| Valuation method | Value, ¥ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 1104.66 | -8 |
| Intrinsic value (DCF) | 252.00 | -79 |
| Graham-Dodd Method | 1721.29 | 44 |
| Graham Formula | 245.78 | -79 |
Makoto Construction Co., Ltd. is a Japanese real estate company specializing in the design, construction, and sale of detached houses, including ready-made, contracted, and custom-built homes, as well as condominiums. Headquartered in Sakai, Japan, the company also engages in real estate brokerage, rental and property management of office buildings, condominiums, and apartments, along with loan funding activities. Founded in 1991, Makoto Construction operates primarily in Japan's residential real estate market, catering to homeowners seeking quality housing solutions. The company’s diversified business model, which includes both construction and property management, positions it as a key player in Japan’s real estate sector. With a market capitalization of approximately ¥1.25 billion, Makoto Construction serves a niche but stable segment of Japan’s housing market, benefiting from urbanization trends and demand for residential properties. Its integrated approach—combining construction, brokerage, and rental services—enhances its competitive edge in a market dominated by larger conglomerates.
Makoto Construction presents a mixed investment profile. On the positive side, the company operates in Japan’s stable residential real estate market, with a diversified revenue stream from construction, brokerage, and property management. Its modest beta of 0.148 suggests lower volatility compared to the broader market, making it a relatively defensive play. However, the company’s negative operating cash flow (-¥11.5 million) and high total debt (¥1.46 billion) relative to its cash reserves (¥1.39 billion) raise liquidity concerns. The diluted EPS of ¥65.12 and a dividend yield based on a ¥25 per share payout indicate modest profitability. Investors should weigh the company’s niche market positioning against its financial leverage and cash flow challenges before considering an investment.
Makoto Construction competes in Japan’s fragmented residential real estate and construction sector, where it faces competition from both large conglomerates and regional players. The company’s competitive advantage lies in its integrated business model, combining construction with property management and brokerage services, which allows it to capture multiple revenue streams from a single customer base. However, its small market cap limits its ability to compete on scale with industry giants like Daiwa House or Sekisui House. Makoto’s focus on detached houses and condominiums differentiates it from competitors specializing in large-scale commercial or multi-family developments. The company’s local expertise in Sakai and surrounding regions provides a regional moat, but its lack of nationwide presence restricts growth opportunities. Financially, its high debt-to-cash ratio could hinder expansion or resilience in economic downturns, unlike larger peers with stronger balance sheets. While Makoto’s niche focus offers stability, its long-term competitiveness depends on improving operational efficiency and managing leverage.