CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Quantamental Investing to beat Benchmarks

A. Stotz Investment Research

We pick stocks. We construct portfolios. All our effort is focused on how to better pick stocks and construct portfolios. We serve fund management companies, family offices, and high net worth individuals.

Equity Bottom-Up

<ul><li>Cheap on a gross profit basis, good price momentum, and more attractive to analysts relative to its sector</li><li>Raised launch value target for 2018 by 30% should drive presales further, 1Q18 saw presales up by 168% YoY</li><li>More low-rise project launches should pay off as AP has proven to be successful in this segment, gross margin expansion of almost 4 ppts in 1Q18 YoY at strong low-rise presales</li><li>Attractive at 18CE* 12.8% ROE/PB versus Thai Real Estate at 3.5% and AP offers a nice 4.3% dividend yield</li><li>Risks: Project delays and increasing competition</li></ul>* Consensus Estimates

Cheap on a gross profit basis, good price momentum, and more attractive to analysts relative to its sectorRaised launch value target for 2018 by 30% should drive presales further, 1Q18 saw presales up by 168% YoYMore low-rise project launches should pay off as AP has proven to be successful in this segment, gross margin expansion of almost 4 ppts in 1Q18 YoY at strong low-rise presalesAttractive at 18CE* 12.8% ROE/PB versus Thai Real Estate at 3.5% and AP offers a nice 4.3% dividend yieldRisks: Project delays and increasing competition* Consensus Estimates

AP (AP TB): Raised Property-Launch Target in 2018 and Nice Dividend Yield

Director, Pearl Hill Advisors

Nicholas Tanner

Director

Pearl Hill Advisors

This is Japan's premier real estate company with much of its property portfolio centered around the Marunouchi district of central Tokyo. We have written on this in the past and the recent sell off prompts us once again to point out the low valuation at which this trades. It is worth noting the a number of analysts have been revising their view on this name, the most recent being Goldman Sachs with a BUY rating and a target price of Y2,500, 40% higher than the current share price. Nine month…

This is Japan's premier real estate company with much of its property portfolio centered around the Marunouchi district of central Tokyo. We have written on this in the past and the recent sell off prompts us once again to point out the low valuation at which this trades. It is worth noting the a number of analysts have been revising their view on this name, the most recent being Goldman Sachs with a BUY rating and a target price of Y2,500, 40% higher than the current share price. Nine month…

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

We reduce our fair value estimate for <a href="https://www.smartkarma.com/entities/566" target="_blank" data-smartkarma-citation="entities:566:1">Mitsubishi Estate Co Ltd (8802 JP)</a>, or MEC, to JPY 2,100 per share, from JPY 2,200 per share previously, representing 1.6 times to our forward book value estimate. Our updated assumption on interest rate increases and reduced earnings contribution from its overseas business segments will lead to a lower return on equity assumption at 5.0% and a lower return on invested capital assumption at 3.0% against our cost of capital assumption at 5.1%. Our latest…

We reduce our fair value estimate for Mitsubishi Estate Co Ltd (8802 JP), or MEC, to JPY 2,100 per share, from JPY 2,200 per share previously, representing 1.6 times to our forward book value estimate. Our updated assumption on interest rate increases and reduced earnings contribution from its overseas business segments will lead to a lower return on equity assumption at 5.0% and a lower return on invested capital assumption at 3.0% against our cost of capital assumption at 5.1%. Our latest…

Untimely Overseas Investments in Rising Interest Rates, Reducing MEC's FVE to JPY 2,100

<a href="https://www.smartkarma.com/entities/565" target="_blank" data-smartkarma-citation="entities:565:1">Mitsui Fudosan Co Ltd (8801 JP)</a>, or MF, missed our adjusted earnings estimate by 15% mainly due to lower-than-expected institutional sales of investment property and disappointing performance in overseas business. Although management maintained the full-year forecast, which implies a 6.2% EPS increase for the year, we are less confident in the underlying business strength as the group continues to ramp up the investment in underperforming segments ahead of real demand. A benign financial market…

Mitsui Fudosan Co Ltd (8801 JP), or MF, missed our adjusted earnings estimate by 15% mainly due to lower-than-expected institutional sales of investment property and disappointing performance in overseas business. Although management maintained the full-year forecast, which implies a 6.2% EPS increase for the year, we are less confident in the underlying business strength as the group continues to ramp up the investment in underperforming segments ahead of real demand. A benign financial market…

An Uphill Battle Awaits for Building Large Asset Risk Ahead of Real Demand, MF’s Shares Overvalued

<ul><li>Good price momentum, low volatility in earnings, and low core profit valuation relative to its sector</li><li>Strong presales should drive earnings moving forward. As of 10M17, AP had surpassed its full-year presales target of Bt26bn by 16% and had a backlog of Bt39bn</li><li>Profit contribution from its JV with Mitsubishi Estate should grow further, driven by new project launches such as Life Asoke-Rama 9, equity income in 9M17 was 99% of full-year 2016 equity income</li><li>Attractive as it trades below Thai Real Estate at 18CE* 7.8x PE but offers earnings growth that is in line</li><li>Risks: Project delays and increasing competition</li></ul>* Consensus Estimates

Good price momentum, low volatility in earnings, and low core profit valuation relative to its sectorStrong presales should drive earnings moving forward. As of 10M17, AP had surpassed its full-year presales target of Bt26bn by 16% and had a backlog of Bt39bnProfit contribution from its JV with Mitsubishi Estate should grow further, driven by new project launches such as Life Asoke-Rama 9, equity income in 9M17 was 99% of full-year 2016 equity incomeAttractive as it trades below Thai Real Estate at 18CE* 7.8x PE but offers earnings growth that is in lineRisks: Project delays and increasing competition* Consensus Estimates

AP (AP TB): Cheap Real Estate Developer Reaping Benefits from JV

Japan

DAIWA HOUSE INDUSTRY CO., LTD. designs and builds residential, commercial, and institutional buildings.  The Company constructs single-family houses, collective housings, condominiums, stores, office buildings, factories, and hospitals. DAIWA HOUSE INDUSTRY also operates real estate businesses. The Company, through its subsidiaries, manages hotels and golf country clubs.

Mitsui Fudosan Co., Ltd. provides overall real estate services such as leasing, subdivision, construction, sales, and maintenance of office buildings and residential houses.  The Company also manufactures building materials, operates commercial facilities including hotels and golf places, and provides financial services such as securitization of real estate properties.

Sumitomo Realty & Development Co., Ltd. develops, manages, and sells houses and condominiums.  The Company also develops and manages real estates in overseas. Sumitomo Realty & Development undertakes infrastructure projects, manages real estate properties, and provides financing services to its customers.  The Company operates fitness clubs and restaurants as well.

Hulic Company, Limited. operates real estate business and marketable securities investment business.  The Company also conducts environment related businesses.

Tokyu Fudosan Holdings, Corp. is a holding company established through the merger of Tokyu Land Corporation, Tokyu Community Corp, and Tokyu Livable Inc. The Company manages operations for its subsidiaries.

DAITO TRUST CONSTRUCTION CO., LTD. operates building construction and real estate businesses.  The Company plans and constructs apartment and commercial buildings mainly for land owners.  Daito Trust Construction provides brokerage and maintenance services as well.

Tokyo Tatemono Co., Ltd. develops, sells, and leases commercial buildings, condominiums, and houses.   The Company also develops and manages hotels, vacation houses, leisure facilities, and resort places.

Open House Co.,Ltd. provides real estate services. The Company offers services including renting, buying, selling and appraising real estate.

Nomura Real Estate Holdings, Inc. sells and leases condominiums, residential houses, and office buildings.  The Company also manages REITs, real estate development, and consulting services.

AEON Mall Co., Ltd. develops, manages, and maintains large-scale shopping malls throughout Japan. The Company develops shopping malls, rent the space, manages and maintains the shopping malls.

The Wharf (Holdings) Limited, through its subsidiaries, develops and invests in real estate properties. The Company also owns and manages hotels and operates logistics business. In addition, the Wharf operates telecommunication business, cable television, and Internet-related businesses.

SM Prime Holdings Inc., through its subsidiaries, is engaged in residential property, shopping malls, offices, hotels and convention centers development.

Sun Hung Kai Properties Limited develops and invests in properties. The Company operates and manages hotels, properties, car parking, and transportation infrastructures. Sun Hung Kai Properties serves customers in Hong Kong.

Henderson Land Development Company Limited, through its subsidiaries, develops, invests in, and manages properties. The Company also provides project management, construction, and finance services. In addition, Henderson Land Development operates department stores, hotels, and infrastructure business.

China Resources Land Limited, through its subsidiaries, develops and invests in properties.  The Company also provides corporate financing and electrical engineering services.

China Overseas Land & Investment Limited provides real estate services. The Company develops, manages, and invests in commercial properties. China Overseas Land & Investment serves customers globally.

China Overseas Land & Investment (688 HK)

Godrej Properties, Ltd. is a real estate development company.

Swire Properties Limited develops and manages commercial, retail, and residential properties. The Company's investment portfolio includes office and retail premises, and serviced apartments and other residential accommodation.

Longfor Properties Co. Ltd. operates in the property development, property investment and property management businesses in China.

Poly Real Estate Group Co., Ltd. mainly develops and sells residential homes. The company is also in the business of leasing and rental of real estates, and property management.

Poly Real Estate Group Co., Ltd (600048 CH)

Mitsubishi Estate Company Ltd. invests in real estate properties in Japan.  The Company leases, manages, and develops commercial buildings in central Tokyo. Mitsubishi Estate also develops and sells residential properties and parking lots and manages recreational facilities including golf courses and tennis clubs.

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Mitsubishi Estate (8802 JP)

AP (AP TB): Raised Property-Launch Target in 2018 and Nice Dividend Yield

Cheap on a gross profit basis, good price momentum, and more attractive to analysts relative to its sector Raised launch value target for 2018 by...

A. Stotz Investment Research

Mitsubishi Estate (8802) Too Cheap BUY

This is Japan's premier real estate company with much of its property portfolio centered around the Marunouchi district of central Tokyo. We have...

Pearl Hill Advisors

Untimely Overseas Investments in Rising Interest Rates, Reducing MEC's FVE to JPY 2,100

We reduce our fair value estimate for Mitsubishi Estate Co Ltd (8802 JP), or MEC, to JPY 2,100 per share, from JPY 2,200 per share previously,...

Morningstar, Inc.

An Uphill Battle Awaits for Building Large Asset Risk Ahead of Real Demand, MF’s Shares Overvalued

Mitsui Fudosan Co Ltd (8801 JP), or MF, missed our adjusted earnings estimate by 15% mainly due to lower-than-expected institutional sales of...

Morningstar, Inc.

AP (AP TB): Cheap Real Estate Developer Reaping Benefits from JV

Good price momentum, low volatility in earnings, and low core profit valuation relative to its sector Strong presales should drive earnings moving...

A. Stotz Investment Research

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