COMPANY RESEARCH AND ANALYSIS REPORT

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

5-Jul.-2019
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.

5-Jul.-20193254 Tokyo Stock Exchange First Section

http://www.pressance.co.jp/ir/ir6.html#english■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Market trends. . .............................................................................................................................................

01

2. Strengths.....................................................................................................................................................

01

3. Results trends........................................ ......................................................................................................

02

4. Growth strategy and topics. . ........................................................................................................................

02

5. Shareholder return policy....................... ......................................................................................................

03■Company overview--------------------------------------------------------------------------------------------------------------------------------------------------- 04
1. Company overview......................................................................................................................................

04

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

04

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

05■Market trends---------------------------------------------------------------------------------------------------------------------------------------------------------------- 06
1. Condominium market trends. . ......................................................................................................................

06

2. Condominium supply ranking................ ......................................................................................................

07■Strengths---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 08
1. Location Strategy. . ................................. ......................................................................................................

08

2. Strengthening sales capabilities. . ........... ......................................................................................................

08■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 09
1. Financial results for FY3/’19. . ................. ......................................................................................................

09

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

10■Business outlook-------------------------------------------------------------------------------------------------------------------------------------------------------- 11■Medium-/long-term topics-------------------------------------------------------------------------------------------------------------------------------- 12
1. Raised goals in the medium-term management plan. ..................................................................................

12

2. Strengthening real estate tech: Launched Braight service. ..........................................................................

13

3. ROE comparison in the real estate industry. ................................................................................................

14■Shareholder return policy---------------------------------------------------------------------------------------------------------------------------------- 15

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.

5-Jul.-20193254 Tokyo Stock Exchange First Section

http://www.pressance.co.jp/ir/ir6.html#english██Summary
Posted higher sales and profits in a ninth consecutive year in
FY3/’19 with gains of over 30% in all profit categories; raised goals
in the medium-term management plan through FY3/’21 and started
operating Braight, a real-estate tech service that utilizes AI
Pressance Corporation Co., Ltd. <3254> (hereafter, also “the Company”) is an independent and integrated developerof studio and family condominiums that handles planning, development, sales and rentals as well as building
management It has been the largest supplier in the Kinki and Tokai-Chukyo areas for nine and seven years, respectively, and was in second place nationwide behind only Sumitomo Realty & Development<8830> for the second
consecutive year in 2018. The Company offers the Pressance Series of condominiums, conveniently located close
to major railway stations at or around the center of cities, designed and developed under the Company brand.
Another strength is a highly motivated sales force resulting in so few unsold inventories. Pressance has grownsteadily since its establishment in 1997. It was listed on the Second Section of the Tokyo Stock Exchange in 2007.
Having suffered little from the Lehman Brothers bankruptcy, it was listed on the First Section of that stock market in2013. The Company is highly rated on the stock exchange and selected as a component of the JPX-Nikkei Index
400 in 2015 and of the JPX-Nikkei Mid and Small Cap Index in 2016.
Pressance is a unique company in the condominium development industry with diverse products that range fromstudio condominiums, family condominiums and buildings (studio condominium wholesale business) to hotels.
The diverse product line-up enables optimal use of sites when land information is acquired and enlarges purchasevolume. Consequently, the Company can purchase lands and build on them more effectively and less expensively
than competitors.
1. Market trends
Nationwide new condominium supply remains healthy, though market trends differ in Tokyo metropolitan and Kinki
areas. While supply volume in the Tokyo metropolitan area rose 3.4% YoY to 37,132 units (during Jan-Dec 2018),
it grew at a stronger pace in the Kinki area of 7.1% to 20,958 units. In condominium contract rates (first monthcontracted units/supplied units; Jan-Dec 2018) too, the Tokyo metropolitan area was at 62.1% versus the Kinki
area’s 74.5%, which exceeded the 70% threshold value for healthy conditions throughout the year. We think this isfavorable market environment for the Company with its business activity centered in the Kinki area.
2. Strengths
The Company rigorously adheres to a strategy of supplying condominiums with emphasis on the locations withparticularly high population growth rates in the Kinki area and Tokai and Chukyo area. In Osaka City, the Company
provides concentrated supply of studio condominiums to six wards (Chuo, Kita, Nishi, Fukushima, Naniwa, andYodogawa) that have higher population growth rates than other wards and the entire Osaka Prefecture (+5.3%
over the past three years). The Company utilizes a similar strategy in Aichi Prefecture. Focus areas are located incity centers, have many offices and commercial facilities, and are highly convenient for “living and working.” Theirvalue does not fade even with advances in the “compact city” trend. The strategy of “supplying properties in highly
convenient locations in city centers” fits population trends and consumer needs. We think it is one of the factors
sustaining the Company’s rapid growth.

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

01 15

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

Pressance Corporation Co., Ltd.

5-Jul.-20193254 Tokyo Stock Exchange First Section

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

Summary

3. Results trends
The Company reported sharply higher sales and profits in FY3/’19 consolidated results at ¥160,580mil in net sales(+19.8% YoY), ¥27,118mil in operating profit (+33.2%), ¥26,531mil in ordinary profit (+33.6%), and ¥18,296mil in
net profit attributable to parent shareholders (+33.0%). These results were the ninth consecutive year of higher sales
and profits and set new all-time highs. In sales, studio condominium sales rose sharply to 2,363 units (+36.9%) andfamily condominium sales increased at a healthy pace to 2,078 units (+11.7%). Hotel sales climbed dramaticallyin the second year after beginning sales to 980 rooms (+435.5%). Gross margin was up by 1.8ppt YoY to 27.5%
thanks to a large share for studio units with relatively high margin. Despite a 0.1ppt rise in the percentage of SG&A
expenses (mainly sales fees and personnel costs), operating margin improved by 1.7ppt to 16.9%, a strong level.
Additionally, operating profit recorded robust growth at a 33.2% increase.
The Company forecasts sharply higher sales and profits in FY3/’20 consolidated guidance at ¥209,219mil in net
sales (+30.3% YoY), ¥32,531mil in operating profit (+20.0%), ¥31,429mil in ordinary profit (+18.5%), and ¥21,520mil
in net profit attributable to parent shareholders (+17.6%). If it realizes guidance, net sales will exceed ¥200bil for the
first time, profit will post a double-digit increase in a 10th consecutive year, and net sales and profits will reach new
all-time highs. In the product sales plan by segment, the Company targets a steep rise in studio condominiums to¥70,901mil (+64.8% YoY). For family condominiums, the largest segment, meanwhile, it expects roughly flat sales
at ¥74,757mil (-3.4%). The projected 20.0% YoY rise in operating profit means that the Company should easily
exceed the management goal of “at least 10%.” The Company implements business with an outlook of 1-2 years
and already acquired orders totaling 73.3% of the sales target (¥147,102mil) at the start of FY3/’20. We think theCompany’s outlook is highly reliable with very low possibility of shortfall, considering its excellent planning precision.
The Company revised its target upward for the three-year medium-term management plan that lasts throughFY3/’21. It lifted FY3/’20 profit targets to FY3/’21 levels from the plan before revisions, attaining the goals one year
ahead of time. It also boosted FY3/’21 goals to ¥250,960mil in net sales (+20.0%), ¥36,434mil in operating profit(+12.0%), ¥35,108mil in ordinary profit (+11.7%), and ¥23,984mil in net profit attributable to parent shareholders(+11.4%). This updated plan forecasts continuation of profit growth at over 10%.
4. Growth strategy and topics
The Company started operating Braight, a comprehensive site for investment real estate that utilizes AI, in April 2019
and thereby began an initiative to accelerate income growth using real estate tech. The “Braight” name combines AI(artificial intelligence) and bright with a message of wanting a bright future for the real estate investment market. Now,
the Company has launched five sites and offers information and services that extend from the stage of customers
expressing interest in real estate investment to property comparison reviews and post-sale services. It aims to
expand the new customer base and boost efficiency by closely linking real estate tech to business. The Company
is targeting 75,000 Braight members by FY3/’24, the fifth year of service, and hopes to generate ¥24,480mil in
FY3/’24 sales (¥7,200mil in used properties and ¥17,280mil in new-construction properties). We expect upside in
the Company’s results if Braight business is successful because goals in the medium-term management plan, which
has arrived at the second year, do not contain sales from this initiative.

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

02 15

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

Pressance Corporation Co., Ltd.

5-Jul.-20193254 Tokyo Stock Exchange First Section

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

Summary

5. Shareholder return policy
The Company regards return of profit to shareholders via dividends as an important management topic. Its fundamental policies are “expansion of dividend funds through operating profit growth of at least 10% YoY each year,”“incremental increase of the dividend payout ratio to 20% by FY3/’23,” and “increase in total dividend payment valueof at least 15% YoY,” and we thus expect acceleration of the dividend hike pace over the medium term. In FY3/’19,
the Company paid a ¥40.50 dividend (¥17.50 at end-1H and ¥23.00 at end-2H; raising it ¥11.10 or 37.8% YoY)
with the dividend payout ratio at 13.7%. After targeting ¥35.00 (¥17.50 at end-1H, ¥17.50 at end-2H) at the start of
the fiscal year, the Company increased the dividend at period-end in light of upbeat earnings. In FY3/’20, it guides
for a ¥52.00 dividend (¥26.00 at end-1H, ¥26.00 at end-2H) with a 15.0% dividend payout ratio.
Key Points
Healthy market environment with solid demand in the Kinki area; making strong advances with a location
strategy that focuses on popular areas in city centers• Posted higher sales and profits in a ninth consecutive year in FY3/’19 with a rise in studio condominium sales
and profit growth of over 30% in all categories• Raised goals in the three-year medium-term management plan that lasts through FY3/’21; expects to realize
pre-revision FY3/’21 profit goals a year ahead of time in the second year and further sustained profit growth ofover 10% in the third year too• Asset value surpassed ¥300bn on increase in real estate for sale in process; maintains financial soundness• Full-fledged rollout of real estate tech using AI. Braight, a comprehensive site for investment properties, started
operating• Accelerating the dividend hike pace with a combination of profit growth and increase in the dividend payout
ratio plus upward revision of the medium-term plan; lifted the FY3/’19 dividend by 37.8% YoY•Consolidated annual business results
Net sales (left)(¥mil)
210,000

Operating profit (right)
32,531

180,000

90,00012,262

14,05720,00015,645

209,219
15,000160,580

10,334
134,059

60,00030,00025,00020,362120,000

51,75565,641

78,99035,00030,00027,118150,000(¥mil)

10,000101,083

5,000

0

0
FY3/14

FY3/15

FY3/16

FY3/17

FY3/18

FY3/19FY/20 E

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

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

03 15

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

Pressance Corporation Co., Ltd.

5-Jul.-20193254 Tokyo Stock Exchange First Section

http://www.pressance.co.jp/ir/ir6.html#english██Company overview
The Company has a dominant presence in the Kinki area and Tokaiand Chukyo area and is Japan’s No.2 condominium developer. It
specializes in city centers and possesses strength with a diverse
product portfolio that ranges from studios and family condominiums
to hotels.
1. Company overview
Pressance is an independent, integrated developer of studio and family condominiums that handles planning,development, sales as well as rentals and building management. It has been the largest supplier in the Kinki andTokai-Chukyo areas for nine and seven years, respectively, and was in the second place nationwide behind only
Sumitomo Realty & Development<8830> for the second consecutive year in 2018, in terms of supply units. The
Company offers the Pressance series of condominiums. Studio condominiums are conveniently located within 5
minutes’ walk from major railway stations, and family condominiums are located within 10 minutes’ walk as well.
Both are originally designed and developed. Its product power and highly motivated sales force are strengths andresult in few unsold inventories. Pressance has grown steadily since its establishment in 1997. It was listed on theSecond 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 included in the JPX-Nikkei Index
400 in 2015.
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 as 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 the 2000s, Pressance began developing properties by itself and extended its business area to
the Tokai-Chukyo and Kanto areas. It established Pressance Realta Co., Ltd. to handle brokerage and mediationfor existing condominiums in 2008, acquired Tryst Co., Ltd., to operate 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 seriously sufferedfrom the aftermath of the Lehman Brothers bankruptcy in September 2008, the Company has kept outstanding
performance and grown to a solid player just behind the leading pack in the condominium business. Pressance waslisted 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, selected as a component of the JPX-Nikkei Index 400 in 2015 and of the
JPX-Nikkei Mid and Small Cap Index in 2016, maintaining that status thereafter.

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

04 15

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

Pressance Corporation Co., Ltd.

5-Jul.-20193254 Tokyo Stock Exchange First Section

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

Company overview

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

Advanced 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

May 2015

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

Aug. 2015

Selected as a component stock of 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 Lala place Co., Ltd. and made it a wholly-owned subsidiary

July 2017

Established Pressance USA Inc. in the United States

Source: Prepared by FISCO from Company materials

3. Business breakdown
Pressance mainly develops and sells studio as well as family condominiums. Both businesses involve building
construction and sales of condominiums. Studio condominium sales, a core business since its foundation, booked
2,363 units sold and generated 26.8% of total sales in FY3/’19. Studio condominiums are 20-50 square meters
at highly convenient location within five minutes on foot from major train stations in central urban areas under thePressance brand. Customers purchase studio condominiums for investment purposes as their financial assets ingeneral, and main customers are ordinary salaried employees with stable income in addition to wealthy professionals.
Family condominium sales booked 2,078 units and provided 48.2% of FY3/’19 sales. Family condominiums are
50-100 square meters at location with attractive environments located within 10 minutes on foot from major train
stations under Pressance Loger and other brands. Pressance Jyuhan Co., Ltd., a subsidiary, manages sales offamily condominiums.
The Company started booking sales in FY3/’18 for the “hotel sales” business, its next largest product segment. It
mainly develops business hotels and sells them to hotel firms, REITs, and others. With a completion rush in FY3/’19,
it sharply expanded business to 980 units in FY3/’19 and 11.0% of total sales in FY3/’19. “Building sales” are mainly
wholesale transfers of studio condominium buildings to condominium sales firms and provide 7.8% of total sales
in FY3/’19. The Company also handles leasing, building management, leasing management, and insurance agent
services for sites it developed.

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

05 15

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

Pressance Corporation Co., Ltd.

5-Jul.-20193254 Tokyo Stock Exchange First Section

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

Company overview

Business lineup in FY3/’19 results
Business segment

Real estate sale business(main segments)

FY3/’19 full-year results

Business description

No. of units soldNet sales (¥mil)

Composition

Studio condominium sales

2,363

43,011

26.8%

Family condominium sales

2,078

77,37548.2%

Condominium building sales

880

12,4597.8%

Hotel property sales

980

17,625

11.0%

Other housing and real estate sales, etc.

98

4,572

2.8%

-

5,535

3.4%

6,399

160,580

100.0%

Others
Total
Source: Prepared by FISCO from the Company's financial results██Market trends
Healthy market environment with solid demand in the Kinki area,
remains the No. 1 volume supplier in the Kinki area and Tokai and
Chukyo area
1. Condominium market trends
New condominium supply has been healthy nationwide, though market trends differ for the Tokyo metropolitan area
and Kinki area. While supply rose 3.4% YoY to 37,132 units in the Tokyo metropolitan area (Jan-Dec 2018), it grewat a much faster pace of 7.1% to 20,958 units (same) in the Kinki area.

New Condominium Units suppliedTokyo metropolitan area

Kinki area

(unit)
50,00040,00030,00020,00010,00040,44918,93037,13235,89835,772

18,676

19,56020,958

0
2015

2016

2017

2018

Source: Prepared by FISCO from the “Nationwide Condominium Market Trends” report issued by the Real Estate Economic
InstituteWe encourage readers to review our complete legal statement on “Disclaimer” page.

06 15

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

Pressance Corporation Co., Ltd.

5-Jul.-20193254 Tokyo Stock Exchange First Section

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

Market trends

In condominium first month contracted rates (first month contracted units/initially supplied units; Jan-Dec 2018)
too, the Tokyo metropolitan area was at 62.1% versus the Kinki area’s 74.5%, which exceeded the 70% thresholdvalue for healthy conditions throughout the year. We think this is favorable market environment for the Company
as, compared to the Tokyo metropolitan area, it is easier to reach consumers in the Kinki area where its businessactivity is centered.
2. Condominium supply ranking
In the for-sale condominium supply ranking (announced by the Real Estate Economic Institute on February 20, 2019),
the Company holds the No.1 position in the Kinki area for the ninth consecutive year with a 19.7% share (2018). It
also has the No.1 spot in the Tokai and Chukyo area in the seventh consecutive year with a 19.9% share (2018).
These results show that it continues to have a dominant business foundation in both major urban markets besides
the Tokyo metropolitan area. Key drivers of its high rankings in the Kinki area and Tokai and Chukyo area include
strength in land acquisition based on trust relationships with local real estate firms built over many years, provisionof condominiums that fit customer needs at reasonable prices, and advertisement and promotions using the familiar
hermit crab and actress Kazue Fukiishi. Nationwide it ranks second after Sumitomo R&D. We think the Company’s
advances, despite fierce competition for top market positions by zaibatsu-affiliate developers, deserve notice.
Company’s market position(units)Area

Kinki area

Tokai-Chukyo area

Nationwide
No.2 in two consecutive years

No.1 in nine consecutive years

No.1 in seven consecutive years

Pressance’s supply results

4,133

1,019

5,267

Supply results for the entire area

20,9585,115

80,256Company’s ranking market share

19.7%

19.9%

6.6%

Pressance’s ranking

Note: C ondominium supply (release) results in FY3/’19 calculated by the Company based on the “Nationwide Condominium Market Trends” reportissued by the Real Estate Economic InstituteSource: Prepared by FISCO from the Company’s results briefing materials

Ranking of the top five firms and supply volumes(units)Position

Kinki

Tokai/Chukyo

Nationwide

1

Pressance Corporation

4,133

Pressance Corporation

Sumitomo Realty & Development

7,337

2

Nihon Eslead

2,401

Nomura Real Estate Development

1,019
425

Pressance Corporation

5,267

3

Nissho Estem

1,053

Daikyo Incorporated

270

Nomura Real Estate Development

5,224

4

Hankyu Hanshin Properties

966

Shizuoka Railway

253

Mitsubishi Jisho Residence

3,614

5

Kintetsu Real Estate

734

Takara Leben

228

Mitsui Fudosan Residential

3,198

Note: C ondominium supply (release) results in FY3/’19 calculated by the Company based on the “Nationwide Condominium Market Trends” reportissued by the Real Estate Economic InstituteSource: Prepared by FISCO from the Company’s results briefing materials

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

07 15

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

Pressance Corporation Co., Ltd.

5-Jul.-20193254 Tokyo Stock Exchange First Section

http://www.pressance.co.jp/ir/ir6.html#english██Strengths
Making strong advances with a location strategy that focuseson popular areas in city centers; provides high compensation tosalespeople producing results and ranks fifth in the Kinki area’s
annual salary ranking
1. Location Strategy
Osaka and Aichi Prefecture are largely urban areas, but population trends vary depending on locations within theseareas. The Company rigorously adheres to a strategy of supplying condominiums with emphasis on locations withparticularly high population growth rates in the Kinki area and Tokai and Chukyo area. In Osaka City, the Company
provides concentrated supply of studio condominiums to six wards (Chuo, Kita, Nishi, Fukushima, Naniwa, andYodogawa) that have higher population growth rates than other wards and the entire Osaka Prefecture (+5.3% overthe past three years). In Nagoya, it primarily supplies studio condominiums in four wards (Naka, Higashi, Chikusa,
and Nakamura) that have higher population growth rates than other wards and Aichi Prefecture (+2.5% over the
past three years). Focus areas are located in city centers, have many offices and commercial facilities, and are highly
convenient for “living and working.” Their value does not fade even with advances in the “compact city” trend. The
strategy of “supplying highly convenient locations in city centers” fits population trends and consumer needs. We
think it is one of the factors sustaining the Company’s rapid growth.
Population trends(people)Area

January 2016

January 2019

Growth rates(2016/2019, %)630,075

663,480

105.3

Osaka City (other 18 wards)

2,063,164

2,063,775

100.0

Osaka Prefecture (besides Osaka City)

6,146,069

6,096,630

99.2

Osaka City (Pressance’s six focus wards*)

459,742471,277

102.5

Nagoya City (other 12 wards)

1,837,957

1,850,450

100.7

Aichi Prefecture (besides Nagoya City)

5,190,943

5,221,666

100.6

Nagoya City (Pressance’s four focus wards*)* Focus wards out of Osaka’s 24 wards (Chuo, Kita, Nishi, Fukushima, Naniwa, and Yodogawa) and out of Nagoya’s
16 wards (Naka, Higashi, Chikusa, and Nakamura)
Source: Prepared by FISCO based on various municipal government websites

2. Strengthening sales capabilities
The sales division with robust sales capabilities is a key source of the Company’s strength. It promotes internal
competition to drive the motivation of salespeople as part of concentrated efforts by the entire division to sell asingle property within a certain amount of time. The Company also has a longstanding education system in which
managers provide on-site guidance for young employees to help build success experiences. An evaluation systemthat allows for wage hikes and promotions based on results (twice a year) unrelated to age and career history also
contributes to motivation. Employees who deliver results earn high pay. The Company ranked fifth with the large
company category for the ranking of estimated average annual salary paid to 40-year olds in the Kinki area in 2018
(Toyo Keizai Online). Its high salary level is well known in the job market. This enables the Company to hire ambitious
qualified employees even in the real estate industry that reportedly struggles with manpower shortages.

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

08 15

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

Pressance Corporation Co., Ltd.

5-Jul.-20193254 Tokyo Stock Exchange First Section

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

Strengths

Estimated annual salary ranking for 40-year olds (Kinki area, 2018)
Position

Company

Estimated salary for
40-year olds (¥10,000)

Headquarters location

1

Keyence

2,226

Osaka

2

ITOCHU

1,423

Osaka

3

Nippon Commercial Development

1,331

Osaka

4

Asahi Broadcasting Group Holdings

1,330

Osaka

5

Pressance Corporation

1,114

Osaka

6

Takeda Pharmaceutical

1,027

Osaka

7

Nihon Eslead

1,012

Osaka

8

Daibiru Corporation

942

Osaka

9

Hirose Tsusho

940

Osaka

10

Nintendo

936

Kyoto

Source: FISCO from Toyo Keizai Online (September 21, 2018)██Results trends
Achieved sales and profit growth in a ninth consecutive year in
FY3/’19; increased studio condominium share and profit were up by
over 30% in all categories
1. Financial results for FY3/’19
For FY3/’19, Pressance reported net sales of ¥160,580mil (+19.8% YoY), operating profit of ¥27,118mil (+33.2%),
ordinary profit of ¥26,531mil (+33.6%), and net profit attributable to owners of parent of ¥18,296mil (+33.0%), withsignificant YoY growth for sales and earnings. This was a record performance, being the ninth consecutive year ofincreased sales and earnings.
In sales, studio condominium sales rose sharply to 2,363 units (+36.9%) and family condominium sales increased
at a healthy pace to 2,078 units (+11.7%). Building sales dropped to 880 units (-29.4%), though this was on trackwith the plan. Hotel sales climbed dramatically in the second year after beginning sales to 980 rooms (+435.5%).
Primary drivers of the Company’s ¥8,109mil in sales upside, versus the period-start plan, were upbeat sales of family
condominiums and healthy hotel sales.
Gross margin was up by 1.8ppt YoY to 27.5% thanks to a large share for studio condominiums with relatively
high margin. Despite a 0.1ppt rise in the percentage of SG&A expenses (mainly sales fees and personnel costs),
operating margin improved by 1.7ppt to 16.9%, a strong level. Additionally, operating profit recorded robust growth
at a 33.2% increase.
Despite multiple cases of improper behavior in the investment real estate industry by other companies, these
conditions do not appear to have directly affected the Company’s results in FY3/’19. Financial institutions have notaltered review standards and loan terms for the customers of the Company’s investment studio condominiums. In
fact, they take even more aggressive lending stances in new products (45-year loan, loan for 105% of the property
price, etc.).

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

09 15

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

Pressance Corporation Co., Ltd.

5-Jul.-20193254 Tokyo Stock Exchange First Section

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

Results trends

Business results for FY3/’19(¥mil)
FY3/’18

FY3/’19

Results

Composition

Results

Composition

Net sales

134,059

100.0%

160,580

100.0%

YoY
19.8%

Cost of sales

99,575

74.3%

116,378

72.5%

16.9%

Gross profit

34,48425.7%

44,201

27.5%

28.2%

SG&A expense

14,121

10.5%

17,082

10.6%

21.0%

Operating profit

20,36215.2%

27,118

16.9%

33.2%

Ordinary profit

19,85814.8%

26,531

16.5%

33.6%

Net profit attributable toowners of parent

13,757

10.3%

18,296

11.4%

33.0%

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

Increase in real estate for sales in process (semi-finished properties
under construction), a barometer of future sales, and asset value
above ¥300bn, maintaining financial soundness too
2. Financial position and management indicators
Gross asset value increased by ¥56,543mil YoY to ¥301,942mil. The main addition was ¥53,430mil to current
assets with contributions of ¥44,840mil in real estate for sale in process and ¥10,615mil in cash and deposits. Realestate for sales in process, a barometer of future sales, has reached a high level at ¥225,302mil. Real estate forsales (finished inventory), meanwhile, totaled ¥9,603mil (-¥1,672mil YoY), a much smaller amount than real estate
for sale in process. This discrepancy highlights the Company’s success in steadily selling supplied condominiums.
Total liabilities value rose by ¥37,096mil YoY to ¥207,323mil. Current liabilities were up by ¥15,379mil, mainly on a
¥12,040mil increase in long-term loans slated for repayment within one year. Fixed liabilities climbed by ¥21,717mil,primarily due to a ¥24,497mil rise in long-term loans.
In this way, the Company mainly obtains funds as interest-bearing debt at a low capital cost and is acquiring sitesthat provide the basis for future sales. We think it is in healthy financial shape, including low finished inventory.
In management indicators, the current ratio is 338.4%, significantly higher than the 200% threshold for short-termsoundness. The 30.7% equity ratio is on par with the industry average. These values show that the Company
maintains financial soundness despite achieving strong growth with emphasis on procurement.

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

10 15

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

Pressance Corporation Co., Ltd.

5-Jul.-20193254 Tokyo Stock Exchange First Section

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

Results trends

Consolidated balance sheet and management indicators(¥mil)
As of March 31,
2018

As of March 31,
2019

Change227,161

280,591

53,430Cash and deposits

31,374

41,99010,615

Real estate for sale

11,275

9,603-1,672

Real estate for sale in process

180,461

225,30244,840Current assets

Non-current assets

18,237

21,3503,112

Total assets

245,399

301,942

56,543Current liabilities

67,537

82,916

15,379Current portion of long-term loans payable

32,50744,547

12,040

Short-term loans payable

7,965

9,920

1,954

102,689

124,407

21,717

Non-current liabilities

95,621

120,119

24,497

Total liabilities

170,226

207,323

37,096

Total net assets

75,172

94,61819,446

Total liabilities and net assets

245,399

301,942

56,543Current ratio (current asset/current liabilities)

336.4%

338.4%-

Equity ratio (equity/total assets)

29.8%

30.7%

-

Long-term loans

Stability

Source: Prepared by FISCO from the Company’s financial results██Business outlook
Aiming for over ¥200bil in FY3/’20 sales and a 10th consecutive yearof sales and profit gains; already booked orders for 73.3% of theannual sales target for real estate sales business
Pressance retained FY3/’20 consolidated forecast of ¥209,219mil in net sales (+30.3% YoY), ¥32,531mil in operating
profit (+20.0%), ¥31,429mil in ordinary profit (+18.5%) and ¥21,520mil in net profit attributable to owners of parent(+17.6%), projecting a significant increase in sales and earnings. Fulfillment of the forecast means sales at over
¥200bil for the first time and ten consecutive years of double-digit profit growth as well as all-time high results.
In the product segment sales plan, the Company targets a steep rise in studio condominiums to ¥70,901mil (+64.8%
YoY). For family condominiums, the largest segment, meanwhile, it expects ¥74,757mil (-3.4%). Other targets arebuilding sales at ¥24,715mil (+¥98.4%) and hotel sales at ¥18,292mil (+3.8%), on par with the previous year. The
overall sales outlook is ¥5,148mil more than the second-year value from the medium-term business plan announced
a year ago and factors in a steep increase in sales of studio units with high margin and hence a bigger sales portion
for this business. The projected 20.0% YoY rise in operating profit means that the Company should easily exceed
the management goal of “at least 10% growth YoY.”
The Company always implements business with an outlook of 1-2 years and already acquired orders totaling 73.3%
of the sales target (¥147,102mil) of ¥200,702mil for real estate sales business and other housing and real estate
sales business at the start of FY3/’20. We think the Company’s outlook is highly reliable with very low possibility ofshortfall, considering its excellent planning precision in the past as well.

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

11 15

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

Pressance Corporation Co., Ltd.

5-Jul.-20193254 Tokyo Stock Exchange First Section

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

Business outlook

Outlook for FY3/’20 consolidated earnings(¥mil)
FY3/’19

FY3/’20

Results

Composition

Forecast

Composition

Net sales

160,580

100.0%

209,219100.0%

YoY
30.3%

Operating profit

27,11816.9%

32,531

15.5%

20.0%

Ordinary profit

26,531

16.5%

31,429

15.0%

18.5%

Net profit attributable toowners of parent

18,296

11.4%

21,520

10.3%

17.6%

Source: Prepared by FISCO from the Company’s financial results██Medium-/long-term topics
Upward revision of the medium-term management plan throughFY3/’21; sustained high profit growth
1. Raised goals in the medium-term management plan
Compared to the three-year medium-term management plan disclosed in May 2018, first-year FY3/’19 sales andprofits overshot, including net sales by 5.3% and operating profit by 10.5%. The Company raised second-year
FY3/’20 and third-year FY3/’21 goals in light of upbeat first-year results and likely continuation of healthy sales. The
second-year FY3/’20 operating profit goal of ¥32,531mil surpassed the pre-revised third-year goal (¥32,028mil)
one year ahead of time. Furthermore, the Company increased the FY3/’21 operating profit goal to over 10% morethan the updated FY3/’20 goal.
Revisions to the medium-term management plan(¥mil)
FY3/’19(Medium-term plan –1st year)

FY3/’20(Medium-term plan –2nd year)

FY3/’21(Medium-term plan –3rd year)Prior torevisions

Net sales

152,471204,070

247,858

Operating profit

24,541

28,08832,028Results

Net sales

160,580--

Against plan

5.3%

-

-

Operating profit

27,118--Against plan

10.5%

-

-

Net sales-

209,219

250,960% change

-

2.5%

1.3%

Operating profit-

32,53136,434% change

-

15.8%

13.8%

After
revisions

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

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

12 15

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

Pressance Corporation Co., Ltd.

5-Jul.-20193254 Tokyo Stock Exchange First Section

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

Medium-/long-term topics

2. Strengthening real estate tech: Launched Braight service
The Company started operating Braight, a comprehensive site for investment real estate that utilizes AI, in April 2019
and thereby began an initiative to accelerate income growth using real estate tech. The “Braight” name combines
AI (artificial intelligence) and bright with a message of wanting a bright future for the real estate investment market.
The Company launched five sites and offers information and services that extend from the stage of customers
expressing interest in real estate investment to property comparison reviews and post-sale services. The sites are
Braight Lab that provides a wide range of information to potential customers, Braight Simulator that estimatesproperty prices and income with AI from big data, Braight Arrival that carries the Company’s newly built properties,
Braight Vintage that carries used properties (including ones built by other companies), and Braight Owner app for
confirming occupancy and contract content of properties purchased by the owner, and conducting chat interaction
with the rental management company.
The Company hopes to bring “transparency” to real estate prices, which had often been unclear, by providing
property pricing, income forecasts, and other information simulated by AI via Braight. This service supports
straightforward comparison with properties from other companies and therefore clarifies the high market value of
the Company’s properties. Also, the Company aims to develop new types of customers, such as those who prefer
digital communications and people living abroad, and expand sales. Accordingly, moving this online and systemizing
should improve customer service quality and raise work efficiency too. The Company plans to accelerate growth byadding income from Braight business to income from its existing businesses.
Overview of Braight-related sites

Source: From company releases

The Company is targeting 75,000 Braight members by FY3/’24, the fifth year of service, and hopes to generate ¥24,480mil in FY3/’24 sales (¥7,200mil in used properties and ¥17,280mil in new-construction properties).
Furthermore, these levels assume current Braight service content, and the Company is likely to boost sales with
future releases of new Braight services. We expect upside in the Company’s results if Braight business is successful
because goals in the medium-term management plan do not contain sales from this initiative.

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

13 15

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

Pressance Corporation Co., Ltd.

5-Jul.-20193254 Tokyo Stock Exchange First Section

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

Medium-/long-term topics

Braight sales plan for current service(¥mil)
FY3/’20

FY3/’21

FY3/’22

FY3/’23

FY3/’2475,0004,500

15,00035,00055,000

Sales from used properties

600

2,160

4,320

5,760

7,200

Sales from newly built properties

720

3,600

6,480

10,80017,280

1,320

5,760

10,80016,56024,480Braight members (period-end, people)

Net sales total

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

3. ROE comparison in the real estate industry
The Company generates top-class ROE (ratio of net profit to capital) in the real estate industry. It boosted ROE by
1.3ppt YoY to 22.1% in FY3/’19 and has been steadily raising ROE annually in recent years. Just a few companies in
the real estate industry surpass 20% in ROE, and Pressance is one of them. In the ROE ranking, ROE at developers
focused on the Tokyo metropolitan area is peaking out, and ROE at companies with large stock (rental properties,etc.) ratios has been trending lower. While multiple trouble incidents related to investment properties have occurredin other companies since 2018, the Company has sustained and lifted growth potential and profitability without any
negative impact from industry problems.

ROE (ratio of net profit to capital; latest results)
Tokyu Fudosan Holdings
Mitsui Fudosan
Hoosiers Holdings
Mitsubishi EstateTokyo Tatemono
WADAKOHSAN
Nomura Real Estate Development
Nihon Eslead
Sumitomo realty & Development
Takara Leben
Anabuki Kosan
Daiwa House Industry
COSMOS INITIA
SAMTYPressance Corporation
Shinoken Group

7.3%
7.4%
7.4%
7.8%
7.9%
8.5%
8.9%
11.0%
11.3%
14.3%
14.9%
15.5%
16.4%
16.9%
22.1%

25.2%
0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Source: Prepared by FISCO from each company’s website

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

14 15

30.0%

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

Pressance Corporation Co., Ltd.

5-Jul.-20193254 Tokyo Stock Exchange First Section

http://www.pressance.co.jp/ir/ir6.html#english██Shareholder return policy
Accelerating the dividend hike pace with a combination of profit
growth and increase in the dividend payout ratio plus upwardrevision of the medium-term plan; lifted the FY3/’19 dividend by
37.8% YoY
The Company recognizes return of profit to shareholders via dividends as an important management topic. Its
fundamental policies are “expansion of dividend funds through operating profit growth of at least 10% YoY eachyear,” “incremental increase of the dividend payout ratio to 20% by FY3/’23,” and “increase in total dividend payment
value of at least 15% YoY.” And we thus expect acceleration of the dividend hike pace over the medium term.
In FY3/’19, the Company paid a ¥40.50 dividend per share (¥17.50 at end-1H and ¥23.00 at end-2H; raising it¥11.10 or 37.8% YoY) with the dividend payout ratio at 13.7%. After targeting ¥35.00 (¥17.50 at end-1H, ¥17.50 at
end-2H) at the start of the fiscal year, the Company increased the dividend at period-end in light of upbeat earnings.
In FY3/’20, it guides for a ¥52.00 dividend (¥26.00 at end-1H, ¥26.00 at end-2H) with a 15.0% dividend payout ratio.
As a shareholder benefit, the Company gave VJA gift cards worth ¥2,000 to shareholders with 100 shares to lessthan 400 shares (two cards with a face value of ¥1,000 each) and VJA gift cards worth ¥5,000 to shareholders withover 400 shares (five cards with a face value of ¥1,000 each) the fiscal year-end (last day of March 2019).

Annual dividends and dividend payout ratios
Annual dividend (left)

Dividend payout ratio (right)

(¥)

15.0
13.7

60.00
12.1

11.8

50.00

9.9

（%）
15.0

12.6
12.5

9.8

40.00

10.0

30.00

7.5
52.00
40.50

20.00

5.0

29.40
10.00
12.50

12.50

15.00

FY3/14

FY3/15

FY3/16

21.15

2.5

0.00

0.0

FY3/17

FY3/18

FY3/19FY3/20 E

Note: The Company implemented a 4-for-1 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.

15 15

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.
The issuers’ securities, currencies, commodities, securities and other financial instruments
mentioned in this report may increase or decrease in value or lose their value due to influence
from corporate activities, economic policies, world affairs and other factors. This report does
not make any promises regarding any future outcomes. If you use this report or any information
mentioned herein, regardless of the purpose therefor, such use shall be made based on yourjudgment and responsibility, and FISCO shall not be liable for any damage incurred by you asa result of such use, irrespective of the reason.
This report has been prepared at the request of the company subject hereto based on theprovision of information by such company through telephone interviews and the like. However,
the hypotheses, conclusions and all other contents contained herein are based on analysis
by FISCO. The contents of this report are as of the time of the preparation hereof, and are
subject to change without notice. FISCO is not obligated to update this report.
The intellectual property rights, including the copyrights to the main text hereof, the data
and the like, belong to FISCO, and any revision, reprocessing, reproduction, transmission,
distribution or the like of this report and any duplicate hereof without the permission of FISCO
is strictly prohibited.
FISCO and its affiliated companies, as well as the directors, officers and employees thereof,
may currently or in the future trade or hold the financial instruments or the securities of issuersthat are mentioned in this report.
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