Good Com Asset Co.,Ltd. Q4 FY2025 earnings call

Core FY2025 Financial Results

• Total consolidated revenue: 54.58 billion yen
• Operating profit: 2.93 billion yen
• Ordinary profit: 2.58 billion yen
• Net profit attributable to parent shareholders: 1.52 billion yen
• Results reflected lower gross margins from fund external sales, one-time higher expenses for M&A, advertising, and shareholder return initiatives, and the retail sales segment loss.

2025 Operational Milestones

• Completed formation of 3rd and 4th private real estate funds, totaling 27 billion yen in assets, with 16 buildings and 936 units of the company's own GENOVIA brand properties included.
• Entered into a capital and business alliance with Nissei Advance to expand property sourcing in the Kansai region, leveraging Nissei Advance's strong local supply and sales capabilities. Three properties have already been sourced in Kansai, with plans for continued aggressive expansion to capitalize on continued population inflow and long-term economic growth driven by upcoming integrated resort development.
• Consolidated Livenup Group as a subsidiary, marking entry into the detached home and used home resale market. Livenup focuses on the Tokyo central and southern suburban areas, where sales are solid on strong demand, and it is expected to contribute full-year earnings starting in FY2026.
• Launched development of new high-end condominium brand G-classt, targeted at dual-income households and high-net-worth customers. The brand focuses on 40-70 sqm units, with full glass walls, open rooftop spaces, all-unit large vehicle parking, and ground-floor tenant space to create a complete in-community living experience. Four buildings are scheduled to break ground in 2026.
• Confirmed 106.9 billion yen equivalent in secured property pipeline (contract-signed, not yet reflected on balance sheet under the company's deposit-only sourcing model), totaling 66 buildings and 4,832 units, double the sourcing volume of FY2024.
• Preparing 10th anniversary listing shareholder benefits: 100 thousand yen in digital gift per year for shareholders holding 1,000+ shares, planned 9th consecutive dividend increase to 46 yen per share.

Core Company Competitive Advantages

• Efficient, low-risk sourcing via exclusive scheme with construction companies: the company sources land and signs purchase contracts with only a deposit, requiring no large outlay of own capital, reducing exposure to price volatility. Multiple sales channels eliminate inventory risk, and post-sale management generates recurring stock income. This structure is win-win for construction partners, with 73.1% repeat sourcing partner rate.
• High-value own-brand properties focused on high-demand areas: 11,756 total units supplied, 173 buildings in Tokyo's 23 wards, most within 10 minutes walking from a station. Occupancy has stayed near 99% consistently since the COVID pandemic, reaching 99.4% at end-FY2025.
• Diversified sales channels: over half of sales go to real estate funds, which accelerates capital recycling for faster sourcing and development. The company also sells to corporations and individual investors to avoid inventory buildup.
• Accelerated growth and risk hedging via active M&A: past M&A has expanded into rent guarantee, detached home sales, and regional expansion, with M&A pipeline active for future deals.

• Retail Sales: Reported a segment loss of 1.23 billion yen in FY2025, driven by stagnant sales to its core customer base of public servants due to price and cost inflation, leading to a 40% reduction in segment personnel that are being redeployed to other high-margin divisions. Fund sales to external entities also pulled overall gross margin down. No separate revenue contribution percentage is provided for this segment.
• Real Estate Fund Business: Formed the 3rd and 4th funds in FY2025, with a total combined scale of 27 billion yen (27.0 billion yen). Cumulative total funds formed by the end of FY2025 reached 43 billion yen (43.0 billion yen), and fund sales now account for over 50% of total company revenue.
• Detached Home & Used Home Resale Business: Entered this segment via the consolidation of Livenup Group as a subsidiary at the end of FY2025; the business is expected to contribute 9 billion yen (9.0 billion yen) in revenue to the full FY2026 results.

• FY2026 October Term Guidance: Expects top-line and bottom-line growth, with projected revenue of 79.28 billion yen, operating profit of 7.72 billion yen, ordinary profit of 6.84 billion yen, and net profit attributable to parent shareholders of 4.54 billion yen. This guidance is an upward revision from FY2025's results.
• FY2026 Fund Target: Plans to form 3 new funds totaling 60 billion yen (60.0 billion yen), bringing cumulative total fund sales to 100 billion yen (100.0 billion yen). After hitting this milestone, the company will enter phase 2 with the launch of private REITs, to grow managed assets and recurring stock income, with a phase 3 target of launching a listed REIT.
• Organizational Changes: 40% of retail sales personnel will be redeployed to wealth management, wholesale sales, and real estate management to grow these higher-margin divisions.
• M&A: Multiple M&A targets are under review; the company will pursue deals that deliver clear synergy in FY2026.
• Advertising: Pausing TV advertising to align with a shift in customer segment focus.
• Medium-Term (to FY2030) Guidance: Sets a target of 600 billion yen (600.0 billion yen) in revenue by FY2030, with the goal of entering the top tier of Japanese real estate companies by market capitalization.
• Medium-Term Fund Growth Strategy: Will expand beyond selling to private funds to include sales to private REITs, listed REITs, and real estate STOs to grow both flow income from sales and recurring stock income from asset management.

• Segment risk: Stagnant sales to the core retail customer base of lower-to-middle income public servants, driven by rapid property price increases, general inflation, and rising interest rates that have made investment condominiums unaffordable for this group, resulting in a 1.23 billion yen segment loss in FY2025.
• Industry-wide cost and supply risk: Continued rising construction costs (up 40% in 10 years as of 2025) and persistent labor shortages in the construction industry, which create risk of delayed projects and higher input costs.
• Interest rate risk: Rising interest rates impact borrowing costs for the company and for fund investors.
• Market risk: Elevated property prices have led to buy-side caution for larger condominium units over 70 sqm in central Tokyo.

Q: Will sales to public servants in the retail segment decline after the company set up a dedicated division for high-net-worth customers? / A: Management explains that the company originally targeted licensed, high-income individuals (including female professionals like accountants, nurses, and lawyers) from founding. Public servants became the core focus over time because public employee directories were easily accessible for marketing, leading to an unintended shift away from the original high-net-worth target. The current shift back to high-net-worth is a return to founding strategy, not a new policy. The 1.23 billion yen FY2025 loss reflects that lower-middle income public servants can no longer afford properties amid price/inflation hikes, so a 40% personnel cut was necessary, with top performers reassigned to the new wealth management division. The new G-classt brand is specifically designed for this new target, offering 40-70 sqm units in prime Tokyo locations at the ~120 million yen price point that appeals to affluent buyers hesitant to purchase full-sized detached homes.

Q: What impact has rising construction costs had, and how is the company responding? / A: Management confirms that construction costs have risen 40% over 10 years, paired with severe construction labor shortages. The company's primary response is to pursue M&A or capital alliances with construction companies. This creates preferential access to construction capacity, stabilizes costs, and allows both parties to share profits. The company can also provide capital to partner construction firms to make it easier for them to secure bank financing, creating mutual benefits.

Q: How strong is demand from foreign investors today? / A: Management states that the company stopped selling directly to foreign investors in 2022, after establishing its own investment advisory arm. The current strategy is to focus on selling to domestic Japanese investors, including institutional investors, via the company's own internally managed funds. Management notes that domestic demand is currently stronger than foreign demand, so no changes to this policy are planned.

Q: Will fund formation be harder in the current rising interest rate environment, and what is the current investor climate? / A: Management explains that the company's fund structure is designed to adapt to rising rates. Funds are structured with three tranches: low-interest senior debt (~60% of total capital), higher-yield mezzanine, and equity from investors. In a rising rate environment, the company increases the size of the mezzanine tranche to lock in returns for equity investors, even as overall rates rise. The company also takes the final 5% subordinated equity stake to absorb residual risk and underpin investor returns. The company's consistent 99%+ occupancy rate makes its funds attractive to financing banks and investors, supporting stable fund formation even amid higher rates.