While having battled some major setbacks in the past two years, including fraudulent misrepresentation of fuel economy and emissions readings for many of its trucks, Toyota subsidiary Hino Motors in Japan has come up with a real estate deal that warm the cockles of even the fiercest of Sydney’s land sharks.
The loss making Japanese truck company has served up an abject lesson in land trading skills by announcing it has offloaded some land adjacent to its headquarters outside Tokyo to register a return of close to 50000 per cent the book value of the plot.
The company recently sold the land which had a book value of about ¥100mn ($AUD 1 million) and inked the deal for the 114,000sq metre piece of land for a whopping for approximately ¥50billion ($AUD 528 billion)
Japanese land brokers have labelled the book value of the land as grossly under valued and some say the deal highlights the way i value can be trapped inside Japanese corporations, which have often not marked the value of assets to their full market price.
Some activist investors are increasingly judging Japanese companies poorly as a result of many of them like Hino, undervaluing o their assets and refusing to countenance sales of assets including property.
Hino’s windfall profit on the land sale has been called “an extreme example of quite how undervalued some property assets have become”, by one market analyst.
The analyst said that ‘corporate Japan doesn’t sweat its assets, it deep freezes them.’
When it announced the planned land sale in December 2022 it indicated the book value was just ¥10mn, which would barely cover the cost of a one-bedroom apartment in the area. The truck group had raised the book value of the land to ¥100mn when it announced the completion of the sale last week.
Hino indicated the difference was as a result of “a careful examination” of the land but would not comment on why retire was such a discrepancy.
The 50.1 per cent owner of Hino, the Japanese automotive giant Toyota, also refused to comment on the windfall sale.
The Japanese truck maker said the deal would lead it to record an extraordinary profit for the second quarter of its fiscal which runs from 1 April 30 March.
Analysts say that Hino is not the only Japanese automotive group to be potentially sitting on highly valued property assets, which many land banked in the time before the move to zero emission and battery electric. powertrains. In the next wave of battery electric machines truck makers are indicating there may no longer be the need for as many factories and the land to house them on.
One analyst, Seth Fischer, of Oasis Management, who is a long time campaigner to force Japanese companies to properly value land assets and to release the locked up value of assets indicated that many Japanese companies don’t often place book values that are much lower than market value on significant assets.
“This is a very good example of the whole latent value story in Japan,” he said.
Hino and rival Daimler owned truck maker Fuso said in May that would potentially ‘merge’ operations, in a bid to remain competitive and survive into the future where environmental restrictions will place enormous development cost on truck makers.