Focusing on Properties for High-net-worth Investors in the Tokyo Area

Providing a one-stop solution focused on properties for the wealthy class
A. D. Works Co., Ltd. began a dyeing business in 1886. A.D.W. began the
Property Division in 1970, making Property its sole business in 1975. After the
Lehman Shock, the company specialized in purchasing used apartment blocks for
less than 300 million yen and selling them to high-net-worth investors after
increasing their value by repairing, lowering vacancy rates, and making the
properties compliant with relevant laws. The company also provides “one-stop”
management and a variety of consulting services. The company has ties with
external agencies in purchasing and sales. The highlights of their business model
are (1) the investors receive quick cash income because apartment trading does
not dry out even in times of recession, and (2) the investors can increase their
financial stability by receiving income from rent of the inventory properties. The
business model is not easily affected by economic conditions, therefore enabling a
stable business expansion.

The Blue Ocean type business is being developed, and provides potential
While most properties in this category are traded directly between private
investors and small property dealers, A.D.W. provides high quality and
differentiated “one-stop solutions” utilizing its reliability, financial strength,
information management, mobility and manpower as a listed company. The
company is already developing the “Blue Ocean type market” without much
competition. However, the company only established its business model in the last
few years and the sales are around 10 billion yen. The company is not fully
utilizing the advantages of their position yet, and has potential for more business
expansion, improvement of profit rate and stabilization of its business
performance.

The keys are higher profit rate, performance stability and money-raising ability
There is enough potential for A.D.W. considering there are 12 trillion yen worth of
privately owned property stock in the Tokyo area (from our data). The company
operates a Blue Ocean type business which has high growth potential and
provides differentiated customer value. The keys for higher profit are (1)
improvement of profit rate and business performance stability by expanding its
business and (2) increasing the fund to purchase more properties. It is highly
important for the company’s future to improve business performance using the
money from last year’s Rights Offering effectively, and successfully obtain larger
funds from their shareholders.

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