COMPANY RESEARCH AND ANALYSIS REPORT

Cosmos Initia Co., Ltd.
8844
TSE JASDAQ

19-Aug.-2020
FISCO Ltd. Analyst

Kimiteru Miyata

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

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

Cosmos Initia Co., Ltd.
8844 TSE JASDAQ

19-Aug.-2020
https://www.cigr.co.jp/english/message.html■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Expanding business domains from being a condominium developer..........................................................

01

2. Strengths include planning capabilities for product and services................................................................

01

3. In FY3/20, the Solutions business performed strongly. ................................................................................

02

4. It is anticipated that the COVID-19 outbreak will have a major impact in the short term..............................

02■Company profile -------------------------------------------------------------------------------------------------------------------------------------------------------- 03
1. Company profile and history........................................................................................................................

03

2. Capital and business alliance with Daiwa House Industry............................................................................

05■Business overview---------------------------------------------------------------------------------------------------------------------------------------------------- 05
1. The Company’s businesses.........................................................................................................................

05

2. Residential business.............................. ......................................................................................................

06

3. Solutions business.......................................................................................................................................

09

4. Accommodation business. . .................... ......................................................................................................

11

5. Construction business.................................................................................................................................

12■Results trends -------------------------------------------------------------------------------------------------------------------------------------------------------------- 12
1. FY3/20 results..............................................................................................................................................

12

2. FY3/21 forecasts . . .......................................................................................................................................

13

3. Results trends by business..........................................................................................................................

14■Medium- to long-term management policy ------------------------------------------------------------------------------------- 19
1. Effects of the COVID-19 outbreak on the medium-term business plan 2021. ..............................................

19

2. Medium- to long-term management policy. .................................................................................................

19

3. Specific measures for each business..... ......................................................................................................

20■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 21■Information security------------------------------------------------------------------------------------------------------------------------------------------------ 22*This is an English translation of a report issued on July 13, 2020.

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

Cosmos Initia Co., Ltd.
8844 TSE JASDAQ

19-Aug.-2020
https://www.cigr.co.jp/english/message.html█ SummaryAlthough there are concerns about the impact of the COVID-19
outbreak in the short term, no changes to the medium- to long-term
management policy
1. Expanding business domains from being a condominium developer
Cosmos Initia <8844> (hereafter, also “the Company”) is a mid-tier developer operating mainly in the Metropolitan
Tokyo area and in the Kinki region. Its businesses include the development and sales of newly-built condominiums
and investment real estate, and the Accommodation business. The Company was found in 1969 as a subsidiaryof Japan Recruit Center (now Recruit Holdings Co., Ltd. <6098>) and it started a business of selling newly-built
condominiums. But is now pursuing a growth strategy as a subsidiary of Daiwa House Industry <1925> andmember of the Daiwa House Group. The scope of Cosmos Initia’s business has broadened over the years outsideof newly-built condominiums as it has gained expertise in different areas and customer needs have grown morediverse. The Company’s business is split into four segments. The Residential business provides housing-related
products and services, the Solutions business is engaged in selling of real estate for investors as well as rental
management, while the Company is also engaged in the Accommodation business and the Construction business.
In FY3/20, the Residential business accounted for 34% of sales, the Solutions business 43%, the Accommodation
business 11%, and the Construction business 12%.
2. Strengths include planning capabilities for product and services
In the Residential business, the Company is developing various brands*, including INITIA newly-built condominiums,
INITIA FORUM newly-built single-family houses (formerly: GRAND FORUM), and INITIA & Renovation renovatedcondominiums (formerly: &Renovation). For some time, it has had an excellent reputation for its planning capabilities for new products and services and for developing businesses that are strongly “customer” orientated, suchas for its after-sales services. The Solutions business mainly involves sales of real estate for investors, such as
investment condominiums and office buildings; real estate rental operations and management for the subleasing ofcondominiums, office buildings, and other properties; and real estate brokerage and other services, including realestate brokerage services and development consulting. In the Accommodation business, it develop and operate for
APARTMENT HOTEL MIMARU, which are long stay-type hotels. The Construction business mainly involves repairs
and improvements for office relocations, the building of condominiums galleries, and sales of interior design options.
A feature of each of these businesses is that they are provided by the Group as one-stop services.
*	From the spring of 2020, the Company integrated the product and service brands sold in the Residential business into
INITIA.

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01 22

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

Cosmos Initia Co., Ltd.
8844 TSE JASDAQ

19-Aug.-2020
https://www.cigr.co.jp/english/message.html

Summary

3. In FY3/20, the Solutions business performed strongly
In the FY3/20 results, sales were ¥110,559mn (+5.7% year-on-year (YoY) and operating profit was ¥6,010mn(+11.7%). These results were also above the initial forecasts, sales by ¥559mn and operating profit by ¥210mn.The
Solutions business performed particularly well, with sales and operating profit increasing for the sixth consecutive
period and operating profit rising by double digits. In the Solutions business, it appears that the joint investment-type
real estate SELESAGE, which is a small-lot investment product, is proving popular. However, financial costs rosedue to the increase in borrowing from the progress made in purchases, and therefore recurring profit increased only
by a single digit. The FY3/21 results outlook deteriorated from the start of the year following the global impact of
the COVID-19 spread, leading to a reversal of deferred tax assets, and there was also a decline as a reaction to therecording of extraordinary profit in the previous fiscal period. As a result, net profit attributable to parent company
shareholders decreased.
4. It is anticipated that the COVID-19 outbreak will have a major impact in the short term
For the FY3/21 results, the Company is forecast sales of ¥105,000mn (-5.0% YoY) and operating profit of ¥0mn(-100.0%). It also expects to record a recurring loss and net loss attributable to parent company shareholders,and business conditions appear extremely severe. In terms of the impact of the COVID-19 outbreak, the Company
is assuming that the crisis will not completely settle down until September 2020 and that a gradual recovery will
occur from October onwards, and that the business environment will return to something similar to before the
COVID-19 outbreak by the end of the period. Therefore, it expects self-restraint for sales activities mainly in the 1Q
and the decline in the profitability of some delivered properties. However, the impact will be particularly great in the
Accommodation business, and it is thought that the effect of the decline in the hotels’ occupancy rates will persist
over the long term. For the results outlook for the future, there are some aspects that are unclear, but it seems thatin the medium- to long-term, there will be no change to the trends of the declining birthrate and aging populationand the rise in the number of foreign visitors to Japan. Against this backdrop, it is considered that the Company will
not make any major changes to strategy for its medium- to long-term management policy.
Key Points
A mid-tier developer whose strengths include planning capabilities for and the quality of its products andservices• The innovative products, including joint investment-type real estate, continue to perform strongly• Expects to struggle in the short term due to the impact of the COVID-19 outbreak, but no changes to themedium- to long-term management policy•

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02 22

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

Cosmos Initia Co., Ltd.
8844 TSE JASDAQ

19-Aug.-2020
https://www.cigr.co.jp/english/message.html

SummaryR e s ul ts t rends（¥mn）

Sales (left)（¥mn）

Operating profit (right)

120,000

7,200
6,010

100,000
4,869
80,000

6,000

5,380

4,800

4,084
3,480

60,00040,00087,022

92,366

100,829

104,606

110,559

3,600
105,000
2,400

20,000

1,200
0

0

0
FY3/16

FY3/17

FY3/18

FY3/19FY3/20FY3/21 E

Source: Prepared by FISCO from the Company’s financial results█ Company profile
Expanding its businesses, from developing real estate to utilizing
real estate
1. Company profile and history
Cosmos Initia is a mid-tier developer affiliated with the Daiwa House Group. Specializing in family-oriented condominiums for first-time buyers, Cosmos Initia has a very long track record and has brought a cumulative total ofmore than 100,000 new condominium units to the market. The Company’s mainstay condominiums brand is INITIA,
while during the Recruit Cosmos period, COSMOS was used. As the needs of customers have grown more diverse
and its partnership with Daiwa House has grown, Cosmos Initia has turned itself into a one-stop shop for a wide
variety of housing products and services for the general consumer, including new condominiums and single-family
houses, sales of renovated condominiums, renovation, retail brokerage services, as well as various after-sale services
after the homeowner or tenant moves in. For owners of business-use properties, the Company currently offers aone-stop real estate solutions service, including for investment property sales, subleasing of condominiums andoffice properties, brokerage services for business-use properties, and real estate consulting. In this way, it is greatly
expanding its business portfolio away from its past focus on condominium development.

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03 22

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

Cosmos Initia Co., Ltd.
8844 TSE JASDAQ

19-Aug.-2020
https://www.cigr.co.jp/english/message.html

Company profile

The roots of Cosmos Initia go back to its founding in 1969 as Japan Recruit Motion Pictures Co., Ltd., a subsidiary ofJapan Recruit Center. The Company subsequently switched its business to real estate in 1974. In 1985 the Company
changed its Recruit Cosmos Co., Ltd. and was listed on Japan’s over-the-counter stock market (now JASDAQ) in1986. Following its independence due to a management buyout from the Recruit Group in 2005, it changed its nameto Cosmos Initia in 2006, the name it still holds today. Not long after that, however, the real estate market crashedas the collapse of Lehman Brothers shook the financial markets and Cosmos Initia fell victim to its heavy debt load.
Having become insolvent, the Company went into Business Revitalization ADR proceedings in 2009, where anagreement was reached on business rehabilitation plan. Cosmos Initia got financial support from its creditors but
had to sell off its condominium management company to Daiwa House Industry. The business rehabilitation plan was
finally completed in 2013 as Cosmos Initia paid off the last of the debt covered by the Business Revitalization ADR
agreement. Shortly thereafter Cosmos Initia entered into a capital and business alliance with Daiwa House Industry
that made it a subsidiary, and it is currently pursuing its growth strategy as a member of the Daiwa House group.
But in this situation, the COVID-19 pandemic has occurred, the impact of which is certainly not small. However,while a review of short- to medium-term goals and strategy may be necessary, it seems that there will be no majorchanges to the management policy that the Company is considering for the medium- to long-term.
History
History
June 1969
February 1974

Japan Recruit Motion Pictures Co., Ltd. is founded in Chiyoda-ku, Tokyo
Business objective is changed to the real estate business, and the company name changed to Environment Development Co., Ltd.

May 1974

Sales operations for mid- to high-rise housing begin

June 1977

Osaka Branch (now West Japan Branch) is established and begins sales operations for mid- to high-rise housing in the Kinki region

January 1985
March 1985
July 1986
October 1986
March 1987
January 1990
September 1990
April 1996
October 1998
June 2005
September 2006

Brokerage Department is establishedCompany name is changed to Recruit Cosmos Co., Ltd.
Head office is moved to Chuo-ku, Tokyo
Real Estate Rental Business begins in earnest
Company stock is listed on the over-the-counter market (now the Tokyo Stock Exchange JASDAQ)
All stock for Cosmos Life Co., Ltd. (now DAIWA LIFENEXT Co., Ltd.) is acquired, and entry is made to the real estate management businessCosmos More Co., Ltd., (now a consolidated subsidiary) is established to undertake building and repair work
Cosmos Australia Pty. Ltd. is established in Australia
Overseas hotels and resorts operations begin
Sales operations of single-family homes begins in earnest
Cosmos Hotline is established as a point of contact for customers
The Company is spun off from the Recruit Group through a management buyoutCompany name is changed to Cosmos Initia Co., Ltd.
Head office is moved to Chiyoda-ku, Tokyo

April 2009

After becoming insolvent amid real estate market downturn, used Business Revitalization ADR (alternative dispute resolution) proceedings tocreate business rehabilitation plan

July 2009

Three branches in the Tokyo metropolitan area (Chiba Branch/Yokohama Branch/Northern Kanto Branch) are integrated into the head office

September 2009

All stock from Cosmos Life Co., Ltd. is transferred to Daiwa House Industry Co., Ltd.

January 2011

Number of condominiums sold tops 100,000

July 2011

The head office is moved to Minato-ku, Tokyo.

June 2013

Daiwa House Industry Corp. became the largest stockholder of company and joined the Daiwa House Group

October 2014

Cosmos Life Support Co., Ltd. (now a consolidated subsidiary) is established

December 2016

Cosmos Australia Holdings Pty Ltd (now a consolidated subsidiary) is established

October 2017

Cosmos Hotel Management Co., Ltd. (now a consolidated subsidiary) is established

December 2017

Entered into capital and business alliance with WOOC Co., Ltd. to develop business to revitalize vacant space in rental office buildings andother properties

March 2018

All stock from KBRV Resort Operations Pty. Ltd. held by Cosmos Australia Pty. is transferred. Withdraw from overseas hotels and resorts
operations

May 2019

Establishment of medium-term business plan 2021

Source: Prepared by FISCO from the Company’s securities report, etc.

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

Cosmos Initia Co., Ltd.
8844 TSE JASDAQ

19-Aug.-2020
https://www.cigr.co.jp/english/message.html

Company profile

Leveraging synergies from the alliance with Daiwa House Industry
2. Capital and business alliance with Daiwa House Industry
Cosmos Initia has enjoyed the textbook synergies one might expected from its acquisition by Daiwa House in 2013.
As a subsidiary of Daiwa House Industry, Cosmos Initia has been able to more easily secure the financing needed topursue its real estate development business, receiving strong backing Daiwa House in the form of credit guarantees
as well as overall support. And, because Daiwa House Industry makes it a practice to respect the management
teams of the companies it acquires, Cosmos Initia has also enjoyed a great deal of autonomy since being acquired,making its own decision about personnel, operations, and even maintaining its stock exchange listing. As this has
allowed Cosmos Initia to maintain the continuity in its management team as well as in its branding, which in turnhas helped drive the subsequent recovery in sales and earnings. From the perspective of Daiwa House Industry,
the acquisition of Cosmos Initia has helped it fill a gap, for even though Daiwa House was already operating inmany areas—from single-family houses to rental housing, to commercial buildings and construction—prior to theacquisition of Cosmos Initia it did not have much of the presence in the Tokyo area condominium market. Withknowledge and experience in the Tokyo, Japan’s largest condominium market, Cosmos Initia was a welcome addition
to the Daiwa House Group that is helping to expand and add momentum to its condominium business.

█ Business overview
The main businesses are the Residential business and the Solutions
business
1. The Company’s businesses
Cosmos Initia’s primary business is real estate development and sales, but this is broken down further into a
Residential business that offer housing products and services for the general consumer and a Solutions businessthat provides professional services as well as real estate for investors and other products to the corporate market. It
also conducts the Accommodation business and the Construction business, for business classifications that can besaid to be easier for customers, business partners, and investors to understand. The Residential business in FY3/20
accounted for 34% of sales and 19% of operating profit, the Solutions business 43% of sales and 62% of operating
profit, the Accommodation business 11% of sales and 15% of operating profit, and the Construction business 12%of sales and 4% of operating profit. The mainstays of business that the Company develops are the Residential andSolutions businesses, which are primarily managed by the parent company while the Accommodation business andthe Construction are operated by subsidiaries.

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

Cosmos Initia Co., Ltd.
8844 TSE JASDAQ

19-Aug.-2020
https://www.cigr.co.jp/english/message.html

Business overview

Breakdown of sales ratio and operating profit ratio by segment (FY3/20)
Residential business
Accomodation business

Solutions business
Construction business

Sales ratio by segmenｔ

Operating profit ratio by segment
4%

12%
19%

15%
11%

34%

62%

43%

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

A strength is the quality of its services not bound by theconventional framework of new homes and pre-owned homes
2. Residential businessCosmos Initia’s Residential business does not follow the traditional split between new homes and pre-owned homes,
but rather holds itself out as a one-stop shop for housing-related products and services for the general consumer.
Its menu of products and services include INITIA newly-built condominiums, INITIA FORUM newly-built single-family
houses, INITIA & Renovation renovated condominiums, and retail real estate brokerage. In FY3/20, new condominiums accounted for 49% of segment sales ratio, new single-family houses 14%, renovated condominiums 35%, andretail real estate brokerage services 2%. Features of the Company include that it is strongly customer-orientated andthe high quality of its services, such as for its planning capabilities to create new products and services, in addition
to its after-sales services that have had an excellent reputation since previously. It has integrated the brands of the
products and services in the Residential business into INITIA, and it has changed the brand name and the logo to
INITIA since the spring of 2020 sales of newly-built residences (new condominiums, new condominiums for active
seniors, new town houses, and new single-family houses) and in the Renovation business (renovated condominiums
and renovation and reform work).

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

Cosmos Initia Co., Ltd.

19-Aug.-20208844 TSE JASDAQ

https://www.cigr.co.jp/english/message.html

Business overview

Breakdown of net sales for Residential business (FY3/20)
New condominiums
Renovated, pre-owned condominiums

New single-family houses
Real estate brokerage and other services

2%

35%
49%

14%

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

New condominiums “INITIA CHUO MINATO”

Source: The Company’s results briefing materials

The new condominiums that account for most of sales in the Residential business go under the INITIA brand name.
INITIA condos are aimed at DINKs (Double Income, No Kids) households and families, their target market being firsttime buyers in their 30s and 40s. In particular, its strength is in planning new products and services, including highquality living space designs such as “scenery kitchens” that place the kitchen in the center of an LDK condominium
and widening entryways to create “welcome halls.” In addition to such spatial quality, the Company is thoroughlycommitted to quality, from its construction system through QIT, its proprietary quality management system, throughto various support services. In such ways, it aims to provide value exceeding customers’ expectations by providing
living spaces that are more enjoyable, easier to live in, and more convenient. Cosmos Initia’s success is evidenced
by its long track record that took it over the 100,000-unit mark for new condominiums in 2011 (its 37th year as adeveloper) and its receipt of the prestigious Good Design awards for 18 years running.

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

Cosmos Initia Co., Ltd.
8844 TSE JASDAQ

19-Aug.-2020
https://www.cigr.co.jp/english/message.html

Business overview

However, as Japan’s population ages we can expect to see a sharp increase in the number of healthy and active
seniors. Unfortunately, when most people think about senior-oriented business they wrongly jump to the conclusionthat this refers to nursing care and similar businesses, and very few think of businesses that are aimed healthy
and active seniors. The Company is stepping into this gap and attempting to address the needs of the market
represented by active seniors market by designing condominiums specifically for this market. The Company’s INITIAGRAND (formerly: GRAND COSMO) are condominiums designed for active seniors, with features aimed specificallyat reducing the burden of housework and physically-demanding tasks. However, unlike serviced units in retirement
homes or assisted living facilities, a feature of INITIA GRAND is that they maintain their value as property in which
the residents can live as they please.
Moreover, unlike in normal condominiums, the Group provides a variety of services and support in its condominiums
for senior citizens, such as the various events conducted by subsidiary Cosmos Life Support Co., Ltd., and others,
and living-support activities that contribute to the residents’ health and peace of mind. In government-designatedcities and cities with populations of at least 400,000 people and above 500,000 people, the Company is mainly
selecting locations like sites of urban redevelopment projects that are highly convenient for living, like for shopping,hobbies, travel, and medical services, and it is strengthening measures for business participation in collaboration
with Daiwa House Industry and Fujita Corporation, which is also a member of the Daiwa House Group. It currently
has provisionally confirmed that it will move forward on the seventh project and has started sales for two projects in
Hokkaido. It is also progressing multiple urban redevelopment projects, including in Fukui Prefecture and Fukuoka
Prefecture.
Although best known as a condominium developer, Cosmo Initia is also a prolific builder of single-family houses, having built more than 4,300 sections. Appling the unique QIT quality control management system to new single-family
houses, Cosmos Initia has been received high praise for its block designs and the marketability of room designs
such as SOLA LIVING, which allows for a brighter and more open living space for second floor housing. When it
comes to renovating condominiums, the Company applies the design expertise and skills that it has acquired fromyears in the new condominium development business and applies it to older condominiums to transform them fromthe aspect of comfortable living. In the area of residential-use real estate brokerage services, Cosmos Initia also
develops new condominium projects and carries out partnerships with renovating condominiums, offering services
that make it easier for homeowners to move to a new home by allowing them to stay in their current and complete
the sale only after they buy a new home (katte kara nattoku baikyaku) or, alternatively, buys the condominium fromthe owner and allows them to stay there while looking for a new place to live (suminagara kaitori).
Exterior views of condominiums for active seniors
INITIA GRAN Sapporo EAST (left) and INITIA Sapporo Naebo (right)

Source: The Company’s results briefing materials

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

Cosmos Initia Co., Ltd.

19-Aug.-20208844 TSE JASDAQ

https://www.cigr.co.jp/english/message.html

Business overview

Provides one-stop solutions for utilizing properties
3. Solutions businessIn the Solutions business, the Company provides one-stop solution services for owners of investment real estate toutilize their real estate, through an alliance between the Company’s Group and the Daiwa House Group. The products
and services menu includes real estate for investors for sales, including COSMOS REID and COSMOS GRACIA leasecondominiums and REID-C lease office buildings; real estate rentals operation and management for condominiums
and office buildings; land and building brokerage services, such as for investment in entire buildings and business
land; and real estate brokerage and other services, including consulting on real estate. In the percentages of total
sales in the Solutions business (FY3/20), real estate for investors provided 65%, real estate rentals operation andmanagement 33%, and real estate brokerage and other services 2%.

S o l uti ons bus i ness s ales r ati o (F Y3/20)
Real estate for investors
Real estate brokerage and other services

Real estate rentals operation and management

2%

33%

65%

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

Real estate for investors “COSMOS GRACIA Sumida Oshiage”

Source: The Company’s results briefing materials

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

Cosmos Initia Co., Ltd.
8844 TSE JASDAQ

19-Aug.-2020
https://www.cigr.co.jp/english/message.html

Business overview

In the area real estate for investors, Cosmos Initia develops smartly-styled condominiums for rent, office buildings,
and commercial properties for sale to investors, and also buys entire old rental condominium complexes and officebuildings in central urban areas and other high-demand areas that it can renovate, upgrade, bring up to code, andthen resell to investors that are looking to generate steady returns by investing in real estate. Utilizing its expertise,
the business of purchasing real estate properties in the several hundred million yen to hundreds of thousands ofbillion yen, adding property value and then selling them, has become a driver of business growth.
In recent years, SELESAGE, which is the Company’s joint investment-type real estate, has proven popular. It is
an investment product enabling investments from as little as ¥10mn yen by dividing the ownership of properties
worth billions of yen in good locations in central Tokyo into small lots. Following on from the projects in Daikanyama
and Omotesando, the third project, SELESAGE Nakameguro, has also been completely sold, and the Company isactively developing this business. In addition, for rental office projects to regenerate pre-owned properties and torealize workplaces close to homes, the second project, MID POINT Otsuka, has been opened following MID POINT
Meguro Fudomae. It also continues to develop products and services that raise the value of these real estate to rise.
In such ways, the Company’s Solutions business menu is becoming more and more rich, and it is able to provide a
one-stop solution for whatever type of property that the customer wants.
Cosmos Initia has long been in the property management business, managing the leases of more than 10,000
residential properties as well as a variety of other buildings, including retail store space. In the real estate rentals
operation and management, the condominium owner leases his property to the Company who in turn subleases
it to tenants. This service offers a great deal of convenience to property owners, as it allows them to avoid thetroublesome process of finding tenants, signing rental contracts, renewing contracts, and responding to tenant
problems, and also has the additional advantage of signing a one-time leasing agreement that guarantees a safe
and steady stream of rental income. The real estate rentals operation and management business also works out wellfor Cosmos Initia by limiting the business risk that goes along with property ownership while remaining in a position
to generate a steady stream of revenues and earnings.
Exterior view of SELESAGE Nakameguro (left)
and the MID POINT Otsuka shared lounge (right)

Source: The Company’s results briefing materials

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

Cosmos Initia Co., Ltd.
8844 TSE JASDAQ

19-Aug.-2020
https://www.cigr.co.jp/english/message.html

Business overview

At MIMARU, stays are like you live there
4. Accommodation business
The Accommodation business is a new business from the division of segments in FY3/20. The Company is utilizing
its expertise in developing and building new condominiums to develop and manage MIMARU hotels that, as
Accommodation facilities in urban areas, make possible “stays are like you live there,” for which there are still few
other examples in Japan. They are located in areas with easy access to cities, tourist attractions, and so on, andoffer a style of stay that is the same as living at home for families and groups of four or more people. Moreover, theirmulti-national staff provide support for sightseeing, eating and shopping. The concept is to provide large rooms that
include a kitchen and dining space so that guests can reside in a relaxed atmosphere just like their own homes. The
Company has currently opened 15 hotels in Tokyo and Kyoto*.
*	As of the end of June 2020, 11 hotels had been temporarily closed due to the COVID-19 spread.

Long stay-type hotels like MIMARU are rare in Japan and they have acquired an excellent reputation among
foreign visitors to Japan, including that 3 hotels have been ranked in the top 20 in the Ranking of Hotels chosen
by Foreigners in the Inbound Demand Report of Tripadvisor, Inc. So since its launch, this business has been
performing extremely steadily. The Company is also conducting various other measures, including preparing rooms
in collaboration with Pokémon and designers. However, due to the impact of the COVID-19 outbreak, occupancy
rates have fallen since February 2020 and it has been necessary to implement measures including temporarily
closing some hotels. But as the medium- to long-term trend, it is forecast that demand will increase for long-termstays from both inbound and domestic guests, so the rates are expected to recover in the future.
Pokémon Rooms (left) are available in 6 hotels, anda room in MIMARU Tokyo UENO OKACHIMACHI (right)

Source: The Company’s results briefing materials

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

Cosmos Initia Co., Ltd.
8844 TSE JASDAQ

19-Aug.-2020
https://www.cigr.co.jp/english/message.html

Business overview

Has an excellent reputation for design work and construction
technologies
5. Construction business
The Construction business is conducted by Cosmos More Co., Ltd., which builds condominiums galleries, sells interior design options for new condominiums, conducts repairs and improvements for office relocations, and conducts
design and construction work of constructing steel housing for residential environments and office environment.
It also provides “design +α” value-added services. It is currently strengthening measures for office repairs andimprovements to maximize the value of offices through design and construction work in accordance with workstylereforms. In addition, it is steadily expanding the business scope, including by participating in design and construct
work for a variety of facilities, including sports facilities, shops, and amusement facilities. It has acquired an excellent
reputation for its design work, including that already in 2020, three of its design works had won overseas awards.
The Amuse office (left) won in the German Design Awards 2020,
and the COSMOS office (right) won in the 2020-2021 Asia Pacific Property Awards

Source: The Company’s results briefing materials█ Results trends
Before the spread of COVID-19, results were trending extremely
steadily
1. FY3/20 results
For FY3/20, the Company reported sales of ¥110,559mn (+5.7% YoY), operating profit of ¥6,010mn (+11.7%),
recurring profit of ¥5,250mn (+3.9%), and net profit attributable to parent company shareholders of ¥3,415mn(-25.1%). Sales and operating profit were also above the initial forecasts, by ¥559mn and ¥210mn, respectively,
although recurring profit was ¥50mn below forecast and net profit attributable to parent company shareholders¥885mn below forecast. The Solutions business performed particularly strongly, with sales and operating profit
increasing for the sixth consecutive period. While operating profit was strong and increased by double digits,
recurring profit only increased by a single digit due to the rise in financial costs from the expansion in purchases in
the Company’s proactive strategy. The FY3/21 results outlook deteriorated from the start of the year following the
global impact of the COVID-19 spread, leading to a reversal of deferred tax assets, and there was also a decline asa reaction to the recording of extraordinary profit in the previous period. As a result, net profit attributable to parent
company shareholders decreased.

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12 22

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

Cosmos Initia Co., Ltd.

19-Aug.-20208844 TSE JASDAQ

https://www.cigr.co.jp/english/message.html

Results trends

FY3/20 results(¥mn, %)
FY3/19FY3/20

Amount% of sales

Amount% of sales

Sales

104,606

100.0

110,559

100.0% of change
5.7

Gross profit margin

19,13418.3

18,658

16.9-2.5

SG&A expenses

13,75413.1

12,64711.4-8.0

Operating profit

5,380

5.1

6,010

5.4

11.7

Recurring profit

5,050

4.8

5,250

4.7

3.9

Net profit attributable to parent
company shareholders

4,562

4.4

3,415

3.1

-25.1

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

The self-restraint measures are gradually being lifted from May 2020
onwards
2. FY3/21 forecasts
For the FY3/21 results, the Company is forecasting sales of ¥105,000mn (-5.0% YoY), operating profit of ¥0(-100.0%), a recurring loss of ¥800mn (-¥6,050mn), and a net loss attributable to parent company shareholders of¥800mn (-¥4,215mn). It is assuming that the coronavirus crisis will not completely settle down until September 2020
and a gradual recovery will occur from October onwards, and that the business environment will have returned tosomething similar to that before the COVID-19 outbreak by the end of the period. Therefore, it expects self-restraint
for sales activities and the profitability of some delivered properties to decline, mainly in the 1Q. However, in the
Accommodation business, it seems that the effect of COVID-19, of causing the hotels’ occupancy rates to decline,
will persist over the long term.
As of the middle of June, in principle the Company’s employees are working from home and working at work sites
at different times only as necessary. It has temporarily closed some work sites, including the condominium andsingle-family houses information centers and the brokerage sales offices, while it is also exhibiting self-restraint forsome activities, like sales and purchasing activities, including shortening the working hours on the inquiries help
desk. But following the end of the period of consecutive holidays in May, it has been sequentially resuming sales
activities. At the current time, the impact on construction projects has been minimal. But going forward, should
construction work be suspended, deliveries of properties and the recording of sales may be delayed. In addition,
the Company is keeping down new investment in systems and R&D and reviewing implementation periods, while inpreparation for the impact of the COVID-19 pandemic becoming prolonged, it is working on measures to maintainand improve liquidity on hand. Within this situation, in the Accommodation business, there are several cases of sales
self-restraint (temporary closures) for the MIMARU hotels. But if excluding the Accommodation business, it is forecast
that business conditions will slowly improve from May and June onwards, alongside the lifting of the self-restraint
measures. Therefore, the Company’s assumptions for its mainstay businesses appear somewhat conservative, andas a result, it is also possible to assume that it can avoid losses for the profit items from the recurring loss and down.
However, at the present time there is no treatment or vaccine for COVID-19 and it is also certain that the future is
impossible to predict, so it must remain on guard for whatever the future holds.

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13 22

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

Cosmos Initia Co., Ltd.

19-Aug.-20208844 TSE JASDAQ

https://www.cigr.co.jp/english/message.html

Results trends

FY3/21 forecast(¥mn, %)
FY3/20FY3/21 E

Amount% of sales

Amount% of sales

Sales

110,559

100.0

105,000

100.0% of change-5.0

Gross profit margin

18,65816.9

13,900

13.2

-25.5

SG&A expenses

12,647

11.4

13,90013.2

9.9

Operating profit

6,010

5.4

0

0.0

100.0

Recurring profit

5,250

4.7

-800

-0.8

-

Net profit attributable to parent
company shareholders

3,415

3.1

-800

-0.8

-

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

Although the Accommodation business continues to struggle,
conditions are improving in the mainstay businesses
3. Results trends by businessLooking by business in FY3/20, in the Residential business, although sales declined, profits increased by double
digits due to the improvement in earnings. In the Solutions business, sales increased and profits grew by double
digits, while in both the Accommodation business and the Construction business, sales rose by double digits. So
it was thought that the Company was making steady progress for its proactive strategy in accordance with themedium-term business plan. However, due to the impact of the COVID-19 outbreak across the end of the period,
results in the Accommodation business slowed down dramatically. For the FY3/21 outlook, the Accommodation
business is forecast to record a loss, as the impact of the COVID-19 outbreak will last over the entire period. For
all the other businesses also, the forecasts are for significant decreases in profits, mainly due to the impact of theself-restraint measures. However, toward a recovery from the 2H, the Company is likely to secure sales at a certain
level in all businesses except for the Accommodation business. It seems that the profits resulting from these sales
levels will somewhat cover for the Accommodation business, but it cannot be complacent. The details of the results
and the results forecast by business are shown below.

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14 22

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

Cosmos Initia Co., Ltd.
8844 TSE JASDAQ

19-Aug.-2020
https://www.cigr.co.jp/english/message.html

Results trends

FY3/20 results and FY3/21 forecast by segment(¥mn, %)
FY3/19Sales

FY3/20% of sales% of change% of sales% of change

Residential business

38,87537.2

37,36933.8-3.9

42,30040.3

13.2

Solutions business

43,74441.8

47,44042.9

8.4

45,50043.3-4.1

Accommodation
business

10,1209.7

12,730

11.5

25.8

5,300

5.0

-58.4

Construction business

11,665

11.2

13,70612.4

17.5

12,50011.9-8.8

Eliminations of interGroup transactions

199

-

-686

-

-

-600

-

-

104,606

100.0

110,559

100.0

5.7

105,000

100.0

-5.0

% of sales

Operatingprofit% of change

OperatingprofitTotal% of sales

Sales

FY3/21 E

FY3/19OperatingprofitSales

FY3/20% of sales

FY3/21 E% of sales% of change

Residential business

1,183

3.0

1,545

4.1

30.5

600

1.4

-61.2

Solutions business

3,457

7.9

4,887

10.3

41.4

2,500

5.5

-48.8

Accommodation
business

1,871

18.5

1,162

9.1

-37.9

-1,500-28.3-

Construction business

366

3.1

349

2.5

-4.6

200

1.6

-42.7

Eliminations of interGroup transactions-1,498--1,934---1,800

-

-

Total

5,380

5.1

6,010

5.4

11.7

0

0.0

-100.0The overseas business is included in eliminations of inter-Group transactions in FY3/19
Source: Prepared by FISCO from the Company’s financial results(1) Residential businessIn the FY3/20 results, sales were ¥37,369mn (+3.9% YoY) and operating profit was ¥1,545mn (+30.5%). The
number of deliveries of renovated condominiums increased, but the number of deliveries of new condominiums
and new single-family houses decreased. The reason for these decreases was that, in the severe purchasing
environment, little progress was made in acquiring business-use sites. For new condominiums, there were many
deliveries of high-priced properties compared to in FY3/19, so the sales unit price rose, but the gross profit
margin declined due to the increase in construction costs. Conversely, the gross profit margins of renovatedcondominiums and new single-family houses improved. SG&A expenses were also kept down compared to in
the previous period, so profits increased by double digits.
For the FY3/21 results, the Company is forecasting sales of ¥42,300mn (+13.2% YoY) and operating profit of¥600mn (-61.2%). The number of deliveries of renovated condominiums is set to decrease slightly, but the numberof deliveries of new condominiums and new single-family houses will increase, while sales are also scheduled tostart for two projects for condominiums for seniors in Hokkaido. The sales unit price is expected to normalize,
but sales costs of several hundreds of millions of yen will be incurred in advanced for the condominiums forseniors and other properties that are scheduled to be delivered from FY3/22 onwards. There is also the impactof the COVID-19 outbreak, so the operating profit margin is forecast to decline. The effects of the COVID-19
outbreak are expected to include that the number of contracts and deliveries will decrease and the profitabilityof some properties will decline, alongside the self-restraint for sales activities and the delays in progressing
sales. The current situation is that model rooms have gradually reopened after Golden Week, and it appears thatprojects are also being resumed without any of the feared major impacts, such as the suspension of construction
work. Therefore, even on considering effects such as a certain level of delay in the progress made and upfront
sales costs, the Company’s forecasts appear somewhat conservative. However, there are likely to be somedevelopments that will help to get a grip on the situation, particular in 1H FY3/21.

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15 22

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

Cosmos Initia Co., Ltd.

19-Aug.-20208844 TSE JASDAQ

https://www.cigr.co.jp/english/message.html

Results trends

Background to the results of the Residential business(¥mn, %)
FY3/19Number ofdeliveries

Sales

FY3/20Percentagesof total sales

Number ofdeliveries

FY3/21 E

Increase/
Sales
Percentages decrease in increase/of total sales number of decrease
deliveries
rate

Sales

Number ofdeliveries

Sales

Increase/
Sales
Percentages decrease in increase/of total sales number of decrease
deliveriesrate

New condominiums (units)414

20,33652.3

325

18,185

48.7

-89

-10.6

421

20,300

48.0

96

11.6

New single-family houses(sections)

109

6,981

18.0

70

5,224

14.0

-39

-25.2

92

7,600

18.0

22

45.5

Renovated, pre-owned
condominiums-

10,63427.4-

13,179

35.3

-

23.9

-

13,600

32.2

-

3.2

234

9,986

25.7

317

12,333

33.0

83

23.5

295

12,800

30.3

-22

3.8

Of which, renovatedcondominiums (units)
Real estate brokerage and otherservices

-

922

2.4

-

779

2.1

-

15.5

-

800

1.9

-

2.7

Total

-

38,875100.0-

37,369

100.0

-

-3.9

-

42,300

100.0

-

13.2

Note: In new condominiums, town houses and new single-family houses include residential land subdivisions
Note: The number of units and the number of sections in joint-project properties are based on the business ratios

Gross profit margin (%)

New condominiums (units)

Completed inventory

Completed contracts

Contract progress
rate (%)

FY3/19FY3/20FY3/21 E

End
FY3/19End
FY3/20End
FY3/19End
FY3/20End
FY3/19End
FY3/20

19.1

18.5

16.1

80

92

108

150

31.2

35.6

72

83

33

53

3

3

4.4

3.3

30

50
12

5

3.9

1.7

Of which, uncompleted
contracts (units)
New single-family houses (sections)

10.1

10.8

10.4

Of which, uncompleted
contracts (units)
Renovated condominiums(sections)

13.3

14.1

13.2

Note: The gross profit margin does not include the inventory write-down
Note: The contract progress rate is the progress made for sales at the end of the period in relation to the next period’s results forecast
Source: Prepared by FISCO from the Company’s results briefing materials(2) Solutions businessIn the FY3/20 results, sales were ¥47,440mn (+8.4% YoY) and operating profit was ¥4,887mn (+41.4%). Due tothe active conditions in the market for real estate for investors, sales of real estate for investors were strong. In
addition, in real estate rentals operation and management, the number of subleasing units rose and sales of realestate brokerage and other services increased, which led to the higher sales and profits. In particular, the joint
investment-type real estate, which the Company began selling in FY3/18, has proven popular among customers.
The gross profit margin for entire buildings improved, the contract progress rate and the number of real estate
subleasing units grew steadily, while the vacancy rate also trended a low level.
For the FY3/21 results, the Company is forecasting sales of ¥45,500mn (-4.1%) and operating profit of ¥2,500mn(-48.8%). In addition to the decline as a rebound from the strong sales in the previous period, the sales earnings
from some properties is expected to fall due to the self-restraint in sales activities from the impact of the COVID-19
outbreak and the deterioration of leasing conditions, including for store sections, and the gross profit margin is
forecast to decrease. However, real estate for investors has the aspect of being dependent on customers, so thepossibility remains that results will exceed the forecasts.

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16 22

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

Cosmos Initia Co., Ltd.

19-Aug.-20208844 TSE JASDAQ

https://www.cigr.co.jp/english/message.html

Results trends

Background to results in the Solutions business(¥mn, %)
FY3/19Number ofdeliveries
Real estatefor investors(properties)

Sales

FY3/20Percentagesof total sales

Number ofdeliveries

Sales

FY3/21 E

Increase/
Sales
Percentages decrease inincrease/of total sales number ofdecrease ratedeliveries

Number ofdeliveries

Sales

Increase/
Sales
Percentages decrease inincrease/of total sales number ofdecrease ratedeliveries-

28,16064.4-

31,067

65.5

-

10.3

-

29,200

64.2

-

-6.0

Of which, entire
buildings

23

20,24946.3

1920,615

43.5

-4

1.8

19

25,700

54.2

0

24.7

Real estate rentals
operation andmanagement

10,15815,032

34.4

10,633

15,466

32.6

475

2.9

10,15015,900

34.9

-483

2.8

Real estate
brokerage andother services

-

551

1.3

-

906

1.9

-

64.4

-

400

0.9

-

-55.8

Total

-

43,744100.0-

47,440

100.0

-

8.4

-

45,500

100.0

-

-4.1

Gross profit margin (%)
Entire buildings(Real estate for investors)(properties)

Completed contracts

Contracts progress rate (%)

FY3/19FY3/20FY3/21 E

End FY3/19

End FY3/20

End FY3/19

End FY3/20

11.9

12.6

10.5

600

5,329

3.0

20.7

Note: The gross profit margin does not include the inventory valuation loss
Source: Prepared by FISCO from the Company’s results briefing materials(3) Accommodation businessIn the FY3/20 results, sales were ¥12,730mn (+25.8% YoY) and operating profit was ¥1,162mn (-37.9%). Sales
increased by double digits due to the increase in the number of operating hotels in properties managed, including
the new openings of seven MIMARU apartment hotels and 399 rooms. Conversely, due to the impact of the
COVID-19 outbreak since the beginning of 2020, the business environment has rapidly deteriorated, such as thatin March the average occupancy rate fell to 15.6% and the average room unit price and the average number ofdays of stays both fell significantly. The occupancy rate of rooms for the full fiscal year was 64.9%, a decline of
17.3 percentage points YoY, while there was also the impact of the sale of a high-earnings property in the previous
fiscal period, so profits declined.
For the FY3/21 results, the Company is forecasting sales of ¥5,300mn (-58.4% YoY) and an operating loss of¥1,500mn (-¥2,662mn). On entering FY3/21, the same severe conditions as in March are continuing, includingthat the Company has temporarily closed 11 of the 15 MIMARU hotels. Therefore, for hotel management, it isassuming that the FY3/21 occupancy rate will remain around the March level until September, and although it will
gradually recover from October onwards, it will not completely recover until the end of the period. For hotel sales,
the sales periods of some properties will be delayed, while it is also possible that there will be partial delays for thefour hotels and 133 rooms scheduled to newly open in Osaka and Kyoto in FY3/21. However, results are expected
to recover from the major trend in the “post-coronavirus” period of the increase in demand for Accommodationfrom tourists, particularly overseas tourists. Therefore, it seems that there has been no change to the Company’s
medium- to long-term growth strategy. But until the number of overseas tourists recovers, it is thought that it will
aim to capture demand for Accommodation from Japanese guests, for who it has not conducted much sales
activities up to the present time

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17 22

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

Cosmos Initia Co., Ltd.

19-Aug.-20208844 TSE JASDAQ

https://www.cigr.co.jp/english/message.html

Results trends

Background to the apartment hotels’ results
FY3/19Number of developments
Of which, completed developments

FY3/20(hotels)(rooms)(hotels)(rooms)

25

1,237

33

1,752

8

361

15

760

Management conditions
FY3/19FY3/20March 2020(reference)
15.6

82.2

64.9

Average room unit price (¥1,000)

25

24

16

Average length of stay (days)

2.9

3.0

2.4

Average occupancy rate (%)

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

Ratios of numbers of hotel guests by country

Source: The Company’s results briefing materials(4) Construction businessIn the FY3/20 results, sales were ¥13,706mn (+17.5% YoY) and operating profit was ¥349mn (-4.6%). Orders
for construction work increased and sales rose by double digits. But due to the relocation expenses for the
COSMOS More head office, SG&A expenses increased and profits declined. For the FY3/21 results, the Company
is forecasting sales of ¥12,500mn (-8.8%) and operating profit of ¥200mn (-42.7%). It is anticipating that orders
will decrease and the completion of some construction projects will be delayed due to the impact of the COVID-19
outbreak.

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18 22

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

Cosmos Initia Co., Ltd.
8844 TSE JASDAQ

19-Aug.-2020
https://www.cigr.co.jp/english/message.html█ Medium- to long-term management policy
May change the medium-term business plan due to the impact of
the COVID-19 outbreak
1. Effects of the COVID-19 outbreak on the medium-term business plan 2021
In 2020, the COVID-19 pandemic suddenly struck the human race, and it is having a major impact on the world.
As previously stated, each of the Company’s businesses are being affected to a greater or lesser extent, and it
currently implementing its responses to and measures for the virus. Therefore, positioning the current time as thefirst step toward a new stage, its policy is to strengthen investment and strategy towards taking an even greater leap
forward. It seems that the Company’s medium-term business plan 2021 is also being affected. It is possible that it
will revise, postpone, or at the very least change its measures for the FY3/22 targets, which are sales of ¥135bn,
operating profit of ¥8.1bn, and an equity ratio of 30%. However, this is not to say that the direction it is aiming for in
the medium-term business plan 2021 is a mistake. Due to the efforts of the human race, the “post-coronavirus” world
will arrive, perhaps even in the near future. When this occurs, it intends to aim for these targets once again. So evenfor the Accommodation business that is struggling the most, against the backdrop of the medium-term businessplan 2021, we consider that the Company’s approach and measures for its medium- to long-term management
policy are correct, and that it should deploy a strategy in accordance with this policy.

No change to the basic medium- to long-term policy
2. Medium- to long-term management policy
As its medium- to long-term management policy, the Company is aiming to create social value through managementthat implements CSV*1 and that is aware of the SDGs*2 and ESG*3 in all its management activities; to create andinnovate businesses by producing urban environments in response of societal changes and the diversification ofneeds; and to improve shareholder value through further strengthening its financial foundation and enhancing returns
to shareholders. It intends to take an even greater leap forward and to enter a new stage, and as the measures
for this, it is deploying an integrated strategy for business, investment, and organization and personnel, as well
as expanding its businesses and actively conducting investment. At the same time, it is further strengthening thefinancial foundation and aiming to improve returns to shareholders. The medium-term business plan embodies
these efforts.
*1	CSV (Creating Shared Value): A differentiation strategy aimed at creating sustainable growth by using the strength of acompany to address society problems; said to be an extension of CSR (Corporate Social Responsibility).
*2	SDGs (Sustainable Development Goals): The SDGs were unanimously adopted at the 2015 U.N. Summit, and comprise
17 goals for the international community, including “No Poverty,” “Decent Work” and “Climate Action.”*3	ESG (Environment, Social, Governance): The three elements that companies and institutional investors should consider
in order to contribute to the formation of a sustainable society.

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19 22

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

Cosmos Initia Co., Ltd.
8844 TSE JASDAQ

19-Aug.-2020
https://www.cigr.co.jp/english/message.html

Medium- to long-term management policy

The reason why the Company has not made any changes to the management policy is precisely because Next
GOOD, which it has set as its mission, contains “the wish” of having a presence that provides “value that is one stepahead” to its customers and to society in advance, and the medium- to long-term management policy serves as
the backbone of this Next GOOD mission. What is considered to have a particularly important meaning within themedium- to long-term management policy is creating and innovating businesses through producing urban environments that respond to societal changes and the diversification of needs. For the Company, this entails deploying
each strategy, such as the business, investment, and organization and personnel strategies, in an integrated manner
to respond to every societal change occurring around its business domains. These changes include the increases
in single-person households and senior citizens, the diversification of work styles and employment, the increases in
the number of overseas visitors to Japan and of foreigners living in Japan, the changes to the social infrastructure
due to technological innovation, the expansion of the sharing economy, the growth of the leisure and entertainment
areas, and the rise in interest in health and beauty.
When dividing from the perspective of strategy, it can be broadly divided into the business strategy, the investment
strategy, the organizational and personnel strategy, and the financial strategy. For the business strategy, it is considered that the Company will deploy the products and services it has developed for existing business domains inperipheral business domains; actively expand the regeneration, utilization, and management business of pre-owned
stock; and create new businesses to follow on from the apartment hotel business and expand the business domains.
For the investment strategy, in addition to conducting R&D to grow and expand existing businesses, it seems
that it will incorporate ICT (Information & Communication Technology) and concentrate resources into creating
new businesses, including through M&A. For the organizational and personnel strategy, the Company is aiming toenhance WSI*, its proprietary workstyle reform, and overwhelmingly improve creativity and productivity. Moreover,for the financial strategy, it is thought that, at the same time as expanding businesses and actively investing, it will
strengthen the financial foundation and increase shareholder value by greatly improving returns to shareholders,
including by continuously increasing the dividend.
*	WSI (Work Style Innovation): The Company’s unique work style reform initiative. In a comparison of before WSI to after(FY3/19 to FY3/15), operating income increased by 208%, overtime hours decreased by 42%, holiday work attendance
decreased by 99%, and paid leave usage increased by 44%. In FY3/19, the Company promoted the company-wide useof remote work and also expanded support for balancing work with childcare and family care.

No sense of a change of direction for the specific strategies for eachbusiness
3. Specific measures for each business
While it is possible that the medium-term targets for the respective business will change due to the impact of
COVID-19, it is considered that the sense of direction for the overall strategy will not change. Of course, for aspects
such as schedules and resource management, it seems that on occasions it will be necessary to adjust the senseof direction itself.
In the Residential business, the Company is aiming to improve profitability through providing a rich menu of services
that it provides as a one-stop service. For new condominiums, through strengthening products and services with afocus on quality, such as developments in locations that are highly convenient and for spatial designs, it is aiming
to differentiate its residential developments that are one step ahead and to ensure a certain level of market share.
In condominiums for active seniors, it is thought that it will accelerate developments in the major cities nationwide
to respond to diverse needs. It intends to incorporate the space designs of new condominiums for renovatedcondominiums and to provide one-stop services for retail real estate brokerage and renovation work.

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

20 22

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

Cosmos Initia Co., Ltd.
8844 TSE JASDAQ

19-Aug.-2020
https://www.cigr.co.jp/english/message.html

Medium- to long-term management policy

In the Solutions business, the Company provides a one-stop service for every aspect, from purchasing through tomanagement and sales, while it is also working to improve the efficiency of operations. In real estate for investors, inaddition to diversifying products, regenerating pre-owned stock, and strengthening branding, it seems that, following
on from SELESAGE and MID POINT, it will continue to develop products and services that cause the real estate toimprove in value. In real estate rentals operation and management, it will increase the number of units managed andthe total area managed and improve the efficiency of operations. In real estate consulting, the policy is to enhance
the Solutions business and consulting services and to respond to customers through providing one-stop services.
In the Accommodation business, it seems that risks are easy to control because this business combines property
development and operations management (after the sale). That said, for the time being, use by overseas visitors toJapan is not expected, so the Company is considering strengthening sales promotions for Japanese guests, for who
it has not conducted much customer-attraction measures up to the present time. In the Construction business, rather
than simply for office spaces, its policy is to further strengthen measures for office design and construction work forworkstyle reforms, for sports facilities like futsal pitches and clubhouses, and also for shops and amusement facilities.

█ Shareholder return policy
The Company is aware that improving enterprise value and returning profits to shareholders are important management issues. For its dividend policy, it works to stably pay a dividend while considering returns to shareholders andsupplementing the internal reserves it needs for continuous growth. For the FY3/20 dividend, as was announced on
August 7, 2019, the Company changed its dividend policy toward enhancing opportunities for returns to shareholders, and began paying an interim dividend from FY3/20. Therefore, the annual dividend was ¥13 per share as thetotal of the period-end dividend of ¥8 and the interim dividend of ¥5. It does not plan to pay a dividend in FY3/21
due to concerns about the COVID-19 impact.

D i v ide nd p e r sh ar e a n d d i vide n d p a you t r at io
Dividend per share (left)

（¥）

(%)

Dividend payout ratio (right)

15.0

16.0
12.9
12.0

10.0
7.8

8.3

8.2
8.0

6.5
13.0
11.0

5.0

9.0
7.0

4.0

7.0
0.0

0.0

0.0
FY3/16

FY3/17

FY3/18

FY3/19FY3/20FY3/21 E

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

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

21 22

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

Cosmos Initia Co., Ltd.
8844 TSE JASDAQ

19-Aug.-2020
https://www.cigr.co.jp/english/message.html█ Information security
In the course of its business the Company comes into the possession of personal information of buyers andprospective buyers of new condominiums and single-family houses and, as a result, is subject to the Protectionof Personal Information Act. In keeping with the Act, the Company has taken all appropriate steps to guard thepersonnel information in its possession, including establishing a privacy policy and procedures and rules for thehandling of personal information. It is also working to fortify its information management structure across thecompany as a whole, including employee training and the installation of secure entry/exit systems for all offices.

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

22 22

Disclaimer
FISCO Ltd. (“FISCO”) offer stock price and index information for use under the approval of theTokyo Stock Exchange, the Osaka Stock Exchange and Nikkei Inc.
This report is provided solely for the purpose of offering information, and is not a solicitationof investment nor any other act or action.
FISCO prepared and published this report based on information which it considered reliable;
however, FISCO does not warrant the accuracy, completeness, fitness nor reliability of thecontents of this report or the said information.
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subject to change without notice. FISCO is not obligated to update this report.
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Please use the information in this report upon accepting the above points.

◾ For inquiry, please contact: ◾

FISCO Ltd.
5-11-9 Minami Aoyama, Minato-ku, Tokyo, Japan 107-0062
Phone: 03-5774-2443 (Financial information Dept.)
Email: support@fisco.co.jp