ESG

• Many companies had the goal of IPOs as a means to save taxes rather than growth, but it’s good to seriously consider go private for the sake of their shareholders.
• This is due to companies’ awareness of listing costs, such as demands from overseas investors for improved governance and requests from TSE for “management with awareness of the stock price.”
• Another issue that needs to be examined is the loss of growth and profitability for companies that are delisted and then relisted.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We view Braskem’s ESG as “Weak”, in line with its scores for the Environmental, Social and Governance pillars. Controversies are “Material”, and Disclosure is “Strong”.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Aggreko’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial”, but Disclosure is “Weak”.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Synlab’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial”, but Disclosure is “Weak”. 

• Since the ROE has been hovering around the 9% ceiling, the challenge is that few companies could present future outlook convincing enough to raise expectations of sustainable ROE growth.
• Since stable BPS has higher correlation with TOPIX than EPS, investors trust a company that accumulates cash flow in shareholders’ equity to sustainably increase profits than to temporarily increase profits.
• Since it’s been confirmed that Tobin’s Q of companies with more cash on hand is higher, the stock valuations of companies with higher cash flow margins tend to be higher.

• While OP Margin did not improve much, companies did execute a certain degree of shareholder return in the previous fiscal year, but it did not significantly increase ROE.
• Since companies with lower profits are also increasing shareholder returns, the dividend payout is likely to rise a bit more. It will be interesting to see how much ROE improves.
• There is a correlation between ROE+DOE and TOPIX. Since TOPIX has risen significantly this year, it will be interesting to see if ROE+DOE actually increases in the future.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Klockner Pentaplast’s ESG as “Adequate”, in line with the Environmental, Social and Governance pillars. Controversies are “Immaterial” and Disclosure is “Strong”.

• TSE data (April 2022-October 2023) shows that the correlation between TOPIX and ROE for prime market listed companies is extremely low, while the correlation between TOPIX and BPS is high.
• It may be that a company that can sustainably increase cash flow and build up net assets is more trustworthy than a temporary increase in profits.
• It’s presumed that the company increased EPS to the extent that it did not reduce ROE and implemented a certain degree of shareholder return to slow the increase in BPS.

• An increasing number of companies rehire senior employees until age 65 to address labor shortages and pass on skills, but there are challenges in retaining senior employees and maintaining loyalty.
• Daikin is expected to be effective in motivating senior employees and passing on skills in terms of extending employment to age 65 without lowering wages. 
• Daikin’s board members are older, so they fully understood that age was not an obstacle to senior employee success. On the other hand, Daikin faces many challenges in diversity.

• A company that does’t include a cash flow statement in its 1Q and 3Q financial summaries, which will now be mandatory, is a company that is reluctant to disclose information.
• Management groups have called for making quarterly disclosure voluntary. This time, a hand has been dealt with a compromise proposal to unify quarterly reports and financial statements in securities reports.
• While the risk of dropping quarterly disclosure in the near future is small, the major problem is that some managers are still reluctant to disclose information.

• The contents of quarterly reports are the same as those of financial summaries. Therefore, it’s in order that the quarterly reports for 1Q /3Q be unified with the financial summaries.
• The major difference between quarterly securities reports and financial summaries is the significance of legal responsibility. By requiring partial review by auditors, TSE will ensure the reliability of financial summaries.
• Meanwhile, TSE must continue to enhance the ethics of company managers and require companies to eliminate malicious misreporting. Unification of quarterly reports would further increase the role of the TSE.

• In the long run, making Oriental Land, which is more profitable, a consolidated subsidiary through TOB would contribute to expanding Keisei’s corporate value.
• Keisei’s foreign shareholder ratio is 27.4%. It seems premature for the rotating president to change at once the company’s tradition of maintaining 40-year relationship with Oriental Land as an affiliate.
• Keisei should explain how it will develop its relationship with affiliate to increase corporate value, and what its business strategy would be if it were to sell its shareholding instead.