Category

ESG

Jun 17
0

Daily Brief ESG: Many Companies Are in Stage of Setting Caps to Ensure that Cash on Hand Grows No More than Necessary and more

By | Daily Briefs, ESG

In today’s briefing:

  • Many Companies Are in Stage of Setting Caps to Ensure that Cash on Hand Grows No More than Necessary

Many Companies Are in Stage of Setting Caps to Ensure that Cash on Hand Grows No More than Necessary

By Aki Matsumoto

  • Improvements in OP margin and Sales/Total Assets have been slow to improve ROE. More companies are including DOE in their dividend policy against the backdrop of increasing cash on hand.
  • With costs expected to increase amid rising prices, sales and gross margins need to be raised, and therefore the component costs of investment and high-margin operations need to be raised.
  • Restructuring the business portfolio later to determine cash allocation will not result in effective investment and must result in limited improvement in profit margins on sales.

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Jun 15
0

Daily Brief ESG: One of the Clues to Know How Serious a Company Is About Shifting to Management that Creates Value and more

By | Daily Briefs, ESG

In today’s briefing:

  • One of the Clues to Know How Serious a Company Is About Shifting to Management that Creates Value

One of the Clues to Know How Serious a Company Is About Shifting to Management that Creates Value

By Aki Matsumoto

  • The driver of higher stock valuations is overseas investors, and engagement by overseas investors is likely to have a positive effect on return on capital and stock valuations.
  • In many aspects, companies seem to be unwilling to face shareholders. If they don’t confront shareholders and proceed with management reforms, they will not be able to implement serious initiatives.
  • It can be hypothesized that the behavior of prioritizing control over the AGM over engaging with shareholders provides a clue as to the seriousness of a company’s efforts.

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Jun 12
0

Daily Brief ESG: The Reality of the Concentration of AGM Dates Has Not Changed and more

By | Daily Briefs, ESG

In today’s briefing:

  • The Reality of the Concentration of AGM Dates Has Not Changed

The Reality of the Concentration of AGM Dates Has Not Changed

By Aki Matsumoto

  • In 2024, 69.7% of AGMs concentrated on the last three days of June, but in 2025, 79.9% of companies will hold AGMs on the last four days of June.
  • Most companies have established that they provide electronic convocation notices up to three weeks in advance. Meanwhile, only 1/3 of Prime companies provide English translations of all convocation notices.
  • Over 80% of companies hold AGMs in formats that require attendance at the venue to have a say. Only 1.6% hold AGMs where a shareholder can attend and speak online.

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Jun 10
0

Daily Brief ESG: Declining Number of Shares Has Just Begun and more

By | Daily Briefs, ESG

In today’s briefing:

  • Declining Number of Shares Has Just Begun, but Valuations Need to Rise for Market Cap to Grow

Declining Number of Shares Has Just Begun, but Valuations Need to Rise for Market Cap to Grow

By Aki Matsumoto

  • That’s good news when considering that the number of listed shares is declining, which means that the understanding of the cost of capital has spread to some extent among companies.
  • With many companies having excess cash on hand and being able to generate cash from restructuring their business portfolios, the number of listed shares is expected to continue to decline.
  • Since there are only a few companies that global investors can invest in, there is a need to strengthen profitability to increase corporate value to increase market capitalization per company.

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Jun 09
0

Daily Brief ESG: A Reluctance to Confront Shareholders Is at the Root of Many Problems and more

By | Daily Briefs, ESG

In today’s briefing:

  • A Reluctance to Confront Shareholders Is at the Root of Many Problems

A Reluctance to Confront Shareholders Is at the Root of Many Problems

By Aki Matsumoto

  • Until now, listed companies have been reluctant to even lower the minimum shareholder purchase amount for reasons of economic rationality and administrative costs.
  • The same issues underlie reluctance of companies in lowering amount to purchase shares, online AGMs, electronic delivery of text in notice of convocations, and pre-AGM disclosure of annual securities reports.
  • Companies have been focused on controlling AGM rather than facing shareholders to increase their interests. This practice is problem that can lead to slower ROE and excessive cash on hand.

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Jun 06
0

Daily Brief ESG: What the Tokyo Market Needs Is a Metabolism and Replacement with Motivated Managers and more

By | Daily Briefs, ESG

In today’s briefing:

  • What the Tokyo Market Needs Is a Metabolism and Replacement with Motivated Managers

What the Tokyo Market Needs Is a Metabolism and Replacement with Motivated Managers

By Aki Matsumoto

  • The background for raising the maintaining listing criteria was that the current criteria are loose and that many companies aren’t motivated to grow because they consider IPO to be goal.
  • Too long time horizons and previous listing maintenance criteria that might have been manageable did not create a sense of urgency for the company to grow.
  • There’s concern that quality of standard market, to which companies that fail the criteria migrate, will deteriorate, and the entire market will need metabolism and replacement of management through M&A.

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Jun 05
0

Daily Brief ESG: Success Experiences Will Be Necessary for IR to Function and more

By | Daily Briefs, ESG

In today’s briefing:

  • Success Experiences Will Be Necessary for IR to Function

Success Experiences Will Be Necessary for IR to Function

By Aki Matsumoto

  • While TSE will require companies to have IR staff, but most companies disclose that they have IR staff, there is gap with investors who believe that IR is not functioning.
  • The issue is the substance issue, as most companies have disclosed that they have already conducted the information meetings included in the implementation of specific IR activities expected by TSE.
  • The reason why many companies still do not make IR function may be because they do not realize the effect of IR in terms of higher stock valuations.

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Jun 02
0

Daily Brief ESG: Governance Issues Were Not Highlighted and the Win-Win by REIT Sponsors and Investors Continues and more

By | Daily Briefs, ESG

In today’s briefing:

  • Governance Issues Were Not Highlighted and the Win-Win by REIT Sponsors and Investors Continues

Governance Issues Were Not Highlighted and the Win-Win by REIT Sponsors and Investors Continues

By Aki Matsumoto

  • While offering non-serious TOB prices, knowing that the likelihood of TOBs by the activist fund is low, the aim to extract concessions from the REIT and sponsor companies was successful.
  • The governance problem is the composition of the company, which continues to manage off-balance sheet real estate through its subsidiary REIT asset management company.
  • So far, however, governance issues have not received much attention, only confirming the sponsor companies’ willingness to continue REIT control and investors’ benefit from higher REIT stock prices by TOBs.

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May 31
0

Daily Brief ESG: Could It Be that the Unit Share System Has Helped to Turn Away from Growing Shareholder Interests? and more

By | Daily Briefs, ESG

In today’s briefing:

  • Could It Be that the Unit Share System Has Helped to Turn Away from Growing Shareholder Interests?

Could It Be that the Unit Share System Has Helped to Turn Away from Growing Shareholder Interests?

By Aki Matsumoto

  • The reason behind “TSE’s request to lower minimum investment amount to around JPY100,000” is to increase stocks that can be purchased with monthly 100,000 yen of NISA’s installment investment limit.
  • While the share unit system has allowed listed companies to reduce various costs, it has neglected the equal rights of shareholders who own less than one unit of stock.
  • Now that advances in shareholder administrative tools can reduce administrative costs, shareholders could be trade as few as one share and be granted the same rights as a single shareholder.

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May 29
0

Daily Brief ESG: Not the Timing of Annual Securities Report Disclosure and more

By | Daily Briefs, ESG

In today’s briefing:

  • Not the Timing of Annual Securities Report Disclosure, but Rather Company Management Objectives

Not the Timing of Annual Securities Report Disclosure, but Rather Company Management Objectives

By Aki Matsumoto

  • For dialogue with shareholders, annual securities reports should be disclosed in English for overseas investors, who are eager to request the pre-AGM submission and have high demand for this information.
  • To change a company to a mindset of dialogue with shareholders rather than controlling AGM, it needs to have a successful experience in converting management to create value through dialogue.
  • It’ll be interesting to see if the traditional values of companies, which has been accustomed to management that does not face shareholders, can be changed in the coming years.

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