Daiwa House Industry : Nov. 17, 2023 Presentation Summary

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I am Yoshii, President and CEO of Daiwa House Industry. Thank you all for taking time out of your busy schedules to join us today. We have been making progress since the announcement of the 7th Mid‐Term Management Plan last May, and in that context I would like to explain the plan to you, including the fiscal year ended September 30, 2023.

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As you are aware, our H1 results were JPY2,544.8 billion in net sales and JPY154.4 billion in net income, which was a record high for Q2. Operating income was JPY191.1 billion, an increase of JPY36.5 billion over the previous year.

The sales amount of JPY5.02 trillion is described in some of your reports as very conservative, but I would like to explain later how the situation has been for FY2023. We plan to increase the dividend by JPY5 from the original plan, to JPY140.

Sales of the final year of the 7th Medium‐Term Management Plan are JPY5,500 billion, and an operating profit is JPY500 billion, and a ROE is over 13%. What will happen to this 13% under the current circumstances? Last year, actuarial gains and losses were worked out to a great extent, so ROE exceeded 14%, but we are aiming for 13% excluding such actuarial gains and losses. We are thinking of doing shareholder returns and share buy‐backs. I think we need to raise profits from roughly JPY500 billion to around JPY550 billion.

We have not yet finished FY2023, but I believe that the story of how we can increase the operating profit from approximately JPY385 billion to JPY550 billion, or how we can return profits to shareholders, will be our issues.

Growth investment is an area that I am concerned about, and I am not sure if you are also concerned about this. Are we investing well? We will invest JPY2.2 trillion, but only about JPY530 billion has been invested.

What we are looking forward to in Q3 and Q4 is that the hotel business is recovering quite well. Many foreign hotels are still coming to Japan, so we have quite a few of these projects coming in now, and I think we will be able to make good investments in this area.

On the other hand, there is also the issue of profit margins, so we need to increase the profit margin, which is a concern for everyone at the Logistics, Business & Corporate Facilities Business..

Our current business portfolio consists of Single‐Family Houses division, Rental Housing division, Commercial Facilities division, Logistics, Business & Corporate Facilities division, Condominium division, Environment and Energy division, and Related Business division.

For portfolio optimization, If possible, we would like to move some group companies from Related Business division to Commercial Facilities division. We would also like to move them to Logistics, Business & Corporate Facilities division. We would like to review this because we think that we could do a very wide range of projects in this area.

We have also decided to create new businesses and establish a CVC fund. We originally wanted to do it a little earlier. However, we ourselves have not been able to get around to it due to a number of issues, so we have finally come to this place and would like to make a solid investment in projects related to our housing life. That is what we hope to sow a little seed in this 7th Medium‐Term Management Plan, which will sprout a little, and grow toward the next target figures in the 8th Medium‐Term Management Plan.

This is the circular economy or something like that. We would like to address the issue of rebuilding condominiums and other such issues in an integrated manner, so we are including such issues as well.

Also, as I have mentioned in various opportunities, we have 61 Neopolis that we have created, and we are currently working on 10 places to make them shine again. Next year, we will finally be able to hold the Neopolis Summit (tentative name), although not residents of all 61 locations will participate, and we hope that this will help to revitalize the city.

We want to make sure that we are doing the right thing here, because the housing we have built and the community we have created are still infrastructure.