Daiwa House Industry: Price target raised by 9.41% to 4,512.48

The average annual price target for Daiwa House Industry (TYO:1925) has been revised to 4,512.48 per share. This represents a 9.41% increase from the previous estimate of 4,124.20 on August 31, 2023.

This target is an average of several projections provided by analysts. The most recent targets range from a minimum of 4,050.10 to a maximum of 5,040.00 per share. The average target price represents a 17.02% increase from the last reported closing price of 3,856.00.

I find this projection quite optimistic, considering the current conditions of the Japanese real estate market. Do the fundamentals really justify such an increase?

Daiwa maintains a dividend yield of 3.50%

At the most recent price, the company's dividend yield is 3.50%. Additionally, its dividend payout ratio is 0.27, indicating that the company only distributes 27% of its earnings as dividends. A ratio below 0.5 usually means that the company retains earnings to invest in growth.

The 3-year dividend growth rate is 0.50%, demonstrating a modest but sustainable increase.

What about the sentiment of the funds?

There are 291 funds or institutions reporting positions in Daiwa House Industry, an increase of 2 owners (0.69%) in the last quarter. The average weight of the portfolio of all funds dedicated to 1925 is 0.25%, an increase of 35.03%. Total shares held by institutions increased in the last three months by 4.91% to 56,356,000 shares.

Large funds seem to be accumulating positions, which could be a bullish signal. However, I wonder if this institutional confidence is justified or if we are facing a bubble in the making.

What are other shareholders doing?

Vanguard Total International Stock Index Fund holds 8,616,000 shares, representing 1.31% of the company. In its previous statement, it reported 8,464,000 shares, which represents an increase of 1.76%.

Vanguard Developed Markets Index Fund Admiral Shares owns 5,102,000 shares, representing 0.78% ownership. This marks an increase of 3.75% compared to its previous statement.

iShares Core MSCI EAFE ETF holds 3,264,000 shares, representing a 0.50% ownership, increasing its position by 1.12%.

Vanguard Global ex-U.S. Real Estate Index Fund Admiral holds 3,136,000 shares (0.48%), slightly decreasing its previous position by 0.53%.

iShares MSCI Japan ETF has 1,930,000 shares (0.29%), increasing its position by a significant 7.72%.

These institutional movements could be artificially driving the stock price. How long will this trend continue before we see a correction?