six.

Revenue was JPY37.4 billion, up 11.6% YoY. On the other hand, operating profit was JPY6.1 billion, a 15.3% decrease YoY, but the Company reversed a valuation loss of JPY1.4 billion in the fiscal year ended November 2021, from a valuation loss on the lower-of-cost-or-market method that was recorded in the fiscal year ended November 2020, when corona pandemic occurred. Excluding the impact of this, operating profit increased by 4.7% YoY.

In the bar graph on the left, the gross profit margin is indicated by a broken line. The figure for the fiscal year ended November 2021 is 25.8%, but this figure includes the return of the valuation loss I just mentioned. Excluding that, the gross profit margin remains at a certain level at 21.6%.

In addition, the bar graph is for revenue, and the green color represents condominiums, and revenue of pre- owned condominium units by the Princes Group, which joined the Group in October 2021, contributed approximately JPY9 billion in the fiscal year ended November 2022.

The blue square in the middle shows the breakdown of the gross profit margin. The profit ratios for the fiscal years ended November 2022 and November 2021 are shown separately for condominiums and buildings. As you can see, both of them have allowed us to increase profit margins from a year ago.

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We will continue with the development business on page seven.

In the development business, revenue was JPY13.7 billion, up 15.3% YoY. Operating profit was JPY2.9 billion, approximately 2.8 times that of the fiscal year ended November 2021.

As shown in the line graph of gross profit margin, we were able to record a very high-profit margin of 32.4% for the fiscal year ended November 2022. However, as with the revitalization business, there was a reversal of the valuation loss recorded immediately after the pandemic, and if this is excluded, the profit margin was approximately 28%. Even so, we were able to post a higher profit margin than in previous years.

Photos of the sold properties are shown to the right. The middle row on the far right is THE Palms Toda Master Graces, which was completed in October 2022 and started handing over to customers the following November. As noted in this comment, 93 of the 114 units were handed over at the end of November. Since December, the handover has progressed to the point where they are almost sold out.

In addition to this, in the fiscal year ended November 2022, we were able to record sales of a commercial facility in Minami Aoyama and detached houses.

The profit margin is shown in the box with the blue line in the middle, and here, too, all property types were able to increase their profit margins YoY.

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