COMPANY RESEARCH AND ANALYSIS REPORT

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

28-Sept.-2020
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

28-Sept.-2020
https://www.samty.co.jp/en/ir.html■ Index■Summary---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 01
1. Company profile.. ................................... ......................................................................................................

01

2. Business result for FY11/20 1H. . ..................................................................................................................

01

3. FY11/20 forecast.. .................................. ......................................................................................................

02

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

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

03

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

07

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

08■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 09
1. Overview of FY11/20 1H results. . .................................................................................................................

09

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

12■Topics------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ 12
1. Measures to halt the COVID-19 outbreak....................................................................................................

12

2. Investment made................................... ......................................................................................................

12

3. Expansion of the hotel and office business. .................................................................................................

13

4. Movement toward establishment of a hotel REIT. ........................................................................................

13■Earnings outlook-------------------------------------------------------------------------------------------------------------------------------------------------------- 13
1. FY11/20 forecast.. .................................. ......................................................................................................

13

2. View of FY11/21 results...............................................................................................................................

15■Results trends--------------------------------------------------------------------------------------------------------------------------------------------------------------- 15■Industry environment--------------------------------------------------------------------------------------------------------------------------------------------- 17■Growth strategy----------------------------------------------------------------------------------------------------------------------------------------------------------- 20
1. Medium-term management plan............ ......................................................................................................

20

2. Key priority measures 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

28-Sept.-2020
https://www.samty.co.jp/en/ir.html█ SummarySales and profits down sharply in 1H FY11/20 though largely due
to skewing of property sales to 2H, mainstay leasing condominium
business remains healthy despite the coronavirus disease (COVID19) outbreak but delayed establishment of a hotel REIT until at least
FY11/21
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 is also involvedin hotel business and other related operations. A feature of the Company is that it is able to respond flexibly tochanges to its business environment from its balance of realizing stable income from its Property Leasing Businessand accelerating 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
aspect of the property business, and presently it is continuing to achieve high growth. In addition to expanding thebusiness area, it entered into the J-REIT business* in June 2015. 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.

While the Company postponed establishment (and listing) of a hotel REIT that had been planned in 2020 to at least
FY11/21 because of the COVID-19 outbreak, the leasing condominium business less affected by the impact offluctuations in economic activity remains healthy and the Company is steadily moving forward with its investment
plan (land procurement and acquisition of income properties) for future business.
2. Business result for FY11/20 1H
In FY11/20 1H, the Company reported sharply lower sales and profits with net sales at ¥27,322mn (down 42.9%
YoY) and operating income at ¥5,368mn (down 61.5%). Net sales fell substantially year-on-year in the Real EstateBusiness, though largely because of heavy sales in FY11/19 1H and skewing of FY11/20 sales to 2H. The Company’s
mainstay leasing condominiums have not been affected by the COVID-19 outbreak and continue to attract strong
interest from domestic and overseas institutional investors with support from ongoing low interest rates globally.
Additionally, the Property Leasing Business secured higher sales thanks to firm trends in occupancy rates andrent levels at leasing condominiums directly held by the Company, and an increase in owned properties. In Other
Business, meanwhile, even though sales fell on a decline in hotel occupancy rates with the COVID-19 outbreaksituation, the impact on the Company’s overall results is limited and occupancy rates are currently recovering. Profit
dropped on lower sales and the operating income margin also decreased. Nevertheless, the margin setback reflects
the impact of high-margin property sales in FY11/19, and FISCO believes that the Company is sustaining a highprofit margin from the standpoint of the past trend.

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01 21

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

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

28-Sept.-2020
https://www.samty.co.jp/en/ir.html

Summary

3. FY11/20 forecast
For the results forecast for FY11/20, the Company revised initial forecast targets to a range format, taking into
account the delay in establishment of the hotel REIT and other factors. Updated targets are ¥88,000mn (up 2.9%
YoY) to ¥105,000mn (up 22.7%) in net sales and ¥14,600mn (down 5.2%) to ¥16,900mn (up 9.8%) in operating
income. Revisions to initial forecast targets mainly reflect postponement of hotel REIT establishment and related
hotel sales until at least FY11/21. Meanwhile, even though the Company plans to shift properties planned for sale toincome properties (leasing condominiums, etc.) that are relatively protected from the impact of economic fluctuation
with the aim of offsetting this portion, it decided to change the results forecast to a range format based on multiple
scenarios due to difficulty of precisely forecasting results at this point. In net sales, the Company expects to secure
an increase even at the low end. In profits, however, the Company sees a possibility of profit decline at the low end
because of the impact of reassigning properties planned for sale and other factors.
4. Growth strategy
The Company is advancing its medium-term management plan that covers the three-year period from FY11/19 to
FY11/21. 1) Developing a business model centered on SRR (strengthening the fee income business); 2) Strategicallyinvesting in regional metropolitan areas (expanding business area); and 3) Promoting the hotel development andoffice building development businesses (develop new growth engines). Also, the Company is placing more of a
focus on managing the balance sheet to prepare for a future correction phase. The Company is aiming 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%.
Key Points
Sales and profits down sharply in FY11/20 1H though largely due to skewing of property sales to 2H
Mainstay leasing condominium business remains healthy despite the COVID-19 outbreak but the Company
delayed establishment of a hotel REIT until at least FY11/21• Revised FY11/20 results forecast to a range format accompanying delay in establishment of the hotel REIT, also
expects higher net sales at the low end due to selling income property• Medium-term management plan through FY11/21 seeks sustainable profit growth by raising productivity andcapital efficiency while putting emphasis on the balance sheet••

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

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

28-Sept.-2020
https://www.samty.co.jp/en/ir.html

Summary

Results trends
Net sales (left)

Operating income (right)

（¥mn）

（¥mn）

120,000

15,39515,75014,033100,000
80,00018,00015,00012,000

10,131
8,586

60,000

9,000
5,932

84,27440,00052,40920,00085,55296,5006,000

60,4793,000

38,45800
FY11/15

FY11/16

FY11/17

FY11/18

FY11/19

FY11/20E

Note: FY11/20 (E) indicates the median value from the outlook range

Source: Prepared by FISCO from the Company’s financial results█ Company profile
Balanced business portfolio based on Real Estate Business andProperty Leasing Business. Leasing condominium business amainstay largely unaffected by economic fluctuations
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 80.4% of net sales (after adjustment) in
FY11/20 1H. 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 areaof expertise of residential properties (condominiums, etc.) that can be expected to stably maintain high occupancy
rates. Recently the Company has been promoting hotel development business through an alliance with Daiwa
Securities Group Inc. <8601>.

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03 21

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

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

28-Sept.-2020
https://www.samty.co.jp/en/ir.html

Company profile

Percentages of net sales by business in FY11/20 1H(after adjustment)

5.2%
14.4%

Real Estate Business
Property Leasing Business
Other Business
80.4%

Source: Prepared by FISCO from 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 continues to steadily expand and currently owns 128 properties withcombined value of ¥118.6bn (as of August 3, 2020). The Company is also moving ahead with formation of a hotel
development fund and plans to list a hotel REIT in FY11/21 or later.
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), Nagoya (Nakamura-ku), and Hiroshima (Naka-ku) and it is establishing anationwide system centered on the major regional cities.
*	Owns the Shinjuku and Yokohama sales offices.

The Samty Group is comprised of the Company and 13 consolidated subsidiaries, including eight 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.), Samty Hotel Management Co., Ltd. (hotel management, etc.) andSamty 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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COMPANY RESEARCH AND ANALYSIS REPORTFISCO Ltd.
http://www.fisco.co.jp

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

28-Sept.-2020
https://www.samty.co.jp/en/ir.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
and mainly supplies properties to SRR. It has also been working on planning, development and sales of hotels(S-PERIA series brand developed in-house, etc.) and office buildings as a new 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 and development of studio-type condominiums for investment,
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 network with sales
companies that have a sales track record in the business area and consulting with sales companies at the planningand development stages, it is able to supply properties that meet client (user) needs. Also, 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.
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. The asset management business is also
growing along with expansion in the asset scale of SRR. The revenue structure in this business comprises
management commissions (0.45% of the balance of assets under management), acquisition commissions (1.0%of the property acquisition value), sales commissions (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 under management.

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05 21

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

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

28-Sept.-2020
https://www.samty.co.jp/en/ir.html

Company profile(2) Property Leasing BusinessThis business is the foundation that ensures stability, and the segment profit margins are also maintaining highlevels. It owns around 66 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. It also
conducts diversified investment in a variety of assets, including condominiums, office buildings, and commercial
facilities. In particular, the Company has a high percentage of condominiums that are largely unaffected byeconomic fluctuations and 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 ¥152.0bn (book value), this is divided
into ¥77.0bn of inventory assets that it intends to eventually sell (real estate for sale), and ¥75.0bn of non-current
assets that it intends to continue to own (all results are as of the end of May 2020).

Sales by property type for FY11/20 1H(Property Leasing Business)

Hotel, etc.
26%

Residence
62%
Office building
13%

Source: Prepared by FISCO from the Company’s financial
 results briefing materials
Distribution of properties owned by area for FY11/20 1H( b a sed o n t o t a l f l o o r s p a ce)
Hokkaido
15%
Kansai
29%

Chubu
23%

Kyushu28%

Chugoku
5%

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

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06 21

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

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

28-Sept.-2020
https://www.samty.co.jp/en/ir.html

Company profile(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 10 hotels nationwide,
including four 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.
Hotels in which the Company participates
Hotel nameLocation

No. of rooms

Center Hotel Tokyo

Chuo-ku, Tokyo

108

Amano Hashidate Hotel

Miyazu-shi, Kyoto

86

GOZAN

Higashiyama-ku, Kyoto

21

S-PERIA HOTEL Nagasaki

Nagasaki-shi, Nagasaki

155

Hotel Sunshine Utsunomiya

Utsunomiya-shi, Tochigi

160

S-PERIA HOTEL Hakata (developed in-house)

Hakata-ku, Fukuoka-shi

287

S-PERIA INN Nihombashihakozaki (developed in-house)Chuo-ku, Tokyo

114

S-PERIA INN Osaka Hommachi (developed in-house)

Nishi-ku, Osaka125

S-PERIA HOTEL Kyoto (developed in-house)

Shimogyo-ku, Kyoto

165

NEST HOTEL Hiroshima Hatchobori

Naka-ku, Hiroshima-shi

126
1,347

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 aspects 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. While SRR will becomea stable supply destination, the expansion of the after-sales fee business (commissioned asset management
operations and contract property management operations) can be expected to become a stable source ofrevenue in the future.

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07 21

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

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

28-Sept.-2020
https://www.samty.co.jp/en/ir.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 period of
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 its results deteriorated comparatively little up to the present time (such as following thecollapse of the bubble economy and from the impact of the 2008 financial crisis) is due to the facts that they were
supported by its Property Leasing Business and that it kept its fixed costs down.
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 (currently, Samty
Hotel Management), which owns and manages business hotels. In July 2007, it was listed on the Osaka Hercules
market (currently, 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

28-Sept.-2020
https://www.samty.co.jp/en/ir.html

Company profile

Next, to further expand its business and disperse it over different regions, it opened branch offices in Tokyo in
February 2011, in Fukuoka in June 2012, in Sapporo in May 2015, in Nagoya in March 2016, and in Hiroshima in
December 2019, and it steadily expanded the regions in which it does business.
The Company is actively broadening business scope. In August 2006, it acquired the shares of SUNTOA Co., Ltd.
(currently, Samty Hotel Management), which owns and manages business hotels, to enter into the hotels business.
In December 2011, it established Samty Kanri Co., Ltd. (currently, Samty Property Management) to enter into theproperty management business; in November 2012, it made SUN Asset Management Co., Ltd. (currently, Samty
Asset Management) a wholly owned subsidiary to enter into the asset management business; and in June 2015,
SRR (Samty Residential Investment Corporation) was listed on the TSE J-REIT market. In such ways, it establisheda system for growth to accelerate in the future. Its listing was changed to the TSE First Section in October 2015. In
May 2019, it concluded a capital and business alliance agreement with Daiwa Securities Group.

█ Results trends
Sales and profits down sharply in FY11/20 1H though largely due toskewing of property sales to 2H
1. Overview of FY11/20 1H results
In FY11/20 1H, the Company reported sharply lower sales and profits with net sales at ¥27,322mn (down 42.9%
YoY), operating income at ¥5,368mn (down 61.5%), ordinary income at ¥4,301mn (down 66.4%), and profit attributable to owners of parent at ¥2,939mn (down 67.5%). However, even though the COVID-19 outbreak had some
impact, the primary decline factor is skewing of property sales to 2H and the 1H results were not much weaker
than planned.
Net sales fell substantially year-on-year in the Real Estate Business, though largely because of heavy sales in
FY11/19 1H and skewing of FY11/20 sales to 2H. The Company’s mainstay leasing condominiums have not been
affected by the COVID-19 outbreak and economic trends and continue to attract strong interest from domestic
and overseas institutional investors with support from ongoing low interest rates globally. Additionally, the Property
Leasing Business secured higher sales thanks to firm trends in occupancy rates and rent levels at leasing condominiums directly held by the Company and increase in owned properties. In Other Business, meanwhile, althoughsales fell on a decline in hotel occupancy rates (including temporary closures) with the COVID-19 outbreak situation,
the impact on the Company’s overall results is limited and occupancy rates are currently recovering.
Profit dropped on lower sales and also a decline in operating income margin to 19.7% (vs. 29.2% a year ago).
Nevertheless, the margin setback reflects the impact of high-margin property sales in FY11/19, and FISCO believes
that the Company is sustaining a high profit margin from the standpoint of the past trend*. Regarding losses
accompanying the COVID-19 outbreak, ¥482mn in fixed costs at hotels with reduced operating rates pressured
earnings, though the Company booked ¥101mn in fixed costs from hotels that temporarily suspended operations
as extraordinary losses.
*	Operating income margins (1H basis) in past years were 15.9% in FY11/16 1H, 18.4% in FY11/17 1H, 19.7% in FY11/18
1H, and 29.2% in FY11/19 1H.

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

Samty Co., Ltd.

28-Sept.-20203244 Tokyo Stock Exchange First Section

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

Results trends

Furthermore, while “continuous stable profit” (total value in the various businesses*1) emphasized by the Company
modestly declined to ¥6,015mn (down 3.9% YoY) because of lower hotel guest room income and a drop in
construction income*2 (temporary suspension, etc.) related to the COVID-19 situation, it has been recovering in 2H.
*1	Comprised of rent income, asset management fees, hotel guest room income, and others.
*2	Samty Property Management, which handles management operations, focuses on the construction and renovation
business and property brokerage business in addition to condominium management, leasing property management,
and building management as part of its total support.

Meanwhile, the Company was very successful concerning purchases that will lead to future growth. The Company
acquired 33 development sites (acquisition price of ¥12.5bn), and 39 income properties (acquisition price of¥24.6bn), making healthy progress.
For the Company’s financial condition, the Company effectively utilized funds procured through property sales
and borrowings to proactively acquire land for development and income properties. Gross assets expanded to¥252,522mn, an increase of 15.4% from the end of the previous fiscal year. Shareholders’ equity, meanwhile, fellslightly to ¥70,659mn (down 0.5%), despite a rise in retained earnings, because of the acquisition of treasury shares(¥892mn) and other factors. The Company’s equity ratio dropped to 28.0% (vs. 32.5% at the end of the previous
fiscal year). Also, interest-bearing debt was up 23.4% from the end of the previous fiscal year to ¥173,952mn, but
the ratio of long-term debt was approximately 77% and net D/E ratio* was kept down to a level of 1.94 times, so it
can be said that the Company is maintaining stable financial ratios while expanding assets.
*	(interest-bearing debt - cash and deposits) ÷ shareholders’ equity

FY11/20 1H results(¥mn)
FY11/19 1H
Results

FY11/20 1H% of net
sales

47,827

Results

Change% of net
sales-20,505-42.9%

Real Estate Business

42,743

89.4%

22,125

80.9%-20,617-48.2%

Property Leasing Business

3,203

6.7%

3,949

14.5%

745

23.3%

Other Business

2,106

4.4%

1,439

5.3%

-666

-31.7%Net sales

27,322% ofchangeAdjustment

-226

-

-192

-

33

-

Cost of sales

29,586

61.9%

16,63560.9%-12,951-43.8%

SG&A expenses

4,288

9.0%

5,317

19.5%

1,028

24.0%

Operating income

13,952

29.2%

5,368

19.7%

-8,584-61.5%

Real Estate Business

14,855

34.8%

6,669

30.1%

-8,186-55.1%

Property Leasing Business

1,174

36.7%

1,671

42.3%

497

42.3%

5

0.2%

-285

-

-290

-

Adjustment-2,083--2,686--603-

Ordinary income

12,803

26.8%

4,301

15.7%

-8,502-66.4%

259

-

117

-

-141

-

0

-

108

-

108

-

9,044

18.9%

2,939

10.8%

-6,104-67.5%

Other Business

Extraordinary income
Extraordinary loss
Profit attributable to owners of parent
Breakdown of net sales in the Real Estate Business (after adjustment)
Development securitization

32,142

14,628-17,514-54.5%

Renovation securitization

8,934

5,378

-3,556-39.8%

Investment unit sales in lots

1,258

1,497

239

19.0%

Asset management

389

591

202

51.9%

Continuous stable profit

6,259

6,015

-244

-3.9%

3,272

3,829

557

17.0%

648

315

-333

-51.4%

2,339

1,871

-468

-20.0%

Dividends, rent income
Asset management fees (acquisition), brokerage, construction
Asset management fees (during the period), hotel income,property management

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.

10 21

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

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

28-Sept.-2020
https://www.samty.co.jp/en/ir.html

Results trends

Financial position at the end of May 2020(¥mn)
ChangeEnd of November
2019

End of May 2020

122,428

160,384

37,95531.0%

Cash and deposits

44,91836,548-8,369-18.6%

Real estate for sale

28,63777,027

48,390169.0%

Real estate for sale underconstruction

46,33944,073-2,266-4.9%

96,374

92,138-4,236-4.4%

78,42074,973-3,446

-4.4%

172

157

-14

-8.7%

17,781

17,007

-774

-4.4%

Total assets

218,803

252,52233,71815.4%

Current liabilities

22,581

34,214

11,632

51.5%

2,315

7,961

5,645

243.9%

Current assets

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

Short-term borrowings% of change

16,387

21,320

4,933

30.1%

Non-current liabilities

124,593

147,036

22,44218.0%

Long-term debt

112,224

134,670

22,446

20.0%

Net assets

71,627

71,271

-356

-0.5%

Total liabilities and net assets

218,803

252,52233,71815.4%

Interest-bearing debt

140,927

173,952

33,025

23.4%

Shareholders’ equity

71,02770,659-368-

Equity ratio

32.5%

28.0%

-4.5pt-Current portion of long-term debt

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

The results according to each business are as follows.
(1) Real Estate BusinessNet sales decreased 48.2% YoY to ¥22,125mn, and segment profit declined 55.1% to ¥6,669mn. Both sales
and profits weakened. Main setbacks in net sales were 1) decline in sales of buildings from the S-RESIDENCE
series to three properties (vs. 10 properties in the previous fiscal year) and period delay in selling Mercure Kyoto
Station (developed in-house; though the sale was already completed in June) in development securitization and2) decline in sales of buildings to five properties (vs. eight properties in the previous fiscal year) in renovation
securitization. As already explained, however, this largely happened because of heavy sales in FY11/19 1H andskewing of FY11/20 sales to 2H. Meanwhile, 3) the decline in sales of condominiums for investment to 49 units(vs. 93 units) was within the anticipated range. 4) Asset management business delivered higher sales thanks tooperational and management fee increases accompanying growth in SRR’s asset management balance. Profit
fell on lower sales, and segment profit margin dropped as well to 30.1% (vs. 34.8% in the previous fiscal year).
Nevertheless, the margin moved lower due to the impact of high-margin property sales in the previous fiscal year,
and FISCO believes the assertion that profit margin remains at a high level is reasonable.
(2) Property Leasing BusinessNet sales rose 23.3% YoY to ¥3,949mn, and segment profit expanded at a healthy pace with a 42.3% increaseto ¥1,671mn. Rent income strengthened due to sustaining high occupancy in owned leasing condominiums andproactive acquisitions of income properties. The Company owned 66 buildings (only fixed assets) at the end of 1H.
Profits benefited from a boost driven by higher sales and also significant improvement in segment profit margin
to 42.3% (vs. 36.7% in the previous fiscal year).

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11 21

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

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

28-Sept.-2020
https://www.samty.co.jp/en/ir.html

Results trends(3) Other BusinessNet sales decreased 31.7% YoY to ¥1,439mn, and the segment had a ¥285mn loss. Both sales and profits
weakened (including a loss). Hotel guest room income declined due to a substantial drop in hotel occupancy* andtemporary closures of some hotels due to the impact of the COVID-19 outbreak. Recently, however, conditions
appear to be recovering. In profits, the segment slumped to a loss as fixed costs pressured earnings amid lower
sales.
*	Occupancy was 10-20% during April to mid-June. In July, it recovered to about 30%.

2. The development plan (pipeline) situation
Development conditions for the S-RESIDENCE series and other businesses are a total of 119 planned buildings(7,997 units) with completions of 11 buildings (636 units) in 2020, 48 buildings (3,073 units) in 2021, 48 buildings(3,230 units) in 2022, and 12 buildings (1,058 units) in 2023. FISCO thinks the Company should be capable ofmaintaining strong income results with its healthy pipeline build-up even compared to the end of FY11/19 (total of
79 buildings with 5,267 units). For hotel and office building development, four properties are scheduled to open forbusiness in FY2020, four properties in FY2021, and one property in FY2022 (the details are given below).

█ Topics
Delayed establishment of the hotel REIT due to the COVID-19
outbreak, though making steady progress in the investment plan
mainly for residences in various areas nationwide
1. Measures to halt the COVID-19 outbreakWith the aim of ensuring the health and well-being of employees and their families and business partners, theGroup has taken various steps - 1) adopting work from home, online meetings, and online communication tools,2) recommending staggered working hour and commuting by car and bicycle, 3) curtailing non-essential businesstrips, and 4) distributing non-woven masks and sterilization products. In particular, it introduced telework early andhas focused on cultivating a safe and convenient work environment. Management intends to continue pursuit of
new working styles suited to the “With Corona” and “After Corona” eras.
2. Investment madeAs previously mentioned, the Company acquired 33 development sites (acquisition amount: ¥12.5bn) and 39 income
properties (acquisition amount: ¥24.6bn). Furthermore, including properties with planned settlements, the Company
has secured 64 development sites (acquisition amount: ¥24.9bn) and 54 income properties (acquisition amount:¥43.1bn). Of the 64 development sites (all residences), there are 6 in Hokkaido, 16 in the Tokyo metropolitan area,
19 in Chubu, nine in Kansai, 11 in Chugoku, and three in Kyushu. Also, of the 54 income properties (52 residences,
one hotel/office, one other), there are 5 in Hokkaido, 1 in Tohoku, 11 in the Tokyo metropolitan area, 1 in Koshinetsu,
8 in Chubu, 13 in Kansai, 2 in Chugoku, and 13 in Kyushu. The Company is developing properties nationwide andhas been able to achieve results for investments in regional urban areas as set out in the medium-term management
plan. In addition, it is planning investment of a total amount (including construction expenses) of approximately¥300.0bn for the three years (FY11/19 to FY11/21), and as of end-May 2020, the midway point, it is making steadyprogress toward this goal at ¥214.1bn (71.4% progress rate).
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12 21

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

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

28-Sept.-2020
https://www.samty.co.jp/en/ir.html

Topics

3. Expansion of the hotel and office businessIn hotel development, the Company is currently in the process of developing seven hotels with scheduled openingsof two hotels in 2020, four hotels in 2021, and one hotel in 2022. In addition to hotels, the Company has plans
to develop office buildings, centered on major cities throughout Japan, and is developing two such properties.
Regarding future investments, however, considering current market conditions and other factors, management
intends to focus on residence development and income properties that are relatively unaffected by economic trends
and the COVID-19 outbreak.
Hotel and office building development plans
Openingfiscal year

2020

2021

2022

Propertytype

Project name (provisional)

Location

No. of rooms

Comment

Hotel

Mercure Kyoto Station

Shimogyo-ku, Kyoto

225

Already sold

Hotel

Ibis Styles Nagoya

Nakamura-ku, Nagoya284Land already sold

OfficeS-BUILDING Shin-Osaka

Yodogawa-ku, Osaka-

Already completed purchase reception

OfficeS-BUILDING Sapporo Odori

Chuo-ku, Sapporo-

Currently in sale discussions

Hotel

Agora Kyoto Shijo Karasuma North
Tower (provisional)

Shimogyo-ku, Kyoto

80

Hotel

Agora Kyoto Shijo Karasuma South
Tower (provisional)

Shimogyo-ku, Kyoto

140

Hotel

Fukuoka HOTEL PJ

Fukuoka87

Hotel

Kyoto Oike HOTEL PJ

Chuo-ku, Kyoto

120

Hotel

Haneda HOTEL PJ

Ota-ku, Tokyo

362

Pending

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

4. Movement toward establishment of a hotel REIT
The Company postponed establishment of the hotel REIT that it planned to launch in 2020 to at least FY11/21 dueto the impact of the COVID-19 outbreak. However, it has already secured properties to be included in the portfolio
upon establishment (approximately ¥55.0bn), and has already been acquired for properties to be included in portfolio
in the future (approximately ¥55.0bn).

█ Earnings outlook
Revised FY11/20 results forecast to a range format accompanying
delay in establishment of the hotel REIT
1. FY11/20 forecast
For the FY11/20 results forecast, the Company revised initial forecast targets to a range format, taking into accountthe delay in establishment of the hotel REIT and other factors. Updated targets are ¥88,000mn (up 2.9% YoY)
to ¥105,000mn (up 22.7%) in net sales, ¥14,600mn (down 5.2%) to ¥16,900mn (up 9.8%) in operating income,¥12,200mn (down 7.5%) to ¥14,600mn (up 10.7%) in ordinary income, and ¥8,500mn (down 12.7%) to ¥10,100mn(up 3.7%) in profit attributable to owners of parent.

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13 21

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

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

28-Sept.-2020
https://www.samty.co.jp/en/ir.html

Earnings outlook

Revisions to initial forecast targets, as already explained above, mainly reflect postponement of hotel REIT establishment and related hotel sales until at least FY11/21 due to the impact of COVID-19. The Company also expects
about ¥1,500mn in lost hotel sales (FY11/20) related to the COIVD-19 situation from declines in hotel occupancy
and hotel guest room income. Meanwhile, even though the Company plans to shift properties slated for sale toincome properties (leasing condominiums, etc.) that are relatively unaffected by the impact of economic fluctuations
with the aim of offsetting this portion, it decided to change its results forecast to a range format based on multiple
scenarios due to the difficulty of precisely forecasting results at this point. In other words, disparities between
high-end and low-end estimates in the forecast reflect a range of 30 properties to 44 properties in anticipated sales
for renovation securitization (income properties). The Company does not significantly revise other estimates versus
the initial forecast and targets sales of 28 properties in development securitization (including seven condominium
buildings for investment). As a result, it still projects an increase in net sales even at the low end.
In profits, however, the Company forecasts an increase in profit at the high end and decrease in profit at the low
end based on anticipated declines in the operating income margin in both cases with a range of 16.1% to 16.6%(vs. 18.0% in FY11/19). Margin setbacks are 1) non-recurrence of FY11/19’s high-margin property sales and 2) the
impact of adjusting properties planned for sale (shifting from high-margin hotel development properties to income
properties). Just as in 1H, FISCO thinks the Company is sustaining a high margin from the standpoint of past results*.
*	Operating income margins (full-year basis) in past years were 16.4% in FY11/16, 16.8% in FY11/17, 16.7% in FY11/18,
and 18.0% in FY11/19.

FISCO favorably assesses the Company’s change in policy to sustain high results by shifting properties planned forsale from hotel development properties to income properties (leasing condominiums, etc.), responding dynamicallyto changes in the external environment, as a rational decision. From a different viewpoint, we think the Company’s
ability to make this type of adjustment highlights its strength arising from stable leasing condominiums. Furthermore,regarding the hotel business that postponed property sales (the Company directly owns five of the 10 properties
that are operating), we believe the ability to respond while staying abreast of recovery in market conditions because
it already has financing measures in place to sustain direct ownership for the time being is an advantage, too.
We also think the number of income properties targeted for sale assumed in the forecast is at a level that is wellwithin reach considering external factors (such as continuation of low interest rates worldwide) and internal factors(property ownership situation and stable cash flow), and the main point is how close the Company comes to thehigh-end scenario.
FY11/20 forecast(¥mn)
FY11/19
Results
Net sales
Operating income
Ordinary income
Profit attributable toowners of parent

High end

FY11/20% of net
sales

85,552

Initialforecast% of net
sales

100,000

Low endHigh end

15,39518.0%

17,50017.5%

Low endHigh end

13,193

15.4%

14,60014.6%

Low endHigh end

9,740

11.4%

10,100Low end10.1%

Versus revised forecast

Revisedforecast% of net
sales

Change% ofchange105,000

19,44822.7%

88,000

2,448

2.9%

16,900

16.1%

1,505

9.8%

14,600

16.6%

-795

-5.2%

14,600

13.9%

1,407

10.7%

12,200

13.9%

-993

-7.5%

10,100

9.6%

360

3.7%

8,500

9.7%

-1,240-12.7%

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

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14 21

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

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

28-Sept.-2020
https://www.samty.co.jp/en/ir.html

Earnings outlook

2. View of FY11/21 results
In FY11/21, the final fiscal year of the medium-term management plan, FISCO thinks the Company’s success inestablishing the hotel REIT will strongly influence the outcome, particularly amid continued heightened uncertainty
including the impact of COVID-19. Nevertheless, even if the Company delays establishment of the hotel REIT
again, it should be capable of sustaining high results because of the planned completion of 48 buildings in thedevelopment securitization business (S-RESIDENCE series and others). We therefore believe that FY11/21 results
could rise significantly if the Company achieves the best-case scenario (establishment of the hotel REIT, advances
in development securitization business, and other positives).

█ Results trends
Substantial growth in Real Estate Business amid strong real estatemarketLooking 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 evenunder a severe industry environment, which has supported the results of the Company as a whole. The fact that it
does not have its own in-house sales team and has kept down fixed costs has also had a positive effect, and it canbe 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 particular, the Company has achieved asignificant expansion in business over the past few years, aided by the establishment of a business model centeredon SRR which listed on the stock market in October 2015, as well as increased demand from overseas investors.
In terms of profit and loss also, the ordinary income margin has been improving year by year thanks to the progressin the highly profitable development securitization, and in FY11/19 it has reached a high ordinary income marginof over 15.0%.

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15 21

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

Samty Co., Ltd.

28-Sept.-20203244 Tokyo Stock Exchange First Section

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

Results trends

Trends in net sales (by business)（¥mn）
120,000

Real Estate Business

Property Leasing Business

Other Business（High end）
105,000

100,000
84,27485,55280,00060,47960,00052,40975,138 74,793

38,45840,00022,04820,000（ L o w e n d）
88,00027,374

16,227

15,98424,363

43,77351,46728,647
10,87012,903
21,602 17,478
7,572 11,966 5,954
6,666
4,876 5,235 4,978 4,404 4,343 5,140 6,183 8,974 7,016 7,380 6,806
700 836 1,619 1,630 2,329 4,092
427 418352 343 572 631

16,744 10,329
0Note: Excluding internal sales

Source: Prepared by FISCO from the Company’s financial
 results and financial results briefing materials
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)（¥mn）
15,000

15.4%

12,000
9,000

13.0%
9.8%

8.9%

9.5%

7.9%

14.0% 13.8%

10.1%

16.0%
12.0%

7.6%

6,000
3,000

20.0%

8.0%

1.2%

1.7%

4.0%

0

0.0%

-3,000-4.0%-6,000-8.0%

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 ¥2.0bn), 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 due to the disposition of treasury shares(approximately ¥2.7bn) in conjunction with the capital and business alliance with Daiwa Securities Group in May
2019, the equity ratio as of November 30, 2019, was 32.5%.
*	T he Company issued new shares by allotting listed-type stock acquisition rights without contribution to existing
shareholders.

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16 21

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

Samty Co., Ltd.

28-Sept.-20203244 Tokyo Stock Exchange First Section

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

Results trends

On the other hand, ROE, which indicates capital efficiency, has trended upward alongside the improvement in the
profit margin. In FY11/19, it had reached the high level of 14.7%.

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%

32.5%
23.3%

23.1%

23.1%

23.4%

17.1%

15.3%

15.8%

16.9%

10.1%

14.7%

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

Source: Prepared by FISCO from the Company’s financial results█ Industry environment
Cautious stance toward hotel and commercial facilities due to theimpact of the COVID-19 outbreak, though residential and logistic
center businesses are firm
The J-REIT market will have a significant impact on the Company’s growth strategy in the future. As of the end ofJune 2020, its market capitalization stood at around ¥13,044.2bn (-14.2% YoY), and there were 63 J-REITs listed(flat YoY). Looking back, although there was a phase in which the market was temporarily sluggish due to the impactof tightening credit and related factors following the 2008 financial crisis, since 2012 it has steadily trended upward
thanks to the recovery of the domestic economy and the effects of long-term monetary easing. However, despite
the cautious stance toward hotels and commercial facilities amid concerns about overall economic sluggishness,slumping inbound tourism demand, and movement restrictions and activity curtailment due to the COVID-19
situation, demand remains firm in the residential and logistic center businesses that are relatively insulated from theimpact of economic fluctuations and these areas help to support the entire market.

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17 21

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

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

28-Sept.-2020
https://www.samty.co.jp/en/ir.html

Industry environment

The TSE REIT index trended firmly due to a robust domestic real estate market (rising rents, etc.). In particular,
investment appetite for J-REITs from domestic and overseas institutional investors remains vibrant because theygenerate yield and have relatively stable cash flow against a backdrop of sustained monetary easing policy by the
Bank of Japan (BOJ) and healthy office demand up to now. At the same time, J-REITs still lack direction even though
they recovered after a temporary large decline in March 2020 in reaction to the COVID-19 outbreak from the startof 2020. Nevertheless, FISCO thinks room for further decline is limited considering expectations for prolonged
monetary easing from the BOJ.

T r e nd s i n th e T S E R EIT i n d ex
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 strong
inquiries about entire buildings from overseas funds and other investors for properties in Tokyo’s prime locations.

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18 21

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

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

28-Sept.-2020
https://www.samty.co.jp/en/ir.html

Industry environment

Population trend in Tokyo’s 23 wards（1,000 people）
9,800

9,653
9,569

9,600

9,479
9,385

9,400

9,288
9,180

9,200

9,000

8,947

8,973

9,016

9,087

8,800
8,600
8,400

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, hotel occupancy rates
have remained high against a backdrop of increased inbound demand. However, even though hotel occupancy has
dropped significantly because of the COVID-19 outbreak, FISCO believes it is likely to recover over the longer term
due to the Japanese government’s tourism promotion strategy and structural supply-demand balance. In officebuilding development as well, despite the need to pay attention to the impact of changes in working style (such as
wider use of remote work and satellite offices), regional major urban areas where the Company develops properties
face severe office shortages and this suggests that sufficient business opportunities exist.

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19 21

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

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

28-Sept.-2020
https://www.samty.co.jp/en/ir.html█ Growth strategy
The Company will promote its medium-term management plan, theSamty Toughening Plan, and will aim for sustainable profit growth
while emphasizing the balance sheet
1. Medium-term management plan
The Company is advancing its medium-term management plan which covers the three-year period from FY11/19
to FY11/21. The Company is looking to succeed and further strengthen the key priority measures and financial
strategies of the previous medium-term management plan “Challenge 40” which it achieved two years ahead ofschedule in FY11/18. Specifically, the Company will work on the following: 1) Developing a business model centeredon 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 (develop new
growth engines). Also, the Company is placing more of a focus on managing the balance sheet in order to prepare
for a future correction phase, and as a part of this, the Company is putting maximum emphasis on strengthening its
financial base, centered on rental cash flow. The Company is looking to realize sustainable growth while maintaining
an equity ratio of at least 30%. The Company is aiming for operating income around the ¥20.0bn level, ROE aroundthe 15.0% level, and ROA around the 7.0% level by focusing on productivity and capital efficiency, while purposely
not setting a net sales target.
New medium-term management plan Samty Toughening Plan (numerical targets)
FY11/18
Results

FY/11/19
Results

FY11/21
Targets¥14,033mn¥15,395mn¥20,000mn

level

ROE

16.9%

14.7%

15.0%

level

ROA

8.5%

8.1%

7.0%

level

Equity ratio

37.9%

32.5%

30.0%

or higher

Operating income

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

2. Key priority measures and direction(1) Development of a business model centered on SRR (bolstering the fee income business)
The Company intends to continue promoting asset build-up at SRR with ongoing robust property supply andpursue expansion of asset management fees. It also plans to focus on the property management operations(managing properties, construction, etc.). In addition to adding hotels and office buildings to the lineup of realestate for development and sale, the Company will launch new management funds*1 in addition to SRR andincrease acquisition fees. Furthermore, in addition to creating a mechanism to acquire MC fees by bringing hotelmanagement operations in-house*2, the Company will bolster the fee income business by growing rental income
and acquiring overseas income, along with other initiatives.
*1	As explained above, the Company is jointly launching a large-scale hotel development fund with Daiwa Securities Groupand aims to establish a hotel REIT in FY11/21 or later (with the Group handling the asset management business).
*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 21

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

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

28-Sept.-2020
https://www.samty.co.jp/en/ir.html

Growth strategy(2) Strategic investment in regional metropolitan areas (expanding the business area)
The Company plans to invest approximately ¥300.0bn (land + construction expenses) over three years. The
Company is making steady progress with accumulation of ¥214.1bn (71.4% progress rate) as of the end of May
2020, the midway point. In particular, residence development, the Company’s core business, already reached¥84.9bn (106.2%), surpassing the goal. The expansion of the sales area has been a success with properties
developed in the Tokyo metropolitan area and regional cities nationwide. Income property (this category is also
mainly residence properties) totaled ¥97.8bn (72.5%), indicating healthy progress with acquisitions.
(3) Expand the hotel development and office building development businesses
Investments in hotel and office development, which is positioned as a new growth engine, meanwhile, is lagging
at ¥31.2bn (36.8% progress rate). The Company has taken a cautious stance for the time being in light of the
impact of the COVID-19 outbreak on market condition trends. For the remaining investment portion, it intends toshift to residence development and income property acquisitions because these categories are less affected by
the impact of economic fluctuations.
The direction the Company is focused on is not only a flow type earnings structure from repeated buying andselling, but also converting to a stock-type earnings structure that stably accumulates earnings. At FISCO, weevaluate this strategy to be rational, because it minimizes the impact of the business cycle and enables it toachieve sustainable growth. Furthermore, FISCO thinks the policy change in respect to the COVID-19 outbreak
impact is a rational decision. Build-up in residence developments and income properties that attract vibrantdemand from domestic and overseas investors is therefore likely to strongly affect future growth. We believe theCompany holds advantages precisely due to the highly uncertain industry environment with its knowhow, network
cultivated up to now and financial capabilities. The Company’s alliance with Daiwa Securities Group deserves
notice from a longer-term perspective. We see opportunities in a new era and new business that envisions thenext stage, including the hotel REIT trend, overseas initiatives, and crowdfunding.

█ Returns to shareholders
Plans to raise the dividend for an eighth straight year in FY11/20, still has
considerable room for dividend increase in the future from profit 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 based on a comprehensive consideration of its
future business plans and financial condition.
In FY11/20, the Company plans to raise the dividend by ¥3 year-on-year to ¥82 (with a ¥38 interim dividend and ¥44
year-end dividend). If this level is achieved, it will increase the dividend for the eighth straight year since FY11/12. The
Company 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 number of shares held).
*	Center Hotel Tokyo, S-PERIA INN Nihombashihakozaki, and S-PERIA INN Osaka Hommachi

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◾ 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