Japan Experts, Extraordinary Performance, Astris Advisory Japan

Astris Advisory Japan

Japan Experts, Extraordinary Performance

Our Corporate Advisory service is designed to give clients access to a wider range of investors. These include Japan specialists as well as global investors. The goal is to help achieve a fair equity valuation.

Equity Bottom-Up

<ul><li>Expansion plans on track – Q1 FY3/27 results were softer than expected; despite sales growth driven by new hotel openings, profitability declined YoY reflecting higher variable rents, softer revenue at some existing hotels, and rising operating and new- opening costs.</li><li>FY guidance was maintained, indicating expectations of stable inbound demand going forward.</li><li>The key takeaway was that management remains focused on reaching its Medium-Term Management Plan of 150 hotels and 20,000 rooms in FY3/31; the company has contracted to open eight new hotels in Q1 FY3/27 (versus two in Q1 FY3/26), bringing the running total to 126 hotels with 17,869 rooms.</li></ul>

Expansion plans on track – Q1 FY3/27 results were softer than expected; despite sales growth driven by new hotel openings, profitability declined YoY reflecting higher variable rents, softer revenue at some existing hotels, and rising operating and new- opening costs.FY guidance was maintained, indicating expectations of stable inbound demand going forward.The key takeaway was that management remains focused on reaching its Medium-Term Management Plan of 150 hotels and 20,000 rooms in FY3/31; the company has contracted to open eight new hotels in Q1 FY3/27 (versus two in Q1 FY3/26), bringing the running total to 126 hotels with 17,869 rooms.

Polaris Holdings (3010 JP) - Expansion Building Scale and Visibility

<ul><li>Double-digit growth strategy – Led by capable management and a strategy centered on sustaining double-digit growth, we view the earnings outlook for Polaris Holdings as positive.</li><li>Management aims to outperform the market by 1) increasing its domestic footprint organically and via M&amp;A, 2) driving domestic demand via brand integration and loyalty programs, and 3) portfolio repositioning by diversifying to resilient geographic regions and increasing the brand portfolio to apartment hotels, onsen/lifestyle, and resort hotels.</li><li>The core message is that growth should be sustained despite near-term volatility in inbound demand, supported by substantial expansion opportunities in the domestic market as a leading hotel operator.</li></ul>

Double-digit growth strategy – Led by capable management and a strategy centered on sustaining double-digit growth, we view the earnings outlook for Polaris Holdings as positive.Management aims to outperform the market by 1) increasing its domestic footprint organically and via M&amp;A, 2) driving domestic demand via brand integration and loyalty programs, and 3) portfolio repositioning by diversifying to resilient geographic regions and increasing the brand portfolio to apartment hotels, onsen/lifestyle, and resort hotels.The core message is that growth should be sustained despite near-term volatility in inbound demand, supported by substantial expansion opportunities in the domestic market as a leading hotel operator.

Polaris Holdings (3010 JP) - Domestic Expansion Supporting Sustained Growth

<ul>
<li>Consistent growth strategy – Polaris beat FY3/26 guidance and expectations with a strong showing in Q4 FY3/26 amid an evolving market environment, with existing RevPAR up 12.3% YoY, and sustaining double-digit underlying OPM.</li>
<li>With the Minacia PMI completed, the company has built a solid foundation to pursue growth initiatives, encompassing a multifaceted approach that includes market-share gains through new hotel openings, diversification of hotel brands and portfolio with a pivot towards more upscale offerings, and the stimulation of domestic demand.</li>
<li>Management is also taking a balanced approach to targeting growth and shareholder returns by maintaining flat dividends YoY (DPS increased YoY to ¥5 in FY3/26).</li>
</ul>


Consistent growth strategy – Polaris beat FY3/26 guidance and expectations with a strong showing in Q4 FY3/26 amid an evolving market environment, with existing RevPAR up 12.3% YoY, and sustaining double-digit underlying OPM.
With the Minacia PMI completed, the company has built a solid foundation to pursue growth initiatives, encompassing a multifaceted approach that includes market-share gains through new hotel openings, diversification of hotel brands and portfolio with a pivot towards more upscale offerings, and the stimulation of domestic demand.
Management is also taking a balanced approach to targeting growth and shareholder returns by maintaining flat dividends YoY (DPS increased YoY to ¥5 in FY3/26).


Polaris Holdings (3010 JP) - Management Demonstrating Clear Commitment to Growth

<ul><li>Despite a decline in Chinese visitor numbers from November 2025, Polaris reported underlying operating profit growth (ex-goodwill) of 122.5% for Q1-3 FY3/26 results.</li><li>In order to maintain robust earnings momentum, the company has embarked on a strategy of gaining market share by 1) accelerating hotel openings, 2) portfolio repositioning by increasing exposure to resilient geographic regions, and growing the brand portfolio to apartment hotels, onsen/lifestyle, and resort hotels, and 3) growing domestic demand by brand integration.</li><li>The current plan now positions the company as the eighth-largest operator of limited- service hotels in Japan. </li></ul>

Despite a decline in Chinese visitor numbers from November 2025, Polaris reported underlying operating profit growth (ex-goodwill) of 122.5% for Q1-3 FY3/26 results.In order to maintain robust earnings momentum, the company has embarked on a strategy of gaining market share by 1) accelerating hotel openings, 2) portfolio repositioning by increasing exposure to resilient geographic regions, and growing the brand portfolio to apartment hotels, onsen/lifestyle, and resort hotels, and 3) growing domestic demand by brand integration.The current plan now positions the company as the eighth-largest operator of limited- service hotels in Japan. 

Polaris Holdings (3010 JP) - Share Gains to Fuel Earnings Momentum

<ul><li>Despite some one-off inbound travel disruption during June to August 2025, Q1-2 FY3/26 results demonstrated strong and sustained YoY growth.</li><li>We interpret this as Polaris’s earnings stream becoming more resilient and predictable, with improved quality of earnings.</li><li>FY3/26 guidance has been upwardly revised, indicating robust earnings visibility for Q3-4 FY3/26, and the company has increased DPS to ¥4.0 from ¥3.0, with capital allocation demonstrating a well-structured balance between active growth investments and improving shareholder returns. </li></ul>

Despite some one-off inbound travel disruption during June to August 2025, Q1-2 FY3/26 results demonstrated strong and sustained YoY growth.We interpret this as Polaris’s earnings stream becoming more resilient and predictable, with improved quality of earnings.FY3/26 guidance has been upwardly revised, indicating robust earnings visibility for Q3-4 FY3/26, and the company has increased DPS to ¥4.0 from ¥3.0, with capital allocation demonstrating a well-structured balance between active growth investments and improving shareholder returns. 

Polaris Holdings (3010 JP) -  Durable Earnings Point to Improved Earnings Quality

Japan

Polaris Holdings Co., Ltd. operates and develops hotels. The Company provides catering, lodging, and other services. Polaris Holdings also operates real estate development.

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Polaris Holdings (3010 JP)