Open House Group Co., Ltd. (3288.T) fair value

ACCE thesis

Open House Group builds and sells detached houses and condominiums in Japan under its own brands, and it also runs a sizeable brokerage and renovation business around them. The company's edge is its scale in Japan's fragmented homebuilding market and the ability to convert land and buyer demand into repeatable, mid-priced housing. Revenue growth of 12.8% and a return on equity of 20.2% are unusually strong for a Japanese builder, while the stock trades at 7.8 times trailing earnings and 10.1 times forward, a discount that the market may not be reflecting fully. The obvious question for a deeper look is whether that growth can hold through a higher-rate environment that tends to squeeze mortgage affordability, and whether the 10.9% operating margin, thin for a developer, is holding up against rising land and construction costs.