SYLA Holdings Co.,Ltd. Q4 FY2025 earnings call

Post-Merger Integration Progress

• Seira Technologies and former Kumika completed formal business integration on June 1, 2025, after 1 year and 8 months of post-integration (PMI) work. Around 20 senior executives from the former Kumika departed voluntarily due to cultural misalignment, and remaining younger employees have aligned with the new company's mission, with management confirming the first phase of integration is successful.
• The combined entity has cumulative development experience of 194 buildings and 4,825 completed residential units, with over 4,000 managed units post-merger. Management emphasizes the merged entity combines Seira's strength in compact single-person apartments in Tokyo 23 wards, Yokohama, Kawasaki, with Kumika's experience in southern Saitama and general contractor capabilities to improve profit margins via economies of scale.

Core Corporate Mission

• The company's slogan is 'Democratize real estate investment worldwide', rooted in management's view that Japan's large pool of personal financial assets (2,200 trillion yen, 56% held as low-interest bank deposits) has not grown due to broad investment aversion, and expanding access to real estate investment supports Japanese economic revitalization.

Key Competitive Strengths

• End-to-end integrated business model: Full in-house internalization from basic/structural design, construction, sales, to property management, large-scale repairs, and after-sales service. This eliminates 15% of third-party fees (3% for design, 1-2% for design styling, ~10% for general contractor fees) that most peer developers outsource, creating a unique high-margin advantage for the company's scale.
• Niche market focus: Specializes in compact single-person apartments, ~15 tsubo (≈49.5m²) compact offices, and ~20 tsubo (≈66m²) compact commercial buildings — segments largely ignored by large developers. It focuses exclusively on high-growth areas with rising single-person population: Tokyo 23 wards, Yokohama, Kawasaki, and southern Saitama.
• Growing bedrock (岩盤) recurring income: The company currently holds over 26 billion yen in investment properties, generating 1.8 billion yen in annual recurring rental and management income, which already covers 50% of total SG&A. The long-term target is to cover 100% of SG&A via recurring stock-based income within 5 years.
• Circular economic ecosystem via real estate tech: The company operates Japan's largest online rental brokerage service ieTTY (over 400,000 members, profitable) and leading real estate crowdfunding service '利回りくん' (≈280,000 members, AUM approaching 10 billion yen this fiscal year). '利回りくん' acts as a third financing channel for development projects and an exit route for completed properties, with organic member growth requiring only ~500,000 yen per month in marketing costs currently. The ecosystem combines shareholders, '利回りくん' users, and property customers to reduce marketing costs and expand the company's economic network.

Shareholder Return

• Annual dividend forecast is 12 yen per share (6 yen interim + 6 yen final, including 1 yen commemorative special dividend), with a combined dividend and shareholder benefit yield of up to 10.40% based on the June 2, 2025 share price. Shareholder benefits include digital gifts and '利回りくん' service credits to grow the company's user and shareholder base.

For the 2026 May full-year (first post-merger consolidated period) forecast, Seira Holdings reports segment performance as follows:

1. Comprehensive Real Estate Business: Forecast revenue of 30.3 billion yen, accounting for ~87.8% of total forecast consolidated revenue of 34.5 billion yen. This segment includes real estate development and the Capital portion of the 'Rimashi-kun' (利回りくん) real estate crowdfunding business.
2. Real Estate Management Business: Forecast revenue of 2.7 billion yen (~7.8% of total revenue). This is the core 'bedrock (岩盤)' recurring income segment, covering asset management (AM) and property management, which contributes to steady stock-based earnings.
3. Construction Business: Forecast revenue of approximately 2.5 billion yen (~7.2% of total revenue). The company targets half of new development projects to be constructed in-house with this segment, leveraging internalized end-to-end development capabilities.
4. Renewable Energy Business: No explicit revenue forecast was provided in the transcript, but it is noted as a growing business that includes solar power generation, power sales, and emerging energy storage initiatives.

• FY2026 (May 2026) consolidated forecast: Total revenue of 34.5 billion yen (6.4x year-over-year growth), operating profit of 2.4 billion yen (12x year-over-year growth). Compared to the earlier press release forecast, revenue was lowered by 10 billion yen to shift some sales to future periods, while operating profit guidance was maintained, as the company confirmed the full-year profit target is achievable.
• Profit projections are set conservatively to rebuild investor trust, with management targeting steady incremental growth rather than aggressive upward guidance.
• Forecast key performance metrics: ROE of 4.1-4.8%, ROA of 1.4-1.5%, DOE of 2.4-2.7%, and consolidated payout ratio of 57.0%.
• 5-year (2030) strategic target: Grow total assets from the current 60 billion yen to 100 billion yen, and achieve full SG&A coverage via recurring bedrock income within 5 years.
• '利回りくん' AUM targets: Reach 15 billion yen next fiscal year, and 20 billion yen in subsequent years, building a separate second balance sheet via the crowdfunding platform.

• Macroeconomic risks: The company notes the global economy is slowing, with widespread downward revisions to global growth projections that will impact the business, and Japan has entered an inflationary period with rising construction costs and steadily increasing interest rates.
• Post-merger integration risks: The 18-month PMI process faced significant cultural friction between the older established firm Kumika and the younger newer Seira, requiring fundamental cultural and operational changes that resulted in around 20 senior departures, though the first phase of integration is now confirmed successful.

Q: What challenges did Seira face during the integration with Kumika, and how were they addressed? / A: Seira CEO Hiroyuki Sugimoto noted the biggest challenge was differing corporate cultures: former Kumika was a 55-year-old firm centered on a strong top-down leadership structure, while Seira prioritized employee autonomy and alignment with core corporate values. Over 1 year of frequent site visits and one-on-one discussions, management communicated the need for growth and independent initiative, and approximately 20 senior leaders who could not align with the new culture departed voluntarily, while younger employees who supported the new strategy remained. Sugimoto confirmed the first phase of integration is successful, with the team now fully aligned. (312 characters)

Q: Why does Seira target the compact apartment and compact office niche? / A: As a mid-sized developer with far smaller capital bases than large Japanese real estate giants, Seira can only compete by focusing on small-scale deals that large developers ignore or discard. Management also identified a strong structural demographic trend: 70% of Tokyo's annual population growth comes from single people, with ongoing concentration of labor in Tokyo even as overall Japanese population declines. Over 15 years, Seira has accumulated unique data and expertise in this niche, leading to major institutional buyers like BlackRock purchasing its compact apartments, confirming the strength of its competitive position. (398 characters)

Q: What key priorities shaped the development of the '利回りくん' service? / A: Sugimoto explained that most competing crowdfunding platforms felt cold and unapproachable to new investors, so Seira prioritized approachability to align with its mission of democratizing real estate investment. Key efforts included making the UI/UX extremely simple, with a goal that users of all ages can complete registration and start investing in under 5 minutes. The team conducted extensive user testing, using heatmaps to track drop-off points and adjusting UI elements at a very granular level, and also prioritized visual explanations with animations and videos to make investment details accessible to new users. (397 characters)