COMPANY RESEARCH AND ANALYSIS REPORT

Takara Leben Infrastructure Fund, Inc.
9281
Tokyo Stock Exchange Infrastructure Fund Market

1-Mar.-2019
FISCO Ltd. Analyst

Nozomu Kunishige

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

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

Takara Leben Infrastructure Fund, Inc.
9281 Tokyo Stock Exchange Infrastructure Fund Market

1-Mar.-2019
http://tif9281.co.jp/en/■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. In the FY11/18 results, revenue and profits increased and exceeded the initial forecasts,
and the dividend also increased..................................................................................................................

01

2. Results may exceed the forecasts from FY5/19 onwards also. ....................................................................

01

3. Growth is being driven by external growth and internal growth. ..................................................................

01

4. Stably high dividends are appealing............................................................................................................

02■Overview and Characteristics ---------------------------------------------------------------------------------------------------------------------- 03
1. TIF’s basic policy.........................................................................................................................................

03

2. TIF’s framework..................................... ......................................................................................................

04

3. TIF’s characteristics.....................................................................................................................................

04■Outlook for renewable energy --------------------------------------------------------------------------------------------------------------------- 06
1. The prospects for renewable energy............................................................................................................

06

2. Purchases at fixed prices over 20 years based on the FIT system. ..............................................................

06■Results trends -------------------------------------------------------------------------------------------------------------------------------------------------------------- 07
1. FY11/18 results overview.............................................................................................................................

07

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

08■Outlook-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 09■Growth strategy----------------------------------------------------------------------------------------------------------------------------------------------------------- 10
1. External growth strategy..............................................................................................................................

10

2. Internal growth strategy......................... ......................................................................................................

11

3. Measures for social contribution activities. ..................................................................................................

11■Benchmarking--------------------------------------------------------------------------------------------------------------------------------------------------------------- 12

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

Takara Leben Infrastructure Fund, Inc.
9281 Tokyo Stock Exchange Infrastructure Fund Market

1-Mar.-2019
http://tif9281.co.jp/en/██SummaryInvests in solar power generation facilities and stably provides
appealing dividends
Takara Leben Infrastructure Fund, Inc. <9281> (hereafter, “TIF”), is Japan’s first infrastructure investment fund, andit stably provides appealing dividends to its unitholders through investment in solar power generation and othersuch facilities. TIF will continue to grow in the future, such as through utilizing the management expertise in power
generation facilities and brand power of its sponsor, Takara Leben Co., Ltd. <8897>, and the independent networkof Takara Asset Management Co., Ltd. (hereafter, the Asset Management Company). The major appeal of TIF is
that, based on the Feed-in-Tariff (FIT) system, it has established a framework to continue to steadily generate cash
flow and revenue to stably pay dividends to unitholders.
1. In the FY11/18 results, revenue and profits increased and exceeded the initial forecasts, and the dividend
also increased
On June 1, 2018, TIF acquired 4 solar power generation and other such facilities (acquisition price, ¥4,930mn), andTIF owns 25 facilities with 69.5MW of panel output in total as of the end of FY11/18. As of the end of FY11/18, its
total assets owned were 25 facilities (total price, ¥30,242mn) and the total panel output was 69.5MW. As a result, in
the FY11/18 results, operating revenue was ¥1,493mn (up 23.9% from FY5/18) and ordinary income was ¥488mn(up 17.7%). Due to the effects of the dry rainy season, the actual power generated exceeded the forecast amount,so each profit item was 10% or more above the initial forecasts. In October and November 2018, Kyushu ElectricPower Co., Inc. <9508> began measures to keep down solar power output in order to maintain the demand-supply
balance, but the minimum guaranteed rent received by TIF from Takara Leben is fixed, so this had no impact on
results.
2. Results may exceed the forecasts from FY5/19 onwards also
The forecasts for FY5/19 are operating revenue of ¥1,468mn (down 1.7% from FY11/18) and ordinary income of¥457mn (down 6.4%), while for FY11/19, TIF projects operating revenue of ¥1,423mn (3.1% down from FY5/19)
and ordinary income of ¥ 407mn (down 11.0%). The reason why the revenue and profit forecasts are higher for the
fiscal periods ending in May than in November is that in a typical year, more power is generated in the May-ending
fiscal period than in the November-ending fiscal period. Going forward also, it seems likely that the results will
surpass the forecasts, the same as up to the present time, alongside the excess in the actual power generated andthe new acquisitions of power facilities.
3. Growth is being driven by external growth and internal growth
In the medium- to long-term, it is possible that TIF will grow from external growth through newly acquiring power
facilities. That is to say, the sponsor is aiming to operate 250MW of generating capacity by the end of March
2021, which corresponds to 3.6 times TIF’s current power generation, so it can be said that its growth potential isenormous. It is also aiming to acquire solar power generation and other such facilities from third parties other than
the Takara Leben Group. In addition, TIF is aiming for internal growth, such as through improving the operating
rates and rent at the power facilities it already owns, and reducing management costs. Further, in accordance with
its fundamental principle, TIF intends to also focus on social contribution activities.

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

Takara Leben Infrastructure Fund, Inc.
9281 Tokyo Stock Exchange Infrastructure Fund Market

1-Mar.-2019
http://tif9281.co.jp/en/

Summary

4. Stably high dividends are appealing
TIF’s policy is to return profits to unitholders twice a year, and it plans to pay high dividends each six months. The
forecast dividend per investment unit (including the surplus earning distribution) is ¥3,631 for FY5/19 and ¥3,271 for
FY11/19, and when converted to an annual figure, the dividend yield is 6.43% based on the investment unit priceof January 21, 2019, of ¥107,400. TIF has so far paid dividends above the initial forecast in every fiscal period, so
for FY5/19 onwards as well, there are major expectations for upward revisions. TIF also received an A - (A minus:
stable) rating from Japan Credit Rating Agency, Ltd. (JCR), which is likely to give investors a sense of security.
Key Points
In FY11/18, actual power generated exceeded the initial forecast due to the increase in power facilities and also
the effects of the dry rainy season, for major increases in revenue and profits• Going forward also, it is highly likely that results will continue to exceed the initial forecasts alongside theexcess in actual power generated and the new acquisitions of power facilities• The sponsor’s development assets are forecast to reach output of 250MW by the end of March 2021, so in themedium- to long-term, the growth capacity is enormous• Plans dividends of ¥3,631 in FY5/19 and ¥3,271 in FY11/19, and the stably high yield is appealing•㻾㼑㼟㼡㼘㼠㼟㻌㼠㼞㼑㼚㼐㼟㻻㼜㼑㼞㼍㼠㼕㼚㼓㻌㼞㼑㼢㼑㼚㼡㼑㻌㻔㼘㼑㼒㼠㻕㻔¥㼙㼚㻕㻻㼞㼐㼕㼚㼍㼞㼥㻌㼕㼚㼏㼛㼙㼑㻌㻔㼞㼕㼓㼔㼠㻕
㻠㻤㻤㻌

㻝㻘㻢㻜㻜

㻔¥㼙㼚㻕
㻠㻡㻣㻌

㻠㻝㻡㻌

㻝㻘㻠㻜㻜

㻠㻡㻠㻌

㻠㻜㻣㻌

㻠㻡㻜

㻟㻢㻥㻌

㻠㻜㻜

㻝㻘㻞㻜㻜

㻟㻡㻜

㻝㻘㻜㻜㻜

㻟㻜㻜

㻤㻜㻜

㻝㻘㻠㻥㻟㻌
㻝㻠㻥㻌

㻢㻜㻜
㻠㻜㻜

㻞㻜㻜

㻡㻜㻜

㻝㻢㻝㻌

㻝㻘㻜㻢㻞㻌

㻝㻘㻠㻢㻤㻌

㻝㻘㻠㻞㻟㻌

㻝㻘㻠㻢㻜㻌

㻝㻘㻞㻜㻡㻌

㻞㻡㻜
㻞㻜㻜
㻝㻡㻜
㻝㻜㻜

㻟㻤㻞㻌

㻠㻜㻥㻌

㻲㼅㻝㻝㻛㻝㻢

㻲㼅㻡㻛㻝㻣㻡㻜㻜㻜㻲㼅㻝㻝㻛㻝㻣

㻲㼅㻡㻛㻝㻤

㻲㼅㻝㻝㻛㻝㻤 㻲㼅㻡㻛㻝㻥㻌㻱 㻲㼅㻝㻝㻛㻝㻥㻌㻱 㻲㼅㻡㻛㻞㻜㻌㻱Note: Figures are forecasts as of January 15, 2019
Source: Prepared by FISCO from the Company’s financial results

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02 12

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

Takara Leben Infrastructure Fund, Inc.
9281 Tokyo Stock Exchange Infrastructure Fund Market

1-Mar.-2019
http://tif9281.co.jp/en/██Overview and Characteristics
Japan’s first infrastructure investment fund that invests in solar
power generation facilities
1. TIF’s basic policy
TIF was listed on the Tokyo Stock Exchange (TSE) Infrastructure Fund Market on June 2, 2016, as Japan’s first
infrastructure investment fund. It has two fiscal periods a year (its fiscal periods end twice a year, in May andNovember, in order to eliminate as much as possible that seasonality of revenue that accompanies the fluctuationsin power generation). TIF is aiming to grow based on its sponsor support contract in which receives various types of
support from its sponsor, Takara Leben, such as its management expertise in renewable energy power generation
facilities and its brand power, and also from utilizing the Asset Management Company’s independent network.
The introduction of renewable energy power generation facilities and other such facilities that TIF targets for investment plays various roles, including reducing carbon dioxide emissions and improving the energy self-sufficiency
ratio, so there are great expectations for its contributions to solving the problems in Japan’s energy policy. In thissort of environment, TIF’s fundamental principle is to create a sustainable eco-friendly environment, and also tocontribute to creating value and employment opportunities, developing a social economy, preventing global warming
and increasing Japan’s energy independence through utilizing natural energy.
Based on this principle, TIF is aiming to expand the scale of managed assets, realize improvements in revenue, andmaximize unitholder value, at the same time as maintaining stable cash flow and revenue, mainly through investingin specific assets, such as renewable energy power generation facilities.
Basic policy

Source: Company website

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

Takara Leben Infrastructure Fund, Inc.
9281 Tokyo Stock Exchange Infrastructure Fund Market

1-Mar.-2019
http://tif9281.co.jp/en/

Overview and Characteristics

2. TIF’s framework
TIF’s primary investment targets are renewable energy power generation facilities and other such facilities. Among
the renewable energy power generation facilities in which it has invested, on an acquisition-price basis, more than
90% are solar power generation facilities. Other than these, its investment ratio is less than 10% in renewable energy
power generation facilities. In particular, it is considered that in the near future, solar power generation will play acentral role among the various forms of renewable energy. In the medium- to long-term also, it is considered that
it will serve as important source of power, and at the current stage, all TIF investment targets are at solar power
generation facilities.
Also, in order to meet the requirements of conduit tax treatment (the inclusion of the amount of dividends etc. in theinvestment fund deduction amount, which is permitted in order to exclude double taxation between the investment
fund and unitholders), TIF adopts a framework in which it leases the renewable energy power generation and othersuch facilities it has invested to the lessee (Takara Leben), and TIF receives lease income from the lessee.
TIF’s framework

Source: The Company’s results briefing materials

3. TIF’s characteristics
TIF is the first infrastructure investment fund in Japan and it has the following characteristics; 1) a sustainable growthstrategy through steadily acquiring facilities, 2) a portfolio developed nationwide centered on areas with high demandfor electric power, 3) a policy of returning profits to unitholders that prioritizes profit dividends, and 4) it is the only
listed infrastructure fund with a rating.
For the first characteristic, of a sustainable growth strategy through steadily acquiring facilities, TIF increased thetotal price of managed assets by approximately 3.7 times in the 2.5 years after it was listed. It currently owns 25
power facilities with a total asset price of ¥30.24bn, and its portfolio’s total panel output has reached 69.5MW.
Going forward also, it will acquire additional assets through the asset management company’s independent route,mainly to acquire the sponsor’s development assets, and it is expected to grow steadily.

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

Takara Leben Infrastructure Fund, Inc.
9281 Tokyo Stock Exchange Infrastructure Fund Market

1-Mar.-2019
http://tif9281.co.jp/en/

Overview and Characteristics

For the second characteristic, of a portfolio developed nationwide centered on areas with high demand for electric
power, on looking at the distribution of TIF’s portfolio assets by region, we see that close to 90% of its assets arelocated in three regions; 75.0% in the Kanto region, 10.4% in the Kinki region, and 4.2% in the Chubu region. In
this way, majority of the managed assets are located in areas with high demand for electric power, therefore stableelectric power sales revenue can be expected in the future as well.

㻰㼕㼟㼠㼞㼕㼎㼡㼠㼕㼛㼚㻌㼛㼒㻌㼜㼛㼞㼠㼒㼛㼘㼕㼛㻌㼍㼟㼟㼑㼠㼟㻌㼎㼥㻌㼞㼑㼓㼕㼛㼚㻌㻔㼍㼟㻌㼛㼒㻌㻺㼛㼢㼑㼙㼎㼑㼞㻌㻟㻜㻘㻌㻞㻜㻝㻤㻕



㻠㻚㻞㻑

㻟㻚㻞㻑

㻢㻚㻥㻑
㻷㼍㼚㼠㼛

㻝㻜㻚㻠㻑

㻷㼕㼚㼗㼕

㼀㼛㼔㼛㼗㼡
㻯㼔㼡㼎㼡㻷㼥㼡㼟㼔㼡
㻣㻡㻚㻜㻑

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

For the third characteristic, of a policy of returning profits to unitholders that prioritizes profit dividends, TIF prioritizes
dividends based on net income, so compared to other infrastructure funds, its surplus earning distribution (capital
reimbursement) rate is low. In other words, it has a framework in which it aims to stabilize revenue through setting
minimum guaranteed rent with the lessee, and should the electric power sales actual amount exceed the forecast, it
receives half of this amount as rent linked to the actual amount. In this way, it adopts a rent form in which it can realizeboth stability and upside. So it has a track record of paying a dividend exceeding the forecast in every fiscal period.
Stabilizing revenue

Source: The Company’s results briefing materials

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05 12

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

Takara Leben Infrastructure Fund, Inc.
9281 Tokyo Stock Exchange Infrastructure Fund Market

1-Mar.-2019
http://tif9281.co.jp/en/

Overview and Characteristics

For the fourth characteristic, of being the only listed infrastructure fund with a rating, on May 16, 2018, TIF was rated
as A – (A minus: stable) by JCR. Its strong financial base that is backed by this rating is information that enables
investors to feel a sense of security when deciding to invest.

██Outlook for renewable energy
Renewable energy is expected to grow
1. The prospects for renewable energy
On July 16, 2015, the Ministry of Economy, Trade and Industry (METI) formulated the Long-term Energy Supply and
Demand Outlook (energy mix) as a possible form of the realizable energy supply-and-demand structure in the future.
In terms of the prospects for the power supply structure in FY2030, it forecasts that renewable energy, including
water power, will provide from around 22% to 24% of the power supply, within which, solar power’s contribution
will increase to 7%. In the Fifth Basic Energy Plan also, the government has clarified its policy of aiming to steadily
realize the energy mix for FY2030. But on looking at the current worldwide trend, it is expected that in Japan also,
the shift to safe and stable renewable energy will proceed at a pace above the government’s forecast.

㻹㻱㼀㻵 㻸㼛㼚㼓㻙㼠㼑㼞㼙㻌㻱㼚㼑㼞㼓㼥㻌㻿㼡㼜㼜㼘㼥㻌㼍㼚㼐㻌㻰㼑㼙㼍㼚㼐㻌㻻㼡㼠㼘㼛㼛㼗㻌 㻝㻜㻜㻚㻜㻑

㻤㻜㻚㻜㻑

㻞㻚㻞㻑
㻤㻚㻡㻑
㻝㻚㻜㻑

㻝㻟㻚㻠㻑

㻝㻠㻚㻥㻑

㻤㻚㻤㻑
㻞㻞㻚㻜㻑

㻢㻜㻚㻜㻑

㻟㻜㻚㻟㻑

㻠㻜㻚㻜㻑

㻳㼑㼛㼠㼔㼑㼞㼙㼍㼘㻌㼍㼚㼐㻌㼚㼑㼣㻌㼑㼚㼑㼞㼓㼥㼃㼍㼠㼑㼞㻌㼜㼛㼣㼑㼞

㻟㻚㻜㻑

㻞㻢㻚㻜㻑

㻺㼡㼏㼘㼑㼍㼞㻌㼜㼛㼣㼑㼞㻻㼕㼘㻘㻌㼑㼠㼏㻚
㻯㼛㼍㼘

㻞㻜㻚㻜㻑

㻸㻺㻳

㻠㻟㻚㻞㻑
㻞㻣㻚㻜㻑

㻜㻚㻜㻑
㻲㼅㻞㻜㻝㻟

㻲㼅㻞㻜㻟㻜

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

2. Purchases at fixed prices over 20 years based on the FIT system
Japan’s FIT scheme for renewable energy is a system in which certain electric power businesses (electric powercompanies that supply electric power, such as to companies and households) are obliged to purchase electric power
generated using certified renewable energy power generation facilities at fixed procurement prices over a 20-year
period to spread purchases of renewable energy at fixed prices. Through this, power generation businesses can
expect stable and continuous revenue from electric power sales, while it also makes it easier to recover the highconstruction costs required for renewable energy power generation facilities.

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

Takara Leben Infrastructure Fund, Inc.
9281 Tokyo Stock Exchange Infrastructure Fund Market

1-Mar.-2019
http://tif9281.co.jp/en/

Outlook for renewable energy

The procurement price of electric power generated using solar power generation facilities in the FIT system has been
declining year by year, and METI has communicated that its policy is to reduce the purchase price (per kilowatt-hour)from businesses from ¥18 in FY2018 to ¥8 in FY2022 to FY2024. However, it is necessary to be aware that the
reduction in the purchase price applies only to new projects, and it will not be applied to already certified power
facilities (for which the purchase prices have already been determined).
In fact, among its 25 power facilities, TIF has secured purchases prices of ¥40 for 6 facilities, ¥36 for 18 facilities, and¥32 for 1 facility, and it has concluded 20-year contracts with purchasing electric power companies for the sale ofelectric power at these purchases prices. In addition, the purchasing prices have already been set to be purchasedfor 20 years by electric power companies for each facility of the already developed assets of Takara Leben, TIF’s
sponsor, and also for the assets it is currently developing and it plans to develop.

██Results trends
Strong results that greatly exceeded the initial forecasts
1. FY11/18 results overview
In FY11/18, the Japanese economy continued to recover robustly, driven by domestic demand, despite the concerns
about the effects of the global economic slowdown. In the environment surrounding renewable energy power
generation and other such facilities, as before, the issues include improving the primary energy self-sufficiency rate
and reducing emissions of greenhouses gases. The introduction of renewable energy power generation and othersuch facilities that utilize natural energy is expected to help solve these problems in Japan’s energy policy.
In this sort of environment, on June 1, 2018, TIF acquired 4 solar power generation and other such facilities(acquisition price ¥4,930mn), with the aims of expanding external growth and increasing the dividend. As a result,at the end of FY11/18, its total assets owned were 25 facilities (total price, ¥30,242mn) and the total panel output
was 69.5MW.
As a result of the management of the above-described facilities, in the FY11/18 results, operating revenue was¥1,493mn (up 23.9% from FY5/18), operating income was ¥555mn (up 17.2%), ordinary income was ¥488mn (up17.7%), and net income was ¥487mn (up 17.8%). Due to the effects of the dry rainy season, actual power generated
exceeded expected power generation, so on August 23, 2018, TIF upwardly revised the initial results and dividends
forecasts. But in the end, the results were strong to the extent that they also exceeded the revised forecasts, witheach profit item exceeding the initial forecast by 10% or more. The dividend per investment unit was also higher
than initially forecast, increasing ¥361 (up 10.3%) to ¥3,871.
In October and November 2018, Kyushu Electric Power began measures to keep down solar power output inorder to maintain the demand-supply balance, but this had no impact on the forecasts of management conditions
at the power facilities owned by TIF. The power generation lost by these measures was small, and the minimum
guaranteed rent that TIF receives from Takara Leben is fixed, so it has framework in place in which it is not affectedby output controls.

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

Takara Leben Infrastructure Fund, Inc.
9281 Tokyo Stock Exchange Infrastructure Fund Market

1-Mar.-2019
http://tif9281.co.jp/en/

Results trends

Also, the reason why there is practically no difference between ordinary income and net income is that listed
infrastructure investment funds receive preferential treatment for corporate tax and are tax exempt for 20 years.
FY11/18 results(¥mn)
FY5/18

FY11/18

vs. forecast

Results

Operatingvs. FY11/17
revenue

Results

Operatingrevenuevs. FY5/18

Forecast% change

Operating revenue

1,205

100.0%

13.5%

1,493

100.0%

23.9%

1,467

1.8%

Operating income

473

39.3%

12.0%

555

37.2%

17.2%

535

3.8%

Ordinary income

415

34.4%

12.4%

488

32.7%

17.7%

466

4.9%

Net income

414

34.4%

12.4%

487

32.7%

17.8%

465

4.9%

Net income per investment unit (¥)

3,511

-

12.0%

3,524

-

0.4%

-

-

Dividend per investment unit (¥)

3,976

-

10.9%

3,871

-

-2.6%

3,711

4.3%

Note: the forecasts are the revised forecasts announced on August 23, 2018. The dividend per investment unit includes the surplus earning
distribution.
Source: Prepared by FISCO from the Company’s financial results

Manages assets targeting LTV of 50%
2. Financial position and management indicators
In FY11/18, TIF borrowed ¥3,024mn on June 1, 2018, in order to supplement the funds to acquire 4 renewableenergy power generation and related facilities, and also for the costs relating to these acquisitions. Conversely, it
carried out scheduled repayments, and so as of the end of FY11/18, its borrowing was ¥15,610mn. As a result,at the end of FY11/18, the percentage of interest-bearing debt to total assets; Loan to Value (LTV), was 53.2%. In
principle, TIF has set an upper limit for LTV of 60%, but for the time being, in consideration of factors such as theportfolio size, it manages assets targeting 50%.
Also, through a capital increase of ¥2,230mn from a public offering on June 1, 2018, net assets increased to¥13,571mn, while the equity ratio also rose to 46.3%. Going forward also, TIF is expected to conduct capitalincreases through public offerings when necessary for the funds to newly acquire power generation facilities.
Balance sheet and key management indicators(¥mn)
End-FY5/18
Current assets(Cash and deposits)
Non-current assets(Property, plant and equipment)
Total assets
Current liabilities
Non-current liabilities

End-FY11/18

Change

2,155

2,420

2,000

1,995

264
-5

22,357

26,892

4,535

21,98326,262

4,278

24,53829,334

4,795

948

1,160

211

12,266

14,602

2,335

13,097

15,6102,513

Total liabilities

13,215

15,762

2,546

Total net assets

11,322

13,571

2,248

Current ratio (current assets ÷ current liabilities)

227.2%

208.5%

Long-term debt ratio (long-term liabilities ÷ total liabilities)

92.8%

92.6%

LTV (interest-bearing debt ÷ total assets)

53.4%

53.2%

Equity ratio (shareholders’ equity ÷ total assets)

46.1%

46.3%

(Interest-bearing debt)<Financial soundness>

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

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

Takara Leben Infrastructure Fund, Inc.
9281 Tokyo Stock Exchange Infrastructure Fund Market

1-Mar.-2019
http://tif9281.co.jp/en/██Outlook
Results may exceed the forecasts from the excess of actual power
generated and the new acquisitions of power facilities
The Japanese economy will likely continue to trend robustly going forward, mainly from domestic demand, due toconsumer spending against the backdrop of the steady growth in employee incomes, and also due to the increase incapital investment by companies, mainly investment in rationalization and labor saving in the context of the shortageof workers. However, the situation requires close attention due to the effects of conditions overseas, including
developments relating to U.S. trade policy.
Among the renewable energy power generation facilities, in the environment surrounding solar power generation
facilities, as of the end of June 2018 after the introduction of the FIT system for fixed-price purchases, the capacity ofthe solar power generation facilities certified in this system is approximately 65.4GW for non-residential use of 10kW
or above, and around 5.7GW for residential use of less than 10kW. Within these amounts, the actually introduced
amounts are approximately 34GW for non-residential use and around 5.5GW for residential use. Based on this sortof situation, on December 5, 2018, METI published New Measures on Non-operation of Approved Facilities for
Photovoltaic Power Generation under the FIT scheme. New rule indicates that it would revise purchases prices inthe event that certain conditions were not met within a certain period for those projects for which a deadline to start
operations had not been set, and for which certification have been received in the three years from FY2012. As aresult of this, it is expected that projects with little chance of being realized will be weeded-out.
For the time being, TIF’s policy is to primary target solar power generation facilities for investment and to acquireand manage assets based on an external growth strategy (acquisition opportunities from the sponsor’s development
assets, and acquisitions from the Asset Management Company’s independent route), and an internal growth strategy(stabilize revenue, mainly from the minimum guaranteed rent for a 20-year period, and the possibility of upside fromrent linked to the actual results).
From the above, the forecasts are as follows: for FY5/19, operating revenue of ¥1,468mn (down 1.7% from FY11/18),
operating income of ¥527mn (down 4.9%), ordinary income of ¥457mn (down 6.4%), and net income of ¥456mn(down 6.4%); for FY11/19, operating revenue of ¥1,423mn (down 3.1% from FY5/19), operating income of ¥472mn(down 10.5%), ordinary income of ¥407mn (down 11.0%), net income of ¥406mn (down 11.0%); for FY5/20,
operating revenue of ¥1,460mn (up 2.6% from FY11/19), operating income of ¥517mn (up 9.7%), ordinary incomeof ¥454mn (up 11.5%), and net income of ¥453mn (up 11.6%). Also, the forecast dividend per investment unit are¥3,631 for FY5/19, ¥3,271 for FY11/19, and ¥3,594 for FY5/20.
The reason why the revenue, profits, and dividend forecasts are higher for the fiscal periods ending in May thanin November is that at the power facilities FIT currently owns, more power is generated in the May-ending fiscal
period than in the November-ending fiscal period. Going forward also, it seems likely that the results will surpass theforecasts alongside the excess in actual power generated and the new acquisitions of power facilities.

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09 12

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

Takara Leben Infrastructure Fund, Inc.

1-Mar.-2019

9281 Tokyo Stock Exchange Infrastructure Fund Market

http://tif9281.co.jp/en/

Outlook

Results forecasts for FY5/19, FY11/19, and FY5/20(¥mn)
FY11/18

FY5/19FY11/19

Results

vs. FY5/17

Forecast

vs.
FY11/18

Forecast

Operating revenue

1,493

23.9%

1,468

-1.7%

Operating income

555

17.2%

527

-4.9%

Ordinary income

488

17.7%

457

-6.4%

487

17.8%

456

3,871

-2.6%

3,631

Net income
Dividend per investment unit (¥)

FY5/20vs. FY5/19

Forecast

vs.
FY11/19

1,423

-3.1%

1,460

2.6%

472

-10.5%

517

9.7%

407

-11.0%

454

11.5%

-6.4%

406

-11.0%

453

11.6%

-6.2%

3,271

-9.9%

3,594

9.9%

Note: the dividend per investment unit includes the surplus earning distribution.
Source: Prepared by FISCO from the Company’s financial results██Growth strategy
TIF will continue to grow, including by utilizing the sponsor’s pipeline
1. External growth strategy
In the medium- to long-term, TIF will be able to grow profits (external growth) through benefiting from the management expertise that its sponsor, Takara Leben, has cultivated in its solar power generation business as a whole,and also from new acquisitions of power facilities that utilize the independent expertise of the Asset Management
Company.
First, TIF will be able to utilize the various types of support it receives from its sponsor to acquire power facilities in
the future, which can be said will contribute to its medium- to long-term growth. In other words, TIF is able to aim to
expand its power facilities based on the first refusal right granted to it from the sponsor. As of the end of November,the sponsor had 33 already developed assets for 92.7MW, and 2 assets under development for 41.8MW. Further,by the end of March 2021, it is aiming for 250MW, which corresponds to 3.6 times TIF’s current power generationof 69.5MW, so it can be said that its growth potential is enormous.
Also, through its solar power generation business, the sponsor has relations with and a network of third parties,
including other companies that manage solar power generation businesses, fund management companies, andthe businesses of individuals. TIF is also able to receive information acquired through this network on the salesof facilities owned by third parties, and it is considered that this will contribute to its external growth in the future.
Further, the Asset Management Company intends to expand its independent information network outside of the
Takara Leben Group and to collection information on assets. Based on this asset information, TIF will also acquire
solar power generation facilities from third parties outside of the Takara Leben Group (including acquisitions throughsecondary transactions, such as for already operational solar power generation facilities). In fact, it seems that the
number of proposals being brought to the Asset Management Company is rapidly increasing.

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

10 12

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

Takara Leben Infrastructure Fund, Inc.
9281 Tokyo Stock Exchange Infrastructure Fund Market

1-Mar.-2019
http://tif9281.co.jp/en/

Growth strategy

External growth strategy

Source: The Company’s results briefing materials

2. Internal growth strategy
TIF is able to grow profits, including by raising the operating rates and rent at the power facilities it already owns,
and reducing management costs (internal growth).
First, as was already described, TIF is aiming to stabilize revenue through minimum guaranteed rent over a 20-year
period, and as can be seen in its results up to the present time, there is the possibility of upside from rent linked toactual results. Also, from a medium- to long-term perspective, it intends to stabilize revenue in the medium- to longterm by carrying out scheduled renovations and capital investment in order to maintain and improve the assets’ value.
3. Measures for social contribution activities
Further, in accordance with its fundamental principle, TIF is also focusing on social contribution activities. First, on
December 21, 2018, TIF and the Asset Management Company decided to donate to the Miyagi Disaster Prevention
and Forest Restoration Partnership Promotion Project, which aims to utilize the regional creation support tax
system (the corporate version of the hometown tax payment system) toward preventing damage and restoringdisaster-damaged forests in Miyagi Prefecture.
Also, on January 1, 2019, TIF announced it had concluded a contract with Minna-denryoku, Inc., for a specified
wholesale supply. Through its supply of electric power, Minna-denryoku focuses on a new common sense of“making” and “using” electricity, and promotes measures that vitalize regional communities to develop services
that realize cooperation between communities through electric power. TIF will deliver the electric power from twoof its power facilities to electric power customers via Minna-denryoku, and going forward, it is expected that theframework will be expanded to include additional power facilities.

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

11 12

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

Takara Leben Infrastructure Fund, Inc.
9281 Tokyo Stock Exchange Infrastructure Fund Market

1-Mar.-2019
http://tif9281.co.jp/en/██Benchmarking
Provides an appealing dividend yield
TIF’s policy is to return profits to unitholders twice a year, and it plans to pay high dividends each six months. The
forecast dividend per investment unit (including the surplus earning distribution) is ¥3,631 for FY5/19, ¥3,271 for
FY11/19, and ¥3,594 for FY5/20. As previously stated, the reason why the dividend forecasts are higher for the fiscal
periods ending in May than in November is that, based on the power facilities TIF currently owns, more power isgenerated in the May-ending fiscal period than in the November-ending fiscal period. When converted to an annual
figure, the dividend yield is 6.43% based on the investment unit price of January 21, 2019, of ¥107,400 (calculatedby dividing the total dividend for FY5/19 and FY11/19 by the investment unit price). TIF has so far paid dividends
above the initial forecast in every fiscal period, so going forward also, there are major expectations that the dividend
will increase above the forecasts.
Currently, within the five listed infrastructure fund issues, TIF’s investment unit price is the highest, which can be said
to express the evaluation of it by investors, that it is the leading infrastructure fund issue. Rather than the distributionof the amount exceeding profits (the surplus earning distribution; in other words, the capital reimbursement), TIF
prioritizes increasing the dividend based on net income, and its dividend yield based on net income is the highest
among the five issues. Further, TIF also received an A - (A minus: stable) rating from JCR, which is likely to giveinvestors a sense of security. As a result of these factors, it is considered that a high percentage of its unitholders
are financial institutions.
As described in TIF’s basic policy, infrastructure fund activities lead to social contributions. In the future, alongside
the deepening of investors’ understanding about infrastructure funds, and in a situation in which for the time being,
the low interest rate environment is forecast to continue, at FISCO we think that TIF will attract further attention forproviding an appealing level of dividend yield compared to the yields of other financial products, such as the dividend
yield of TSE 1st Section listed shares, which is currently about 2.0%, and the J-REIT yield of slightly over 4%.
Comparison of the infrastructure funds’ main indicators
Securities
code

Investment corporations

Investment Investment
unit priceunit priceon Jan 21, previous day
2019 (¥)
comparison

Dividend
yield (%)

Marketcapitalization(¥mn)

Trading
volume(units)Fiscal period(month)9281

Takara Leben Infrastructure Fund, Inc.

107,400-0.09%

6.43

14,883247

9282

Ichigo Green Infrastructure Investment Corporation

58,100-3.16%

6.13

5,982

89

6

9283

Renewable Japan Energy Infrastructure Fund, Inc.

99,100

0.40%

6.52

9,490

369

1/7

9284

Canadian Solar Infrastructure Fund, Inc.

96,500

0.41%

7.49

22,310

314

6/12

9285

Tokyo Infrastructure Energy Investment Corporation

87,000

0.46%

7.76

4,005

146

6/12

Source: Prepared by FISCO from the Real Estate Investment Trust Data Portal

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

12 12

5/11

Disclaimer
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This report is based on information that we believe to be reliable, but we do not confirm or
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This report was prepared at the request of its subject company using information provided
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