GLOBAL LINK MANAGEMENT INC. Q4 FY2024 earnings call

• Long-term and Mid-term Strategic Framework

  • Set long-term goal "GLM1000" targeting 100 billion yen recurring profit by 2040, with a target 25% annual average profit growth
  • Launched 3-year mid-term plan "GLM100" targeting 100 billion yen in revenue, 17 billion yen in gross profit, and 10 billion yen in recurring profit by the 2027 December fiscal year

• Core Growth Strategies

  • Build an investor demand-driven business model: Collected 3.3 trillion yen in 3-year Japanese real estate investment budgets from 12 existing institutional investors, against GLM100's 250 billion yen 3-year supply target, indicating large unmet demand; management will expand investor base and explore joint projects to meet demand
  • Expand asset types and revenue models: Maintain development business as foundation, grow land planning and regeneration as new growth drivers; add new asset brands including urban hotels (THE RESITEL) and commercial tenancy buildings (Frame); use AP-AI to improve procurement and development efficiency for all three real estate segments
  • Expand DX utilization: Leverage real estate data and AP-AI to improve sales efficiency across all three real estate segments; build a system that learns investor demand to generate optimal asset portfolio plans
  • Build and promote human capital management: Revised evaluation and incentive systems; target higher per-employee productivity, engagement, and employee compensation; currently has lower than industry average turnover, and aims to become the industry leader in average employee salary

• Corporate Governance and Capital Strategy

  • Achieved 10 consecutive years of revenue growth, 4 consecutive years of profit growth, and 3 consecutive years of dividend increases; 2024 FY capital structure: 31.8% equity ratio, 33.3% ROE, 30.5% payout ratio
  • Implemented 1-for-2 stock split and 20th anniversary shareholder special benefit; adopted a progressive dividend policy, and has not cut dividends since listing in 2017
  • Aims to meet Prime Market listing maintenance criteria for floating market capitalization by end-2025 FY through solid业绩 achievement and enhanced IR

1. Development Business (Real Estate): In 2024 FY, the segment missed plan slightly due to fiscal year closing date slippage, but contributed the majority of core residential development revenue. For 2025 FY, it plans to sell 1,118 units of new residential properties, with 1,118 units already procured and 649 units already under signed sales contracts; the segment will expand into new asset types including hotels and commercial tenancy buildings. 2. Land Planning Business: In 2024 FY, it sold 19 parcels, one more than planned, and supported full-year plan achievement. For 2025 FY, it plans to sell 18 parcels (same level as 2024 FY), with 1 sales contract already signed. 3. Regeneration Business: In 2024 FY, it achieved on-plan sales, and supported full-year plan achievement. For 2025 FY, it plans to procure 10 buildings and sell 7 buildings (3 more than 2024 FY), with 1 procurement contract already signed. 4. DX Business: In 2024 FY, it recorded a ~0.2 billion yen deficit due to upfront investment, and is on track to acquire client leads.

• 2025 December fiscal year (first year of GLM100): Target new all-time highs for revenue and profit, with guidance of 72.0 billion yen revenue, 11.4 billion yen gross profit, and 6.0 billion yen recurring profit, representing year-over-year growth from 2024 FY's 64.482 billion yen revenue and 5.138 billion yen recurring profit
  • Gross margin and recurring margin are expected to improve as the revenue contribution of higher-margin land planning and regeneration businesses increases
  • 2025 FY dividend guidance is 72.5 yen per post-split share, equal to 145 yen pre-split, a 15 yen increase from 2024 FY
  • Financial targets: Maintain minimum 30% equity ratio, minimum 25% ROE, and 30% payout ratio
  • Quarterly业绩 leveling is a core target, with 2025 FY planned to have stable quarterly revenue and profit distribution, an improvement from 2024 FY's Q4-heavy业绩
• DX Business: Target standalone profitability in 2025 FY

• Project completion delay risk: Development, land planning, and regeneration projects all face risk of closing date slippage that could lead to lower than planned quarterly and full-year业绩, and potential second-half heavy weighting
• External construction cost risk: Construction material and labor costs continue to rise, which could negatively impact profit margin depending on price pass-through and construction timing
• Interest rate risk: Bank of Japan has raised policy rates, but Japanese rates remain low compared to other developed economies, and the market has already priced in moderate rate hikes; GLM will continue to monitor changes and adjust plans as needed
• Exchange rate risk: High overseas investor demand for Japanese real estate remains despite recent yen volatility, and GLM will continue to monitor exchange rate movements
• Prime Market listing risk: GLM currently does not meet the floating market capitalization requirement for Prime Market maintenance, and may need to implement additional measures to meet the target by end-2025 FY

Q: 2024 FY had heavy Q4业绩 concentration, what allows GLM to plan quarterly业绩 leveling for 2025 FY? / A: Management reflected on the 2024 Q4-heavy performance that caused investor uncertainty. Since project completion dates are difficult to fully control, GLM strategically adjusted sales timing across its three balanced real estate segments (development, land planning, regeneration) to achieve more even quarterly业绩 distribution going forward. GLM will continue to prioritize leveling going forward.

Q: Could you explain GLM's 2025 outlook for the DX business? / A: DX has two core strategic roles. First, it improves internal efficiency across all three real estate segments: AP-AI helps quickly target inheritance-related land for the land planning business, and matches in-house and investor data to speed up development and regeneration. Management plans to complete phase 1 and 2 of system implementation in 2025. Second, GLM is seeing strong external demand for its AP-AI solutions from other industries, and will disclose details as offerings are finalized.

Q: Is the GLM100 2027 target achievable only with residential development, or do you need growth from land planning and regeneration? What is the strategy for profit margin? / A: GLM100 cannot be achieved with residential development alone. Management explicitly plans to grow land planning and regeneration beyond current plans through 2027. Residential development has a 2-year lead time that creates market risk two years out, so GLM will only moderately grow residential development. The faster capital turnover and higher margins of land planning and regeneration will drive overall profit margin improvement, while also hedging long-term residential market risk.

Q: What led to the sharp drop in turnover in 2024? / A: Turnover was already below industry average, but dropped sharply after management revised the人事 evaluation system and incentive structure in 2024. Management held company-wide meetings to collect employee feedback, revised the system to be fairer, granted stock options to all employees tied to mid-term plan targets, increased employee stock purchase plan incentives to 50%, and now 60% of employees participate in monthly purchases. These measures increased employee engagement and lowered turnover.