Kasumigaseki Capital Co.,Ltd. Q4 FY2025 earnings call

• Achievements of the First Mid-Term Management Plan • Achieved the 5-year net income target of 10 billion yen one year ahead of schedule, hitting 10.2 billion yen in 4 years, with a 115% CAGR over the plan period. • Completed the full 3-phase business model across all three core domestic segments (hotel, logistics, healthcare): assembled 150 billion yen in total long-term stable funds (REIT + private funds), all holding in-house developed properties. • Shifted revenue structure: ~30% of total gross profit now comes from success fees, driven by the completion of fund formation, creating a more diversified multi-layer revenue portfolio that also includes land sale profits and asset management/project management fees. Sales grew 1.5x year-over-year, while all profit categories grew ~2x, indicating expanding profit margins.

• Operational Milestones • Total project pipeline grew 170 billion yen year-over-year to 660 billion yen; after adjusting for the 28 billion yen wind-down of the residential fund (closed due to lower-than-expected STO demand for residential assets), underlying growth was 200 billion yen. Inventories total 53.3 billion yen, providing strong visibility for 2026 August fiscal year results. • Hotel: Won multiple industry awards including Graphis Design 2026 Awards gold medal (first ever for a global hotel brand, first for a Japanese hotel), driving strong international brand exposure. Uses a franchise operating model that enables faster nationwide expansion than traditional hotel operators. • Logistics: Launched the (provisional name) Factory & Logistics Park integrated factory-warehouse development concept, which delivers cost savings for tenants via shared space, labor, and transport, and has already received strong inbound inquiries from multiple municipalities after the first partnership with Hakodate City. Is developing automated solutions to reduce truck waiting and handling time in line with Japan's revised Logistics Efficiency Promotion Act, and is exploring expansion to dry ambient temperature warehouses. • Overseas: Selected Malaysia for initial ASEAN expansion due to its strong economic and population growth, allow 100% foreign land ownership, and access to the massive Port Klang, which matches the company's frozen warehouse development focus. Dubai has strong structural residential demand growth driven by rapid population expansion, supporting the new development focus.

1. Hotel Segment: Successfully listed Kasumigaseki Hotel REIT Investment Corporation with 50 billion yen of total assets, all from self-developed properties. Achieved 16 profitable asset sales and 21 new project acquisitions, exceeding original plans. Opened 5 new hotels in the period, including the first renovated rebranded hotel under the BASE LAYER HOTEL brand, which delivered more than doubled top-line revenue and improved GOP margin to 55% from the original 35%. Total pipeline stands at ~200 billion yen for REIT external growth, with a cumulative total pipeline of 56 hotels (18 opened, 22 under development, 16 planned), targeting an average of 10+ openings per year over the next 3 years.
2. Logistics (Infrastructure Innovation) Segment: Formed an 80 billion yen private equity fund focused on frozen/cold storage warehouses, all developed in-house. Launched the on-demand cold storage service COLD X NETWORK, which temporarily reached nearly 100% occupancy in July 2025 with zero operational errors in its first year. Changed the segment name from Logistics Business Headquarters to Infrastructure Innovation Business Headquarters to expand scope beyond pure logistics.
3. Healthcare Segment: Formed a 15 billion yen private equity fund for 6 hospice properties under the CLASWELL brand, all developed in-house. There are 11 additional properties in the development pipeline, planned for future transfer to stable long-term funds.
4. Overseas Segment: Started a residential development joint venture with Daito Trust Construction in Dubai (the first Japanese developer residential development project in Dubai), shifted from value-add of existing properties to greenfield development. Acquired land in Kuala Lumpur, Malaysia to start development of the first automated frozen warehouse in ASEAN. Total project pipeline increased by 10 billion yen year-over-year.

• For the 2026 August fiscal year, Kasumigaseki Capital upwardly revised its net income guidance from the prior 15 billion yen to 16.5 billion yen. The official guidance also includes 150 billion yen in revenue, 26.5 billion yen in operating profit, and 24 billion yen in ordinary profit.
• The second mid-term management plan targets 50 billion yen in net income by the 2029 August fiscal year, requiring a 50% CAGR through the plan period, and the company is off to a strong start with solid current pipeline visibility.
• The 2026 August fiscal year dividend is planned at 165 yen post 2-for-1 stock split (equivalent to 330 yen pre-split), representing a nearly 40% increase from the 240 yen pre-split dividend for the 2025 August fiscal year.
• The company will accelerate full international expansion starting in the 2026 August fiscal year: starting frozen refrigerated warehouse development in Malaysia, launching the Factory & Logistics Park business domestically and preparing it for ASEAN expansion, starting residential development in Dubai via JV, and exploring hotel expansion opportunities in the U.S.

The call transcript provided does not contain explicit discussion of operational failures or material downside risks, aside from the minor already-executed risk of closing the underperforming residence digital securities fund due to weaker-than-expected market demand for residential STO products.

The provided transcript does not include a question and answer section, so there are no exchanges to summarize.