By Takayasu Kitagawa / Yomiuri Shimbun Staff Writer
Major Japanese home builder Daiwa House Industry Co. plans to increase its corporate value through growth investment aimed at capturing rising demand for AI, according to Chairman and CEO Keiichi Yoshii.
"In Japan, AI-related stocks are driving up share prices," Yoshii said during the company's annual general shareholders meeting held Friday in Osaka.
Yoshii also reported that Daiwa House has achieved its net sales and operating profit targets outlined in its 7th medium-term business plan a year ahead of schedule. He boasted about the company's success in achieving 16 consecutive years of dividend increases. This was accomplished by transitioning to a revenue structure encompassing commercial facilities, overseas operations and investments, rather than relying solely on the contracting business, he said.
Meanwhile, uncertainty is increasing over the outlook of housing investment, stemming from factors such as the Middle East conflict and soaring energy prices. "We're facing a tough situation, but we won't stop investing in the future," Yoshii said.
Daiwa House's success in growth investment lies with Sumitomo Densetsu Co., a major electrical construction company it acquired in March through a tender offer.
"We are the only company that has an equipment and installation company within our group — even top-tier general contractors don't have one," Yoshii said when answering a question from a shareholder.
Daiwa House expects demand for the construction of data centers and semiconductor factories to increase due to the growing adoption of AI. Yoshii said such facilities require advanced electrical and air-conditioning systems, stressing that Daiwa House has a significant advantage in "offering integrated proposals to clients covering not only the buildings but also the systems."
Yoshii described Sumitomo Densetsu as a "treasure" to Daiwa House, stressing that the company will drive future value.
At the general meeting, a shareholder asked Yoshii how to boost the company's stock price. "I'm not satisfied with the current price at all," Yoshii responded. "Investors seem to recognize our current value, but they overlook the future value that will stem from our upcoming investments."
Yoshii pointed out that Daiwa House spent about 1.94 trillion yen in strategic investments ahead of schedule during its 7th medium-term business plan. "We have sown the seeds for the future. We aim to explain exactly when the seeds will bear fruit in the 8th medium-term business plan."
There was also a chance for Yoshii to share his honest opinion about meeting expectations of shareholders and employees. "I want to drive our share price higher," he said.
While capital is flowing into AI-related stocks, housing stocks are generally viewed as vulnerable to interest rates and geopolitical risks. Daiwa House is now trying to show the market that it is transcending the label of a simple "home builder" by highlighting infrastructure demand for AI, such as data centers and semiconductor factories, as a new growth area in addition to traditional markets for housing and commercial facilities.
----
This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.
YDN-M0000213630-1