Director, Pearl Hill Advisors

Nicholas Tanner

Director

Pearl Hill Advisors

Equity Bottom-Up

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…

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Morningstar

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Morningstar, Inc.

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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

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.

<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

This, and the sector, has been a dreadful performer over the last 12 months. We suspect it is now worth looking at this name. There is significant new office supply coming on line in 2018, particularly from the end but this should not materially impact Mitsubishi Estate. The company is making good progress in finding new tenants, including for Marunouchi 3-2 Project which will be completed in October 2018. Mitsubishi Estate has also been able to increase rents by around 10% as contracts come up…

This, and the sector, has been a dreadful performer over the last 12 months. We suspect it is now worth looking at this name. There is significant new office supply coming on line in 2018, particularly from the end but this should not materially impact Mitsubishi Estate. The company is making good progress in finding new tenants, including for Marunouchi 3-2 Project which will be completed in October 2018. Mitsubishi Estate has also been able to increase rents by around 10% as contracts come up…

Mitsubishi Estate (8802) Trades at 60% of Adjusted NAV, a Laggard and Too Cheap.

Japan

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)

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

Mitsubishi Estate (8802) Trades at 60% of Adjusted NAV, a Laggard and Too Cheap.

This, and the sector, has been a dreadful performer over the last 12 months. We suspect it is now worth looking at this name. There is significant...

Pearl Hill Advisors

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