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>While investment managers spend money on expanding their ESG investment systems and disclosures in preparation for the FSA's guidelines, they expect the business of ESG funds to continue to grow.</li>
<li>It's desirable for investment managers to disclose qualitative and quantitative information, recognizing the need to incorporate ESG factors into their investment decisions and to show that results are being achieved.</li>
<li>Some investment managers are redefining ESG funds to incorporate ESG factors beyond ESG integration, and this trial-and-error process will continue as investment managers position ESG investment trusts as key products.</li>
</ul>


While investment managers spend money on expanding their ESG investment systems and disclosures in preparation for the FSA's guidelines, they expect the business of ESG funds to continue to grow.
It's desirable for investment managers to disclose qualitative and quantitative information, recognizing the need to incorporate ESG factors into their investment decisions and to show that results are being achieved.
Some investment managers are redefining ESG funds to incorporate ESG factors beyond ESG integration, and this trial-and-error process will continue as investment managers position ESG investment trusts as key products.


Trial and Error Continues for Investment Managers to Enhance Disclosure for Resuming ESG Fund Sales

<ul>
<li>Japanese companies are keen on obtaining ISO certifications, so it's relatively easy for companies that have obtained these certifications to ensure the comprehensiveness of sustainability information by disclosing such information.</li>
<li>It’s useful to know the degree to which management recognized the challenges and the leadership that management could exercise in solving those challenges, rather than laundry list of self-praise information.</li>
<li>For management to recognize issues and implement initiatives at global level, it’s expected to hire a head who is sensitive to global initiatives and work with him/her to resolve issues.</li>
</ul>


Japanese companies are keen on obtaining ISO certifications, so it's relatively easy for companies that have obtained these certifications to ensure the comprehensiveness of sustainability information by disclosing such information.
It’s useful to know the degree to which management recognized the challenges and the leadership that management could exercise in solving those challenges, rather than laundry list of self-praise information.
For management to recognize issues and implement initiatives at global level, it’s expected to hire a head who is sensitive to global initiatives and work with him/her to resolve issues.


Sustainability Reporting Is Expected to Share Valuable Information, Not PR Magazine Type Information

<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

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)

Trial and Error Continues for Investment Managers to Enhance Disclosure for Resuming ESG Fund Sales

I would like to discuss the issues regarding the February 24 Nikkei article, "Asset Management Companies Urge 'ESG' Responses."

Metrical Inc

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

Trial and Error Continues for Investment Managers to Enhance Disclosure for Resuming ESG Fund Sales

I would like to discuss the issues regarding the February 24 Nikkei article, "Asset Management Companies Urge 'ESG' Responses."

Metrical Inc

Sustainability Reporting Is Expected to Share Valuable Information, Not PR Magazine Type Information

I would like to discuss the issues on the January 23 Nikkei article, "Sustainability Reporting in Japan, Quality Challenges: Only 4% Disclose...

Metrical Inc

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