ASIAN STAR CO.

Business Details

Centered on the purchase and resale business for land, income-producing real estate, and residential condominiums, this business is conducted by Griffin Partners Co., Ltd. and Yaxingyuan Co., Ltd. The segment handles a diverse range of property types, including owner-occupied and investment condominiums, whole buildings, and detached houses and land, with its strength lying in a unique sales capability leveraging a network of overseas high-net-worth clients. In the first quarter of FY2026 (ending December 2026), the number of investment condominium units sold increased, but profit margins deteriorated due to a decline in per-unit profitability combined with price adjustments associated with the early sale of long-held detached house properties.

Recent Overview

Although unit sales increased, the segment fell into an operating loss in Q1 due to lower profit margins and early-sale price adjustments

In the first quarter of FY2026 (ending December 2026) (January to March), revenue in the Real Estate Sales Business increased to ¥279 million (up 5.3% year on year). However, the segment fell into an operating loss of -¥7 million (compared to operating income of ¥14 million in the same quarter of the prior year), due to a decline in per-unit profit margins for investment condominiums combined with price adjustments made to prioritize early sale of long-held detached house properties. Against the full-year forecast (revenue of ¥6,500 million, operating income of ¥220 million), progress in the first quarter was only about 4.3% on a revenue basis, and results are expected to be weighted toward the second half of the year.

Key Products

Growth Drivers

• Expansion in the number of investment condominium units sold (increased year on year in Q1)
• Continued high level of acquisition appetite among domestic and overseas investors, sustaining active transactions
• Expanding sales opportunities for quality properties amid growing selective demand focused on central urban areas and highly convenient locations
• Strengthening of a unique sales channel leveraging a network of overseas high-net-worth clients
• Expansion of sourcing routes through real estate brokerage firms, trust banks, and other channels
• Carry-over effect from the accumulated contract balance of ¥746 million (tax included) at the end of FY2025 (ending December 2025)

Risks

• Risk of deteriorating profitability due to a declining trend in per-unit profit margins (which became apparent in Q1)
• Pressure on profit margins from price adjustments associated with the early sale of long-held properties
• Risk of rising procurement costs and margin pressure due to increases in construction costs and land prices
• Increased project finance costs due to rising interest rates (interest expense in Q1 surged approximately 6.9x year on year to ¥6,833 thousand)
• Increasing difficulty in selling owner-occupied properties due to a shift in demand from home purchase to rental
• Inventory risk related to real estate for sale and real estate for sale in process (real estate for sale increased from ¥595 million at the end of the prior period to ¥958 million)
• Risk of revenue concentration among major customers
• Risk of second-half execution weighting toward achieving the full-year earnings forecast