COMPANY RESEARCH AND ANALYSIS REPORT

Samty Co., Ltd.
3244
Tokyo Stock Exchange First Section

25-Sept.-2019
FISCO Ltd. Analyst

Ikuo Shibata

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

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

Samty Co., Ltd.
3244 Tokyo Stock Exchange First Section

25-Sept.-2019https://www.samty.co.jp/en/index.html■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Company profile.. ................................... ......................................................................................................

01

2. Business result for FY11/19 1H. . ..................................................................................................................

01

3. FY11/19 forecast.. .................................. ......................................................................................................

02

4. Growth strategy...........................................................................................................................................

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

03

2. Features.......................................................................................................................................................

07

3. History................................................... ......................................................................................................

08■The capital and business alliance with the Daiwa Securities Group------------------------ 09
1. Details of the business alliance.............. ......................................................................................................

09

2. Details of the capital alliance.. ................ ......................................................................................................

10■Industry environment--------------------------------------------------------------------------------------------------------------------------------------------- 10■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 13
1. Past results trends................................. ......................................................................................................

13

2. Overview of FY 11/19 1H results. . .......... ......................................................................................................

15

3. The development plan (pipeline) situation. ...................................................................................................

17■Topics------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ 18
1. Investments made.. ................................ ......................................................................................................

18

2. Expansion of the hotel business..................................................................................................................

18

3. Sales areas............................................ ......................................................................................................

18■Earnings outlook-------------------------------------------------------------------------------------------------------------------------------------------------------- 19■Growth strategy----------------------------------------------------------------------------------------------------------------------------------------------------------- 20
1. New medium-term management plan..........................................................................................................

20

2. Key strategies and direction. . ................. ......................................................................................................

20■Returns to shareholders-------------------------------------------------------------------------------------------------------------------------------------- 21

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

Samty Co., Ltd.
3244 Tokyo Stock Exchange First Section

25-Sept.-2019https://www.samty.co.jp/en/index.html██Summary
Results are currently steadily increasing due to the growth of thehotels business, etc.
Concluded a capital and business alliance agreement with the
Daiwa Securities Group
1. Company profile
Samty Co., Ltd. <3244> (hereafter, also “the Company”) is a comprehensive real estate company that operates anationwide business, centered on the Kansai region and Tokyo metropolitan area. Its business is based on the twinaxes of its Real Estate Business (including development and sales of large-scale leasing condominiums for realestate funds and hotels) and Property Leasing Business (including leasing condominiums), while it also manages
hotel business and other related operations. A feature of the Company is that it is able to respond flexibly to changes
to its business environment from its balance of realizing stable income from its Property Leasing Business andaccelerating growth from its Real Estate Business, and it achieved sustainable growth even while overcoming major
financial crises. It also has a superior business model in which it combines both businesses to handle every aspectof the property business, and presently it is continuing to achieve high growth. In June 2015, it entered into the
J-REIT business*. The Company has solidified the foundations of its business model for further business expansion.
*	Samty Residential Investment Corporation <3459> (hereafter, “SRR”), which was established in March 2015, is listed on
the TSE J-REIT market.

From this fiscal period, the Company is progressing the new medium-term management plan, the Samty Toughening
Plan (three years), based on a new management regime. In May 2019, it concluded a capital and business allianceagreement with Daiwa Securities Group Inc. Through this alliance, it is aiming to make a leap forward to a new stage
by incorporating the creditworthiness of the Daiwa Securities Group.
2. Business result for FY11/19 1H
In the FY11/19 1H results, both sales and profits increased for new record highs (on a 1H basis), with net sales
rising 3.3% year-on-year (YoY) to ¥47,827mn and operating income growing 53.0% to ¥13,941mn. Results steadily
grew in the Real Estate Business, benefiting from the favorable real estate market. In particular, sales were strong
for the S-RESIDENCE series, for which investment demand, including from overseas funds, continues to be strong,particularly in Tokyo metropolitan area, as well as sales of properties developed in-house, such as hotels, which theCompany has been focusing on recently. Results in Other Businesses also grew significantly due to the increase insales as new hotels opened for business. Profits increased significantly as well, because of the higher sales prices
and sales of developed properties with high profit margins. Steady progress was also made for the purchasing
conditions (and the development pipeline), which will lead to growth in the future.

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01 22

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

Samty Co., Ltd.
3244 Tokyo Stock Exchange First Section

25-Sept.-2019https://www.samty.co.jp/en/index.html

Summary

3. FY11/19 forecast
For the FY11/19 results, the Company has upwardly revised the forecasts for each profit item, based on factors
including the progress made up to the 1H. After the revisions, it is forecasting that net sales will increase 2.0% YoY
to ¥86,000mn and operating income will rise 14.0% to ¥16,000mn (extent of the revision, +¥1,000mn). Net sales
in both the Real Estate Business and the Property Leasing Business will be basically unchanged YoY, but in Other
Businesses, the increase in sales from the growth of the hotels business is expected to contribute. In particular,
the reason the Company upwardly revised the profits forecasts is the sale in the 1H of properties with high profits
margins, such as hotels developed in-house. At FISCO, we think that it is fully capable of achieving its forecasts
when considering the 1H results, the favorable external environment (the real estate market) and internal factors(including the pipeline conditions and the steady launch of the hotels business).
4. Growth strategy
Since the Company already achieved its medium-term management plan covering the five-year period from FY11/16
through FY11/20, two years ahead of schedule, it has been progressing a new medium-term management plan, theSamty Toughening Plan, which will run through FY11/21. There have been no major changes to the overall directionof the plan, as the key priority measures include: 1) Developing a business model centered on SRR (strengthening
the fee income business); 2) Strategically investing in regional metropolitan areas (expanding business area); and
3) Expanding the hotel development and office building development businesses. One key aspect of the new
medium-term management plan is to place more of a focus on managing the balance sheet in order to prepare
for a future correction phase. As a part of this, the Company is putting maximum emphasis on strengthening its
financial base, centered on rental cash flow. The Company will aim for operating income around the ¥20.0bn level,
ROE around the 15.0% level, and ROA around the 7.0% level, while maintaining an equity ratio of at least 30%. We
shall pay attention to the results of this capital and business alliance with Daiwa Securities Group Inc.
Key Points
In FY11/19 1H, sales and profits increased and steady progress was made toward achieving the full fiscal year
forecasts.
• Upwardly revised the FY11/19 full fiscal year forecasts (for profits only). Expects the increases in sales andprofits to continue.
• In May 2019, concluded a capital and business alliance agreement with Daiwa Securities Group Inc.
• Started the new medium-term management plan from this period. By placing more of an emphasis on balance
sheet management, the Company aims to grow profits by boosting productivity and capital efficiency while
maintaining an equity ratio of 30% or higher.
•

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02 22

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

Samty Co., Ltd.
3244 Tokyo Stock Exchange First Section

25-Sept.-2019https://www.samty.co.jp/en/index.html

Summary

Results trends
Net sales (left)(¥mn)

Operating income (right)(¥mn)

100,000

20,00084,27486,00080,00016,00016,00060,47960,00014,03352,40938,45840,00012,000

10,131

8,000

8,586

24,363

5,932

20,000

4,000

4,042
0

0
FY11/14

FY11/15

FY11/16

FY11/17

FY11/18

FY11/19 E

Source: Prepared by FISCO from the Company's financial results██Company profile
Balanced business portfolio based on Real Estate Business andProperty Leasing Business Entered J-REIT market in 2015 Focusing
on hotel business
1. Business overview
The Company has three business segments: The Real Estate Business, the Property Leasing Business, and the
Other Business. The Real Estate Business trended favorably contributing 89.4% of net sales (before adjustment) in
the FY11/19 1H results. However, it is necessary to be aware that in contrast to the steady growth of the Property
Leasing Business, results in the Real Estate Business tend to increase and decrease greatly due to various factors,
including the business environment. Since its foundation, the Company’s strength has been its leasing capabilities
in its area of expertise of residential properties (condominiums, etc.), that can be expected to stably maintain highoccupancy rates. Recently, the Company has been focusing its efforts on the hotel business, which is expected tohave a high occupancy rate.

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03 22

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

Samty Co., Ltd.
3244 Tokyo Stock Exchange First Section

25-Sept.-2019https://www.samty.co.jp/en/index.html

Company profile

Percentages of net sales by business in FY11/19 1H(before adjustment)
4.4%

6.7%

Real Estate Business
Property Leasing Business
Other Business

89.4%

Source: Prepared by FISCO form the Company’s financial resultsAlso, in March 2015 it established SRR, which was listed on the TSE J-REIT market in June of the same year. The
Samty Group plays the role of sponsor of SRR (supplying it with properties) and is responsible for the subsequent
asset management and other operations. SRR’s current asset scale is approximately ¥90.8bn.
For its sales bases, in addition to its Osaka Head Office (Yodogawa-ku), it has branch offices in Tokyo (Chiyoda-ku),
Fukuoka (Hakata-ku), Sapporo (Chuo-ku) and Nagoya (Nakamura-ku), and it is establishing a nationwide systemcentered on the major regional cities.
*	The Company has seven branch office locations in total, including the Shinjuku and Yokohama Business Offices opened
in April 2019. It also plans to open the Hiroshima Branch Office in December 2019.

The Samty Group is comprised of the Company and 15 consolidated subsidiaries, including 10 special purpose
companies (SPC) and general incorporated associations established and receiving investment in the processes ofcarrying out for the Real Estate Business and Property Leasing Business in relation to schemes to acquire, own,
and develop land, properties, and trust beneficiary rights. The main consolidated subsidiaries include Samty AssetManagement Co., Ltd. (asset management, etc.), Suntoa Co., Ltd. (hotel management, etc.), and Samty Property
Management Co., Ltd. (property management, etc.).
Overviews of each business are as follows.
(1) Real Estate BusinessThis business supports the Company’s growth and is divided into four sub-segments: “development securitization,” “renovation securitization,” “investment unit sales in lots,” and “asset management.”

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04 22

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

Samty Co., Ltd.
3244 Tokyo Stock Exchange First Section

25-Sept.-2019https://www.samty.co.jp/en/index.html

Company profile“Development securitization” refers to the planning, development, and sales of leasing condominiums for realestate funds (including of the S-RESIDENCE series, the brand developed in-house). Basically, the properties arelarge-scale, studio-type condominiums with a total number of around 200 units, and include features such as
stairwell entrances and luxurious designs. Recently, demand has been considerable from real estate funds andother clients regardless of building size, so sales of medium-sized properties have also increased. The Company
has granted SRR preferential transaction negotiating rights (first refusal rights) for the S-RESIDENCE series andmainly supplies properties to SRR. It has also been working on planning, development and sales of hotels andoffice buildings as a new focus field.
S-RESIDENCE series

Source: The Company’s website and materials supplied by the Company“Renovation securitization” refers to the revitalization and sales of existing income properties. The Company
aims to improve occupancy rates by utilizing its leasing capabilities and expertise for the income properties andupgrading properties through renovating facilities, which generates earnings over the period of ownership. In
addition, its final objective is to record gains on sales through selling its holdings and investment properties toreal estate funds, business companies, and wealthy individuals. It also carries out warehousing* for SRR. During
the ownership period, leasing income is recorded in the Property Leasing Business.
*	Properties acquired to incorporate into REIT

“Investment unit sales in lots” involves the planning, development, and sales of studio-type condominiums forinvestment, mainly to individual investors. A feature of the Company is that it does not have an in-house sales
team, and it conducts wholesales (selling units or entire buildings) to sales companies. Through building a networkwith sales companies that have a sales track record in the business area and consulting with sales companies atthe planning and development stages, it is able to supply properties that meet client (user) needs. Also, excluding
the Tokyo metropolitan area, which has an active trend of purchasing before the condominium is ready by sales
companies due to their sense of the scarcity of properties, the Company’s excellent leasing expertise (wholesale
sales after leasing a property) differentiate it from its competitors and results in it being trusted by and having
negotiating power with the sales companies.

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05 22

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

Samty Co., Ltd.
3244 Tokyo Stock Exchange First Section

25-Sept.-2019https://www.samty.co.jp/en/index.html

Company profile

The objectives of “asset management” are obtaining commission income, from the Company being commissioned (outsourced) to operate and manage real estate as the asset manager by real estate funds, and also
dividend income from the Company’s own investments in real estate funds. Through the smooth launch of SRR,
it would seem that the asset management business will also expand in the future, alongside the expansion in theasset scale of SRR. The revenue structure in this business comprises management commissions (0.45% of thebalance of assets under management), acquisition commissions (1.0% of the property acquisition value), salescommissions (0.5% of the property sales value) and other components. Notably, management commissions
can be expected to provide a source of steady revenue every fiscal year based on the balance of assets undermanagement.
(2) Property Leasing BusinessThis business is the foundation that ensures stability, and the segment profit margins are also maintaining highlevels. It owns around 72 properties nationwide (non-current assets only), centered on the Kansai region, Tokyo
metropolitan area and government ordinance designated cities such as Fukuoka, Sapporo, and Nagoya. In
addition, it conducts diversified investment in a variety of assets, including condominiums, office buildings, andcommercial facilities. The Company utilizes its leasing expertise to realize high occupancy rates above 90% when
averaged over the year. While the scale of the real estate it owns amounts to around ¥91.8bn (book value), thisis divided into ¥35.8bn of inventory assets that it intends to eventually sell (real estate for sale), and ¥56bn of
non-current assets that it intends to continue to own (all results are as of the end of May 2019).



Distribution of properties owned by area(based on total floor space)

22%

26%

Hokkaido
Tokyo metropolitan area
Chubu
Kansai8%2%

Chugoku

Kyushu13%
29%

Source: Prepared by FISCO from the Company's results briefing materials(3) Other BusinessThis business mainly involves the ownership and management of hotels, the condominium management business,and the construction and renovation business. The hotels business operates and manages 11 hotels nationwide,
including 4 hotels developed in-house. Other than conducting the hotel business, the subsidiary Samty Property
Management also conducts condominium management (including external properties, mainly the Company’s
condominiums), construction and renovation, and other work. Important strategies going forward will be togrow the hotel development business (secure rental income) and handle hotel management operations in-house(strengthen the fee income business).

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

Samty Co., Ltd.
3244 Tokyo Stock Exchange First Section

25-Sept.-2019https://www.samty.co.jp/en/index.html

Company profile

Hotels in which the Company participates
Location

No. of rooms

Center Hotel Tokyo

Hotel nameChuo-ku, Tokyo

108

Amano Hashidate Hotel

Miyazu-shi, Kyoto

86

Higashiyama-ku, Kyoto

21

S-PERIA HOTEL Nagasaki

Nagasaki-shi, Nagasaki Prefecture

155

Hotel Sunshine Utsunomiya

Utsunomiya-shi, Tochigi

160

SMART HOTEL kutchan

Abuta-gun, Hokkaido

67

S-PERIA HOTEL Hakata

Hakata-ku, Fukuoka-shi

287

S-PERIA INN Nihombashihakozaki

Chuo-ku, Tokyo

114

S-PERIA INN Osaka Hommachi

Nishi-ku, Osaka125

S-PERIA HOTEL Kyoto

Shimogyo-ku, Kyoto

165

NEST HOTEL Hiroshima Hatchobori

Naka-ku, Hiroshima-shi

GOZAN

126
1,414

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

2. Features
A feature of the Company is that it handles all aspect of the property business with its business model combining
two businesses, the Real Estate Business and the Property Leasing Business. This forms its strength in terms of
the superiority of its business and revenue structure.
(1) A superior business model
A feature of the Company’s business model is that every phase of the property business, of land purchases,
development, leasing, sales, and after-sales, are conducted within the Group, and by connecting these respectivefunctions, it creates value (a value chain) that is unique to the Company. In particular, it utilizes its sophisticatedleasing expertise, which it has cultivated in the Property Leasing Business, in the Real Estate Business. In addition
to improving the value of income properties, this has positive effects for the superiority of its bargaining power
when purchasing land, as well as for establishing relationships based on trust and negotiating with buyers.
The Company also has a competitive advantage for its business model, centered on SRR. SRR will become astable supply destination, and in addition, the expansion of the after-sales fee business (commissioned asset
management operations and contract property management operations) can be expected to become a stablesource of revenue in the future.

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

Samty Co., Ltd.
3244 Tokyo Stock Exchange First Section

25-Sept.-2019https://www.samty.co.jp/en/index.html

Company profile

Business model overview

Source: The Company's results briefing materials(2) The profit structure as a strength
One of the Company’s strengths is that it can respond flexibly to changes to its business environment while
maintaining a balance between stable income from its Property Leasing Business (a stock-type business) andgrowth acceleration from its Real Estate Business (a flow-type business). In other words, during a period of
economic recession, its results can be supported by its Property Leasing Business, and then during a periodof economic expansion (recovery), it can accelerate its growth through its Real Estate Business. In addition, its
ability to withstand periods of recession is strengthened by the fact that it keeps down fixed costs by not having
an in-house sales team and instead utilizing external resources (it has networks and expertise to do so). The
reasons why in the financial crises up to the present time (such as following the collapse of the bubble economy
and from the impact of the 2008 financial crisis), its results deteriorated comparatively little, is due to the fact thatthey were supported by its Property Leasing Business and the fact that it kept its fixed costs down. On the other
hand, in the current situation of a continuingly favorable business environment, the Real Estate Business is themain driving force behind the growth in the Company’s results.
3. History
The Company was established in December 1982 in Higashiyodogawa-ku, Osaka, as Samty Development Co.,
Ltd. (it changed to its current company name in June 2005). Centered on three people, Mr. Shigeru Moriyama(current chairman), Mr. Ichiro Matsushita, and Mr. Kiyoharu Taniguchi, it launched a real estate sales, leasing, andmanagement business. It initially started from consignment sales of condominiums, but subsequently it steadily
accumulated results in areas such as sales of entire condominium buildings for investment and sales of units incondominium buildings for families.
After launching sales in May 2001 of its Samty series of studio-type condominiums for investment, in March 2005 it
launched sales of its S-RESIDENCE series of leasing properties for real estate funds, which spurred on its businessexpansion. In August 2006, it entered into the hotels business by acquiring the shares of Suntoa, which owns andmanages business hotels. In July 2007, it was listed on the Osaka Hercules market (now the TSE JASDAQ market).

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

Samty Co., Ltd.
3244 Tokyo Stock Exchange First Section

25-Sept.-2019https://www.samty.co.jp/en/index.html

Company profile

Next, in order to further expand its business and disperse it over different regions, it opened branch offices in Tokyoin February 2011, in Fukuoka in June 2012, in Sapporo in May 2015, and in Nagoya in March 2016, and over this5-year period it steadily expanded the regions in which it does business.
The Company has also actively taken steps to expand its business area. In August 2006, it acquired the shares of
SUNTOA Co., Ltd., which owns and manages business hotels to enter into the hotels business. In December 2011,it established Samty Kanri (now Samty Property Management) to enter into the property management business; inNovember 2012, it made Samty Asset Management a wholly owned subsidiary to enter into the asset managementbusiness; and in June 2015, Samty Residential Investment Corporation was listed on the TSE J-REIT market. In
such ways, it has established a system for growth to accelerate in the future. Its listing was changed to the TSEFirst Section in October 2015. In May 2019, it concluded a capital and business alliance agreement with Daiwa
Securities Group Inc.

██The capital and business alliance with the

Daiwa Securities Group

Intends to collaborate in areas such as the formation of a hotel REIT,
overseas business development, and crowdfunding
As of May 30, 2019, the Company concluded a capital and business alliance agreement with Daiwa Securities Group
Inc. Its aims for this alliance include diversifying project information, increasing the scale of projects, and reducing
financing costs by incorporating the strengths of the Daiwa Securities Group, such as its creditworthiness andinformation capabilities. It can be said that it was a decision aimed at a new growth stage. On the other hand, for
the Daiwa Securities Group, it has the major advantage of strengthening its real estate business, so the agreement
was concluded because it benefits both parties. The Company also allocated its treasury shares and unsecured
convertible bonds with stock acquisition rights to the Daiwa Securities Group to strengthen its financial base.
1. Details of the business alliance(1) Collaboration on a large-scale hotel development fund
Based on a concept of targeting inbound demand and domestic travelers, they will fully utilize the Company’s
development capabilities and the Daiwa Securities Group’s finance functions to consider investments up to¥30bn. Samty Asset Management (hereafter, Samty AM) will be entrusted with the development fund’s asset
management operations.
(2) Aiming to form a hotel RIET by FY2020
The Company’s pipeline has already exceeded ¥100bn, mainly including properties owned or under developmentby the Company’s Group, and it plans to incorporate the properties into the RIET as they are completed. The
hotels developed for the hotel development fund described above in (1) will also be incorporated into the RIET.
Similar to the development fund, Samty AM will be entrusted with the asset management operations, which willlead to increases in fee income for both SRR and asset management operations.

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

Samty Co., Ltd.
3244 Tokyo Stock Exchange First Section

25-Sept.-2019https://www.samty.co.jp/en/index.html

The capital and business alliance with the Daiwa Securities Group(3) Receive information on CRE (corporate real estate) held by the Daiwa Securities GroupFor the real estate related to the information provided, the Company’ Group will acquire properties, when bothsides judge to be appropriate, and effectively utilize and redevelop the real estate, with the aim of incorporating
it into SRR and the hotel RIET described above in (2) according to its type and purpose.
(4) Collaboration for business development in Asia
The Company’s Group has already invested a total of US$30 million in two local developer companies in Ho Chi
Minh City, Vietnam, while it will utilize the Daiwa Securities Group’s network to further accelerate investment andbusiness activities.
(5) Collaborations on real estate sales to the wealthy and crowdfunding
The Company will sell real estate to the wealthy who are customers of the Daiwa Securities Group. It will also utilize
crowdfunding through a collaboration with Fintertech Co., Ltd. which was established by the Daiwa Securities
Group in March 2018. It intends to flexibly create next-generation financial services.
2. Details of the capital alliance
In order to strengthen its relationship with the Daiwa Securities Group (shared interests) and enhance its financialbase, the Company has allocated to the Daiwa Securities Group its treasury shares and unsecured convertible bonds
with stock acquisition rights. As a result, it raised funds of approximately ¥12.7bn in total, of around ¥2.7bn from thedisposal of treasury shares and ¥10bn from the issue of unsecured convertible bonds with stock acquisition rights.
After the implementation of this issue, the Daiwa Securities Group’s shareholding ratio became 29.9% (includes
Daiwa PI Partners’ shareholding ratio of 2.67%)*.
*	Calculated from the 1,737,068 shares acquired through the disposal of treasury shares, the 5,813,953 shares issued in
the event that all of the unsecured convertible bonds with stock acquisition rights are converted at the conversion priceof ¥1,720, and also the 5,204,074 shares transferred from sales by the Company’s shareholders (12,755,095 shares intotal).

██Industry environment
Conditions continue to be favorable in the real estate market
The J-REIT market will have an important influence on the Company’s growth strategy in the future. As of the endof June 2019, its market capitalization stood at around ¥15,196.2bn, and there were 63 J-REITs listed. Although
there was a phase in which the market was temporarily sluggish due to the impact of the credit tightening andrelated factors following the 2008 financial crisis, since 2012 it has steadily trended upward thanks to the recoveryof the domestic economy and the effects of long-term monetary easing. Although we currently see sluggish growth
in property acquisition due to the rise in real estate prices, there has been a diversification of investment targets,
such as hotels and commercial facilities with an eye to the increase in inbound demand, long-term care facilities
that are being built in response to the aging of society, and logistics facilities and infrastructure (solar power plants,etc.) So a variety of investment opportunities are being created, yet at the same time there remains considerable
room for the market to grow.

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10 22

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

Samty Co., Ltd.
3244 Tokyo Stock Exchange First Section

25-Sept.-2019https://www.samty.co.jp/en/index.html

Industry environment

The TSE REIT index is trending firmly due to a robust domestic real estate market (rising rents, etc.) More specifically,
demand for J-REITs remains strong from domestic and overseas institutional investors seeking strong yields andrelatively stable cash flow based on the view that the Bank of Japan will maintain its policy of monetary easing andthe expectation that office demand will rise going forward. In addition, the medium-term outlook for J-REITs looks
strong amid continued monetary easing and a strong real estate market (improving vacancy rates and rising rents).

Trends in the TSE REIT index

2,500

2,000

1,500

1,000

500

0

Source: Prepared by FISCO from various materials

The market for condominiums for investment is also trending favorably, supported by the strong demand from bothtenants (users) and investors. According to data published by the Tokyo Metropolitan Government Bureau of General
Affairs, the population of Tokyo’s 23 wards, which constitutes most of the region to which the Company supplies
properties, is continuing to increase against the backdrop of the large number of people moving to metropolitan
Tokyo. In particular, there has been a noticeable increase in the number of single-person households, including
among the young, which is occurring in the context of later marriages and the increase in the divorce rate, and itis thought that this will also support lease demand for studio-type condominiums in the future. This trend can also
be seen not only in Osaka and Nagoya, but also in regional metropolitan areas such as Fukuoka and Sapporo,and while on one hand the population of Japan is declining, on the other hand it continues to be concentrated into
cities. On the investor side also, demand is increasing from individual investors in their twenties and thirties who
are anxious about their futures in terms of their pensions and lives in their old age, and also from the elderly as aninheritance-tax measure following the reduction in the basic exemption amount. In addition, we also see intensified
demand from overseas funds and other investors for properties in Tokyo’s prime locations with many inquiries about
entire buildings rather than individual unit purchases.

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

Samty Co., Ltd.
3244 Tokyo Stock Exchange First Section

25-Sept.-2019https://www.samty.co.jp/en/index.html

Industry environment in Tokyo’s 23 wards
Population trend(1,000 people)
9,700

9,569

9,600

9,479

9,500

9,385

9,400

9,288

9,300

9,180

9,200

9,087

9,100
9,000

8,947

8,973

9,016

8,900
8,800

8,700
8,600
2011.1.1 2012.1.1 2013.1.1 2014.1.1 2015.1.1 2016.1.1 2017.1.1 2018.1,1 2019.1.1
Source: Prepared by FISCO based on materials issued by the Tokyo Metropolitan Government Bureau of General Affairs

Meanwhile, looking at the hotel development and office building development businesses, which are expected tobe new growth engines going forward, hotel occupancy rates remain high with the backdrop of increased inbounddemand. Some in the market are concerned about a deterioration in the supply-demand situation after the Tokyo
Olympic and Paralympic Games, but we basically think that hotel management can remain stable, as the Japanese
government will continue with its policy of making Japan a major destination for tourism. With respect to officebuildings, the decline in vacancy rates in central urban areas (an increase in the sense of a shortage of office space)is currently receiving a lot of attention, but the shortage of office space regional metropolitan areas (where theCompany is also active) is also a serious situation, so we believe that there are sufficient business opportunities
when it comes to office building development.
The problems that the industry is facing include that it has become more difficult to purchase land in city centers,
the rise in land prices, soaring construction costs and insufficient personnel numbers.

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12 22

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

Samty Co., Ltd.

25-Sept.-20193244 Tokyo Stock Exchange First Section

https://www.samty.co.jp/en/index.html██Results trends
Substantial growth in Real Estate Business amid strong real estatemarket1. Past results trends
Looking back on the Company’s results since FY11/07, which was the year it listed on the Osaka Stock Exchange
Hercules market (currently, the TSE JASDAQ market), immediately after it listed it was impacted by the 2008
financial crisis, and there was a period in which its results trended at a low level. The major contraction of its Real
Estate Business due to the credit tightening by financial institutions had a particularly adverse impact on its results.
However, the points we should focus on are that results in the Property Leasing Business have trended stably evenwhen within a severe industry environment, which has supported the results of the Company as a whole. The factthat it does not have its own in-house sales team and has kept down fixed costs has also had a positive effect,
and it can be highly evaluated on the point that it has secured profits in every fiscal year expect FY11/08, when it
recorded a net loss due to declaring impairment.
Since FY11/13, the Real Estate Business has greatly recovered due to the change in financial institutions’ attitude
toward financing, which has occurred against the backdrop of the recovery of the domestic economy and monetaryeasing, and the Company’s results have entered an expansion phase. In terms of profit and loss also, the ordinary
income margin has been improving year by year thanks to the progress in the highly profitable development securitization, and in FY11/18 it has maintained a high ordinary income margin of over 13.0% for three consecutive years.



Trends in net sales (by business)
Real Estate Business
Other Business(¥mn)
90,000Property Leasing Business
84,27480,00070,00060,47960,00052,40950,00030,00020,00010,000075,13838,45840,00027,37422,04815,984

12,90324,363

43,77351,46728,647

16,227
10,870 21,602 17,478

16,744 10,329
11,966836 1,619 1,630
2,329
700
427
418 7,572352
343 5,954 572 631
7,380 6,806
8,974
7,016
6,183
5,140
5,235
4,876
4,978 4,404 4,343

Note: Excluding internal sales
Source: prepared by FISCO from the Company's financial results

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13 22

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

Samty Co., Ltd.

25-Sept.-20193244 Tokyo Stock Exchange First Section

https://www.samty.co.jp/en/index.html

Results trends

Trends in ordinary income, profit attributable to owners of parent,
and the ordinary income margin

Ordinary income (left)
Profit attributable to owners of parent (left)
Ordinary income margin (right)
13.0%

(¥mn)
15,00012,000

9.8%

8.9%

9.5%

7.9%

9,000

14.0%

13.8%

10.1%

15.0%
12.0%

7.6%

9.0%

6,000

6.0%
1.2%

3,000

1.7%

3.0%

0

0.0%

-3,000-3.0%-6,000-6.0%

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

Although the equity ratio increased to 27.9% in FY11/13 following the implementation of a capital increase througha public offering (approximately ¥2bn), it has been at a level of around 23% since FY11/14 due to the Company’s
active accumulation of assets and other factors. However, the Company bolstered its financial base in October
2018 by issuing stock acquisition rights* (approximately ¥15.0bn), and this boosted the equity ratio to 37.9% asof November 30, 2018.
*	T he Company issued new shares by allotting listed-type stock acquisition rights without contribution to existing
shareholders.

On the other hand, ROE, which indicates capital efficiency, has trended upward alongside the improvement in the
profit margin. In FY11/18, it maintained the high level of 16.9%.



Trends in the equity ratio and ROE
Equity ratio

ROE

50.0%

37.9%

40.0%
30.0%
20.0%

13.1%

10.0%

16.3%

12.2%

0.0%

20.7%

8.0%

24.5%

25.3%

7.8%

6.5%

27.9%

8.1%

23.3%

23.1%

23.1%

23.4%

17.1%

15.3%

15.8%

16.9%

10.1%

-10.0%-20.0%-30.0%-40.0%-32.2%

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

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14 22

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

Samty Co., Ltd.
3244 Tokyo Stock Exchange First Section

25-Sept.-2019https://www.samty.co.jp/en/index.html

Results trends

In FY11/19 1H, the Company achieved higher sales and a major
increase in profits. Growth in the hotel development business
contributed greatly to the results
2. Overview of FY 11/19 1H results
In FY11/19 1H results, net sales rose 3.3% YoY to ¥47,827mn, operating income grew 53.0% to ¥13,941mn,
ordinary income climbed 61.9% to ¥12,803mn, and profit attributable to owners of parent increased 59.9% to¥9,044mn. For the full fiscal year forecasts, net sales are basically in line with the forecast, while the progress rates
are high for each profit item.
Sales steadily grew in the Real Estate Business, benefiting from the favorable real estate market. In particular, sales
were strong for the S-RESIDENCE series, for which there is strong investment demand from overseas funds andother investors, mainly in metropolitan Tokyo, as well as sales of properties developed in-house, such as hotels,
which the Company has been focusing on recently. Results in Other Businesses also grew significantly due to theincrease in sales from hotel openings, etc. Conversely, sales declined in the Property Leasing Business because
the Company actively promoted selling properties it owned, but this can be understood to be a temporary factor.
In profits, the operating income margin improved significantly to 29.1% (19.7% in the same period in the previous
fiscal year) due to the increases in sales prices and the significant fall in the cost ratio following the sales ofdevelopment properties with high profit margins, such as hotels. As a result, these factors and the effects of thehigher sales led the Company to realize a major increase in profits.
The Company is steadily making purchases which will lead to future growth. The Company acquired 20 development
sites (estimated net sales of approximately ¥57.4bn, acquisition price of approximately ¥21.5bn) and 26 income
properties (acquisition price of approximately ¥20.1bn). This move has been steadily progressing, including forproperties to be acquired in the future*.
*	The rates of progress toward the full fiscal year forecasts (based on the acquired monetary amounts) was 86.1% fordevelopment sites and 50.2% for income real estate.

For the Company’s financial condition, in addition to self-funding through the rights offering and sales of properties
conducted in October 2018, it effectively utilized borrowing to actively acquire income real estate. Therefore, there
were increases in “real estate for sale,” “real estate for sale under construction,” and “tangible non-current assets,”and total assets were up 18.7% from the end of the previous fiscal year to ¥192,808mn. Meanwhile, shareholders’equity also increased 11.7% to ¥68,748mn due to factors such as accumulation of internal reserves. As a result,the equity ratio declined slightly, but it was still maintained at a level of above 35%. Interest-bearing debt was up
29.3% from the end of the previous fiscal year to ¥115,332mn, mainly from long-term borrowings. But the net D/E
ratio* was kept down to a level of 1.04 times. It can be said that the Company maintains a sound financial structure
while it aims to expand assets.
*	Net D/E ratio = (interest-bearing debt – cash and deposits) ÷ shareholders’ equity

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15 22

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

Samty Co., Ltd.
3244 Tokyo Stock Exchange First Section

25-Sept.-2019https://www.samty.co.jp/en/index.html

Results trends

Overview of FY11/19 1H results(¥mn)
FY11/18 1H
Results

FY11/19 1H% of net
sales

46,317

Change% of net
sales

Results% ofchangeRevisedforecast% of net
sales

Progress
rate

1,510

3.3%

86,000Real Estate Business

41,86990.4%

42,743

89.4%

874

2.1%

75,100

87.3%

56.9%

Property Leasing Business

3,616

7.8%

3,203

6.7%

-413

-11.4%

6,800

7.9%

47.1%

Other Business

946

2.0%

2,106

4.4%

1,160

122.6%

4,400

5.1%

47.9%

Adjustment

-115

-

-226

-

-111

-

-300

-

Cost of sales

33,82273.0%

29,59761.9%-4,225-12.5%--

SG&A expenses

3,382

7.3%

4,288

9.0%

906

26.8%

-

-

-

Operating income

9,112

19.7%

13,941

29.1%

4,829

53.0%

16,000

18.6%

87.1%

Real Estate Business

9,608

22.9%

14,845

34.7%

5,237

54.5%

18,300

24.4%

81.1%

Property Leasing Business

1,046

28.9%

1,174

36.7%

128

12.2%

2,600

38.2%

45.2%

-42

-4.4%

5

0.2%

47

111.9%

100

2.3%

5.0%

Adjustment-1,500--2,083--583--5,000--Ordinary income

7,908

17.1%

12,803

26.8%

4,895

61.9%

13,500

15.7%

94.8%

Profit attributable to owners of parent

5,655

12.2%

9,044

18.9%

3,389

59.9%

9,500

11.0%

95.2%

Net sales

Other Business

47,827

FY11/19

55.6%

Breakdown of net sales in the Real
Estate Business
Development securitization

16,25032,142

15,892

97.8%

Renovation securitization

21,9408,934-13,006-59.3%

Investment unit sales in lots

3,051

1,258

-1,793-58.8%

620

389

-231

-37.3%

Asset management

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

Financial position at the end of May 2019(¥mn)
End ofNovember 2018

End of
May 2019

Change107,904

124,512

16,608Cash and deposits

44,51043,658

-852

-1.9%

Real estate for sale

26,18135,838

9,657

36.9%

Real estate for sale under construction

34,886

42,574

7,688

22.0%

54,59568,295

13,70025.1%

46,53956,008

9,469

20.3%

172

184

12

7.0%

7,883

12,103

4,220

53.5%

Total assets

162,500

192,808

30,308

18.7%

Current liabilities

19,77921,517

1,738

8.8%

1,340

5,931

4,591

342.6%

Current assets

Non-current assets
Property and equipment
Intangible assets
Investments and other assets

Short-term borrowings

15.4%

9,470

9,549

79

0.8%

Non-current liabilities

80,282

101,970

21,68827.0%

Long-term debt

Current portion of long-term debt

78,36299,852

21,49027.4%

Net assets

62,43869,320

6,882

11.0%

Total liabilities and net assets

162,500

192,808

30,308

18.7%

Interest-bearing debt

89,172

115,332

26,16029.3%

Shareholders’ equity

61,53368,748

7,215

11.7%

Equity ratio

37.9%

35.7%

-2.2%

-

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

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16 22

-

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

Samty Co., Ltd.
3244 Tokyo Stock Exchange First Section

25-Sept.-2019https://www.samty.co.jp/en/index.html

Results trends

The results according to each business are as follows.
(1) Real Estate BusinessNet sales increased 2.1% YoY to ¥42,743mn and segment profit rose 54.5% to ¥14,845mn, for higher sales andsignificantly higher profits. To these amounts, development securitization contributed significantly, including fromsales of 10 properties in the S-RESIDENCE series (11 properties in the same period in the previous fiscal year)
and 3 hotels developed in-house (no results in the same period in the previous fiscal year). In particular, against
the backdrop of strong investment demand from overseas funds, it can be said that the increases in sales prices
and the sales of large-scale hotels contributed to the growth of the results. On the other hand, only 8 propertiesof renovation securitization were sold (21 in the same period in the previous fiscal year), but this is expected toincrease toward the 2H. Meanwhile, sales in condominiums for investment declined due to the drop in units soldto 93 units (195 properties in the same period in the previous fiscal year), but this was within expectations. This isbecause the purchase needs for single buildings are strong and the Company is selling development securitization
properties with high sales efficiency and profitability. Sales declined in asset management as acquisition fees
temporarily declined YoY, despite management and administration fees, which are a stable source of earnings,
steadily increasing alongside the growth in SRR’s asset management balance.
In profits, a major increase in profits was realized from sales of development properties with high profit margins,such as hotels. The rates of progress toward achieving the full fiscal year forecasts are also high.
(2) Property Leasing BusinessNet sales decreased 11.4% YoY to ¥3,203mn, while in contrast segment profit increased 12.2% to ¥1,174mn,
resulting in lower sales but higher profits. For real estate owned, the high occupancy rates were maintained, but
rental income temporarily decreased because the Company actively sold properties owned (this was within the
expected range though). At the end of the period, it owned 72 properties (non-current assets; 82 properties atthe end of the same period in the previous fiscal year).
(3) Other BusinessNet sales increased 122.6% YoY to ¥2,106mn and segment profit was ¥5mn (a loss of ¥42mn in the same period
in the previous fiscal year). Significantly higher sales contributed to this positive turnaround. Results in the hotels
business grew greatly due to the cruising operations, such as at S-PERIA HOTEL Hakata, and also due to the
openings of S-PERIA INN Nihombashihakozaki and S-PERIA INN Osaka Hommachi.
3. The development plan (pipeline) situation
The development conditions of the S-RESIDENCE series and condominiums for investment are that 9 buildings(514 units) will be completed in 2019, 28 buildings (1,764 units) in 2020, and 22 buildings (1,402 units) in 2021, fora total of 59 buildings (3,680 units), and the numbers are steadily increasing. For hotel and office developments,
4 buildings are scheduled to open for business in FY2020, 3 buildings in FY2021, and 1 building in FY2022 (thedetails are given below).

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17 22

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

Samty Co., Ltd.
3244 Tokyo Stock Exchange First Section

25-Sept.-2019https://www.samty.co.jp/en/index.html██Topics
Is making steady progress for strategic investments and hotel
developments. Is also working to expand the sales areas.
1. Investments madeAs previously mentioned, the Company acquired 20 development sites (acquisition amount: ¥21.5bn) and 26
income real estate properties (acquisition amount: ¥20.1bn). Of the 20 development sites (14 residences, 5 hotels,
and 1 office), there are 6 in the Tokyo metropolitan area, 6 in Chubu, 7 in Kansai, and 1 in Kyushu. Also, of the 26
income real estate properties, there are 5 in Hokkaido, 5 in the Tokyo metropolitan area, 3 in Chubu, 7 in Kansai,
and 6 in Kyushu, and these properties are being developed nationwide. The Company was able to achieve resultsfor investment in regional urban areas as set out in the medium-term management plan. In addition, it is planninginvestment of a total amount (including construction expenses) of approximately ¥300bn for the 3 years (FY11/19
to FY11/21), and at the current time it is making steady progress toward this, having invested ¥98.2bn (included
completed contracts and scheduled payments).
2. Expansion of the hotel businessIn terms of expansion of the hotel business, the Company opened S-PERIA INN Osaka Hommachi in February
2019 and S-PERIA HOTEL Kyoto in April 2019, its third and fourth hotel development projects. Besides these, theCompany is currently developing six buildings (and it seems there are also a couple of plots of land for other projects).
In addition to hotels, the Company has plans to develop office buildings, centered on major cities throughout Japan,
and is already developing two such office buildings. The Company has positioned the hotel and office building
development businesses as new engines for future growth as those businesses are expected to be highly profitable
as the Company is involved from the development stage.
Hotel and office building development plans
Fiscalyear ofcompletion

2020

2021
2022

Project name (provisional)

Location

No. ofrooms

Mercure Kyoto Station

Hotel

Shimogyo-ku, Kyoto

225

Ibis Styles Nagoya

Hotel

Nakamura-ku, Nagoya

284

Yodogawa-ku Nishimiyahara 1cho-me PJ

OfficeYodogawa-ku, Osaka-

Chuo-ku Odorinishi 5cho-me PJ

OfficeChuo-ku, Sapporo

Kyoto Shijo-karasuma kita HOTEL PJ

HotelKyoto City, Shimogyo Ward80

Kyoto Shijo-karasuma minami HOTEL PJ

Hotel

Shimogyo-ku, Kyoto

140

Kyoto Oike HOTEL PJ

Hotel

Nakagyo-ku, Kyoto

120

Haneda HOTEL PJ

Hotel

Ota-ku, Tokyo

-

362
1,211

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

3. Sales areas
To expand the sales areas, which is one of the priority strategies in the medium-term management plan, theCompany opened the Shinjuku and the Yokohama Business Offices in April 2019. It also plans to open the Hiroshima
Branch Office in December 2019.

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18 22

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

Samty Co., Ltd.
3244 Tokyo Stock Exchange First Section

25-Sept.-2019https://www.samty.co.jp/en/index.html██Earnings outlook
Upwardly revised the FY11/19 profits forecasts. Expects the higher
sales and profits to continue.
For FY11/19, the Company upwardly revised its forecasts considering the progress in 1H and other factors, with net
sales of ¥86,000mn, up 2.0% YoY; operating income of ¥16,000mn, up 14.0% (extent of the revision: +¥1,000mn);
ordinary income of ¥13,500mn, up 16.0% (extent of the revision: +¥500mn); and profit attributable to owners ofparent of ¥9,500mn, up 11.9% (extent of the revision: +¥500mn).
Net sales in both the Real Estate Business and the Property Leasing Business are expected to be roughly flat YoY,
while Other Business is expected to contribute to the increase in net sales due to the expansion of the hotel business.
As occupancy rates remain high, the hotels that opened in FY11/18 will contribute to net sales from the start of
FY11/19, while hotels scheduled to open during FY11/19 (two hotels in 1H) are expected to further boost earnings.
In profits, the outlook is for higher profits to be secured due to the improvement in the profitability of comprehensive
transactions, in addition to the effects of the higher sales. In particular, the Company upwardly revised the profits
forecasts following the sales in the 1H of properties with high profit margins, including hotels developed in-house.
In the investment plan, approximately ¥25bn is scheduled for development sites and approximately ¥40bn forincome real estate.
At FISCO, we think that the Company is fully capable of achieving its forecasts on considering the 1H results thefavorable external environment (in the real estate market) and internal factors (including the pipeline conditions andthe steady launch of the hotels business). In particular, the rates of progress toward achieving the revised profits
forecasts are high, so it is necessary to be aware that the results may even exceeded these forecasts.
FY11/19 forecast(¥mn)
FY11/18
Results

FY11/19% of net
sales

84,274

Net sales

Initialforecast% of net
sales

86,000ChangeRevisedforecast% of net
sales

% of
change86,000

1,726

2.0%

-43

-0.1%

Real Estate Business

75,14389.2%

75,10087.3%

75,10087.3%

Property Leasing Business

6,807

8.1%

6,800

7.9%

6,800

7.9%

-7

-0.1%

Other Business

2,491

3.0%

4,400

5.1%

4,400

5.1%

1,909

76.6%

-

Adjustment

-167

-

-300

-

-300

-133

-

Cost of sales

63,170

75.0%

-

-

-

-

-

SG&A expenses

7,070

8.4%

-

-

-

-

-

Operating income

14,03316.7%

15,00017.4%

16,000

18.6%

1,967

14.0%

Real Estate Business

15,54720.7%

17,30023.0%

18,300

24.4%

2,753

17.7%

Property Leasing Business

1,907

28.0%

2,200

32.4%

2,600

38.2%

693

36.3%

83

3.3%

500

11.4%

100

2.3%

17

20.5%

Adjustment-3,504--5,000--5,000--1,496-

Ordinary income

11,63513.8%

13,00015.1%

13,500

15.7%

1,865

16.0%

Profit attributable to owners of parent

8,489

10.1%

9,000

10.5%

9,500

11.0%

1,011

11.9%

Other Business

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

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

19 22

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

Samty Co., Ltd.
3244 Tokyo Stock Exchange First Section

25-Sept.-2019https://www.samty.co.jp/en/index.html██Growth strategy
Under the new management regime, the Company will promote its
new medium-term management plan, the Samty Toughening Plan,
and will focus more on the balance sheet
1. New medium-term management plan
The Company had been advancing its medium-term management plan covering the five-year period from FY11/16
through FY11/20. Since it achieved the profit target in the previous fiscal year (FY11/18), two years ahead ofschedule, along with its transition to a new management regime led by a new president, the Company has kicked
off a new medium-term management plan, the Samty Toughening Plan, which will run through FY11/21. There havebeen no major changes to the overall aims of the plan, as the priority measures include: 1) Developing a businessmodel centered on SRR (strengthening the fee income business); 2) Strategically investing in regional metropolitan
areas (expanding the business area); and 3) Expanding the hotel development and office building development
businesses (as a new growth engine). One key aspect of the new medium-term management plan is to place moreof a focus on managing the balance sheet in order to prepare for a future correction in the market. As a part ofthis, the Company is putting significant emphasis on strengthening its financial base, centered on rental cash flow.
The Company intends to achieve continuous growth, while maintaining an equity ratio of at least 30% or higher.
Specifically, the Company will aim to achieve operating income around the ¥20.0bn level, ROE around the 15.0%
level, and ROA around the 7.0% level by emphasizing productivity and capital efficiency, while purposely not setting
a net sales target.
New medium-term management plan Samty Toughening Plan (numerical targets)
FY11/17
results

FY11/18
results

FY11/21targets¥10,131mn¥14,033mn¥20,000mn

level

ROE

15.8%

16.9%

15.0%

level

ROA

6.6%

8.5%

7.0%

level

Equity ratio

23.4%

37.9%

30.0%

or higher

Operating income

Note: ROA = operating income ÷ total assets (average of the balances at the beginning and endof the fiscal year)
Source: Prepared by FISCO from the Company's medium-term management plan

2. Key strategies and direction(1) Development of a business model centered on SRR (bolstering the fee income business)
The Company will continue to proactively supply properties, thereby promoting the accumulation assets by SRR.
In addition to adding hotels and office buildings to the lineup of real estate for development and sale, the Company
will launch new management funds*1 in addition to SRR, and will thereby increase acquisition fees. Furthermore,in addition to creating a mechanism to acquire MC fees by bringing hotel management operations in-house*2,
the Company will bolster the fee income business by growing rental income, acquiring overseas income, alongwith other initiatives.
*1	A s previously mentioned, the Company aims to launch a large-scale hotel development fund jointly with the Daiwa
Securities Group and to form a hotel RIET by 2020 (asset management operations will be entrusted to the Company’sGroup).
*2	The Company will bring hotel management (which the Company has been outsourcing to external management companies) in-house, and create a mechanism to have Samty Group be commissioned to handle hotel management operations(MC) even after the sale of a hotel, thereby acquiring fee income, enjoying the upside, and accumulating management
know-how.

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20 22

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

Samty Co., Ltd.
3244 Tokyo Stock Exchange First Section

25-Sept.-2019https://www.samty.co.jp/en/index.html

Growth strategy(2) Strategic investment in regional metropolitan areas (expanding the business area)
The Company plans to invest approximately ¥300bn over three years. In particular, the Company will pursue hoteland office building development as new growth engines, as well as invest ¥135bn to acquire income properties
and accumulate assets in order to acquire stable rental income. The Company will work on further expanding its
business area, and will purchase income properties and develop residential buildings, office buildings, and hotels
in the Tokyo metropolitan area and other key regional cities throughout Japan.
(3) Expand the hotel development and office building development businesses
In addition to hotels, the Company has positioned the office building development business as a new growthengine and it plans to invest approximately ¥85bn (land + construction expenses) over three years. In the hotel
development business, there have been openings up to the 4th project so far, and 6 development projects
are currently being progressed. These hotels have room sizes of 25 to 40 square meters, and the Company’s
policy is to develop them to be a class of one rank higher than businesses hotels under the brand names ofwell-known foreign hotels. For offices, it intends to supply newly built B/C class* offices, for which there is little
supply or competition, after carefully selecting the areas and sites, mainly in major regional cities where the officedemand-supply balance is tight.
*	In general, grade-B office buildings have between 2,000-9,999 tsubo of total floor space (and at least 200 tsubo or moreof floor space on a typical floor), while grade-C office buildings have less than 2,000 tsubo of total floor space (and lessthan 200 tsubo of floor space on a typical floor).

The direction the Company is taking prioritizes not only a flow type earnings structure from repeated buying
and selling, but also converting to a stock-type earnings structure that stably accumulates earnings. At FISCO,
we evaluate this strategy to be rational, because it minimizes the impact of the business cycle and enables it toachieve sustainable growth. In addition, toward achieving these aims, an important theme is pursuing economies
of scale, such as by progressing the Company’s unique business model, as well as by increasing the scale ofprojects and expanding sales areas. Therefore, it is highly likely that the current capital and business alliance with
the Daiwa Securities Group will be a major turning point for the Company to progress toward a different stage it
has never faced. Going forward, we shall be paying attention to the progress the Company will make, including
new developments from the hotel RIET and crowdfunding through the alliance with the Daiwa Securities Group.

██Returns to shareholders
Upwardly revised the FY11/19 dividend forecast. There remains
considerable room for the dividend to increase in the future fromprofit growth.
The Company is aware that retuning profits to shareholders is one of its most important management issues. Its
policy is to pay dividends that reflect its business results and also base on a comprehensive consideration of its
future business plans and financial condition.

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

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

Samty Co., Ltd.
3244 Tokyo Stock Exchange First Section

25-Sept.-2019https://www.samty.co.jp/en/index.html

Returns to shareholders

The Company has also upwardly revised its initial forecast for the FY11/19 period-end dividend to a dividend pershare of ¥77 (dividend payout ratio, 31.9%), which is an increase of ¥9 YoY. If this is paid as planned, it will be theseventh consecutive fiscal year of higher dividends since FY11/12. It targets a dividend payout ratio of around 30%,
but at FISCO, we think that considerable room remains for the dividend to increase in the future from profit growth.
The Company also conducts a shareholder benefits program. It provides shareholders with discounted rates or
coupons to stay at three of the hotels* developed and managed by the Company for free (according to the numberof shares held).
*	Recently changed to three hotels, which include Center Hotel Tokyo, S-PERIA INN Nihombashihakozaki, and S-PERIAINN Osaka Hommachi.

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.
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,
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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