Nomura Real Estate Holdings (3231.T): Model Update

Citi fine-tunes its forecasts for Nomura Real Estate Holdings (3231.T) in light of Q2 results, with the target price unchanged at 1,200 yen and the rating maintained at Buy. The target price is set on an FY3/27E EV/EBITDA multiple of 14.5x, 0.5 sigma above the three-year average of 13.5x, reflecting inflation and higher interest rate expectations; it equates to an FY3/27E PER of 11.9x, a PBR of 1.21x and P/NAV after tax of 0.96x. At the current price of 895.7 yen, expected share price return is 34.0%, dividend yield 4.9% and total return 38.9%. Although the firm is seen lacking strong drivers of profit growth over the next few years, well-balanced growth is anticipated from sales of built-for-sale condos and for-sale real estate and from expansion of the asset management and brokerage businesses. Assuming the condo market correction is mild, the business portfolio should generate relatively stable profit growth. Risks include trends in the office leasing and real estate investment mark