On Tuesday, CLSA upgraded shares of Haseko Corporation (1808:JP), Japan's leading condominium construction firm, from a "Hold" rating to "Outperform." Accompanying this upgrade, the firm also increased its price target for Haseko from JPY1,800 to JPY2,200, indicating a positive outlook for the company's financial performance.
The upgrade comes with the anticipation that Haseko will revise its net profit guidance downward as it reports its third-quarter financial results for the fiscal year ending March 2025. Despite the expected report of extraordinary losses and subdued condominium sales for the fiscal year 2025, CLSA maintains a positive stance on the company's future.
CLSA's optimism is partly based on the expectation that Haseko's management plans to enhance shareholder returns by increasing the dividend payout ratio from 40% to 50% starting from the fiscal year ending March 2026. This strategic move is seen as a commitment to improving value for shareholders.
The new price target set by CLSA suggests a 13% implied upside from the previous target, reinforcing the firm's confidence in Haseko's investment potential. Additionally, the projected dividend yield for the fiscal year ending March 2026 is estimated to be 5.6%, further highlighting the potential for shareholder gains.
CLSA's updated earnings model for Haseko takes into account the potential for extraordinary losses and weaker condominium sales in the upcoming fiscal year. Nonetheless, the revised price target and rating upgrade reflect a belief in the company's long-term prospects and its ability to deliver increased shareholder value.
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