Tosei posts fiscal 9M21 net profit nearly tripled despite hotel segment losses

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Tosei Corp. reported Tuesday its net profit for the fiscal nine month period nearly tripled to 7.08 billion yen, from 2.47 billion yen in the year-ago period.

“In the hotel business, although there was no recovery in accommodation sales due to the impact of the Covid-19 crisis, sales of properties in the revitalization business and the development business progressed according to plan, while other businesses performed favorably,” Tosei said in a filing to SGX.

Revenue for the nine months ended 31 August slipped 7.1 percent on-year to 52.31 billion yen from 56.31 billion yen in the year-earlier period, due to primarily focusing on purchasing activities which will provide a source of income in the next fiscal year and beyond, real estate renovation, and new asset management contracts, the Singapore- and Tokyo-listed property player said.

The dividend for the nine-month period was 19 yen, compared with 42 yen in the year-earlier period, the filing said.

Hotel business

The hotel business posted revenue of 314 million yen down 2.9 percent on-year, with a segment loss of 622 million yen, narrower than the 733 million yen loss in the year-earlier period.

“Despite endeavors including the improvement of occupancy rates at existing hotels, conditions remained harsh due to the renewed spread of Covid-19, with the temporary closure of some hotels,” Tosei said.

The company noted that for the January-to-May period, the average guest room occupancy in the Tokyo business hotel market was 34.5 percent, down from 84.2 percent in the year-ago period, amid the impact from the Covid-19 pandemic.

“The environment is forecasted to remain harsh for the hotel market, despite the daily progress of vaccinations in Japan (according to a survey by the Japan Tourism Agency),” Tosei said.

Revitalization business

In the nine-month period, the revitalization business sold 41 properties which had been renovated, and acquired 25 properties, including income-generating office buildings, apartments and a logistics facility for renovation and sales purposes, and two land lots, Tosei said.

The segment posted revenue of 30.06 billion yen, down 0.9 percent on-year, and a profit of 7.24 billion yen, up 25.4 percent on-year, as it reversed a year-earlier valuation loss.

Development business

For the nine-month period, the development business posted revenue of 10.49 billion yen, down 26.6 percent on-year, and profit of 1.28 billion yen, swinging from a year-ago loss of 3.86 billion yen. The segment also posted a reversal of a valuation loss of 268 million yen.

The development business sold a new logistics facility and a new commercial facility during the period, the filing said.

In addition, the segment focused on the sale of detached houses, which met firm demand, with 66 sold, Tosei said.

Two land lots for logistic facility projects were acquired, as well as one land lot for apartment project, one land lot for commercial facility project, three land lots for income-generating office buildings and land lots for 58 detached houses, Tosei said.

Read Tosei’s financial statement for the nine-month period.