J.P. Morgan

J.P. Morgan Mitsui Fudosan (8801) 2Q Results: Potential for Upward Revision in Late FY2013 Mitsui Fudosan reported 2Q results and held a conference call after market hours on November 7. We get the impression it could revise up guidance late in FY2013 on potential upside in real estate brokerage, hotel business and condo sales. • Leasing business: Operating profit from leasing rose V0.7 billion YoY to ¥55.4 billion. The vacancy rate (parent, Tokyo area) rose from 3.8% in IQ to 4.5% in 2Q, but guidance points to a fall to 3% in 4Q. The rise in 2Q vacancy rate appears to have been temporary, mainly reflecting mismatches in timing between tenants moving in and out. Management commented during its conference call that office leasing might turn in a small profit increase in FY2014. • Sales of housing/sales to investors: Sales of housing (residential portion only) swung from an operating profit of V5.2 billion in IH FY2012 to a loss of ¥1.3 billion in I H FY2013 due to low bookings of unit sales. Conversely, there was a substantial increase in agreed sales, with contracts signed on 4,714 units in IH FY2013, up from 3,018 units in IH FY2012. This strong sales performance should make it easier to generate profits later in FY2013 because it is likely to reduce selling expenses. Agreed sales kept up good progress even in October, suggesting little evidence of a backlash to the introduction of higher consumption tax. Spending on acquisition of land for condo development made good headway, rising from V34.5 billion in 1H FY2012 to V51.5 billion in 2H. • Management (brokerage), other business (hotels): Operating profit from management activities grew 35% YoY to ¥24.2 billion, thanks to strong brokerage to individuals. We see potential upside to full-year guidance of V42.0 billion operating profit from management activities. Operating profit from other business rose from V50 million in 1H FY2012 to V2.1 billion in 1H FY2013 (full-year guidance: ¥1.0 billion) due to strength in hotels. Overall progress looks likely to remain ahead of plan despite costs of opening new hotels in 2H. • Overweight rating, December 2014 price target of V4,000: We continue to base our price target on NAV (derived from SOTP analysis, using a cap rate of 4.0% and our FY2017 estimates). Downside risks include monetary tightening and rising interest rates. Mitsui Fudosan Co., Ltd. (Reuters: 8801.T, Bloomberg: 8801 JT) 201213 201313 2014/3 E 201513E 2010 E Sales bn) 1338.1 1445.6 1,555.0 1,618.0 1,685.0 Operating Prof* (V bn) 126.0 148.2 170.0 187.0 201.0 Recurring Profit (ti bn) 1025 123.1 145.0 1620 178.0 Net Profit (ti bn) 50.1 59.5 75.0 91.0 100.0 EPS (V) 56.9 67.4 85.1 103.2 113.5 PIE (x) 564 47.6 37.7 31.1 28.3 P/BV (x) 2.6 2.3 2.2 2.1 2.0 EWEBITDA (x) 24.6 22.9 20.4 18.9 17.8 Source: Company den. Blccenberg. U. Morgan estimates. Japan Equity Research 07 November 2013 Overweight 8801.T, 8801 JT Price: 143,210 Price Target: 144,000 IMAIT SI FOCUS 1151 Japan Infrastructure (Property, Homebuilder, Construction) Hirokazu Anai AC Bloomberg JP/.IA ANAL cGO, JPMorgan Secunties Japan Co.. Ltd. Price Performance IWO 3.510 fle a I zee I I hat) Warn Jell 1%.13 a/01.T share price (e) TOFU (rebated) Company Data Price (V) 3.210 Date Of Noe 07 Nov13 Market Cap (V bn) 2,829.37 Shares WS (me) 881.4 52-week Range 00 3610-1,802 TOPIX 1.184.73 DPS (Y) 22 Dividend Yield 0.7% ROE 7.5% See page 7 for analyst certification and important disclosures, including non-US analyst disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. www.jpmorganmarkets.com EFTA01148956 Hirokazu Anai Japan Equity Research 07 November 2013 Mitsui Fudosan (8801) J.P.Morgan Company Profile Part of the Mitsui group, which began in 1673 when Takatoshi Mitsui opened the Echigo-ya clothing store. This later became the Mitsui Company, which established a real estate section in 1914 and spun it off as Mitsui Fudosan in 1941. The company is an integrated real estate firm involved in office leasing, commercial facilities, condominium development, investment property development and REITs. Operating Profit Composition by Segment, FY2012 Maui Home 0% Sales of Housing and Sales to Investors Source: Company data. Operating Profit Forecasts: J.P. Morgan versus Consensus V billion Investment Thesis Risk Analysis Upside Scenario to Target Price/Rating • Earnings improving faster than management's guidance, driven by recovery in demand for commercial facilities and hotels. • Rise in REIT prices could lead to capital gains on property sales to Nippon Building Fund, Frontier Real Estate Investment Corporation and Nippon Accommodations Fund. • Full-fledged recovery in office demand owing to improved economic conditions. Downside Scenario to Target Price/Rating • Delayed recovery in office demand, increased condominium construction costs. • Stagnation in POs (public offerings) if REIT unit prices are depressed for long • Monetary tightening and rising interest rates. J.P. Morgan Consensus FY2013E 170.0 FY2014E 187.0 Sara: JP. Morgan estimates. Romberg. Assumptions & Sensitivity Metrics (Impact on FY2012 Profits) 162.5 172.2 Factor Current Assumption Change Vacancy Rate (%) 3.0 +1% Average Rent (W3.3m2) 25,000 +5% Interest rate (%) 1.4 +1% Source: J.P. Morgan estimates. Peer Valuations Based on Bloomberg Consensus Impact OP NP -4.6% -4.6% 23.2% 23.2% 0.0% -21.7% Valuation We base ow December 2014 price target of V4,OOO on a sum-of-the-parts analysis using a cap rate of 4.0% and our FY2OI 7 forecasts. Company name Bloomberg Ticker Currency Market Cap PIE(x) PIB(x) ROE(%) 13E BE 14E 15E 13E 14E 15E Mitsui Fudosan Co Ltd 8801 JT 3,210 Nov-07 28,678 41.5 36.9 33.9 2.29 219 2.09 5.9 latsuCeshi Estate Co Ltd 8802 JT V 2,768 Nov-07 39.009 62.4 5/.2 53.2 2.97 2.86 2.75 5.0 Tokyo Tatemono Co Ltd 8804 JT V 918 Nov-07 4,029 47.5 40.0 34.4 1.84 1.55 1.49 3.8 Tokyu Fudosan Hold. Corp 3289 JT V 943 Nov-07 6,125 23.4 22.1 21.5 1.55 1.47 1.39 1.4 Sumitomo Realty & Dev. 8830 JT V 4,580 Nov-07 22.101 31.2 29.6 27.9 3.16 2.89 2.66 10.7 NTT Urban Dev. Corp 8933 JT V 1,224 Nov-07 4,083 34.3 33.6 29.8 2.14 2.05 1.97 6.4 Hulic Co Ltd 3003 JT V 1,576 Nov-07 9,511 692 5/.5 51.0 5.84 5.32 4.84 8.7 Sun Hung Ka Properties Ltd 16 HK NKD 102.00 Nov-06 35,146 126 12.7 12.1 0.69 0.66 0.63 5.7 Cbeung Kong Holdings Ltd 1 HK HKD 121.50 Nov-CE 36.304 102 9.3 8.9 0.79 0.73 0.69 1.9 Hang Lime Properties Ltd 101 HK FWD 25.85 Nov-06 14,938 26.8 20.1 16.8 0.94 0.93 0.89 4.2 CapdaLand Ltd CAPL SP SGD 3.09 Nov-06 10,586 19.3 15.5 14.1 0.84 0.80 0.77 5.2 Source: asomtere. Note: Market caps we calculated using forex rates as of November 6. 2 EFTA01148957 Hirokazu Anai Japan Equity Research 07 November 2013 Figure 1: Mitsui Fudosan (8801): Sales and Operating Profit by Business Segment V million J. P Morgan 10 20 1H 2H Full Yr 3/14E 3115E 3116E 3,117E 3/18E 3/14 3/14 CoE Sales Leasing 108.644 113.285 221,929 234.071 456.000 470.000 492.000 515.000 534.000 553.000 YoY % chg. 0.5 2.9 1.7 8.4 32 6.4 4.7 4.7 3.7 3.6 Composition (%) 38.2 32.2 34.9 26.2 29.8 30.2 30A 30.6 31.3 32.0 Sales of HousIng and 47,787 70.914 118.701 317.299 436.000 441.200 475.500 531.000 518200 506.500 Sales to Investors YoY % chg. -6.7 -2.8 -4.4 13.0 10.8 12.1 8.7 10.7 -2.4 -2.3 Composition (%) 16.8 20.2 18.7 35.5 285 28.4 29.6 31.5 30.4 29.3 Management 73.557 77.107 150.664 158.336 309.000 309.000 316.000 323.000 331.000 340.000 YoY % chg. 3.1 6.9 5.0 5.2 3.7 3.7 2.3 22 2.5 2.7 Composition (%) 25.9 21.9 23.7 17.7 202 19.9 19.5 192 19.4 19.7 Mitau' Home 29.883 34.434 64,317 159.683 224.000 225.000 220.000 200.000 200.000 200,000 YoY % chg. 26.9 -36.3 -17.1 15.4 72 7.6 -2.2 -9.1 0.0 0.0 Composition (%) 10.5 9.8 10.1 17.9 14.6 14.5 13.6 11.9 11.7 11.6 Others 24.576 25.962 50.538 54.462 105.000 109.800 110.500 116.000 121.800 130,500 YoY % chg. -4.4 -2.2 -3.3 -7.3 1.4 6.1 0.6 5.0 5.0 7.1 Composition (%) 8.6 7.4 7.9 6.1 6.9 7.1 6.8 6.9 7.1 7.5 Consolidated net sales 284.450 351.701 636.151 893.849 1.530.000 1.555.000 1.618.000 1.685.000 1.705.000 1.730,000 YoY %chg. 1.6 4.7 3.3 5.9 5.8 7.6 4.1 4.1 1.2 1.5 Operating Profit by Business Segment Leasing 27180 28.075 55,455 49.545 105.000 110.000 111000 115.000 120.900 130.000 YoY % chg. 0.1 2.8 1.4 14.4 0.6 5A 2.7 1.8 5.1 7.5 Composite+) (%) 85.5 59.0 69.7 48.9 58.0 57.3 53.8 51.6 50.8 51.0 Maren (%) 25.2 24.8 25.0 21.2 23.0 23.4 23.0 22.3 22.6 23.5 Sales of Houslng and 334 1.974 2.308 28.692 31.000 34.000 44.000 49.000 56.000 63.000 Sales to Investors YoY %chg. -87.6 -51.5 -65.9 88.3 34.4 47.4 29.4 11.4 14.3 12.5 Composition (%) 1.0 4.1 2.9 28.3 17.1 17.7 21.0 22.0 23.5 24.7 Maren (%) 0.7 2.8 1.9 9.0 7.1 7.7 9.2 92 10.8 12.4 Management 10.526 13.665 24,191 17.809 42.000 45.000 49.000 54.000 56.000 57,000 YoY % chg. 35.6 35.4 35.5 17.6 1.0 8.2 8.9 102 3.7 1.8 Composition (%) 32.9 28.7 30.4 17.6 232 23.4 23.3 242 23.5 22.3 Mare (%) 14.3 17.7 16.1 11.2 13.6 14.6 15.5 16.7 16.9 16.8 Mitsul Home -7.059 2.644 -4.415 6.415 2.000 2.000 3.000 4.000 4.000 4.000 YoY %chg. -13.4 371.3 -41.8 -48.2 253.4 253.4 50.0 33.3 0.0 0.0 Composition es) -22.1 5.6 -5.5 6.3 1.1 1.0 1.4 1.8 1.7 1.6 Mare (%) -23.6 7.7 -6.9 4.0 0.9 0.9 1.4 2.0 2.0 2.0 Others 825 1.232 2.057 -1.057 1.000 1.000 900 1.000 1.100 1.100 YoY % chg. NM NM NM NM NM -1276.5 -10.0 11.1 10.0 0.0 Composition (%) 2.6 2.6 2.6 -1.0 0.6 0.5 0.4 OA 0.5 0.4 Mare (%) 3.4 4.7 4.1 -1.9 1.0 0.9 0.8 0.9 0.9 0.8 Subtotal 32.006 47.590 79.596 101.404 181.000 192.000 209.900 223.000 238.000 255.100 Eitmeations -5.426 -4.964 -10.390 -10.610 -21.000 -22.000 -22.900 -22.000 -22.000 -22.100 Operating Profit 26.580 42.627 69,207 90.793 160.000 170.000 187.000 201.000 216.000 233.000 YoY % chg. 8.3 16.3 13.1 23.0 8.0 14.7 10.0 75 7.5 7.9 Source: Company dra and J.P. Margan esbmales 3 EFTA01148958 Hirokezu Anal Japan Equity Research 07 November 2013 Figure 2: Mitsui Fudosan (8801): Consolidated Income Statement V million J.P. Morgan 1O 2O 1I4 214 Full Yr 3114E 3115E 3116E 3117E 3718E 3114 3/14 CoE Revenue from operations 284,450 351,701 636,151 893,849 1,530,000 1,555,000 1,618,000 1,685,000 1,705,000 1,730,000 YoY % chg. 1.6 4.7 3.3 5.9 5.8 7.6 4.1 4.1 1.2 1.5 Cost of goods sold 222.580 274.183 496,763 - 1,256,000 1.305.500 1.352.500 1.362,500 1.387.5(Xl As % of sales 78.2 78.0 78.1 - 80.8 80.7 80.3 79.9 802 Gross Profit 61.870 77.517 139.387 - 299,000 312.500 332,500 342,500 342.500 Margin (%) 21.8 22.0 21.9 - 19.2 19.3 19.7 20.1 19.8 SG8A 35.289 34.890 70.179 - 129.000 125.500 131.500 126.500 109.500 SG&Arsales (%) 12.4 9.9 11.0 - - 8.3 7.8 7.8 7.4 6.3 Operating profit 26,580 42,627 69,207 90,793 160,000 170,000 187,000 201,000 216,000 233,000 ?Aaron (%) 9.3 12.1 10.9 10.2 10.5 10.9 11.6 11.9 12.7 13.5 YoY % chg. 8.3 16.3 13.1 23.0 8.0 14.7 10.0 7.5 7.5 7.9 Nonoperating balance -6.230 -6.158 -12.388 -15.612 -28.000 -25,000 -25.000 -23.000 -22,000 -20,000 Financial balance -5.417 -7.080 -12.497 -18.503 -31.000 -27,000 -27.000 -27.000 -27.000 -27,000 Interest and dividends received 1.953 394 2,347 - - 3.000 3,000 3,000 3.000 3,000 Interest expenses 7.370 7.474 14.844 30.000 30.000 30.000 30.000 30.000 Average interest rate 1.4 1.4 1.4 1.4 1.A Equity in net income of affiliates 452 350 802 2.000 2.000 4.000 5.000 7.000 Other revenue and expenditure -1,265 572 -693 3.693 3.000 0 0 0 0 0 Recurring profit 20,350 36,469 56,819 75,181 132,000 145,000 162,000 178,000 194,000 213,000 Recurring margin % 7.2 10.4 8.9 8.4 8.6 9.3 10.0 10.6 11.4 12.3 YoY % chg. 20.9 20.5 20.7 21A 7.3 17.8 11.7 9.9 9.0 9.8 Extraorditary profit 8.796 0 13.188 0 0 0 0 0 0 0 Extraordinary loss 0 2,371 17.629 20.000 20.000 10.000 10.000 10.000 10.000 Pretax profit 29.147 38.489 67.636 44.364 112.000 125.000 152.000 168.000 184.000 203,000 Corporate tax. Vocal inhabitant tax. business lax 14.266 13.367 27.633 18.367 46.000 50.000 60.800 67.200 73.600 81,200 Income taxes-deferred 0 0 0 0 0 0 Tax rates (%) 48.9 34.7 40.9 41.4 41.1 40.0 40.0 40.0 40.0 40.0 Minority interests -1.893 2.043 150 850 1,000 0 200 800 400 800 Net Income 16,773 23,079 39,852 25,148 65,000 75,000 91,000 100,000 110,000 121,000 Marge) (%) 5.9 6.6 6.3 2.8 4.2 4.8 5.6 5.9 6.5 7.0 YoY % chg. 84.8 29.6 48.3 -10.6 9.3 26.2 21.3 9.9 10.0 10.0 Source: Company data and J.P. Morgan estimates 4 EFTA01148959 Hirokazu Ansi Japan Equity Research 07 November 2013 Mitsui Fudosan (8801): Summary of Financials J.P.Morgan income statement II In billions 201313 201413E 201513E 2O1613E Cash Flow statement tO In billions 2013/3 201413E 201513E 2O1613E Revenues 1,445.6 1,555.0 1,618.0 1,685.0 Operating CF 100 102 148 151 Casio( revenue - • • . 59 66 66 66 Operating expenses - • • • Net change in working capital (64) 0 (9) (10) E8ITDA 207 236 253 267 Investment CF (71) (150) (107) (107) Depreaation (59) (66) (66) (66) Calm (77) (160) (150) (150) Operating profit (EBIT) 148 170 187 201 Net change in investments • • - Other income 23 25 25 23 Free cash Mow 86 (30) 48 67 Other expenses (25) (25) (25) (23) Financing CF (8) 59 (120) (70) Pretax income 111 125 152 168 Net debt (cash) 2,019 2,087 2,066 2,027 Abnormal items (net) (12) (20) (10) (10) Change in Net date (cash) 337 68 (21) (39) Income taxes (50) (50) (61) (67) lAncrities (I) 0 (0) (1) Net income - GAAP 59 75 91 100 Diluted shares outstanding (mn) 881 881 881 881 Balance Sheet S In billions 2013/3 201413E 201513E 2O1613E Ratio Analysts 2013/3 201413E 201513E 201673E Total assets 4.390 4,534 4,581 4.660 Gross Margin • • • • Cash and cash equivalents 102 113 84 93 ESITDA margin 14.3% 152% 15.6% 15.8% Trade receivable • • ROCE 2.8% 3.3% 3.3% 3.5% Other current assets 177 253 263 272 Return on equity (ROE) 6.1% 7.5% 7.6% 7.9% Net Tangible fixed assets 2.464 2,598 2,649 2.100 WE ratio 171.9% 170.7% 158.1% 147.2% Net intangible fixed assets 40 30 30 30 Div payout ratio 32.6% 25.9% 21.3% 19.4% InvOStmentS/Other assets • - • Total liabilities 3.157 3,246 3,221 3,220 Short term debt 286 330 290 280 Other short term liabilities 285 313 331 354 Long term debt 1.854 1,870 1,850 1.860 Other tog term liabilities 651 628 633 638 Minority interests Total Equity 1.213 1,288 1,360 1.440 Source: Company data and J.P. Morgan estimates Note: Yin billions (except per-share data).Fiscal year ends Mar 5 EFTA01148960 Cistern: 336100 JJUdorgan Global Equity Quantitative Analysis" 12 Ilth Forward EPS ion ink l0)411 ' . ..... ''' ''''''''' OM ............... OM 400 Corneal: 83.57 9 6 6 6 a a P P S P r em rit all 14 twa t ; Curvets: 3% Implied Value Of Growth* Ia Compri 39 5, Hirokazu Anai Japan Equity Research 07 November 2013 JPM Q-Profile Mitsui Fudosan Co.. Ltd. (JAPAN I Financials) Ave. 01 ne...111.1 Local Share Price imn4 10114 1.01.01 1.0:091 MOM MOO MOO. i0310. MOP Op Earnings Yield (d local bond Yield) IN{ Po )l PE (1Yr Forward) nn Ian 11% 483 0 021 411 441 .014 Comm,: 5749% Price/Book Value Im as 21. at IAt tit as Comm: 0.67 Dividend Yield (Trailing) 2 11 11 IS Owns: 24a S 1 5 1 11 " 11/11/1111 Summary 1 !Anti Futliman Co.. Ltd. As Of: JAPAN SEOCI 5597603 Local Price: Manche EPS: Latest Min Max Malian Average 21.D.. 2SD.. %to ilia % to Mac % to Mod Itmth Posers PE 39.55e 10 58 7500 2322 28 90 57.27 0,52 -73% 90% -41% RSV (TrStic0.) 3.43; 084 357 1.53 1.75 298 0.53 45% 47% 47% D.v441Y1110 (DAV 0.67 031 219 0.87 086 1.78 4.06 -54% 229% 0% ROE (Trollop) 6.92 .1116 0.423 0.92 153 1110 445 -322% 60% 0% weigh) Snots Cr Gnaw 57.9% 443 085 0.34 038 0.84 4.12 -175% 47% -41% Santa. Bboamorg Rein's Gbbal Fundamentals. IDES CONSENSUS. J.P. Mown Cats • (WACO MS) Cal.1)(11. 0.EY/Costal °WO *hem east a IWO .glend Weld • 10% (Er) III I•Nov-13 319500 8157 %to Avg -27% -26% 28% .49% 48% 6 EFTA01148961 Hirokazu Anal Japan Equity Research 07 November 2013 J.P.Morgan Analyst Certification: The research analyst(s) denoted by an "AC" on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an "AC" on the cover or within the document individually certifies, with respect to each security or issuer that the research analyst covers in this research) that (I) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. Important Disclosures • Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Mitsui Fudosan (8801). Company-Specific Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgan- covered companies by visiting https://jpmm.comiresearcWdisclosures calling 1-800-477-0406, or e-mailing [email protected] with your request. J.P. Morgan's Strategy, Technical, and Quantitative Research teams may screen companies not covered by J.P. Morgan. For important disclosures for these companies, please call 1-800-477-0406 or e-mail researeh.disclosure.inquirieskrApmorgan.com. Mitsui Fudosan (8801) (8801.7, 8001 J7) Price Chest PncelY1 8.000 5.000 4.000 3.000 2.000 1.000 0 UW Y2.800 I 1 Y2.650 INY1 600 I I OW Y/.700 INV' 700 1°71°W72lat2ae Ow Y4.000 OW Y2.400 Mar OS Sep 09 Mar 11 Sep 12 Sep 08 Sowco.B1omnteg and JP. Morgan. pone data admmod to, Mona sons anddh4OmMs. maunsd mnwnge Nov 02.20% Date Rating Share Price Price Target (Y) 09-Nov-06 1.7W 2685 2650 13-Feb-07 LIW 3220 2800 22-Jul-08 OW 2335 2800 19-Nov-08 OW 1244 2300 25-Feb-09 N 1007 1500 30-Jun-09 OW 1683 2500 30-Oct-09 N 1510 2000 21-Apr-11 N 1362 1700 16-May-11 OW 1366 1700 15-Jan-13 OW 2067 2400 05-Apr-13 OW 2930 4000 The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire period. J.P. Morgan ratings or designations: OW - Overweight, N- Neutral, UW Underweight, NR - Not Rated Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overweight (Over the next six to twelve months, we expect this stock will outperform the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] Neutral (Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] Underweight (Over the next six to twelve months, we expect this stock will underperfonn the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a recommendation or a rating. In our Asia (ex-Australia) and U.K. small- and mid-cap equity research, each stock's expected total return is compared to the expected total return of a benchmark country market index, not to those analysts' coverage universe. If it does not appear in the Important Disclosures section of this report, the certifying analyst's coverage universe can be found on J.P. Morgan's research website, wwwjpmorganmarkets.com. Coverage Universe: Anal, Hirokazu: Daiwa House Industry (1925) (1925.1), GLP J-REIT (3281) (32811), Haseko Corporation (1808) (1808.T), Hulic (3003) (3003.T), Industrial & Infrastructure Fund (3249) (3249.1), Japan Logistics Fund (8967) (8967.T), Japan Real Estate Investment (8952) (8952.T), Kajima (1812) (1812.1), Mitsubishi Estate (8802) (8802.1), Mitsui Fudosan (8801) (880I.T), NTT Urban Development (8933) (8933.1), Nippon Building Fund (8951) (8951.1), Nippon Prologis REIT (3283) (3283.T), Obayashi (1802) 7 EFTA01148962 Hirokazu Anai Japan Equity Research 07 November 2013 J.P.Morgan (1802.T), Premier Investment (8956) (8956.1), Sekisui House (1928) (1928.T), Shimizu (1803)(1803.T), Sumitomo Realty & Development (8830) (8830.1), Taisei (1801) (1801.1), Tokyo Tatemono (8804) (8804.1), Tokyu Land (8815)(8815.T) J.P. Morgan Equity Research Ratings Distribution, as of September 30, 2013 Overweight Neutral (buy) (hold) Underweight (sell) J.P. Morgan Global Equity Research Coverage 43% 44% 12% IB clients* 57% 497. 39% JPMS Equity Research Coverage 42% 50% 8% IB clients* 76% 65% 57% *Percentage of investment banking clients in each rating category. For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category: our Neutral rating falls into a hold rating category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation arc not included in the table above. Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for covered companies, please see the most recent company-specific research report at hne://www.inmorg,anmarkets.com contact the primary analyst or your J.P. Morgan representative, or email research.disclosure.inquiries©jpmorgan.com. 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