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SBI Leasing Services(5834 TSE Growth)

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Forms and sells investment funds for operating lease business

Formation and Sale of Operating Lease Investment Funds
SBI Leasing Services Group consists of the company and a consolidated subsidiary in Singapore. The company forms and sells funds that invest in the operating lease business for aircraft, ships and other assets.

The group's net sales are classified into the fund business and the general aviation business, while the fund business is further classified into Japanese operating lease (JOL) products and Japanese operating lease with call option (JOLCO) products. In fiscal year ended March 2022, JOL products accounted for 86.3% of net sales, JOLCO products for 11.5%, and the general aviation business for 2.2%.

Fund Business
Through a special purpose company, the company acquires large depreciable assets such as aircraft and marine vessels with capital contributions from investors and loans from financial institutions, and leases them to clients including airlines and ship operators in the form of operating leases.

The company is involved in the formation and management of lease business projects, the sale of leased properties to voluntary associations and the sale of equity interest in silent partnerships to investors. It acquires capital gains by selling the leased asset on the market.

The operating lease business tends to be loss-making in the first half of the lease term, as depreciation expenses are incurred in advance of revenues using the declining balance method. Meanwhile, lower depreciation expenses lead to profitability in the second half of the lease term. Upon lease expiration, the leased asset can be sold for recovery of the investment and capital gain. Investors can defer their tax liability by taking the deficit in the first half of the lease.

General Aviation Business
The company provides a series of services ranging from formation and management lease projects with general aviation operators as lessees to selling the leases to investors. It also sells and leases small aircraft, including helicopters, to operators. Specific leasing projects include medevac helicopters and small aircraft for inter-island transport.













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