Wall Street analysts have assigned their highest rating to this Japanese real estate company and expect double-digit sales growth in the next couple of years.
Mitsubishi Estate (OTC: MITEY)
from Capitalist Times
Japan’s equity market offers respectable values at this juncture. The Tokyo Stock Price Index trades at about 1.28 times book value—not a trough valuation, by any stretch of the imagination, but much lower than its long-term average of 1.64.
Corporate earnings have also held their own, with members of the Tokyo Stock Price Index growing their second-quarter net income by 3% from year-ago levels. In addition, nominal employee compensation rose by 1.6% from year-ago levels in the second quarter, while labor force participation also ticked up to 59.5% in August.
Asset values have also increased, with real estate prices in central Tokyo posting big gains.
Official government estimates indicate that land prices ticked up by 4.7% relative to the second quarter of 2013. Our positive outlook for Japanese equities remains undimmed for patient investors who could reap the rewards if the Abe government manages to end deflation.
Although Mitsubishi Estate (Tokyo: 8802; OTC: MITEY) has tumbled significantly from last year’s high, the stock remains a good bet on Japan’s efforts to restructure its economy and drive inflation.
The blue-chip company owns and manages about 30 office buildings in the Marunouchi area, a prestigious business district near Tokyo Station. With vacancy rates declining in this area, Mitsubishi Estate has pushed through rent increases of 10% to 20% for new tenants—a positive for future earnings. At the same time, management isn’t in a hurry to book up all the company’s available square footage; all indicators point to rents continuing their climb in coming quarters.
And with a debt-to-equity ratio of 0.8, the real estate giant boasts a strong financial position relative to its peers.
Mitsubishi Estate’s American depositary receipt continues to rate a buy up to US$30 for patient investors with a longer time horizon.
Yiannis G. Mostrous, Capitalist Times, www.capitalisttimes.com, 888-960-2759, October 23, 2014