Category

ESG

Feb 21
0

Daily Brief ESG: M&As Due to Restructuring of Business Portfolios Have Finally Begun to Increase and more

By | Daily Briefs, ESG

In today’s briefing:

  • M&As Due to Restructuring of Business Portfolios Have Finally Begun to Increase

M&As Due to Restructuring of Business Portfolios Have Finally Begun to Increase

By Aki Matsumoto

  • Listed subsidiaries and affiliates are now required by the TSE to disclose their basic thoughts on their business portfolio strategy and the rationale for being listed.
  • M&A is expected because Japanese companies have not taken effective steps to expand their corporate value as cash on hand is building up and ROE is sluggish.
  • M&A is likely to be mostly conducted by domestic companies or investment funds as a result of industry restructuring and business portfolio restructuring in Japan.

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Feb 18
0

Daily Brief ESG: Going Private Is Not a Problem for a Special Company and more

By | Daily Briefs, ESG

In today’s briefing:

  • Going Private Is Not a Problem for a Special Company, but a Common Problem for All Listed Companies

Going Private Is Not a Problem for a Special Company, but a Common Problem for All Listed Companies

By Aki Matsumoto

  • While the homework imposed on companies has been increasing year by year, TSE’s market restructuring and “request to raise P/B” have made companies directly aware of the cost of listing.
  • MBO is a company’s choice to go private as a result of the cost of maintaining a public listing. Many companies have yet to reach this conclusion.
  • The conversion of listed subsidiaries into wholly owned subsidiaries is a conclusion that has finally been reached; 230 listed subsidiaries will have to come to some conclusion eventually.

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Feb 16
0

Daily Brief ESG: Companies Should Consider All Options and more

By | Daily Briefs, ESG

In today’s briefing:

  • Companies Should Consider All Options, Not Just Maintaining Their Listing

Companies Should Consider All Options, Not Just Maintaining Their Listing

By Aki Matsumoto

  • Besides not showing concrete measures to increase corporate value, the feasibility of the plan and the valuation at that time are often not verified, so disclosures that don’t add up.
  • Listed subsidiaries and equity method affiliates account for 31.8% of all listed companies. The company is still in the process of restructuring its business portfolio.
  • The growth of each company’s corporate value and stock market capitalization will be determined by how quickly issues that have not been initiated so far are resolved.

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Feb 14
0

Daily Brief ESG: Companies with More Cash on Hand Are Expected to Use Cross-Shareholdings to Repurchase Shares and more

By | Daily Briefs, ESG

In today’s briefing:

  • Companies with More Cash on Hand Are Expected to Use Cross-Shareholdings to Repurchase Shares

Companies with More Cash on Hand Are Expected to Use Cross-Shareholdings to Repurchase Shares

By Aki Matsumoto

  • Stock sale allows brokers to pass on to the company the attraction of being able to diversify its shareholders, and the cross-shareholding sales scheme allows them to obtain higher commissions.
  • One of the solutions that companies have come up with in the absence of improved return on capital is to reduce their policy shareholdings.
  • The use of share repurchases to buy back cross-shareholdings is a very good way to improve return on capital because it also reduces the amount of cash on hand.

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Feb 12
0

Daily Brief ESG: Activist Investors with Increased AUM Will Also Likely Target Larger Companies for Investment and more

By | Daily Briefs, ESG

In today’s briefing:

  • Activist Investors with Increased AUM Will Also Likely Target Larger Companies for Investment

Activist Investors with Increased AUM Will Also Likely Target Larger Companies for Investment

By Aki Matsumoto

  • Engagement begins only when there is a common understanding that “the management goal is to increase corporate value and shareholder interest.
  • Because of differences in the level of understanding among listed companies, not all companies are able to smoothly discuss solutions to management issues based on the same common understanding.
  • While ROA improved moderately, ROE improved slightly, indicating that more and more companies are committed to shareholder returns.

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Feb 11
0

Daily Brief ESG: The Strategy Is More Important than Whether the Mid-Term Business Plan and the Actual Are Blurred and more

By | Daily Briefs, ESG

In today’s briefing:

  • The Strategy Is More Important than Whether the Mid-Term Business Plan and the Actual Are Blurred

The Strategy Is More Important than Whether the Mid-Term Business Plan and the Actual Are Blurred

By Aki Matsumoto

  • Investors want to see if management can be entrusted with strategies to increase certainty of achieving plans, to build foundations for growth to expand corporate value, and to manage company.
  • The problem is that the disclosed contents of the mid-term management plan do not include necessary information, or the goals themselves are not what investors are looking for.
  • Before disclosing medium-term management plans, companies should estimate how much return on capital can be achieved by the plan and how much the corporate value and stock price will be.

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Feb 09
0

Daily Brief ESG: Investors Are Disappointed that ROE Is Not Improving and more

By | Daily Briefs, ESG

In today’s briefing:

  • Investors Are Disappointed that ROE Is Not Improving, yet Companies Can’t Disclose to Improve It

Investors Are Disappointed that ROE Is Not Improving, yet Companies Can’t Disclose to Improve It

By Aki Matsumoto

  • Companies with high stock price valuations are often characterized by high foreign shareholdings and high return on capital, and valuations cannot be raised simply by disclosure without improving profitability.
  • Companies that proactively disclosed to TSE requests were those with large market capitalization and high foreign ownership. They usually try to use their cash effectively for investment and shareholder returns.
  • Raising profit margin is the best way to improve capital profitability. It’s clear that challenge lies in restructuring the business portfolio and reorganizing the industry, which few companies could do.

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Feb 06
0

Daily Brief ESG: “TSE’s Request” and Dissolution of Cross-Shareholdings Are Behind the Increase in Share Repurchases and more

By | Daily Briefs, ESG

In today’s briefing:

  • “TSE’s Request” and Dissolution of Cross-Shareholdings Are Behind the Increase in Share Repurchases

“TSE’s Request” and Dissolution of Cross-Shareholdings Are Behind the Increase in Share Repurchases

By Aki Matsumoto

  • Dividends are still the mainstay of shareholder returns, but shareholder returns, including share buybacks, became a standard “P/B raising measure,” which is why share buybacks increased on a company-by-company basis.
  • Share repurchases increased significantly this year as large cross-holding share dissolutions were undertaken through share repurchases. Share buybacks will continue increasing due to share repurchases for dissolution of cross-shareholdings.
  • Companies that have been reluctant to retire treasury stock are finally moving to do so. This is expected to be a change of the companies.

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Feb 04
0

Daily Brief ESG: Seeing Disappointing Disclosures Raises Question of What Was the Skill Matrix of Board Directors? and more

By | Daily Briefs, ESG

In today’s briefing:

  • Seeing Disappointing Disclosures Raises Question of What Was the Skill Matrix of Board Directors?

Seeing Disappointing Disclosures Raises Question of What Was the Skill Matrix of Board Directors?

By Aki Matsumoto

  • With about 40% of companies having a P/B of less than 1x, the problem is that many disclosures do not understand management to create value and increase the stock price.
  • It’s difficult for investors’ voices to reach small cap companies and companies with still high defensive walls of cross-held shares, which are not easily targeted for investment by institutional investors.
  • Independent directors should be appointed with skillset to participate in developing management plans and scrutinize them for reasonableness and whether the projected corporate value is gapped from that of investors.

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Feb 03
0

Daily Brief ESG: Easier to Raise Listing Criteria and more

By | Daily Briefs, ESG

In today’s briefing:

  • Easier to Raise Listing Criteria, but More Difficult to Encourage Growth of Companies Already Listed

Easier to Raise Listing Criteria, but More Difficult to Encourage Growth of Companies Already Listed

By Aki Matsumoto

  • There is a need to change the mindset of company managers who consider IPO as a goal and not a way to grow after the listing.
  • The listing criteria for TSE Growth Market will be raised as early as April 2026. It’s clear that the current listing criteria are far from liquid enough to invest in.
  • For companies that are already listed, some rule should be established to either de-list them because they cannot bear the listing cost or to increase their market capitalization through M&As.

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