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>The test will be how many companies will disclose details that include the measures investors expect and whether the stock price will react positively when the panel concludes this fall.</li>
<li>The most effective measure to ensure that "TSE's request" doesn't end up as a formal disclosure is for shareholders to press management at the AGMs to raise the share price.</li>
<li>It’s important that the company's resources are used effectively to maximize corporate value, and such measures should be put in place to increase the share price above the current level.</li>
</ul>


The test will be how many companies will disclose details that include the measures investors expect and whether the stock price will react positively when the panel concludes this fall.
The most effective measure to ensure that "TSE's request" doesn't end up as a formal disclosure is for shareholders to press management at the AGMs to raise the share price.
It’s important that the company's resources are used effectively to maximize corporate value, and such measures should be put in place to increase the share price above the current level.


What Is the Effective Way to Ensure That "TSE Request" Does Not End up Being a Formal Disclosure?

<ul>
<li>Population decline is not far in the future, and a situation is looming where rural municipalities will no longer be able to function to support social infrastructure.</li>
<li>The government is sticking to maintain the foreign technical internship in industries where labor is in short supply, and managing the number of foreign workers accepted for 5-10 year time-limit.</li>
<li>Accepting foreigners means that people must live in a society that recognizes diversity and each other's human rights. Unfortunately, we are not ready to create such a society.</li>
</ul>


Population decline is not far in the future, and a situation is looming where rural municipalities will no longer be able to function to support social infrastructure.
The government is sticking to maintain the foreign technical internship in industries where labor is in short supply, and managing the number of foreign workers accepted for 5-10 year time-limit.
Accepting foreigners means that people must live in a society that recognizes diversity and each other's human rights. Unfortunately, we are not ready to create such a society.


Diversity and Human Rights Are Also Challenges in Solving the Problem of Population Decline

<ul>
<li>With increasing pressure to buy back treasury stock to raise ROE, more companies with few tradable shares are expected to promptly retire treasury stock in the future.</li>
<li>Companies that have retired treasury stock three or more times show not only higher stock price valuations, but also superior growth policy scores, cash holding scores, and dividend policy scores.</li>
<li>Rather than simply focusing on the share repurchase, the focus should be on the overall cash allocation that led to it, including investment in growth and shareholder returns.</li>
</ul>


With increasing pressure to buy back treasury stock to raise ROE, more companies with few tradable shares are expected to promptly retire treasury stock in the future.
Companies that have retired treasury stock three or more times show not only higher stock price valuations, but also superior growth policy scores, cash holding scores, and dividend policy scores.
Rather than simply focusing on the share repurchase, the focus should be on the overall cash allocation that led to it, including investment in growth and shareholder returns.


Companies with High Frequency of Share Retirements Tend to Have a High Awareness of Cash Allocation

Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>Quiddity's "Who is Ready" series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.</li>
<li>
<a href="https://www.smartkarma.com/entities/zuiko-corp" target="_blank" data-smartkarma-citation="entities:5568:1" rel="noopener">Zuiko Corp (6279 JP)</a>, <a href="https://www.smartkarma.com/entities/anycolor-inc" target="_blank" data-smartkarma-citation="entities:36618:1" rel="noopener">Anycolor (5032 JP)</a>, and <a href="https://www.smartkarma.com/entities/lifedrink-co-inc" target="_blank" data-smartkarma-citation="entities:39842:1" rel="noopener">Lifedrink (2585 JP)</a> will have TOPIX Inclusion events at the end of June (Zuiko) or July 2023 (the other two).</li>
<li>One of our pre-event TOPIX Inclusion candidates <a href="https://www.smartkarma.com/entities/celsys-inc" target="_blank" data-smartkarma-citation="entities:20774:1" rel="noopener">CELSYS (3663 JP)</a> has experienced sharp price moves over the last few weeks.</li>
</ul>


Quiddity's "Who is Ready" series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.

Zuiko Corp (6279 JP), Anycolor (5032 JP), and Lifedrink (2585 JP) will have TOPIX Inclusion events at the end of June (Zuiko) or July 2023 (the other two).
One of our pre-event TOPIX Inclusion candidates CELSYS (3663 JP) has experienced sharp price moves over the last few weeks.


TOPIX Inclusions: Who Is Ready (Jun 2023)

<ul>
<li>The most important factor in increasing stock valuations is overseas investors, and a clue can be found in exploring what kind of companies they tend to invest in.</li>
<li>It is a company with high cash holdings and a high growth policy score, i.e., a company that generates ample cash flow. This should be considered a necessary condition.</li>
<li>As foreign ownership increases, shareholder returns such as share buybacks will also be implemented to review cash allocations and improve board practices, so these can be considered byproducts.</li>
</ul>


The most important factor in increasing stock valuations is overseas investors, and a clue can be found in exploring what kind of companies they tend to invest in.
It is a company with high cash holdings and a high growth policy score, i.e., a company that generates ample cash flow. This should be considered a necessary condition.
As foreign ownership increases, shareholder returns such as share buybacks will also be implemented to review cash allocations and improve board practices, so these can be considered byproducts.


Cash Flow Return Is Necessary Condition for Higher Stock Valuations; Shareholder Return Is Byproduct

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)

What Is the Effective Way to Ensure That "TSE Request" Does Not End up Being a Formal Disclosure?

I would like to discuss the summary of the 10th Follow-up Meeting on the Revision of Market Segmentation disclosed by the TSE on April 25 and its...

Metrical Inc

Diversity and Human Rights Are Also Challenges in Solving the Problem of Population Decline

I would like to discuss the issues on the April 26 Nikkei article, "Accelerating Declining Birthrate, Crisis of Social Maintenance: Essential to...

Metrical Inc

TOPIX Inclusions: Who Is Ready (Jun 2023)

There are currently 59 names that satisfy all 6 key Segment Transfer requirements based on current data. Another 72 names can satisfy 5 out of 6...

Janaghan Jeyakumar, CFA

Cash Flow Return Is Necessary Condition for Higher Stock Valuations; Shareholder Return Is Byproduct

I would like to discuss the April 23 Nikkei article, "P/B below 1x: Awakening of the Seriousness Questioned in All-Year Undervalued Stocks." I...

Metrical Inc

What Is the Effective Way to Ensure That "TSE Request" Does Not End up Being a Formal Disclosure?

I would like to discuss the summary of the 10th Follow-up Meeting on the Revision of Market Segmentation disclosed by the TSE on April 25 and its...

Metrical Inc

Diversity and Human Rights Are Also Challenges in Solving the Problem of Population Decline

I would like to discuss the issues on the April 26 Nikkei article, "Accelerating Declining Birthrate, Crisis of Social Maintenance: Essential to...

Metrical Inc

Companies with High Frequency of Share Retirements Tend to Have a High Awareness of Cash Allocation

I would like to discuss the issues on the April 24 Nikkei article on Record Number of Treasury Shares Cancellations; TSE Reorganization Boosts 302...

Metrical Inc

TOPIX Inclusions: Who Is Ready (Jun 2023)

There are currently 59 names that satisfy all 6 key Segment Transfer requirements based on current data. Another 72 names can satisfy 5 out of 6...

Janaghan Jeyakumar, CFA

Cash Flow Return Is Necessary Condition for Higher Stock Valuations; Shareholder Return Is Byproduct

I would like to discuss the April 23 Nikkei article, "P/B below 1x: Awakening of the Seriousness Questioned in All-Year Undervalued Stocks." I...

Metrical Inc