Azplanning Co.,Ltd. Q2 FY2026 earnings call

• M&A and Strategic Collaboration • Completed the acquisition of 70-year-old local firm Fuji Home in Asakusa, completed the whole process in a short time with a smooth transition • Expected four synergies: access to high-quality talent, expansion into adjacent strategic areas (Taito, Sumida wards), synergy with the existing buy-resell business, and expansion of stable recurring revenue base via over 200 cash-rich property owners • Named the M&A/partnership strategy "AtoZ Initiative", targeting future deals in property management (PM), building management (BM), asset management (AM), DX, and value-add segments
• Business Transformation Growth • Achieved all-time high results across revenue, operating profit, ordinary profit, and property inventory in the reporting period: total revenue of 5.263 billion yen, operating profit of 331 million yen, ordinary profit of 157 million yen, intermediate net profit of 89 million yen, and over 13 billion yen of property inventory as of end-August • The company is accelerating growth by shifting to larger, higher-priced properties: targeting 500 million yen to 1 billion yen and above 1 billion yen property price segments to represent over half of total sales • Diversifying product mix: currently 60% residential, 40% commercial properties in central 5 wards of Tokyo, targeting an eventual 50/50 split; pursuing a limited number of large development projects in prime central Tokyo locations, with 2 active projects currently • Pulling forward the original medium-term management plan one year ahead of schedule, with the final year target originally set for FY2027 to be achieved in the current fiscal year
• Capital and Shareholder Initiatives • Expanded shareholder benefits: increased QUO card amounts for all holding tiers, pushing estimated combined dividend and benefit yield from 3.83% to 4.53% to attract more shareholders • Issued the 5th and 6th new share subscription warrants to fund large projects and M&A: as of October 9, 98.5% of the 490 million yen target fundraising has been exercised, strengthening net assets and the balance sheet
• Corporate Culture and Sustainability • Prioritizes human connections and relationship building, runs internal networking events and supports local sports and university programs • Continues sustainability and social contribution activities including corporate hometown tax donations, health promotion initiatives, and local community support

1. 不動産販売事業: Revenue of 4.779 billion yen, operating profit of 369 million yen, accounting for 92% of total revenue. It achieved significant year-over-year revenue and profit growth driven by strong sales of large-sized properties. 2. 不動産賃貸事業: Achieved year-over-year revenue and profit growth, accounting for 6% of total revenue. Growth was driven by increased rental income from the expanded inventory of properties for sale. 3. 不動産管理事業: Revenue and profit have remained flat for several years, accounting for 2% of total revenue. Stagnation stems from aging property owners at the Saitama headquarters and property turnover after 30+ years of operation.

• Current full fiscal year 2026 (ending February 2026) guidance: 13.5 billion yen revenue, 1.08 billion yen operating profit, 800 million yen ordinary profit, 510 million yen net profit, which achieves the original medium-term plan's final target one year ahead of schedule
• Full fiscal year 2027 (ending February 2027) guidance: 14.5 billion yen revenue, 1.18 billion yen operating profit, 900 million yen ordinary profit, 600 million yen net profit, representing continued revenue and profit expansion
• The company targets to reach an internal goal of 30 million yen operating profit per employee as early as possible, and targets a double-digit operating profit margin overall
• Management expects Fuji Home's acquisition to drive revenue and profit growth for the real estate management segment starting from FY2027
• A new medium-term management plan is expected to be formally announced by around April 2026

• Competitive procurement environment: The property acquisition market is described as a highly competitive "red ocean", making it difficult to source attractive properties
• Rising construction costs and project delays: Construction cost inflation and project schedule overruns are common for development projects, requiring additional financial buffer and contingency planning
• Rising financing costs: Long-term interest rates are in an upward trend, increasing funding costs; further large rate increases could lead to more cautious purchasing behavior from real estate investors
• Operational risk for real estate management: Existing management contracts are often not retained after property sales, and generational turnover of long-term owners in Saitama has led to management contracts shifting to competitors
• Talent gap: There is a shortage of DX-related talent for customer acquisition and internal systems, which is a key hiring and operational challenge

Q: What is driving the upside beat of the original medium-term plan, and what will drive profit growth going forward? / A: Management notes that the upside beat comes from an increased company-wide focus on improving profit margin, driven by leadership's emphasis on raising per-employee operating profit. This cultural shift accelerated profit-focused operations, leading to around 100 million yen in upside versus original plan. Going forward, the core driver of continued growth will be further improving profit margin in the real estate sales business, complemented by additional strategic M&A.

Q: What is the outlook for the real estate management business after acquiring Fuji Home, and when will growth resume? / A: The real estate management business has been stagnant for years, but adding Fuji Home — which focuses on rental and management business in central Tokyo — is expected to drive growth starting in the next fiscal year. Growing stable recurring stock revenue improves business stability, and management plans to add more similar firms to the group while sharing best practices between existing and new teams to grow overall segment revenue and profit.

Q: How is the company responding to rising construction costs and project delays in development, and are there any major impacts? / A: Management confirms that construction cost increases and project delays are common occurrences. To mitigate this, the company builds financial margin into all borrowing for development projects, adds schedule contingency to all plans, and only pursues projects in carefully selected prime central Tokyo locations. In these prime areas, higher construction costs can typically be passed through to higher selling prices, so sufficient contingency planning is enough to manage the risk.

Q: What impact is rising interest rates having on the business and end-user demand? / A: Management notes that while funding costs are rising, the impact on the business is currently limited, and relationship with partner financial institutions remains strong. End-user and investor demand has not weakened and remains at high levels. If rates rise sharply in the future, the company is already prepared by focusing on prime central Tokyo properties that hold their value well, and will continue focusing on delivering high added-value properties to maintain demand.