Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

Independent Leading Corporate Governance Research

Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

<ul>
<li>TSE will require companies with P/Bs below 1x to disclose improvement plans, urging them to shift to management that reflects an awareness of their cost of capital and stock price.</li>
<li>The good thing about this TSE request is that "cost of capital" will be widely recognized by companies. Companies can no longer easily reject shareholder proposals regarding cost of capital.</li>
<li>It should also be an opportunity for management to evaluate its own corporate value and compare it to market value and consider whether it should remain listed or go private.</li>
</ul>


TSE will require companies with P/Bs below 1x to disclose improvement plans, urging them to shift to management that reflects an awareness of their cost of capital and stock price.
The good thing about this TSE request is that "cost of capital" will be widely recognized by companies. Companies can no longer easily reject shareholder proposals regarding cost of capital.
It should also be an opportunity for management to evaluate its own corporate value and compare it to market value and consider whether it should remain listed or go private.


The Effect of the TSE Requesting an Improvement Plan from a Company with a P/B Below 1x Is....

<ul>
<li>Few companies have generally achieved significant growth since listing, and about half of the companies are below their market capitalization at the IPO, which is challenges in TSE Growth Market.</li>
<li>Even if the number of companies subject to such shares is limited, the use of multiple voting shares shouldn't be ruled out if the dilution of voting rights hinders fundraising.</li>
<li>The key to solving the challenges of TSE Growth Market, where few companies have growth potential and have financing needs, is the ability of management to realize growth potential post-listing.</li>
</ul>


Few companies have generally achieved significant growth since listing, and about half of the companies are below their market capitalization at the IPO, which is challenges in TSE Growth Market.
Even if the number of companies subject to such shares is limited, the use of multiple voting shares shouldn't be ruled out if the dilution of voting rights hinders fundraising.
The key to solving the challenges of TSE Growth Market, where few companies have growth potential and have financing needs, is the ability of management to realize growth potential post-listing.


What's Solution for TSE Growth Market, Where IPOs Became the Goal and Lost Growth Due to Burnout?

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post Holdings (6178 JP)</a> aims to sell around US$9bn worth of  <a href="https://www.smartkarma.com/entities/japan-post-bank-co-ltd" target="_blank" data-smartkarma-citation="entities:838:1" rel="noopener">Japan Post Bank (7182 JP)</a>, trimming its stake by a third.</li>
<li>We have looked at the deal in our previous notes, <a href="https://www.smartkarma.com/insights/japan-post-bank-placement-deal-structure-past-deals-index-buyback" target="_blank" data-smartkarma-citation="insights:96666" rel="noopener">Japan Post Bank Placement - Deal Structure, past Deals, Index, Buyback</a> and <a href="https://www.smartkarma.com/insights/japan-post-bank-placement-misbehaving-still-has-time-to-correct-a-look-at-past-deals" target="_blank" data-smartkarma-citation="insights:97201" rel="noopener">Japan Post Bank Placement - Misbehaving</a>. </li>
<li>In this note, we talk about the updates since our last note and have a look at the post pricing performance of a few more deals.</li>
</ul>



Japan Post Holdings (6178 JP) aims to sell around US$9bn worth of  Japan Post Bank (7182 JP), trimming its stake by a third.
We have looked at the deal in our previous notes, Japan Post Bank Placement - Deal Structure, past Deals, Index, Buyback and Japan Post Bank Placement - Misbehaving. 
In this note, we talk about the updates since our last note and have a look at the post pricing performance of a few more deals.


Japan Post Bank Placement -  Still Misbehaving - Post-Pricing Performance of Some More Deals

<ul>
<li>More companies have made progress in the last 6 months as more companies have made only human capital policies. Specific measures will probably not become visible until April or later.</li>
<li>If companies are required to disclose their policies in a hasty manner, they may end up with a list of unrealistic measures in addition to policies that have no substance.</li>
<li>Companies are expected to spend the next year disseminating their human capital policies internally and implementing specific human capital measures to strengthen their own competitiveness.</li>
</ul>


More companies have made progress in the last 6 months as more companies have made only human capital policies. Specific measures will probably not become visible until April or later.
If companies are required to disclose their policies in a hasty manner, they may end up with a list of unrealistic measures in addition to policies that have no substance.
Companies are expected to spend the next year disseminating their human capital policies internally and implementing specific human capital measures to strengthen their own competitiveness.


Human Capital Measures Should Not Be a Case Of "Plowing the Field and Forgetting the Seeds”

<ul>
<li>There is concern that if the statements in Annual Securities Report, a legal document, are not questioned as misstatements, they will be left unwritten with no hope of being realized.</li>
<li>Most companies didn't have human capital policy as of last July. It’s welcome that more companies will take this opportunity to shift to a strategy of adding value through growth-investments.</li>
<li>Companies  are required to answer  the alignment of management and human resource strategies, whether they can reasonably demonstrate path to future growth in corporate value while investing in human capital.</li>
</ul>


There is concern that if the statements in Annual Securities Report, a legal document, are not questioned as misstatements, they will be left unwritten with no hope of being realized.
Most companies didn't have human capital policy as of last July. It’s welcome that more companies will take this opportunity to shift to a strategy of adding value through growth-investments.
Companies  are required to answer  the alignment of management and human resource strategies, whether they can reasonably demonstrate path to future growth in corporate value while investing in human capital.


Companies that Adequately Disclose Human Capital Must Be Performing Well on Human Capital Investment

Japan

The TOPIX, also known as the Tokyo Stock Price Index, is a capitalization-weighted index of all companies listed on the First Section of the Tokyo Stock Exchange. The index is supplemented by the subindices of the 33 industry sectors. The index calculation excludes temporary issues and preferred stocks, and has a base value of 100 as of January 4, 1968.

TSE Tokyo Price Index TOPIX (TPX INDEX)

The Effect of the TSE Requesting an Improvement Plan from a Company with a P/B Below 1x Is....

I would like to discuss the summary of the materials disclosed by the TSE on February 15 for the 8th Follow-up Meeting on the Revision of Market...

Metrical Inc

What's Solution for TSE Growth Market, Where IPOs Became the Goal and Lost Growth Due to Burnout?

I would like to discuss "The use of multiple voting shares" proposed by METI at the "8th Follow-up Meeting on the Revision of Market Segmentation."

Metrical Inc

Japan Post Bank Placement - Still Misbehaving - Post-Pricing Performance of Some More Deals

Japan Post Holdings aims to sell around US$9bn worth of Japan Post Bank (7182 JP), trimming its stake by a third. In this note, we look at the...

Sumeet Singh

Human Capital Measures Should Not Be a Case Of "Plowing the Field and Forgetting the Seeds”

I would like to discuss the issues on the Nikkei article, "80% of companies lack measures in human capital management: survey by Sumitomo Mitsui...

Metrical Inc

Companies that Adequately Disclose Human Capital Must Be Performing Well on Human Capital Investment

I would like to discuss the issues of the Nikkei article on February 12, "Looming Mandatory Reporting: Is Your Company's Human Capital Disclosure...

Metrical Inc