ESG

• While the company’s attitude toward shareholder returns has been positive, the 11% dividend increase is not expected to reduce cash on hand by much.
• In a condition where so much cash has accumulated, it’s not a bad idea to use DOE as a guide to avoid accumulating cash on hand above a certain level.
• Since FY3/2025 profits will grow in non-manufacturers, which has relatively low profit margin, the overall profit margin of companies won’t increase. Therefore, unless assets are reduced significantly, ROE will soft.

• Many companies that cannot meet listing criteria have challenges with their tradable stock market capitalization in Prime markets, both in Standard markets, and tradable share ratios in Growth markets.
• As a result of the market restructuring, the role of regional securities exchanges became a “receptacle” for ensuring trading of shares of companies that cannot meet the TSE listing criteria.
• For a company that considers the purpose of a stock listing to be to improve the company’s credibility and name recognition, going private or an MBO isn’t on their mind.

• A common feature of the three companies that clearly indicated the conditions for implementing share repurchases and their position in the cash allocations is high foreign ownership.
• Japanese companies’ share buybacks are less than 10% of net income, but on a cash flow basis, taking depreciation into account, share buybacks would be much less.
• If the cost of capital was calculated, it shouldn’t be tremendous requirement to indicate cash allocation and share repurchase terms necessary for targeted return on capital and corporate value.

• With the TSE requiring disclosure of rationale regarding parent-subsidiary listings, etc., it is certain that more companies will move to dissolve parent-subsidiary listings.
• The background for the high TOB premium in Japan was that many companies had stock prices considerably lower than their intrinsic value.
• There are total of 1,217 companies: 230 listed subsidiaries and 987 equity method affiliates. In addition to this, industry restructuring is also required; there are still numerous opportunities for TOB.

• In Japan, where there’s strong peer pressure, people are reluctant to do something before someone else does, and tend to follow the trend once the majority of formality is known.
• When numbers are specified and rules are established, Japanese companies tend to scramble to match the numbers. Thus, many companies have not voluntarily improved their board practices.
• There’re companies that only have good board practices but aren’t generating value .Therefore, we should focus on whether they are doing actions that create value in addition to board practices.

• Most shareholder benefits items can be used in Japan. There’s history of more companies abolishing shareholder benefits programs because they believed that shareholder returns should conducted rather than shareholder benefits.
• Amid rising foreign ownership and the dissolution of cross-shareholdings, more companies have begun to reverse the trend toward companies approaching individual shareholders with shareholder benefits programs.
• The fact that stock prices of companies offering shareholder benefits tended to fall lower during stock market plunges may be due to the fact that they were mostly defensive stocks.

• Most shareholder benefits items can be used in Japan. There’s history of more companies abolishing shareholder benefits programs because they believed that shareholder returns should conducted rather than shareholder benefits.
• Amid rising foreign ownership and the dissolution of cross-shareholdings, more companies have begun to reverse the trend toward companies approaching individual shareholders with shareholder benefits programs.
• The fact that stock prices of companies offering shareholder benefits tended to fall lower during stock market plunges may be due to the fact that they were mostly defensive stocks.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Flos B&B Italia’s (formerly International Design Group) ESG as “Adequate”. The group has “Adequate” scores for the Environmental and Social pillars, while Governance is “Strong”. Controversies are “Immaterial” and Disclosure is “Strong”.

• 42 companies submitted their annual securities reports by the business day before AGM date, and most of them submitted their reports immediately before AGM, such as the day before AGM.
• If the record date is moved forward from fiscal year-end, the problem of administrative burden will be solved. English-disclosure in annual securities reports will increase, and engagement will be positive.
• For companies with a record date in their articles of incorporation, changing the record date would require general shareholders’ meeting, but only a few shareholders would oppose the change.

• The cause of the lower female managerial positions behind gender wage gap is clear, but even proposed amendment to the Act seem to be a detour to solve the problem.
• What hasn’t worked 40 years after the Equal Employment Opportunity Law is that there’re no penalties and the environment has always been one in which it’s permissible not to achieve.
• Effort goals are cozy for both the government, which can feel sense of doing by launching effort goals, and companies that will not be blamed if they don’t achieve them.