Tosei Corporation: FY2025 Financial Results Review and Investment Insights

Tosei Corporation (TSE/SGX: 8923/S2D) has released its consolidated financial results for the fiscal year ended November 30, 2025, under IFRS. The company operates primarily in the Japanese real estate sector, with business segments spanning revitalization, development, rental, fund & consulting, property management, and hotel operations. This article provides a detailed analysis of the latest performance metrics, business segment highlights, dividend policy, and outlook based entirely on the official report disclosures.

Key Financial Metrics and Performance Trends

Note: The company conducted a 2-for-1 share split effective December 1, 2025. Figures for EPS and dividends are presented on a pre-split basis for FY2024 and FY2025. The FY2026 dividend forecast is ¥55/share post-split.

Business Segment Performance Highlights

• Revitalization Business: Revenue up 5.2% YoY to ¥39.2 billion. Segment profit rose 6.1% to ¥6.3 billion, driven by strong sales of renovated properties and high-priced pre-owned condominiums in central Tokyo.
• Development Business: Revenue surged 38.5% YoY to ¥23.1 billion. Segment profit increased 15.5% to ¥5.7 billion, with sales of logistics facilities, rental apartments, and detached houses.
• Rental Business: Revenue grew 11.6% YoY to ¥9.0 billion, with segment profit up 20.9% to ¥4.9 billion due to increased rental properties and higher rents.
• Fund & Consulting Business: Revenue climbed 31.0% YoY to ¥8.9 billion, segment profit soared 43.1% to ¥5.5 billion, supported by new large-scale asset management contracts.
• Property Management Business: Revenue rose 3.8% YoY to ¥7.4 billion; segment profit increased 12.4% to ¥1.2 billion.
• Hotel Business: Revenue up 13.3% YoY to ¥7.1 billion, segment profit jumped 27.3% to ¥2.8 billion, thanks to strong inbound demand and higher occupancy rates.

Cash Flow and Balance Sheet Developments

• Operating Cash Flow: Net outflow of ¥1.7 billion (improved from ¥13.0 billion outflow in FY2024). This was mainly due to increased inventories and tax payments, partially offset by higher profits.
• Financing Activities: Net inflow of ¥9.9 billion, primarily from new borrowings, offset by repayments and dividend payments.
• Cash & Equivalents: Rose to ¥39.6 billion as of Nov 2025 from ¥34.9 billion YoY.
• Total Assets: Increased to ¥307.4 billion (+11.1% YoY); Total Equity: grew to ¥102.8 billion (+13.2% YoY).

Dividends and Shareholder Returns

Tosei increased its year-end dividend to ¥100/share in FY2025 (up 26.6% YoY). For FY2026, post a 2-for-1 share split, the company forecasts a dividend of ¥55/share, reflecting the split adjustment. The dividend payout ratio is set to rise gradually, targeting 35.0% in FY2026 as part of a progressive return policy.

Corporate Actions and Noteworthy Events

• Share Split: A 2-for-1 share split was executed with a record date of Nov 30, 2025, and effective on Dec 1, 2025. The split aims to improve share liquidity and broaden the investor base.
• Medium-term Plan Update: The company revised its “Further Evolution 2026” plan, lifting targets for revenue and profit before tax for FY2026. The ROE is forecast at 14.0% for FY2026, with an equity ratio approaching 35%.
• Fund & Consulting Growth: Assets under management (AUM) reached ¥2.66 trillion, up ¥218.9 billion YoY, with major new mandates including one of Japan’s largest share-house portfolios.
• Stable Segment Expansion: “Stable businesses” (rental, fund & consulting, property management, hotel) contributed 54.4% of operating profit in FY2025, exceeding the plan.

Chairman’s Statement

“In the Tokyo metropolitan area real estate investment market, which is the Group’s mainstay market, long-term interest rates in Japan have remained high due to factors such as policy rate hikes by the Bank of Japan amid rising inflation and concerns over a deterioration due to the government’s expansionary fiscal policy. As a result, Japan’s yield spread is on a narrowing trend; however, compared to major cities in other countries, the spread is still wide enough. Furthermore, considering that further enhancement in real estate profitability can be expected due to rising rents, we recognize that the Japanese real estate market is expected to continue attracting capital inflows. Meanwhile, we view construction cost trends, which are expected to remain high due to structural factors such as labor shortages, along with the impact of prolonged diplomatic tensions with China on inbound demand as critical issues that must be closely monitored in the business strategies for the Development Business and the Hotel Business.

Under this operating environment, as for the business forecast for the fiscal year ending November 30, 2026, which is the final year of the current medium-term management plan, “Further Evolution 2026,” the Group expects consolidated revenue of ¥122.9 billion (up 29.9% year on year), consolidated operating profit of ¥24.6 billion (up 10.2% year on year), consolidated profit before tax of ¥22.0 billion (up 6.6% year on year), and profit attributable to owners of the parent of ¥15.1 billion (up 2.7% year on year). […] The Group, aiming to enhance its corporate value, promotes its businesses by formulating a three-year medium-term management plan. The main policy of the plan is to “Aim for further evolution as a unique comprehensive real estate company capable of contributing to the realization of a sustainable society” and by executing various measures under the policies of the plan, we will enhance the competitive edge of the Group and also contribute to the realization of a sustainable society.”

Tone: The Chairman’s statement is constructive and cautiously optimistic. It acknowledges macroeconomic challenges (rate hikes, labor costs, geopolitical risk) but emphasizes ongoing robust demand, competitive advantages, and the company’s capacity for stable growth and sustainability.

Forecast and Outlook

• FY2026 revenue is forecast to rise 29.9% YoY to ¥122.9 billion, with operating profit up 10.2% and profit attributable to owners up 2.7%.
• The company will focus investments on segments less exposed to construction cost inflation (Revitalization, select Development projects, and stable recurring income).
• Dividend payout ratio is set to rise further, supporting shareholder returns.

Conclusion and Investment Recommendation

Overall Assessment: Tosei Corporation delivered strong earnings growth in FY2025, with record highs in profit before tax and profit attributable to owners for the fourth consecutive year. The company’s business mix continues to shift toward stable, recurring income streams, and its balance sheet and cash position have improved. The medium-term outlook is positive, with solid revenue and profit growth guided for FY2026, and a clear commitment to enhanced shareholder returns through dividends and possible share buybacks.

• If you currently hold Tosei shares: The outlook supports holding the stock. The company is executing well, delivering both growth and increased dividends, and is positioned to benefit from favorable market trends and its diversified real estate platform.
• If you are not currently holding Tosei shares: Investors seeking exposure to Japanese real estate and stable, growing dividends may consider initiating a position, especially with the upcoming share split increasing liquidity. However, monitor macro risks (construction costs, interest rates, China-related inbound demand) as flagged by management.

Disclaimer: This analysis is for informational purposes only and is strictly based on the company’s official disclosures. It does not constitute investment advice. Investors should consider their own financial situation and consult professional advisors before making investment decisions.

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