Category

ESG

Jan 15
0

Daily Brief ESG: The Good News Is that Companies May Change in Less than 17 Years! and more

By | Daily Briefs, ESG

In today’s briefing:

  • The Good News Is that Companies May Change in Less than 17 Years!

The Good News Is that Companies May Change in Less than 17 Years!

By Aki Matsumoto

  • After 17 years of failure to change, Sapporo’s policy change was triggered by the fact that sales in beer business were beginning to recover after the long tunnel of deflation.
  • Regulators, weighed down by the growing number of companies with low profitability and declining competitiveness, want to change the situation, even if it means leveraging the power of activist investors.
  • Many companies bottomed out due to exiting the deflationary economy, and TSE requests prohibit companies from ignoring investors’ proposals, which makes it easier for companies to change.

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Jan 13
0

Daily Brief ESG: “Danger Past and more

By | Daily Briefs, ESG

In today’s briefing:

  • “Danger Past, God Forgotten” How Long Will the Effect of TSE’s Request Last?

“Danger Past, God Forgotten” How Long Will the Effect of TSE’s Request Last?

By Aki Matsumoto

  • The improvement in ROA was not as large as that of ROE, which raises concerns that the improvement in profitability may be running out of steam.
  • Improvements in corporate governance in 2024 were even lower than in 2023. The repetitive loss of enthusiasm after danger past is seen in % Independent Directors, Nomination/Compensation Committee, etc.
  • The reason why stock valuations little increased despite Foreign Ownership’s 2024 increase might have to do with the fact that improvements in corporate governance have not spread to all companies.

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Jan 11
0

Daily Brief ESG: Growth Policy Score Improved with the Request to Raise P/B and more

By | Daily Briefs, ESG

In today’s briefing:

  • Growth Policy Score Improved with the Request to Raise P/B, but Other Criteria Are in the Process

Growth Policy Score Improved with the Request to Raise P/B, but Other Criteria Are in the Process

By Aki Matsumoto

  • It is commendable that more listed companies as a whole are setting ROE and ROIC as their targets. The real value of actually achieving these goals will now be tested.
  • Dividend Policy score, Treasury Shares Retirement score, AGM Disclosure score, and IR Disclosure score improved slightly, but the listed companies as a whole have yet to show improvement.
  • Even though higher stock prices negatively impacted Policy Stock Holding score, overall improvement has not been achieved for the listed companies. Cash allocation also remains an issue for many companies.

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Jan 09
0

Daily Brief ESG: Improvements Have Expired in Criteria Related to the 2019 Corporate Governance Code Revision and more

By | Daily Briefs, ESG

In today’s briefing:

  • Improvements Have Expired in Criteria Related to the 2019 Corporate Governance Code Revision

Improvements Have Expired in Criteria Related to the 2019 Corporate Governance Code Revision

By Aki Matsumoto

  • While companies are eager to improve ％ of female board members, for which they are required to meet new targets, they are less enthusiastic about raising ％ of independent directors.
  • The improvement in ％ of independent directors has been decreasing year by year. As the importance of independent directors increases, it’s necessary to demand increase in this ratio through engagement.
  • For the other evaluation criteria, the median value remained unchanged from the previous year. Meanwhile, some traditional companies have not been able to eliminate the position of ex-CEO advisors.

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Jan 08
0

Daily Brief ESG: Reducing Cross-Held Shares Is Precisely What Is Needed to Promote Management Change and more

By | Daily Briefs, ESG

In today’s briefing:

  • Reducing Cross-Held Shares Is Precisely What Is Needed to Promote Management Change

Reducing Cross-Held Shares Is Precisely What Is Needed to Promote Management Change

By Aki Matsumoto

  • The problem with cross-held shares is that management facing shareholders tends to be neglected if they remain protected by a defensive wall rather than a lower return on capital.
  • The start of mandatory disclosure of policy shareholding policies from FY3/2025 will also help reduce policy shareholdings, which are expected to decrease gradually, but may remain as deemed shareholdings.
  • To improve capital profitability, profit margins must increase, so restructuring the business portfolio and investing for growth are key. Management changes are required to implement these changes.

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Jan 07
0

Daily Brief ESG: Keppel – Is There More to the Keppel O&M Deal than Meets the Eye? and more

By | Daily Briefs, ESG

In today’s briefing:

  • Keppel – Is There More to the Keppel O&M Deal than Meets the Eye?

Keppel – Is There More to the Keppel O&M Deal than Meets the Eye?

By Tan Yee Peng

  • This report aims to examine the rationale and structure of the transformative deal in February 2023 when Keppel spun out its Offshore and Marine (“O&M”) division.

  • This AssetCo transaction was selected because (1) The substantial size, at S$4.4bn, was equivalent to 14% of Keppel’s assets or 37% of its shareholder equity as of Dec 2022.

  • (2) Highly complex transaction with extremely generous financing terms granted by Keppel, which received no cash for selling legacy rigs at its carrying cost.

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Jan 05
0

Daily Brief ESG: Japan Market Attractive for PE Investment Despite Low Profit Growth and more

By | Daily Briefs, ESG

In today’s briefing:

  • Japan Market Attractive for PE Investment Despite Low Profit Growth

Japan Market Attractive for PE Investment Despite Low Profit Growth

By Aki Matsumoto

  • The phenomenon of declining numbers of listed shares due to share buybacks and declining numbers of listed companies in US/Europe starting in 1990s began in Japan 30 years later.
  • On TSE, where there are many companies with parent-subsidiary listings and large shareholders like founder families and parent companies, more companies will choose to go private because of listing costs.
  • Private equity investments in Japanese companies will further increase in the future, as it is easier to find investment opportunities in Japan, where stock valuations are relatively low.

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Jan 04
0

Daily Brief ESG: FSA Roadmap Is Realistic and more

By | Daily Briefs, ESG

In today’s briefing:

  • FSA Roadmap Is Realistic, but Progress on Scope 3 Disclosures Will Follow the Revision of Guidelines

FSA Roadmap Is Realistic, but Progress on Scope 3 Disclosures Will Follow the Revision of Guidelines

By Aki Matsumoto

  • An assurance system will be established to ensure the quality of assurance. The assurance provider is expected to be a profession-agnostic system that is not limited to auditing firms.
  • The assurance will be limited to Scope 1 and 2, and only Scope 1 and 2, which most large companies already disclose, will be initially required to be disclosed.
  • Scope 3 disclosures have not progressed at this time, but Scope 3 disclosures are expected to progress after the safe harbor is included and the disclosure guidelines are revised.

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Jan 02
0

Daily Brief ESG: Can TSE’s “Examples of Bad Disclosures” Help Companies Shift to Shareholder-Oriented Management? and more

By | Daily Briefs, ESG

In today’s briefing:

  • Can TSE’s “Examples of Bad Disclosures” Help Companies Shift to Shareholder-Oriented Management?

Can TSE’s “Examples of Bad Disclosures” Help Companies Shift to Shareholder-Oriented Management?

By Aki Matsumoto

  • The most common example of poor disclosure is “Disclosure is merely a list of initiatives. The timing of achievement, numerical targets, necessary resources, etc. should be explained.
  • Poor disclosure examples that “do not analyze issues or consider additional actions in a flexible manner” may not have a well-reasoned plan to disclose at this stage.
  • It is clear that many companies are not sufficiently considering the reduction or withdrawal of unprofitable businesses, as evidenced by their low return on sales and return on capital.

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Dec 31
0

Daily Brief ESG: Financial Disclosures During Trading Hours Was Disappointing in 2Q and more

By | Daily Briefs, ESG

In today’s briefing:

  • Financial Disclosures During Trading Hours Was Disappointing in 2Q, but Will Increase Gradually

Financial Disclosures During Trading Hours Was Disappointing in 2Q, but Will Increase Gradually

By Aki Matsumoto

  • Comparing the disclosure time of 2Q financial statements to a year ago, the extension of trading hours has had an impact on the disclosure time of companies.
  • After November 5, when trading hours were extended, 31.6% of companies disclosed by 3:29 p.m. The remaining 68.4% moved down their disclosure time.
  • The 2Q results didn’t include companies that were proactive about early disclosure, and it is expected that some of the more cautious companies will switch to disclosure during trading hours.

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