Tokyo Tatemono (8804 JP) (Buy) 16/12 Q3 results

FULL REPORT

Profit guidance hiked; high-rise condos perform well, next focus is on Yoyogi Park development

Tokyo Tatemono released results for 16/12 Q1-3 on 7 November and also issued revised full-year guidance for recurring profits and profits attributable to parent company shareholders, hiking its projections by ¥2.5bn apiece. The revisions reflect the posting of gains on the sale of property, plant, and equipment, as well as equity-method income from overseas operations and increased financial income. We have also revised our forecasts. However, we raise the cap rate we use to calculate our target price from 4.3% to 4.7%, yielding a target price of ¥1,910, to reflect a slower pace of office rent rises in Tokyo’s five central wards and increased uncertainty on global financial markets. We reaffirm our Buy rating.