Tosei is attracting attention as a real estate revitalization stock with a single-digit PER and continued dividend increases. It buys older buildings in central Tokyo, renovates and revitalizes them, and sells them to investors, while also securing stable revenue from leasing, fund management, property management and hotels. As interest rates rise, attention will need to be paid to inventory valuations and acquisition costs.
The introduction reports that Tosei is posting record profits and continuing to increase dividends. It also describes the company as an independent, full-service real estate company focused on real estate revitalization, with a business centered on revitalizing second-hand buildings in central Tokyo.
The company overview explains that Tosei has 6 businesses, centered on real estate revitalization and including leasing, fund management, property management and hotels, and operates a management model that combines stable revenue with transaction-based revenue. The company's strength is said to be its ability to identify the value of older buildings, acquire them, and handle their revitalization and sale in-house.
As risk factors, it is noted that the industry tends to finance inventory with borrowings, and that rising interest rates, fluctuations in real estate prices and higher construction costs could affect earnings. The risk that rising interest rates could reduce the prices buyers are able to pay is emphasized.
For monitoring purposes, the article recommends looking at indicators such as the gross margins on properties sold, the progress of acquisitions, the ability of stable businesses to cover fixed costs, and the balance between borrowings and equity, rather than focusing on absolute revenue.