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Stocks

IPO Profile: Toubujyuhan to sell more used homes through community-based approach

YAMAGUCHI, Japan -- The Japanese real estate company Toubujyuhan will list its shares on the Jasdaq start-up market of the Tokyo Stock Exchange and Fukuoka Stock Exchange's Q-Board on May 22.

     The company was founded in 1984 and specializes in buying and selling used houses -- renovating them if needed. The company offers used houses at 15 million to 16 million yen ($146,200-155,900), targeting people in their 20s and 30s with an annual income of around 3 million yen who are looking to buy their first home. 

     Renovations include the replacement of bathtubs and kitchen equipment, and wall removals to open up rooms. These are seen to be more environmentally friendly than the complete rebuilding of a house.

     President Toshihiro Ogino comes from western Japan's Yamaguchi Prefecture, where Toubujyuhan is headquartered. He began the business after working for a property company in the Kanto region of greater Tokyo. Toubujyuhan now has a total of 12 branches that provide real estate services. Five are located in Yamaguchi and seven in Fukuoka, in northern Kyushu.

     Ogino said the company's sales representatives have been taking a community-oriented, one-stop approach, which means they are responsible from the purchase of used properties all the way to their resale. Ogino said this is the company's strength. He also said that the sales reps hardly make mistakes, as they have thorough knowledge of local property prices.

     For the year ending May 2014, Toubujyuhan expects to sell about 260 used houses, up more than 50 from the previous fiscal year. The property company's parent-only sales appear set to rise 18% on the year to 4.2 billion yen, while its net profit is likely to have gone up 35% to 202 million yen. Ogino expressed confidence in the company's growth, given that Japan has 20 million used houses that are 20-40 years old.

     Toubujyuhan aims to raise roughly 300 million yen from the public offering of 270,000 shares. The company also plans secondary sales of 140,000 shares, of which 53,000 are offered by over-allotment through a third-party share allocation. The company intends to use up to about 60 million yen to buy used houses and open new stores, and plans to open two new stores per year.

     The company is placing a high priority on distributing profits to shareholders while maintaining stable dividends. Toubujyuhan's annual dividend is expected to be 16 yen for fiscal 2013.

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