Takamatsu Construction : Analysis Material for 1Q, FY ending March 2021

Translated version

Analysis Material for

1Q, FY ending March 2021

Takamatsu Construction Group Co.,Ltd.

Securities Code：1762

August 6, 2020

Table of contents

1.	Financial results for the first quarter, FY ending March 2021・・・・	2
2. Earnings forecast for the FY ending March 31, 2021 ・・・・ ・・・	15

1. Indicators ・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 17
2. Topics・・・・・・・・・・・・・・・・・・・・ ・・ ・・・ ・・ ・・ 20

1

©2020 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

Financial results for

1Q,FY ending March 2021

Group formation

• The Takamatsu Construction Group is composed of Takamatsu Construction Group Co., Ltd., a pureholding company, and Takamatsu Corporation Co., Ltd. and 10 other companies, Asunaro Aoki Construction Co., Ltd. and 7 other companies, and TCG USA, Inc., an overseas subsidiary, for a total of 21 companies on a consolidated basis.

TCG USA

Takamatsu	Asunaro Aoki
Corporation	Construction

Takamatsu Construction Group

Parent companies touch the labels of subsidiaries.

Ownership is 100% if not otherwise stated.

As a result of the TOB, Asunaro Aoki Construction Co., Ltd. became a wholly owned subsidiary in November, 2019.

3

©2020 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

Situation of Corporate Group

Group Corporation Takamatsu

Aoki Asunaro Group Construction

Civil Engineering		Architecture	Real Estate	Main sales areas
		Takamatsu Corporation	Tokyo・Nagoya・Osaka
		Takamatsu Techno Service (Osaka)		Osaka
		Takamatsu Techno Service (Tokyo)		Tokyo
			Takamatsu Estate (Osaka)	Osaka
			Takamatsu Estate (Tokyo)	Tokyo
		Suminoe Kogei		Japan(nationwide)
		Takamatsu House	Tokyo・Kanagawa
		Tatsumi Planning		Tokyo・Kanagawa
			Mibu Corporation	Tokyo
		Kongo Gumi		Tokyo・Osaka
		Nakamura Shaji		Nagoya
		Asunaro Aoki Construction		Japan(nationwide)
Mirai Construction		Japan(nationwide)
Toko Geotech				Japan(nationwide)
Aoki Marine				Japan(nationwide)
Asunaro Road				Hokkaido
		M's		Metropolitan area
Niigata Mirai Construction			Niigata
Shimada Gumi				Japan(nationwide)
			TCG USA	USA
	Takamatsu Construction Group（Pure Holding Company）

4

©2020 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

TCG Performance for 1Q, FY ending March 2021 (Consolidated)

• Orders decreased by 43.3% from the previous FY due to the new coronavirus infection, which prevented us from visiting individual customers and the order has been postponed. Revenue increased by 10.6% from the previous FY due to steady construct of construction work in progress.

			Unit:100 million yen
Item	1Q FY ended March 2020	1Q FY ending March 2021	+/－
Orders	758	429	△43.3%
Revenue	598	661	10.6%
Gross Profit	74	78	6.1%
Gross Profit %	12.4%	11.9%	△0.5pt
Operating Income	13	14	6.4%
Operating Income %	2.2%	2.1%	△0.1pt
Ordinary income	13	13	2.7%
Ordinary income %	2.3%	2.1%	△0.2pt
Net earnings attributable to the	4	6	44.5%
owners of the parent
Net earnings attributable to the	0.7%	0.9%	0.2pt
owners of the parent %
			5
	©2020 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

661

(Consolidated) TCG Results for 1Q, FY ending March 2021 by Segment Orders, Revenue

 Architecture：Although we received some orders for public works, we were unable to visit individual customers due to the effects of the new coronavirus infection.

 Civil Engineering： Some orders were deferred. Revenue increased from the previous year due to steady construct of

construction work in progress.		Revenue
Orders	（ 100 million yen ）	（ 100 million yen ）

1000

900

800

700

600

500

400

300

200

100

0

							1000
							900
			758
679	693	675				800
49				700
30	32	40
							600
289		216	321
					500
372			429
				51	Real Estate	400
						Civil	300
				223
359	288	419	387			Engineering	200
					Architecture 100
				154
							0
17/3	18/3	19/3	20/3	21/3
1Q	1Q	1Q	1Q	1Q

					598	51 Real Estate
458	525	541	49
32		40			Civil
30					242	252Engineering

222 267

199

	271	306	357Architecture
227	234

17/3	18/3	19/3	20/3	21/3
1Q	1Q	1Q	1Q	1Q

6

©2020 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

Analysis of Changes in Operating Income（by segment）

• TCG Group was able to build up gross profit due to steady construct of construction work in progress, which enabled it to secure an operating income on a par with the previous year.

• 100 million yen ）

16

1. 13
   12
   10
   8
   6

△0

Architecture

Increase Decrease Total

							1		14
	0
				△0
Civil Engineering				Consolidation
Real Estate
						Adjustment

1Q, FY ended March 2020

Operating Income

1Q, FY ending March 2021

Operating Income

7

©2020 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

(Consolidated) TCG Results for 1Q, FY ending March 2021 by Group Orders, Revenue

• Orders decreased at Asunaro Aoki Construction Group in reaction to large construction orders received in the previous FY. Orders at Takamatsu Corporation Group were weak due to unable to visit individual clients. Revenue and profits were steady.

Orders		（ 100 million yen ）	Revenue		（ 100 million yen ）
1000									1000
900										900
800						758				800
679	693	675
700					700								661
										598
600										600
					403								525	541			Asunaro
500					342					500		458						Aoki
	412	465			429											363 Construction
400										400							357			Group
						Asunaro						322	336
300								Aoki		300	306
						303Construction
200								Group		200										Takamatsu
				333	358
	267													300 Corporation
100	227				Takamatsu	100					205	205	241	Group
						153
							129 Corporation
0							Group		0
17/3	18/3	19/3	20/3	21/3			17/3	18/3	19/3	20/3	21/3
		1Q	1Q	1Q	1Q	1Q					1Q	1Q	1Q	1Q	1Q
																		8

©2020 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

Orders by major 4 companies

 Orders at Takamatsu Corporation were sluggish due to unable to visit private clients. Orders decreased at

Asunaro Aoki Construction and Mirai Construction in reaction to large construction orders received in the previous FY.

（ million yen ）				900		Orders （ 100 million yen ）
		1Q	1Q
	Company Name	FY ended	FY ending	+/－
		March 2020	March 2021		800	758
	Takamatsu	27,260	5,096	△81.3%		33
	Corporation				700
					70
	Takamatsu Corporation	8,601	7,886	△8.3%
	Group Others	600	101
	Takamatsu Corporation	35,861	12,982	△63.8%
	Group Total	500
	Asunaro Aoki	19,789	13,156	△33.5%	197	429	Asunaro Aoki
	Construction						32	Construction
		10,146	6,691	△34.1％	400		Group Others
	Mirai Construction
		72	Toko Geotech
					300	86
	Toko Geotech	7,046	7,246	＋2.8%		66	Mirai Construction
					200			Asunaro Aoki
	Asunaro Aoki Construction
3,395	3,225	△5.0%		131	Construction
	Group Others		272
	Asunaro Aoki Construction	40,376	30,318	△24.9%	100			Takamatsu
	Group Total
			78	Corporation
							50	Group Others
	TCG consolidated	75,822	42,995	△43.3%			Takamatsu
	0			Corporation
2020/3 1Q	2021/3 1Q		9

©2020 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

Revenue by major 4 companies

Revenue increased by 10.6% from the previous FY due to steady construct of

	construction work in progress.			Revenue （ 100 million yen ）
（ million yen ）				700
		1Q	1Q			661		Asunaro Aoki
	Company Name	+/－				Construction
	FY ended	FY ending		598	18	Group Others
		March 2020	March 2021		600	53		Toko Geotech
	Takamatsu	16,822	21,352	+26.9%	20	54
				Mirai Construction
	Corporation		48
	Takamatsu Corporation	7,357	8,706	＋18.3%	500	56
	Group Others
	Takamatsu Corporation	24,179	30,058	+24.3%			236		Asunaro Aoki
	Group Total	400			Construction
	Asunaro Aoki	23,265	23,638	+1.6%		232
	Construction
	Mirai Construction	5,622	5,447	△3.1%	300
		87		Takamatsu
								Corporation
	Toko Geotech	4,844	5,365	＋10.8%	200	73			Group Others
	Asunaro Aoki Construction	2,066	1,879	△9.1%
	Group Others
						213
					100	168		Takamatsu
	Asunaro Aoki Construction	35,797	36,329	＋1.5%		Corporation
	Group Total
	TCG consolidated	59,810	66,123	+10.6%	0
2020/3 1Q	2021/3 1Q	10

©2020 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

Gross Profit by major 4 companies

• Gross profit increased due to steady construct of construction work in progress, but some companies that had fewer high-margin projects saw a decline in profits.

（ million yen ）

	1Q	1Q
Company Name	FY ended	FY ending	+/－
	March 2020	March 2021

Takamatsu	2,909	3,622	＋24.5％
Corporation
Takamatsu Corporation	1,290	1,278	△0.9%
Group Others
Takamatsu Corporation	4,199	4,900	＋16.7％
Group Total
Asunaro Aoki	1,884	1,569	△16.7%
Construction
Mirai Construction	219	384	+75.3%
Toko Geotech	705	791	+12.2%
Asunaro Aoki Construction	398	238	△40.2%
Group Others
Asunaro Aoki Construction	3,206	2,982	△7.0%
Group Total
TCG consolidated	7,426	7,881	6.1%

90Gross Profit（ 100 million yen ）

80		78	Asunaro Aoki
74	2	Construction
	Group Others
70	3	7	Toko Geotech
7	3	Mirai Construction
60	2
	15	Asunaro Aoki
			Construction

5018

	12	Takamatsu
40		Corporation
	Group Others
	12
30
20
36	Takamatsu
	29	Corporation
10

0

2020/3 1Q	2021/3 1Q	11

©2020 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

Analysis of Changes in Operating Income （ by major 4 companies ）

• Operating income increased at Takamatsu Corporation due to steady construct of construction work in progress. Operating income decreased at Asunaro Aoki Construction due to a decrease in high-margin projects.

（ 100 million yen ）

Increase

Decrease

Total

20

5

18

16

0

1

14

△2

1

13

14

12

△1

Takamatsu

Takamatsu

△4

10

Corporation

Corporation

Asunaro Aoki

Asunaro Aoki

Mirai

Toko

Consolidation

Group

8

Others

Construction

Construction

Geotech

Construction

adjustment

Group

6

Others

4

2

1Q,

FY ended March 2020

Operating Income

Takamatsu	Asunaro Aoki Construction
Corporation
Group
Group

1Q,

FY ending March 2021

Operating Income

12

©2020 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

Analysis of Changes in Operating Income（ by gross profit and SG&A expenses ）

• Gross profit increased at Takamatsu Corporation due to steady construct of construction work in progress. Gross profit decreased at Asunaro Aoki Construction due to a decrease in high- margin projects. SG&A expenses increased at Takamatsu Corporation Group due to an increase in the number of employees and other factors.

• 100 million yen ）

Increase Decrease Total

25

20

15

Gross profit increase

7

13

Takamatsu

Gross profit

Gross profit

Gross profit

decrease

decrease

increase

SG&A

expenses

△0

0

increase

SG&A

expenses

SG&A

SG&A

increase

△3

expenses

expenses

increase

decrease

1

14

△1

0

Asunaro

△2

Asunaro

Takamatsu

△0

Asunaro

Consolidation

Takamatsu

Aoki

Takamatsu

Aoki

10Corporation

Corporation	Aoki	Construction	Corporation Corporation	Asunaro	Construction adjustment
Group	Construction	Group	Group	Aoki	Group
Others		Others	Others	Construction	Others

				Gross Profit	+4			SG&A expenses △4
5
			Takamatsu Corporation	Asunaro Aoki	TakamatsuCorporation	Asunaro Aoki
			Group	Construction Group	Group	Construction Group
			＋7	△2	△4	△0
		1Q,								1Q,
FY	ended March 2020						FY ending March 2021
	Operating Income								Operating Income
									13
								©2020 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

Impact of the new coronavirus infection on each segment

	segment	Impact
		Although there were some delays in ordering due to the response
	Public sales activities	to the new coronavirus infection, sales activities generally returned
		to normal.
		Although there have been some delays in placing orders with
	Private sales activities	corporate clients, the order environment is returning to its previous
	state. With regards to individual customers, sales activities on the
Construction		web and over the phone were the main focus.
		Although some construction work was halted, the impact was
	Public construction	minor. Construction work is continuing after taking measures to
		prevent the spread of infection.
	Private construction	Construction work is continuing after taking measures to prevent
	the spread of infection.
	Tenant mediation	It is generally back to business as usual.
Real Estate
	Building management	It is generally back to business as usual.
Employment	Employment of new	Company information sessions and interviews are held online.
graduates
Other	M＆A	The situation is generally back to normal.
		14
		©2020 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

Earnings Forecast

for FY Ending March 2021

Earnings Forecast for FY Ending March 2021

No change from the figures announced on May 27, 2020.

Orders			(100 million yen )
4,000
	3,052	2,967
3,000
			TBD
2,000
1,000
0
	19/3	20/3	21/3
					(Plan)
Operating Income		(100 million yen )
200
			147
150			124	120
100
50
0
		19/3	20/3	21/3
					(Plan)

Revenue			(100 million yen )
3,000		2,497	2,823	2,760
2,000
1,000
0
	19/3	20/3	21/3
				(Plan)

Net earnings attributable to the owners of the parent

100		86	(100 million yen )
70	74
80
60
40
20
0
19/3	20/3	21/3
			(Plan)

The forecast for consolidated results this fiscal year is TBD because it is currently difficult to reasonably calculate the order forecast due to the impact of COVID-19.

Due to the impact of COVID-19, revenue is forecast to decrease 2.3% year-on-year, and operating income is expected to decrease 18.5% year-on-year.

16

©2020 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

Indicators

Takamatsu Corporation : Orders received by condominiums and non-condominiums

• Due to the declaration of a state of emergency following the outbreak of a new type of coronavirus infection, Takamatsu Corporation refrained from visiting individual customers, its main customers, and has been postponed orders from corporate customers who work from home. While just a reference figure, there was no change a ratio of the Osaka Head Office's mainstay of non-condo construction and the Tokyo Head Office's mainstay of rental condominium construction.

Percentage of condominiums and non-condominiums	（%）	（ million yen ）
Year-on-year comparison		Orders received by condominiums and non-condominiums

	Osaka	Tokyo
	2020/3	2021/3	2020/3	2021/3
	1Q	1Q	1Q	1Q
condominiums	19.6%	5.5%	64.8%	68.5%
non-	80.4%	94.5%	35.2%	31.5%
condominiums
Total	100%	100%	100%	100%

	Osaka	Tokyo
	2021/3	2021/3
	1Q	1Q
condominiums	177	1,289
non-	3,038	592
condominiums
Total	3,215	1,881

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©2020 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

Occupancy Rate of Properties Constructed by Takamatsu Corporation at Takamatsu Estate

Occupancy rates of 95% or higher have been maintained for 1Q, FY ending March 2021 in both Tokyo and Osaka.

100.0%

99.0%

98.0%

97.0%

96.0%

95.0%

94.0%

93.0%

92.0%

91.0%

90.0%

Osaka/Nagoya

96.9%

96.5%	96.5%	97.0%	97.3%
95.7%	96.0%	96.0%	96.8%

FY ending March 2021

FY ended March 2020

FY ended March 2019

1Q

2Q

3Q

4Q

100.0%

99.0%

98.0%

97.0%

96.0%

95.0%

94.0%

93.0%

92.0%

91.0%

90.0%

Tokyo

97.2%

96.0%	96.5%	96.7%	97.4%
95.8%	96.2%	95.5%	96.2%

FY ending March 2021

FY ended March 2020

FY ended March 2019

1Q

2Q

3Q

4Q

Definitions

"Osaka/Nagoya"： Osaka, Kyoto, Hyogo, and Nagoya

"Tokyo"： Tokyo, Kanagawa, Saitama, and Chiba

"Occupancy rate"：Number of properties constructed by Takamatsu Corporation managed by Takamatsu Estate (Osaka/Tokyo) that are occupied at the end of each quarter ÷ total number of properties constructed by Takamatsu Corporation managed by Takamatsu Estate (Osaka/Tokyo) at the end of each quarter

19

©2020 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

Topics

About Wooden detached house business ＆ TCG USA Inc.

Wooden detached house business

With the concept of "better quality and value for money", Takamatsu House Co.,Ltd. launched the "MIRAKURAS" brand of wooden detached houses for sale.

Takamatsu House Co.,Ltd. plans to operate mainly in the Jonan, Josai and Jouhoku areas of Tokyo as well as Yokohama.

We aim to provide "homes for sale that do not decline in asset value" and aim for 180 homes and sales of ¥10 billion in three years and ¥50 billion in 10 years.

＊Jonan, Josai and Jouhoku areas of Tokyo : A large number of celebrity living these area

TCG USA Inc.

brand of wooden detached houses for sale

TCG USA Inc. acquired 224.E59th, a 5-story Wooden house in June 2018 and 413.E50th in August 2018 in Manhattan, New York City.

The first building, 224.E59th, is being operated as a rental property, and the second building, 413.E50th, will be sold after full renovation work is completed.

1. third investment has been finalized in a 4-story,192-unit apartment development in California with a local developer.

Due to the effects of the new coronavirus infection, construction is expected to start behind schedule.

TCG USA's third investment project

Blu Laguna Niguel Phase II

image

21

©2020 TAKAMATSU CONSTRUCTION GROUP CO., LTD.

Disclaimer: All financial information has been prepared in accordance with generally accepted accounting principles in Japan. This document is a partial English translation of the Japanese Financial Statements which were filed with Stock Exchanges in Japan on August 6, 2020. The Company provides this translation for your reference and convenience only without any warranty as to its accuracy. In case of any discrepancy between the translation and the Japanese original, the latter shall prevail. Additionally, these materials were created with the intention of providing reference information to be used by investors for their investment decisions, and do not constitute any sort of effort to solicit the purchase or sale of Takamatsu Construction Group stock.