COMPANY RESEARCH AND ANALYSIS REPORT

Pressance Corporation Co., Ltd.
3254
Tokyo Stock Exchange First Section

24-Apr.-2018
FISCO Ltd. Analyst

Hideo Kakuta

FISCO Ltd.
http://www.fisco.co.jp

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Pressance Corporation Co., Ltd.

24-Apr.-20183254 Tokyo Stock Exchange First Section

https://www.pressance.co.jp/ir/ir6.html#english■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Business details...........................................................................................................................................

01

2. Results trends........................................ ......................................................................................................

01

3. Growth strategy...........................................................................................................................................

02

4. Shareholder returns............................... ......................................................................................................

02■Company overview--------------------------------------------------------------------------------------------------------------------------------------------------- 03
1. Company overview......................................................................................................................................

03

2. History................................................... ......................................................................................................

04

3. Business breakdown. . ............................ ......................................................................................................

05■Business overview---------------------------------------------------------------------------------------------------------------------------------------------------- 06
1. Condominium market trends. . ......................................................................................................................

06

2. Pressance’s position....................................................................................................................................

06

3. Strengths and edge.. ....................................................................................................................................

07■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 08
1. 3Q FY3/17 full-year results.. .........................................................................................................................

08

2. Financial position and management indicators. ...........................................................................................

09■Business outlook-------------------------------------------------------------------------------------------------------------------------------------------------------- 10■Medium/long term topics----------------------------------------------------------------------------------------------------------------------------------- 11
1. Advanced acquisition of three years’ worth of land for condominiums. .......................................................

11

2. Hotel business now up to 20 properties.......................................................................................................

12■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 14

We encourage readers to review our complete legal statement on “Disclaimer” page.

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Pressance Corporation Co., Ltd.

24-Apr.-20183254 Tokyo Stock Exchange First Section

https://www.pressance.co.jp/ir/ir6.html#english██SummaryRaises annual forecast, projecting sharp increasein sales and earnings for FY3/18.
Also raises annual dividend forecast to ¥29.40 per share
as growing earnings and rising dividend payout ratio accelerate theincrease in dividend
Pressance Corporation Co., Ltd. <3254> (hereafter, also “the Company”) is an independent developer of family andstudio condominiums that handles planning, development and sales. It is the biggest supplier in the Kinki region
and Chukyo-Tokai regions as well as a solid player just behind the leading pack nationwide. The company offers thePressance Series of condominiums, conveniently located less than 10 minutes’ walk from major railway stations,designed and developed under the company brand. Another strength is a highly motivated sales force. As a result,few units remain unsold. Pressance has grown steadily since its establishment in 1997. It listed on the Second
Section of the Tokyo Stock Exchange in 2007. As the Company has kept growing even after the Lehman Brothers
bankruptcy, it was listed on the First Section of that stock market in 2013 and was included in the JPX-Nikkei Index
400 in 2015.
1. Business details
Pressance mainly develops and sells studio and family condominiums. Studio condominium sales, a core businesssince being founded, involve construction of buildings with units that offer 20-50 square meters at very convenientsites located within five minutes on foot from major train stations in city centers. And the company sells these units
under the Pressance brand. This business generated 28.1% of total sales by 3Q in FY3/18. Family condominium
sales involve construction of buildings with units that offer 50-100 square meters at sites with attractive environments
located within 10 minutes on foot from major train stations. And the company sells these units under Pressance
Loger and other brands. It provided 44.7% of 3Q FY3/18 sales. In addition, 16.9% of total sales were provided fromentire building sales, 2.7% from hotel sales and 3.4% from other businesses.
Pressance’s business model stands out in its formation of strong advantages through a mutually beneficial cycle ofsales capabilities that highly motivated teams sell out inventories with internal competition, financial clout to obtain
attractive terms from financial institutions, aggressive land procurement capabilities and product strengths throughrobust cost performance.
2. Results trends
For the first nine months of FY3/18, Pressance reported consolidated results with ¥101,024mn in net sales (+38.5%
YoY), ¥16,891mn in operating profit (+35.7%), ¥16,557mn in ordinary profit (+34.7%) and ¥11,247mn in net profit
attributable to owners of parent (+36.6%) while YoY growth exceeded 30% in sales and earnings at every level. In
addition to strong growth in sales of studio and family condominiums, the increase in land acquisition allowed theCompany to substantially expand entire building sales as well. Also, sales growth came from two hotel properties
that began delivery during the period. In particular, the Company pointed to stronger-than-expected growth in salesof family condominiums as the main factor that led to the upward revision of its annual forecast.

We encourage readers to review our complete legal statement on “Disclaimer” page.

01 14

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Pressance Corporation Co., Ltd.

24-Apr.-20183254 Tokyo Stock Exchange First Section

https://www.pressance.co.jp/ir/ir6.html#english

Summary

Pressance issued an upward revision to its consolidated annual forecast along with the release of Q3 FY3/18 results,
raising its estimates for both sales and earnings. The Company is forecasting annual net sales of ¥130,664mn(+29.3% YoY), operating profit of ¥20,144mn (+28.7%), ordinary profit of ¥19,572mn (+27.0%), and net profit
attributable to owners of parent of ¥13,368mn (+27.0%). In this relation, the Company noted that planned salesof the extra-large-scale 337-unit Pressance Legend Sakaisuji Honmachi Tower were proceeding apace with morethan 300 sales contracts already finalized. Adding sales already booked and sales expected to be booked during
this fiscal year as of the end of Q3, the sum is already equal to 99.2% of the upwardly revised annual forecast.
Sales results for the first nine months of FY3/18 give the Company 77.3% of its annual net sales forecast (versus
72.2% at this time last year) and 83.9% of its annual operating profit forecast (versus 79.6%). Taking into further
consideration of Pressance’s reputation for its accuracy of forecasts, we conclude that the Company will most likely
meet its upwardly revised annual forecasts in both sales and earnings.
3. Growth strategy
Pressance has actively purchased condominium lands, leveraging its ample retained earnings. It reported¥157,900mn in real estate for sale in progress and ¥15,646mn in real estate for sale at the end of 3Q FY3/18. Assetvalue of land sites, which is determined by subtracting construction costs and other expenses from the total, comesto ¥106,173mn. On a condominium basis, this works out to 6,701 family condominium units (about 3.4 years’
worth of sales assuming around 2,000 units are sold every fiscal year), 6,187 studio condominium units (about 3.1
years’ worth of sales assuming around 2,000 units are sold every fiscal year) and 2,604 units for entire building
sales (about 2.9 years’ worth of sales assuming around 900 units are sold every fiscal year). The company’s ability
to actively procure land reflects not only capital resources but also information-gathering capabilities. Since theCompany has continued to buy land after the Lehman bankruptcy and excel in rapid reviews as well as responses,
it can advantageously obtain primary information from land brokers.
4. Shareholder returns
The Company also raised its dividend forecast for FY3/18 for three consecutive years. Reflecting the upward revision
to its earnings forecast released at the end of Q3, the Company raised its annual dividend to ¥29.40 per share(¥12.50 at the end of 1H and ¥16.90 at the end of 2H) versus its initial forecast of ¥25.00 (¥12.50 at the end of 1H
and ¥12.50 at the end of 2H). Also the Company indicated its intension to continue increasing its dividend payout
ratio. Compared with payout ratio of 9.8% in FY3/16, the new dividend forecast puts the expected payout ratio for
FY3/18 at 13.0%. Increasing its dividend payout ratio in addition to earnings raise, shareholders can expect dividends
to rise at an even faster pace in the future.
Key Points
Company raises annual forecast, projecting sharp increase in sales and earnings for FY3/18
Annual dividend forecast raised to ¥29.40 per share. Rising earnings coupled with higher dividend payout ratio
promise to accelerate pace of dividend hikes• Bringing price-competitive condominiums to market in Kinki and Chukyo-Tokai regions, where market showsno sign of overheating as it does in the Tokyo area••

We encourage readers to review our complete legal statement on “Disclaimer” page.

02 14

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Pressance Corporation Co., Ltd.

24-Apr.-20183254 Tokyo Stock Exchange First Section

https://www.pressance.co.jp/ir/ir6.html#english㻯㼛㼚㼟㼛㼘㼕㼐㼍㼠㼑㼐㻌㼍㼚㼚㼡㼍㼘 㼎㼡㼟㼕㼚㼑㼟㼟㻌㼞㼑㼟㼡㼘㼠㼟㻌㻔¥㼙㼚㻕㻺㼑㼠㻌㼟㼍㼘㼑㼟㻌㻔㼘㼑㼒㼠㻕㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼜㼞㼛㼒㼕㼠㻌㻔㼞㼕㼓㼔㼠㻕㻝㻠㻜㻘㻜㻜㻜
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㻲㼅㻟㻛㻝㻤㻌㻱

Source: Prepared by FISCO from the Company’s financial results██Company overview
No. 1 condominium developer in Kinki and Chukyo-Tokai regions.
Mainstay is studio and family condominiums but also engaged
in hotel development
1. Company overview
Pressance is an independent developer of family and studio condominiums that handles planning, development andsales. It is the biggest supplier in the Kinki region and Chukyo-Tokai regions as well as the second-largest nationwide
in terms of supply units. The company offers the Pressance Series of condominiums, conveniently located lessthan 10 minutes’ walk from major railway stations and using a proprietary design and development. Also its highly
motivated sales force results in so few unsold inventories. Pressance has grown steadily since its establishment in1997. It listed on the Second Section of the Tokyo Stock Exchange in 2007. Having suffered little from the Lehman
Brothers bankruptcy, the Company was listed on the First Section of that stock market in 2013 and was includedin the JPX-Nikkei Index 400 in 2015.

We encourage readers to review our complete legal statement on “Disclaimer” page.

03 14

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Pressance Corporation Co., Ltd.

24-Apr.-20183254 Tokyo Stock Exchange First Section

https://www.pressance.co.jp/ir/ir6.html#english

Company overview

2. History
Pressance’s predecessor was Nikkei Prestige Co., Ltd., which was established in Osaka in October 1997 to sellstudio condominiums. The Company was renamed Pressance Corporation in April 2002. It steadily diversified
into peripheral areas and expanded business scope, such as offering building management as well as insurance
agency services in 1998, starting sales of family condominiums and offering real estate rental management services
in 1999. Early in 2000s, Pressance began developing properties itself and extended its business area to the
Chukyo-Tokai and Kanto regions. It established Pressance Realta Co., Ltd. to handle brokerage and mediation forexisting condominiums in 2008, acquired Tryst Co., Ltd., which operates a construction business and established
Pressance Guarantee Co., Ltd. to offer rent fee payment guarantee service in 2014. It established Pressance Real
Estate Co., Ltd. as a real estate solution consultancy in May 2015. Although the real estate industry suffered greatly
in the aftermath of the Lehman Brothers bankruptcy (September 2008), the Company maintained its performance,
becoming a solid player just behind the leading pack in the condominium business. Pressance listed on the Second
Section of the Tokyo Stock Exchange in 2007 and on the First Section in 2013. The Company is highly rated on
the stock exchange, being included in the JPX-Nikkei Index 400 in 2015 and selected as a component stock of the
JPX-Nikkei Mid and Small Cap Index in 2016.
History
Date

Main events

Oct. 1997

Established Nikkei Prestige Co., Ltd.

Oct. 1997

Obtained real estate broker license from the Governor of Osaka

Nov. 1998

Sold Pressance Namba Higashi, the first building carrying the company’s brand

Dec. 1998

Founded Pressance Community Co., Ltd. (currently Pacific Co., Ltd.), to offer building management and insurance agency services

June 1999

Created Nikkei Assist Co., Ltd. (now Pressance Jyuhan Co., Ltd.), to sell family condominiums

June 1999

Stared offering rental property management services

July 2000

Sold Pressance Shinsaibashi EAST, the first property that the company had itself developed

Apr. 2002

Renamed Pressance Corporation

May 2003

Sold Pressance Nagoya-jo Mae, the first property that the company developed itself in the Tokai region

Feb. 2005

Opened the Nagoya Sales Center

July 2005

Elevated Nagoya Sales Center to branch status

Dec. 2007

Listed on the Second Section of the Tokyo Stock ExchangeAug. 2008

Established Room Pro Co., Ltd. (now Pressance Realta Co., Ltd.), to sell and broker existing condominiums

Dec. 2008

Opened a Tokyo branchOct. 2013

Listed on the First Section of the Tokyo Stock Exchange

Apr. 2014

Acquired a stake in construction firm Tryst Co., Ltd., making it a subsidiary

Aug. 2014

Set up Pressance Guarantee Co., Ltd., to offer rent guarantee services

Aug. 2015

Established Pressance Real Estate Co., Ltd., as a real estate solutions consultancy

Aug. 2015

Included in the JPX-Nikkei Index 400

Sep. 2016

Founded PROSEHRE Co., Ltd. in order to participate in real estate development projects in ASEAN and neighboring countries

Nov. 2016

Acquired all shares of Sanritsu precon Co., Ltd. and made it a subsidiary

Dec. 2016

Selected as a component stock of the JPX-Nikkei Mid and Small Cap Index

Jan. 2017

Designed as loan margin trading issue

Apr. 2017

Acquired all shares of Sanritsu precon Co., Ltd. and made it a wholly-owned subsidiary Lala place Co., Ltd.

Source: Prepared by FISCO from Company materials

We encourage readers to review our complete legal statement on “Disclaimer” page.

04 14

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Pressance Corporation Co., Ltd.

24-Apr.-20183254 Tokyo Stock Exchange First Section

https://www.pressance.co.jp/ir/ir6.html#english

Company overview

3. Business breakdown
Pressance mainly develops and sells studio and family condominiums. Studio condominium sales, a core businesssince being founded, booked 1,651 units and generated 28.1% of total sales from April through December, 2017
in FY3/1/8. This business involves construction of buildings with units that offer 20-50 square meters at highly
convenient sites located within five minutes on foot from major train stations and sales of these units under thePressance brand. Customers generally purchase studio condominiums as investments for their financial assets,
and target customers are not only high-income and wealthy individuals but also general salaried employees withstable income.
Family condominium sales booked 1,293 units and provided 44.7% of 3Q FY3/18 sales. This business consists ofconstruction of buildings with units that offer 50-100 square meters at sites with attractive environments locatedwithin 10 minutes on foot of major train stations and sales of these units under Pressance Loger and other brands.
Subsidiary Pressance Jyuhan Co., Ltd. manages sales of family condominium.
The third largest business is building sales, in which Pressance sells entire developed buildings of studio condominiums to other condominium retailers; this accounted for 16.9% of total sales during the first nine months of
FY3/18. The Company added hotel property sales as a new segment in FY3/18, focusing on developing and sellingbusiness hotels; it delivered two hotel properties (total 183 rooms) to buyers during the first nine months of FY3/18,
generating 2.7% of total sales. “Other” businesses include a real estate rental business that handles self-developed
and owned properties, a building management business, rental property management business and an insurance
agency; these businesses accounted for 3.4% of total sales during the first nine months of FY3/18.
Business breakdown in 3Q FY3/18
Business segments

Real estate sales business

Sales volume(number of units)

Sales
(¥mn)

Sales composition(%)

Studio condominium sales

1,651

28,35028.1%

Family condominium sales

1,293

45,177

44.7%

Building sales

1,086

17,073

16.9%

Hotel sales

183

2,744

2.7%

Other housing sales

35

1,237

1.2%

Other real estate sales

2

2,111

2.1%

855

0.8%

Business description

Peripheral businesses
Other businesses

Rental of company’s properties, etc.
4,250

Total

3,474

3.4%

101,024100.0%

Source: Prepared by FISCO from the Company’s financial results

We encourage readers to review our complete legal statement on “Disclaimer” page.

05 14

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Pressance Corporation Co., Ltd.

24-Apr.-20183254 Tokyo Stock Exchange First Section

https://www.pressance.co.jp/ir/ir6.html#english██Business overview
Bringing price-competitive condominiums to market in Kinki region,
where condominium market shows no sign of overheating
as it does in Tokyo area
1. Condominium market trends
During the 12 month-period from January through December 2017, the Tokyo metropolitan area displayed clear
signs of overheating as the number of condominiums put on the market rose 0.4% YoY to 35,898 units while theaverage price rose 7.6% to ¥59.08mn. In contrast, the Kinki region, where Pressance makes its home base, showedno signs of overheating as the number of condominiums put on the market rose 4.7% to 19,560 units while average
price declined 2.1% to ¥38.36mn. Another indicator of conditions in the condominium market is the sales contract
ratio (number of units for which a sales contract has been completed divided by the number of units supplied tothe market during the term). While contract ratio 70% is viewed as the dividing line between good and bad market
conditions, the Tokyo metropolitan area reported an average contract ratio of 68.1% in 2017 in contrast with 76.1%
for the Kinki region. The ratio for the Kinki region consistently stayed above 70% throughout the year. We see this is
an indication that the greater affordability of condominiums in the Kinki region has fostered a strong underlying levelof real demand in contrast with the Tokyo area. These market conditions are naturally favorable from the perspectiveof Pressance, who focuses mainly on development projects in the Kinki region.
Designed as loan margin trading issue
Number of condominiums soldCondominium price2015(units)2016(units)2017(units)

YoY
(%)

2015
(¥mn)

2016
(¥mn)

2017
(¥mn)

YoY
(%)

Metropolitan Tokyo

40,44935,77235,898

0.4%

5,518

5,490

5,908

7.6%

Kinki region

18,93018,676

19,560

4.7%

3,788

3,919

3,836

-2.1%

Source: Prepared by FISCO from the Real Estate Economic Institute Co., Ltd.’s “Nationwide Condominium Market Trends – 2017”

2. Pressance’s position
According to the latest Nationwide Condominium Market Trends report, released by the Real Estate Economic
Institute on February 21, 2018, Pressance further improved its position in the condominium market in 2017, jumping
to the No. 2 from No. 4 in 2016 in terms of the number of condominium units started selling to market. Pressancewas even stronger in regional markets, maintaining the No.1 condominium supplier position in the Kinki region foreight consecutive years, also No. 1 in Nagoya City for seven consecutive years and in the Chukyo-Tokai region forsix consecutive years. Pressance’s strength in these regional markets reflects its longstanding relationships with local
real estate land brokers to help it acquire land. Other strengths are reasonable price to meet customer needs withefficient advertisements and promotion focused on the regions. The price competitiveness of Pressance condominiums is evident from a quick price comparison. In 2017 the average price for a Pressance family condominium in the
Kinki region was ¥575,000 per square meter, comparing with the market average price for the region’s condominiums(including studios type) of ¥630,000 per square meter.

We encourage readers to review our complete legal statement on “Disclaimer” page.

06 14

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Pressance Corporation Co., Ltd.

24-Apr.-20183254 Tokyo Stock Exchange First Section

https://www.pressance.co.jp/ir/ir6.html#english

Business overview㻯㼛㼚㼐㼛㼙㼕㼚㼕㼡㼙㻌㼜㼞㼕㼏㼑㻌㼜㼑㼞㻌㼟㼝㼡㼍㼞㼑㻌㼙㼑㼠㼑㼞㻌㻔㻷㼕㼚㼗㼕㻌㼞㼑㼓㼕㼛㼚㻌㼙㼍㼞㼗㼑㼠㻌㼍㼢㼑㼞㼍㼓㼑㻌㼢㼟㻚㻌㻼㼞㼑㼟㼟㼍㼚㼏㼑㻕㻻㼟㼍㼗㼍㻌㻯㼕㼠㼥㻷㼕㼚㼗㼕㻌㼞㼑㼓㼕㼛㼚㻼㼞㼑㼟㼟㼍㼚㼏㼑㻌㼒㼍㼙㼕㼘㼥㻌㼏㼛㼚㼐㼛㼙㼕㼚㼕㼡㼙㻌㻔㻻㼟㼍㼗㼍㻌㻯㼕㼠㼥㻕㻼㼞㼑㼟㼟㼍㼚㼏㼑㻌㼒㼍㼙㼕㼘㼥㻌㼏㼛㼚㼐㼛㼙㼕㼚㼕㼡㼙㻌㻔㻷㼕㼚㼗㼕㻌㼞㼑㼓㼕㼛㼚㻕Pressance’s family condominium (Nagoya City)㻔¥ 㼠㼑㼚㻌㼠㼔㼛㼡㼟㼍㼚㼐㼟㻕
㻣㻡㻚㻜

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Source: Prepared by FISCO from the Company’s results briefing materials

3. Strengths and edge
Pressance started selling studio condominiums, and its solid sales capability is a vital strength. Management
encourages internal competition and enhances motivation among sales forces while all the sales forces intensively
sell a certain single property during a certain period of time. Its educational program of one-on-one field guidance
for new employees with their manager functions effectively, aiming to bring them repeatedly through successexperiences. Pressance also offers a highly transparent evaluation system with the opportunity for increase in salaryand promotions twice a year, thoroughly based on sales results regardless of age or seniority. Pressance also realizes
a beneficial cycle in finance by minimizing its inventory of finished units and promptly repaying borrowings. JPX Nikki
Index 400 added Pressance as a component stock in August 2015 in light of its excellent financial conditions. Healthyfinancial status enables proactive land purchasing and helps obtaining advantageous terms in negotiations withfinancial institutions as well as general contractors. Pressance selects sites within 10 minutes walking distance frommajor city-center train stations*, emphasizing sustainable high asset value for a long term. In-house planning anddevelopment excels at provision of products with well-balanced features and high cost performance in a reasonable
price range. The mutually beneficial cycle among sales capabilities, sound financial position, procurement capabilities
and product offerings generates strong competitive advantages.
* Pressance is able to carry out favorable land acquisition owing to its strong relationships with land information providers

We encourage readers to review our complete legal statement on “Disclaimer” page.

07 14

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Pressance Corporation Co., Ltd.

24-Apr.-20183254 Tokyo Stock Exchange First Section

https://www.pressance.co.jp/ir/ir6.html#english

Business overview

Strengths and edge

Source: Prepared by FISCO from Company materials██Results trends
For Q3 FY3/18, YoY growth topping 30% for sales and earnings
at every level
1. Financial results as of 3Q FY3/17
For the first nine months of FY3/18, Pressance reported net sales of ¥101,024mn (+38.5% YoY), operating profitof ¥16,891mn (+35.7%), ordinary profit of ¥16,557mn (+34.7%) and net profit attributable to owners of parent of¥11,247mn (+36.6%) with YoY growth surpassing 30% for sales and earnings at every level. In addition to strong
growth in sales of its core products such as studio and family condominiums, increased land acquisition allowed
the Company to substantially increase entire building sales as well. Another boost to sales came from two hotel
properties that began delivery during the period. In particular, the Company pointed to stronger-than-expected
growth in sales of family condominiums as the main factor that led to the upward revision of its annual forecast.
The cost of sales ratio was up slightly, rising 1.4ppts YoY to 72.9%, but the impact of this was largely offset by adecline in the SG&A expense ratio, which declined by 1.1ppts to 10.3%, keeping the operating profit margin at ahigh 16.7% (down only 0.4ppts). The decline in the SG&A expense ratio reflects lower-than-expected spending on
advertising and promotion amid a strong sales environment.

We encourage readers to review our complete legal statement on “Disclaimer” page.

08 14

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Pressance Corporation Co., Ltd.

24-Apr.-20183254 Tokyo Stock Exchange First Section

https://www.pressance.co.jp/ir/ir6.html#english

Results trends

Business result for 3Q FY3/17(¥mn)
3Q FY3/17

3Q FY3/18

Results

Composition

Results

Composition

YoY (% increase)

Net sales

72,961100.0%

101,024100.0%

38.5%

Cost of sales

52,16971.5%

73,692

72.9%

41.3%

Gross profit

20,791

28.5%

27,331

27.1%

31.5%

SG&A expenses

8,344

11.4%

10,440

10.3%

25.1%

Operating profit

12,44717.1%

16,891

16.7%

35.7%

Ordinary profit

12,292

16.8%

16,557

16.4%

34.7%

Net profit attributable to owners ofparent

8,235

11.3%

11,247

11.1%

36.6%

Source: Prepared by FISCO from the Company’s financial results㻿㼍㼘㼑㼟㻌㼏㼛㼙㼜㼛㼟㼕㼠㼕㼛㼚㻌㻿㼠㼡㼐㼕㼛㻌㼏㼛㼚㼐㼛㼙㼕㼚㼕㼡㼙㻌㼟㼍㼘㼑㼟㻴㼛㼠㼑㼘㻌㼟㼍㼘㼑㼟㻼㼑㼞㼕㼜㼔㼑㼞㼍㼘㻌㼎㼡㼟㼕㼚㼑㼟㼟㼑㼟㻲㼍㼙㼕㼘㼥㻌㼏㼛㼚㼐㼛㼙㼕㼚㼕㼡㼙㻌㼟㼍㼘㼑㼟㻻㼠㼔㼑㼞㻌㼞㼑㼍㼘㻌㼑㼟㼠㼍㼠㼑㻌㼟㼍㼘㼑㼟㻻㼠㼔㼑㼞㻌㻔㼞㼑㼚㼠㼍㼘㼟㻘㻌㼑㼠㼏㻚㻕㻱㼚㼠㼕㼞㼑㻌㼎㼡㼕㼘㼐㼕㼚㼓㻌㼟㼍㼘㼑㼟㻻㼠㼔㼑㼞㻌㼔㼛㼡㼟㼕㼚㼓㻌㼟㼍㼘㼑㼟㻞㻚㻣㻟㻽㻌㻲㼅㻟㻛㻝㻤

㻞㻤㻚㻝

㻠㻠㻚㻣

㻝㻢㻚㻥

㻞㻚㻝

㻟㻽㻌㻲㼅㻟㻛㻝㻣

㻟㻠㻚㻜

㻜㻑

㻝㻜㻑

㻞㻜㻑

㻠㻢㻚㻠

㻟㻜㻑

㻠㻜㻑

㻡㻜㻑

㻝㻚㻞
㻜㻚㻤 㻟㻚㻠

㻢㻜㻑㻜㻚㻠 㻟㻚㻣

㻝㻟㻚㻡

㻣㻜㻑

㻤㻜㻑

㻝㻚㻞 㻜㻚㻣
㻥㻜㻑㻝㻜㻜㻑

Source: Prepared by FISCO from the Company’s financial results

Growth in assets driven by increase in real estate
for sale in progress; stability ratings remains high
2. Financial position and management indicators
Total assets increased substantially with a gain of ¥39,183mn from the end of the previous fiscal year to ¥224,490mn.
Main additions were ¥35,725mn in real estate for sale in progress, ¥1,322mn in real estate for sale and ¥831mn incash and deposits.
As of the end of Q3 FY3/18, the Company’s balance sheet showed total liabilities of ¥152,712mn, an increase of¥27,020mn over the end of FY3/17. The increase in liabilities was driven in large part by a ¥6,666mn increase in
short-term loans payable, ¥9,155mn increase in long-term loans payable, ¥6,723mn increase in the current portionof long-term loans payable, and ¥7,000 increase in bonds with subscription right to shares.

We encourage readers to review our complete legal statement on “Disclaimer” page.

09 14

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Pressance Corporation Co., Ltd.

24-Apr.-20183254 Tokyo Stock Exchange First Section

https://www.pressance.co.jp/ir/ir6.html#english

Results trends

In terms of financial ratios, the current ratio of 347.5% shows that the company is rated high for short-term financial
stability. The equity ratio of 31.1% reflects that the company has consistently kept solid financial stability for mid
and long term, utilizing financial leverage to boost rapid growth.
Consolidated balance sheet and management indicators(¥mn)
As of March 31,
2017

As of December
31, 2017

Change37,517

171,810

209,327

Cash and deposits

30,53431,365

831

Real estate for sale

14,324

15,646

1,322

Real estate for sale in progress

35,725Current assets

122,174

157,900

Non-current assets

13,497

15,162

1,665

Total assets

185,307

224,490

39,183Current liabilities

49,43860,238

10,79923,97030,693

6,723

76,25392,474

16,221
7,000

Current portion of long-term loans payableNon-current liabilities

-

7,000

75,691

84,846

9,155

125,691

152,71227,020Bonds with subscription right to shares
Long-term loans
Total liabilities
Total net assets

59,61571,777

12,162

Total liabilities and net assets

185,307

224,490

39,183Current ratio (current assets ÷ current liabilities)

347.5%

347.5%-

Equity ratio (equity ÷ total assets)

32.0%

31.1%

-

Stability

Source: Prepared by FISCO from the Company’s financial results██Business outlook
Company raises annual forecast, projecting significant increasein sales and earnings for FY3/18
Along with the release of Q3 FY3/18 results, Pressance issued an upward revision to its consolidated annual forecast,raising its projection of both sales and earnings. The Company is forecasting annual net sales of ¥130,664mn(+29.3% YoY), operating profit of ¥20,144mn (+28.7%), ordinary profit of ¥19,572mn (+27.0%), and net profit
attributable to owners of parent of ¥13,368mn (+27.0%). In this relation, the Company noted that more than 300
sales contracts have been already finalized for extra large-scale 337-unit Pressance Legend Sakaisuji Honmachi
Tower. Adding already booked sales and orders expected to be booked during this fiscal year as of the end of Q3,
the sum is already equal to 99.2% of the upwardly revised sales forecast for the full year. Sales results for the firstnine months of FY3/18 give the Company 77.3% of its full-year sales forecast (versus 72.2% at this time in thelast year) and 83.9% of its full-year forecast for operating profit (versus 79.6%). Taking into further considerationof Pressance’s reputation for accurate forecasts, we conclude that the Company will most likely meet its upwardly
revised sales and earnings forecasts for the full year.

We encourage readers to review our complete legal statement on “Disclaimer” page.

10 14

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Pressance Corporation Co., Ltd.

24-Apr.-20183254 Tokyo Stock Exchange First Section

https://www.pressance.co.jp/ir/ir6.html#english

Business outlook

Outlook for FY3/18 consolidated results(¥mn)
FY3/17

FY3/18Results

Composition

Initialforecast

Revisedforecast

CompositionYoY

3Q FY3/18
progress
vs. full-yeartargetNet sales

101,083

100.0%

126,562

130,664100.0%

29.3%

77.3%

Operating profit

15,64515.5%

18,301

20,144

15.4%

28.7%

83.9%

Ordinary profit

15,41415.2%

17,81819,572

15.0%

27.0%

84.6%

Net profit attributable to owners ofparent10,526

10.4%

12,176

13,368

10.2%

27.0%

84.1%

Source: Prepared by FISCO from the Company’s financial results██Medium/long term topics
Have acquired three years’ worth of land to build condominiums,
also have 20-property hotel business
1. Advanced acquisition of three years’ worth of land for condominiums
Pressance has actively purchased lands for condominiums, leveraging its ample retained earnings. It reported¥157,900mn in real estate for sale in progress and ¥15,646mn in real estate for sale at the end of 3Q FY3/18. Assetvalue of land sites, which is determined by subtracting construction costs and other expenses from the total, comesto ¥106,172mn. On the number of unit basis, this works out to 6,701 family condominium units (about 3.4 years’
worth of sales assuming around 2,000 units are sold every fiscal year) 6,187 studio condominium units (about 3.1
years’ worth of sales) and 2,604 units for entire building sales (about 2.9 years’ worth of sales assuming around 900
units are sold every fiscal year). Capital resources and also information gathering capabilities enhance the Company’s
active procurement power. Since the Company continued to buy land after the Lehman bankruptcy and excel in
rapid assessments and responses, it can advantageously obtain primary information from local real estate firms.

We encourage readers to review our complete legal statement on “Disclaimer” page.

11 14

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Pressance Corporation Co., Ltd.

24-Apr.-20183254 Tokyo Stock Exchange First Section

https://www.pressance.co.jp/ir/ir6.html#english

Medium/long term topics㻿㼠㼍㼠㼡㼟㻌㼛㼒㻌㼍㼏㼝㼡㼕㼞㼑㼐㻌㼘㼍㼚㼐㻼㼞㼛㼖㼑㼏㼠㼑㼐㻌㼍㼚㼚㼡㼍㼘㻌㼟㼍㼘㼑㼟㻌㻔㼡㼚㼕㼠㼟㻕㻜㻟㻽㻌㻲㼅㻟㻛㻝㻤㻌㼘㼍㼚㼐㻌㼒㼛㼞㻌㼍㼏㼝㼡㼕㼟㼕㼠㼕㼛㼚㻌㻔㼡㼚㼕㼠㼟㻕

㻞㻘㻜㻜㻜

㻠㻘㻜㻜㻜

㻞㻘㻜㻜㻜

㻲㼍㼙㼕㼘㼥㻌㼏㼛㼚㼐㼛㼙㼕㼚㼕㼡㼙
㼟㼍㼘㼑㼟

㻢㻘㻜㻜㻜

㻤㻘㻜㻜㻜

3.4 years’ worth of sales
㻢㻘㻣㻜㻝

㻞㻘㻜㻜㻜

㻿㼠㼡㼐㼕㼛㻌㼏㼛㼚㼐㼛㼙㼕㼚㼕㼡㼙㼟㼍㼘㼑㼟

3.1 years’ worth of sales

㻢㻘㻝㻤㻣

㻥㻜㻜
㻱㼚㼠㼕㼞㼑㻌㼎㼡㼕㼘㼐㼕㼚㼓㻌㼟㼍㼘㼑㼟

2.9 years’ worth of sales㻞㻘㻢㻜㻠

Source: Prepared by FISCO from the Company’s results briefing materials

2. Hotel business now up to 20 properties
The increase in inbound tourists visiting Japan has led to a serious shortage of hotels, and strong demand exists
along the so-called “Golden Route” of Japan’s most popular sites (metropolitan Tokyo, Hakone and Mt. Fuji, Kyoto,
and Osaka). On some lands acquired mostly in the Kansai region, the Company has been developing hotels at thesites located around downtown centers since such locations meet needs as hotels rather than condominiums withthe objective of potential returns. As of the end of December 2017, Pressance does business on 20 hotel properties
in total, including 18 properties that are either fully developed or under development, one property undergoingrenovation and one acquired existing property. The Company expects to complete construction on three of theseproperties (all in Osaka) during FY3/18, seven more during FY3/19 (three in Osaka, three in Kyoto and one in Akita)
and nine more in FY3/20 (two in Osaka, three in Kyoto, one in Hiroshima, one in Fukuoka, one in Naha, and one
in Yokohama). Pressance gives priority to selling developed hotels to hotel operators, REIT or business entities,emphasizing capital efficiency, rather than managing a hotel property with hotel operators on its own. However,
the Company also considers the possibility to sell after operating some properties for a while and building up a
track record of actual returns. The hotel in Akita acquired this fiscal year is undergoing renovations to restore an
old property near JR Akita Station in the Tohoku area. Although the Company has focused on the Kansai region, it
would develop properties nationwide, depending on the prospective value.

We encourage readers to review our complete legal statement on “Disclaimer” page.

12 14

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Pressance Corporation Co., Ltd.

24-Apr.-20183254 Tokyo Stock Exchange First Section

https://www.pressance.co.jp/ir/ir6.html#english

Medium/long term topics

Hotel Business
Location
Osaka, Inari, Naniwa-ku
ScheduledCompletion Osaka, Motomachi, Naniwa-ku
in FY3/18
Osaka, Hirano-machi, Chuo-ku

Nearest station

Number ofrooms

A(delivery completed)

JR Namba Station

72

A(delivery completed)

JR Namba Station

111

A (delivery scheduled
Kitahama Station (Subway Sakaisuji Line)for following term)

116

Osaka, Shikitsu-higashi, Naniwa-ku

A

Daikokucho Station (Subway Midosuji Line)300

Osaka, Minami-semba, Chuo-ku

A

Shinsaibashi Station (Subway Midosuji Line)

124

Kyoto, Omiya-dori, Shimogyo-ku

AOmiya Station (Hankyu Railway)

122

A

JR Shin-Osaka Station

120

A

Shijo Station (Subway Karasuma Line)

63

Kyoto-city, Higashiyama-ku, Yasakadori

B

Kiyomizugojo Station (Keihan Electric Railway)

Akita-city, Nakadori 3chome*

B

Akita Station(Akita-Shinkansen, JR Uetsu Main Line)

238

Kyoto-city, Shimogyo-ku, AburanokojidoriA

Gojo Station (Kyoto Municipal Subway)

166

Hiroshima-city, Naka-ku, Noboricho

B

Ebisucho Station (Hiroshima Electric Railway)

126

Yokohama-city, Naka-ku, Onoecho

B

JR Kannai Station

277

Osaka-city, Chuo-ku, Minamihonmachi

A

Honmachi Station (Subway Midosuji Line)

174

A

Nakasukawabata Station (Subway Hakozaki Line)

204

B

JR Kyoto Station

119

A

JR Namba Station

404

Kyoto-city, Nakagyo-ku, Oicho

B

Karasuma Marutamachi Station(Subway Karasuma Line)

12

Naha-city, Nishi 2chomeA

Asahibashi Station (Okinawa Monorail)

234

Kobe-city, Chuo-ku, Gokodori

B

JR Sannomiya Station

135

Scheduled
Osaka, Nishi-miyahara, Yodogawa-ku
Completion
Kyoto-city, Nakagyo-ku, Tenjinyamacho
in FY3/19

Scheduled Fukuoka-city, Hakata-ku,
Completion Kamikawabatamachi
in FY3/20
Kyoto-city, Minami-ku, Nishikujozaocho
Osaka-city, Naniwa-ku, Motomachi 2chome

Purchased& Ownedin FY3/17

Management
pattern7

Note: D ue to change in plans or other factors, hotel management pattern (A–sale to hotel operator, or B–held by Pressance) the number of rooms anddate of completion may be subject to change* Newly acquired property, undergoing renovation
Source: Prepared by FISCO from the Company’s results briefing materials

We encourage readers to review our complete legal statement on “Disclaimer” page.

13 14

COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

Pressance Corporation Co., Ltd.

24-Apr.-20183254 Tokyo Stock Exchange First Section

https://www.pressance.co.jp/ir/ir6.html#english██Shareholder return policy
Annual dividend forecast raised to ¥29.40. Rising earnings coupledwith higher dividend payout ratio promise to accelerate pace ofdividend hikes
Pressance plans to consistently increase its dividend payout ratio over med to long term, in addition to operating
profit growth of at least 10% every year. Multiplying two increases both in dividend payout ratio and profit growth,
the Company is aiming to increase dividends at faster pace.
The Company currently forecasts annual dividend of ¥29.40 per share for FY 3/18 (¥12.50 at the end of 1H and¥16.90 at the end of 2H), projecting to increase from the initial forecast ¥25.00 per share (¥12.50 at the end of 1H
and ¥12.50 at the end of 2H). The increase in dividend will be for three consecutive year. This new dividend forecast
raises the expected dividend payout ratio for FY3/18 to 13.0% from 9.8% in FY3/16. Combining expanding earnings
and increasing the dividend payout ratio, shareholders can expect dividend growth at an even faster pace in thedays ahead.
Pressance also announced the scope of its shareholder gift program with provision of a JTB Nice Gift worth ¥2,000
to shareholders owning 100 or more shares and less than 400 shares and also a gift worth ¥5,000 to shareholders
owning 400 or more shares.

㻭㼚㼚㼡㼍㼘㻌㼐㼕㼢㼕㼐㼑㼚㼐㼟㻌㼍㼚㼐㻌㼐㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㼟㻔¥㻕㻭㼚㼚㼡㼍㼘㻌㼐㼕㼢㼕㼐㼑㼚㼐㻌㻔㼘㼑㼒㼠㻕㻰㼕㼢㼕㼐㼑㼚㼐㻌㼜㼍㼥㼛㼡㼠㻌㼞㼍㼠㼕㼛㻌㻔㼞㼕㼓㼔㼠㻕

㻟㻡㻚㻜㻜

㻝㻟㻚㻜
㻝㻞㻚㻝

㻟㻜㻚㻜㻜
㻞㻡㻚㻜㻜

㻝㻝㻚㻤
㻥㻚㻥

㻥㻚㻤

（㻑）
㻝㻡㻚㻜
㻝㻞㻚㻡

㻥㻚㻤

㻝㻜㻚㻜

㻞㻜㻚㻜㻜
㻣㻚㻡
㻝㻡㻚㻜㻜

㻞㻥㻚㻠㻜㻌

㻡㻚㻜㻜㻡㻚㻜㻞㻝㻚㻝㻡㻌

㻝㻜㻚㻜㻜
㻤㻚㻣㻡㻌

㻝㻞㻚㻡㻜㻌

㻝㻞㻚㻡㻜㻌

㻲㼅㻟㻛㻝㻠

㻲㼅㻟㻛㻝㻡

㻝㻡㻚㻜㻜㻌

㻞㻚㻡

㻜㻚㻜㻜

㻜㻚㻜
㻲㼅㻟㻛㻝㻟

㻲㼅㻟㻛㻝㻢

㻲㼅㻟㻛㻝㻣

㻲㼅㻟㻛㻝㻤㻌㻱

Note: Implemented a 1:4 stock split on October 1, 2016
Source: Prepared by FISCO from the Company’s financial results

We encourage readers to review our complete legal statement on “Disclaimer” page.

14 14

Disclaimer
FISCO Ltd. (the terms “FISCO”, “we”, mean FISCO Ltd.) has legal agreements with theTokyo Stock Exchange, the Osaka Exchange,and Nikkei Inc. as to the usage of stock priceand index information. The trademark and value of the “JASDAQ INDEX” are the intellectual
properties of the Tokyo Stock Exchange, and therefore all rights to them belong to the Tokyo
Stock Exchange.
This report is based on information that we believe to be reliable, but we do not confirm or
guarantee its accuracy, timeliness,or completeness, or the value of the securities issued bycompanies cited in this report. Regardless of purpose,investors should decide how to use
this report and take full responsibility for such use. We shall not be liable for any result of its
use. We provide this report solely for the purpose of information, not to induce investment or
any other action.
This report was prepared at the request of its subject company using information provided
by the company in interviews, but the entire content of the report, including suppositions andconclusions, is the result of our analysis. The content of this report is based on informationthat was current at the time the report was produced, but this information and the content of
this report are subject to change without prior notice.
All intellectual property rights to this report, including copyrights to its text and data, areheld exclusively by FISCO. Any alteration or processing of the report or duplications of thereport, without the express written consent of FISCO, is strictly prohibited. Any transmission,
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The final selection of investments and determination of appropriate prices for investment
transactions are decisions for the recipients of this report.
FISCO Ltd.