DAITO TRUST CONSTRUCTION CO.,LTD.

Business Details

The company enters into construction contracts for rental housing and other buildings with landowners, and undertakes design and construction. The mainstay is rental housing (residential construction completion revenue of ¥501,088 million, accounting for 86.4% of total construction completion revenue), with commercial and other buildings also handled. Group companies such as DAITO KENSETSU CO., LTD. handle materials supply and construction support, and the company is also focusing on supplying environmentally conscious properties such as ZEH Rental Housing. Against a backdrop of soaring construction costs, the company is optimizing its sales areas, and orders are on a declining trend.

Recent Overview

Construction progressed smoothly, but operating profit declined 4.2% year on year due to rising labor costs

In FY2026 (ending March 2026), construction progressed smoothly, with construction completion revenue of ¥579,662 million (up 0.6% year on year) and a gross profit margin on completed construction of 25.4% (up 0.1 percentage point year on year), a slight improvement. On the other hand, selling, general and administrative expenses increased due to rising labor costs and other factors, and operating profit declined to ¥45,148 million (down 4.2% year on year). On the order side, due to sales area optimization in light of soaring construction costs and tenant placement conditions, orders received fell to ¥570,514 million (down 4.4% year on year), and the order backlog also contracted to ¥783,634 million (down 2.3% year on year). The plan for FY2027 (ending March 2027) calls for revenue of ¥545,000 million (up 0.1% year on year) and operating profit of ¥47,000 million (up 4.1% year on year).

Key Products

Growth Drivers

• Stable recording of construction completion revenue through progress on the order backlog of ¥783,634 million
• Maintenance and improvement of gross profit margin on completed construction (25.4% in FY2026 (ending March 2026), 26.1% planned for FY2027 (ending March 2027))
• Increase in orders received in the Tokyo metropolitan area (¥154,901 million in FY2026 (ending March 2026), up 2.5% year on year), shifting toward higher-profitability areas
• Expansion of maintenance and repair construction (¥55,820 million in FY2026 (ending March 2026), up 23.4% year on year), accumulating recurring stock-type revenue in line with the increase in managed buildings
• Improved order efficiency through appropriate allocation of construction sales staff and sales area optimization
• Differentiation through environmentally conscious properties such as ZEH Rental Housing, strengthening proposal capabilities toward landowners

Risks

• Downward pressure on gross profit margin on completed construction and operating profit margin from soaring materials prices and labor costs (operating profit margin of 8.3% in FY2026 (ending March 2026), down 0.4 percentage point year on year)
• Deterioration in the order environment due to the sluggish trend in new rental housing construction starts (cumulative rental housing starts of 281,228 units from April 2025 to February 2026, down 10.5% year on year)
• Risk of continued decline in orders received and orders received (buildings) due to sales area optimization in light of soaring construction costs and tenant placement conditions (orders received (buildings) of 3,671 buildings, down 18.3% year on year)
• Impact on future construction completion revenue from the contraction of the order backlog (¥783,634 million, down 2.3% year on year)
• Risk of increased costs related to efficiency improvements in the construction system and securing human resources
• Risk of quarterly earnings volatility due to the second-half weighting of scheduled construction completions

Business Details

This segment centers on the master lease business, in which DAITO KENTAKU PARTNERS Co., Ltd. enters into master lease agreements with landlords under the Rental Management Outsourcing System (Master Lease Business) and subleases properties to tenants. It also encompasses brokerage and tenant placement by DAITO KENTAKU LEASING CO., LTD., the Rent Guarantee Business, and the Electric Power Business, providing comprehensive rental management services to landowners. With 1,351,329 managed units (as of the end of March 2026), this is the largest segment, accounting for approximately 60% of Group revenue.

Recent Overview

Revenue and operating profit both reached record highs, driven by an increase in master-leased properties and sustained high occupancy

In FY2026 (ending March 2026), Real Estate Leasing Business revenue was ¥1,203,091 million (up 3.3% year on year), and operating profit was ¥85,554 million (up 6.5% year on year). The number of managed units expanded to 1,351,329 (up 2.2% year on year), and the residential rent-based occupancy rate remained at a high level of 98.0% (up 0.2 percentage point year on year). Electric Power Business revenue grew strongly, up 14.1%. The plan for FY2027 (ending March 2027) calls for revenue of ¥1,230,000 million (up 3.3%) and operating profit of ¥88,000 million (up 2.9%).

Key Products

Growth Drivers

• Continued expansion of managed units (1,351,329 as of the end of March 2026, up 2.2% year on year), increasing master lease rent revenue
• Maintenance of high rent-based occupancy rates (98.0% residential, up 0.2 percentage point year on year), suppressing vacancy losses
• High growth in Electric Power Business revenue (up 14.1% year on year to ¥12,184 million), accumulating cross-sell revenue
• Stable expansion of revenue from the Rent Guarantee Business (guarantee business revenue of ¥21,768 million, up 3.6% year on year)
• Expansion of the leasing business and other peripheral services (leasing business revenue up 12.6% year on year, other revenue up 11.0% year on year)

Risks

• Risk of margin pressure from increased selling, general and administrative expenses (labor costs, etc.)
• Risk of slowing growth in managed units due to the sluggish trend in rental housing construction starts (down 10.5% year on year cumulatively from April 2025 to February 2026)
• Risk of increased future repair costs due to the accumulation of the reserve for master lease repairs (¥234,722 million as of the end of March 2026)
• Risk of reduced demand for new construction due to increased borrowing costs for landowners amid rising interest rates
• Risk of intensifying competition in the brokerage business, with real estate brokerage revenue planned to grow only slowly to ¥21,700 million (up 1.4% year on year) in FY2027 (ending March 2027)

Business Details

This segment centers on purchase, renovation and resale and development and sale of income real estate (DAITO KENTAKU Asset Solutions), development and sale of investment condominiums (INVALANCE Co., Ltd.), and development and sale of condominiums, offices, and other properties (Ascot Corporation). It has been classified as an independent reportable segment since fiscal year 2024, and is positioned as a priority area under the Group's medium-term management plan (fiscal years 2024–2026). The consolidation of Ascot Corporation as a subsidiary (acquired in March 2025) significantly drove results for the current period.

Recent Overview

Revenue grew significantly, up 186.5% year on year, driven by the Ascot contribution and rapid expansion in development and sales

In FY2026 (ending March 2026), Real Estate Development Business revenue was ¥147,083 million (up 186.5% year on year), and operating profit was ¥18,535 million (up 259.8% year on year). In addition to the contribution from the consolidation of Ascot Corporation as a subsidiary (acquired in March 2025), all categories expanded significantly, with income real estate (development and sales) units sold reaching 127 (up 252.8% year on year) and investment condominium units sold reaching 1,471 (up 102.3% year on year). Note that a correction (dated May 26, 2026) was made to the classification of income real estate business revenue in the segment revenue breakdown, revising revenue from contracts with customers to ¥69,857 million and other revenue to ¥14,671 million. The plan for FY2027 (ending March 2027) calls for revenue of ¥180,000 million (up 22.4% versus plan) and operating profit of ¥25,000 million (up 34.9% versus plan).

Key Products

Growth Drivers

• Significant contribution to revenue and profit from the consolidation of Ascot Corporation as a subsidiary (acquired in March 2025)
• Rapid increase in income real estate (development and sales) units sold (127 buildings, up 252.8% year on year)
• Substantial expansion in investment condominium units sold (1,471 units, up 102.3% year on year)
• Expansion of the purchase and resale business (120 buildings, up 122.2% year on year)
• Concentrated allocation of management resources as a priority area under the medium-term management plan (fiscal years 2024–2026)
• Subsequent event: further expansion of the Real Estate Development Business through the full consolidation of THE Global Co., Ltd. as a wholly owned subsidiary (tender offer price of ¥1,280, tender offer consideration of ¥17,409 million)

Risks

• Impact of real estate market conditions and rising interest rates on sale prices and sales pace
• Risk of deteriorating asset efficiency from the accumulation of inventory in real estate for development and sale in progress and real estate for sale (segment assets increased by ¥99,865 million from the end of the prior period to ¥325,725 million)
• Risk of impairment of goodwill (¥10,143 million) associated with the acquisition of Ascot Corporation
• Rising development costs due to sustained high construction costs and materials prices (gross profit margin declined from 22.9% to 22.0%)
• Risk of additional goodwill and integration costs arising from the full consolidation of THE Global Co., Ltd. as a subsidiary
• Increase in interest-bearing debt associated with the expansion of the Real Estate Development Business (long-term borrowings increased by ¥125,928 million from the end of the prior period)

Business Details

This segment comprises: construction financing (bridge financing and secondary financing pending execution of long-term financing from financial institutions) by DAITO FINANCE CO., LTD.; insurance sales to landlords and tenants by House Guard Small Amount & Short Term Insurance Co., Ltd.; real estate management trust and asset succession consulting by DAITO MIRAI TRUST CO., LTD.; credit card payment processing by HOUSE PAYMENT CO., LTD.; and fire insurance reinsurance by D.T.C. REINSURANCE LIMITED. Its primary customers are landowners and tenants, and it is closely linked with the Group's construction and leasing businesses. It is designated as a reportable segment because segment assets account for 10% or more of the total across all Group business segments.

Recent Overview

Rising funding costs squeezed profit; revenue increased but operating profit declined year on year

In the Financial Business for FY2026 (ending March 2026), revenue from external customers increased to ¥12,808 million (up 5.1% year on year), but rising funding costs squeezed profit, and segment profit came in at ¥6,386 million (down 4.5% from ¥6,684 million in the prior period). Insurance business revenue expanded to ¥10,367 million (versus ¥9,729 million in the prior period), but an increase in interest expense (from ¥611 million in the prior period to ¥3,266 million in the current period on a consolidated basis) affected overall Group profitability. Segment assets increased substantially to ¥225,830 million (versus ¥176,567 million in the prior period), confirming an expansion in the loan balance. The plan for FY2027 (ending March 2027) indicates a significant decline in revenue to ¥10,000 million (down 21.9% year on year), and changes in the business structure are drawing attention.

Key Products

Growth Drivers

• Expansion of demand for insurance and financial services in line with the increase in the Group's managed units (1,351,329 units at the end of FY2026 (ending March 2026), up 2.2% year on year)
• Increase in the number of contracts at House Guard Small Amount & Short Term Insurance Co., Ltd. (expanding uptake of insurance for landlords and tenants)
• Increasing demand for real estate management trust and asset succession consulting (growing inheritance and asset management needs among landowners)
• Maintenance and expansion of the construction financing loan balance through coordination with the Group's construction business

Risks

• Profit pressure from rising funding costs (current period segment profit down 4.5% year on year to ¥6,386 million)
• Risk of business contraction/restructuring, with the plan for FY2027 (ending March 2027) calling for a significant revenue decline to ¥10,000 million (down 21.9% year on year)
• Risk of fluctuating financing demand linked to order trends in the construction business (construction business orders received down 4.4% year on year to ¥570,514 million)
• Risk of a rising loss ratio in the insurance business (increasing frequency of natural disasters, fires, etc.)
• Increased compliance costs associated with tighter financial regulations and revisions to the Trust Business Act and Insurance Business Act

Business Details

This category comprises business segments not included in the reportable segments. Main components are: (1) the LP Gas & Other Energy Supply Business; (2) day care, childcare, and home-visit care businesses; (3) the hotel business in Kuala Lumpur, Malaysia (Le Méridien and Hilton); (4) operation of flexible workspaces; and (5) power generation and electricity sales business, among others. This is a synergy-driven group of businesses leveraging the DAITO KENTAKU Group's rental housing management base as its customer foundation, centered on recurring stock-type revenue. It also includes the Financial Business (construction financing for building owners).

Recent Overview

Revenue increased 5.7% on gas and care business growth, but operating profit declined 1.8% due to rising interest rates

In FY2026 (ending March 2026), Other Businesses revenue was ¥90,283 million (up 5.7% year on year). Revenue increased due to a rise in the cumulative number of active gas meters in the gas supply business and an increase in the number of day care users in the care business. On the other hand, in the Financial Business, rising funding costs squeezed profit, resulting in operating profit of ¥19,519 million (down 1.8% year on year) and an operating profit margin of 21.6% (down 1.7 percentage points year on year). Occupancy rates improved at both Malaysia hotels.

Key Products

Growth Drivers

• Continued expansion in the number of LP gas and city gas supply units (linked to the increase in Group-managed units)
• Improved occupancy rates at Malaysia hotels (maintained at high levels of 80.5% at Le Méridien and 80.6% at Hilton)
• Revenue growth in the care business from an increase in the number of day care users (expansion to 120 welfare facilities)
• Deepening of Group synergies in the energy business, care business, and other areas
• Plan for FY2027 (ending March 2027): targeting revenue of ¥95,000 million (up 5.2% year on year)

Risks

• Profit pressure in the Financial Business from rising funding costs (materialized in FY2026 (ending March 2026), with operating profit margin declining to 21.6%)
• Risk of rising costs in the LP gas business due to sustained high energy prices
• Increasing operating costs in the care and childcare business due to the declining birthrate, an aging population, and a shortage of care workers
• Foreign exchange risk in the Malaysia hotel business (yen depreciation and ringgit fluctuations)
• The plan for FY2027 (ending March 2027) calls for a significant decline in operating profit to ¥14,000 million (down 28.3% year on year), mainly due to contraction in the Financial Business