Value Creation Process

For the realization of a society full of safety, peace of mind and trust, and for the continuous improvement of corporate value.

Link:Integrated Report 2024 p.26-27 “Hulic Group's Value Creation Process”

Input*1

  • Human and intellectual capital

    Number of Employees 1,357 (consolidated)/
    222 (non-consolidated)
    Ordinary profit
    per employee    		 JPY 600.0 million
    Training expenses
    per employee    		 JPY 145 thousand

  • Manufactured capital

    Total number of properties 250 properties
    Percentage of properties
    in Tokyo's 23 wards    		 70 %*2
    Percentage of properties
    within 5 minutes walk from the nearest station    		 77 %*2

  • Social capital

    Active promotion of social contribution activities

    Public-private coordination in PPP business

    Coordination and cooperation with building management and construction companies

  • Financial capital

    Total Assets JPY 2,480.4 billion
    Equity JPY 765.6 billion
    Equity Ratio 37.9 %*3
  • *1As of December 31, 2023
  • *2Excl. residential and related properties
  • *350% (JPY 175 Bln) of hybrid finance (JPY 350 Bln) was calculated as nominal equity.

Business Model

Medium- and Long-Term Management Plan

"Driving Innovation" and "Accelerating Progress"
Balanced Management
Strike a balance between P/L Growth, B/S Soundness, Profitability, and Productivity (efficiency) at a high level
  • P/L Growth
    Posted continued earnings growth since listing on TSE
    Average rate of growth of Consolidated Ordinary Profit: 20.0%
  • B/S Soundness
    External credit rating: AA- (stable)
    Equity Ratio (FY2023): 37.9%*
  • Profitability
    Maintained higher profitability than competitors
    Ordinary Profit to Sales Ratio (FY2023): 30.7%
  • Productivity (Efficiency)
    Putting emphasis on income per employee and ROE
    ROE (FY2023): 13.0%
  • *50% (JPY175 Bln) of hybrid finance (JPY350 Bln) was calculated as nominal equity.
Business
  • 1Further evolve the business model and restructure the leasing portfolio
  • 2Strengthen development and value-added businesses
  • 3Create unique new business domains and improve Group strengths
Management Infrastructure
  • 4Strengthen the management foundation and implement stringent risk management
  • 5Implement management that emphasizes sustainable co-creation and co-existence with society

Corporate Governance/Compliance

Corporate Philosophy and Basic Stance

Link: Corporate Philosophy and Basic Stance

Sustainability Vision

Link: Sustainability Vision

Core theme

1. Disaster preparedness

Materiality
Providing safe, secure buildings and spaces

Related KPIs

  • 100% highly earthquake-resistant buildings*1by 2029 (target to be achieved by the end of 2025 excluding those subjects for sale or reconstruction)
  • Percentage of properties meeting Hulic's earthquake resistance standards*2: 100% each year
Analysis of the Business Environment

Japan is one of the countries where earthquakes occur most frequently, and experts believe there is a 70 to 80%*3 probability of major earthquakes, such as earthquakes directly under metropolitan Tokyo and in the Nankai Trough, within the next 30 years. The Great East Japan Earthquake in 2011 caused a staggering 6.5 trillion yen*4 in damages. In addition to earthquakes, Japan is also at risk of other disasters, such as an eruption of Mt. Fuji and flooding. As a real estate company that provides buildings, we recognize disaster countermeasures for buildings as one of our most significant issues and intend to ensure that our tenants can be active with peace of mind.

Hulic's Major Initiatives and Actions
  • *1Highly earthquake resistant buildings are those that can safeguard human life and enable continued use of the building with post-earthquake repairs when an earthquake occurs with a seismic intensity of level 7.
  • *2Hulic's earthquake resistance standards are where building performance can safeguard human life and enable continued use of the building with post-earthquake repair in the event of an earthquake with a seismic intensity of level 7.
  • *32020 white paper by the Ministry of Land, Infrastructure, Transport and Tourism
  • *4According to the Natural Disaster Damages section of 70th Japan Statistical Yearbook 2021 by the Statistics Bureau of Japan

2. Population decline

Materiality
Addressing changes in demographics
Analysis of the Business Environment

Japan's falling population, the increased aging of society, and the low birth rate will accelerate in the future. Japan's population is predicted to decline from 126.15 million in 2020 to 87 million in 2070. At the same time, the percentage of the population aged 65 and over is predicted to rise steadily from 28.6% in 2020 to 38.7% in 2070. Simultaneously, the average life expectancy is expected to rise and immigration is set to increase.*
Population decline is an issue that affects all industries, but we believe the impact on the real estate market will be especially significant. For this reason, we are building a real estate portfolio that addresses demographic changes, including promoting businesses related to the elderly and inbound tourism, in light of the rising number of overseas tourists coming to Japan.
In addition, while Japan's birth rate has been trending downward over the long term, the number of dual-income households is rising and the government is considering improving programs for child-rearing support. Anticipating the growing demand for tutoring academies and extracurricular activities for children, we have ventured into children's education as one of our new business initiatives.

  • *Source: Summary of Future Population Projections (2023) published by the Ministry of Health, Labour and Welfare
Hulic's Major Initiatives and Actions

3. Energy

Materiality
Contributing to actions for mitigating climate change and reducing our environmental impact

Related KPIs

  • Greenhouse gas emission reduction targets
  • Number of renewable energy systems installed in development and reconstruction projects: at least three every year
  • Number of times climate change risks are monitored by the Sustainability Committee and reported to the Board of Directors
Analysis of the Business Environment

2030 interim targets have been set for reducing greenhouse gas (GHG) emissions, a worldwide issue, and a consensus has been reached on the goal of achieving carbon neutrality by 2050. These initiatives are meant to address the pressing concern of shifting to renewable energy. There are also energy supply concerns as many of the country's nuclear reactors remain idle. We believe that we, as a company, must do our best to address energy issues not only to secure energy for the Hulic Group but to help our customers' businesses run smoothly as well.

Hulic's Major Initiatives and Actions

Output

Business activities

Sustainability activities

Outcome

Creation of social value

Materiality

  • Providing safe, secure buildings and spaces
  • Contributing to actions for mitigating climate change and reducing our environmental impact
  • Addressing changes in demographics
  • Collaborating with business partners and local communities
  • Promoting diversity and the development of professional human resources
  • Maintaining and improving governance trusted by stakeholders

Creating corporate value

Achieving high-level balance between indicators

Indicator FY2023 Results
Ordinary profit
JPY 100.0 billion		 FY2023 JPY 137.4 billion
Maintain an AA
external credit rating		 As of December 31, 2023
AA- (stable)
Maintain ROE
10% or higher		 FY2023 13.0 %
Payout ratio
40% or higher
(during current Medium-Term Management Plan)		 FY2023 40.2 %
(Dividend per share JPY 50.0 )
Market cap.
JPY1 trillion or more		 As of December 31, 2023 JPY
1,133.8 billion
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