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Equity Bottom-Up

Mitsui Fudosan's first-quarter revenue rose 8.4% year over year, to JPY 357.7 billion from JPY 330.0 billion, primarily driven by revenue increases in its three core business segments.<ul><li class="p1">Leasing up 8.5%</li><li class="p1">Property sales up 16.8%</li><li class="p1">Management up 5.5% - despite a 3.4% revenue decline in the Mitsui home segment due to lower orders for new construction item.</li></ul>The group's total operating margin rose to 14.6%, compared with 10.3% in the prior-year quarter, with operating margin improvement in the three core business segments mentioned above, all of which showed double-digit operating margin for the first quarter.Consequently, net margin notched 9.9%, a moderate increase from 4.8% a year earlier.

Mitsui Fudosan's first-quarter revenue rose 8.4% year over year, to JPY 357.7 billion from JPY 330.0 billion, primarily driven by revenue increases in its three core business segments.Leasing up 8.5%Property sales up 16.8%Management up 5.5% - despite a 3.4% revenue decline in the Mitsui home segment due to lower orders for new construction item.The group's total operating margin rose to 14.6%, compared with 10.3% in the prior-year quarter, with operating margin improvement in the three core business segments mentioned above, all of which showed double-digit operating margin for the first quarter.Consequently, net margin notched 9.9%, a moderate increase from 4.8% a year earlier.

Mitsui Fudosan Shows Revenue Increase and Margin Improvement in 1Q

Independent Insight Provider

Hao Wang, CFA

Top two real estate companies in Japan, namely Mitsui Fudosan (Mitsui) and Mitsubishi Estate (Mitsubishi), are diverging in their strategies&nbsp;of running centuries-old real estate business. Mitsui Fudosan stands out&nbsp;because it has&ndash;diversified in geography and by asset class&ndash;improving profitability&ndash;higher visible growth&ndash;cheaper valuationsWhilst these businesses are traditionally seen as very similar, diverging strategies sets them apart, and I expect it will lead to increasingly diverging share price performance.&nbsp;

Top two real estate companies in Japan, namely Mitsui Fudosan (Mitsui) and Mitsubishi Estate (Mitsubishi), are diverging in their strategies&nbsp;of running centuries-old real estate business. Mitsui Fudosan stands out&nbsp;because it has&ndash;diversified in geography and by asset class&ndash;improving profitability&ndash;higher visible growth&ndash;cheaper valuationsWhilst these businesses are traditionally seen as very similar, diverging strategies sets them apart, and I expect it will lead to increasingly diverging share price performance.&nbsp;

Mitsui (8801 JP) vs Mitsubishi (8802 JP): Make a difference in the same old real estate business

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.

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.

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)

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.

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Mitsui Fudosan (8801 JP)

Mitsui Fudosan Shows Revenue Increase and Margin Improvement in 1Q

Mitsui Fudosan's first-quarter revenue rose 8.4% year over year, to JPY 357.7 billion from JPY 330.0 billion, primarily driven by revenue increases...

Morningstar, Inc.

Mitsui (8801 JP) vs Mitsubishi (8802 JP): Make a difference in the same old real estate business

Top two real estate companies in Japan, namely Mitsui Fudosan (Mitsui) and Mitsubishi Estate (Mitsubishi), are diverging in their strategies of...

Hao Wang, CFA

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