Reuse‑oriented stocks have been outperforming across categories—from used cars (IDOM) to pre‑owned jewelry and consumer goods (Book Off). In an inflationary environment, it makes sense: consumers are prioritizing value and shifting toward high‑quality secondhand options.

Pre‑owned housing fits the same pattern. I continue to like the preoccupied‑housing names and highlighted Katitas (8919) in my 11/25 note.

Tosei’s Q1 FY11/26 results reinforce the trend, with sales up 31% y/y and operating profit up 26%.

Tosei (Cap: Y159 Bn) is an independent real estate firm focused on Greater Tokyo. Free from conglomerate structures, it adjusts its business mix dynamically while maintaining recurring income.

Executive Summary

*Integrated real estate platform spanning acquisition, revitalization, development, and asset/fund management

*Strong positioning in Greater Tokyo, with diversified exposure across asset classes

*Core competency in value-add (revitalization) of small/mid-sized properties, a less competitive niche vs. institutional-grade assets

*Growing AUM base (¥2.9tn target by FY2026) supports fee income visibility

Balanced earnings mix between trading (45.6%) and stable businesses (54.4%)

*Financials remain controlled with Equity ratio 33.4% / Net D/E 1.39x

*Tosei sits between:

Large developers (focused on mega projects)

Pure asset managers (fee-heavy, lower returns)

*More resilient than pure developers

*More upside than pure asset managers

 

Management targets a P/E re-rating from 11x to 14x, underpinned by a balanced portfolio featuring 50% stable recurring revenue. This note outlines the fundamental drivers that support this valuation upside.

If you’re interested in learning more about Tosei and its growth potential, I’d like to invite you to experience my service—completely free of charge. I am confident that once you discover the value, convenience, and quality I offer, you’ll be glad you gave me a try. Some of my clients who have a dedicated Japan research team find my take unique and actionable.

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