ESG

• By canceling the IPO of Rakuten Securities, it is assumed that Rakuten Group wanted to generate cash on schedule even if it was 10 billion yen less than originally planned.
• Although Rakuten Group could generate cash in the predetermined time. it remains unclear whether the company has secured a path to improve cash flow in the pending cell phone business.
• If Rakuten Securities went to public, another parent-subsidiary listing would have been created, so the cancellation of the IPO can be evaluated as positive for the quality of the market.

• Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
• We assess Allwyn’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Adequate”. 
• Allwyn (formerly Sazka) is one of the largest pan-European lottery operators, and is active in all major EU countries where lotteries have been privatised (Czech Republic, Cyprus, Austria, Greece and Italy).

• Maintaining a parent-subsidiary listing that fails to ensure the interests of minority shareholders indicates that the parent company is willing to tolerate dysfunctional corporate governance of the subsidiary.
• Parent-Subsidiary listings drain the profits of profitable subsidiaries from the parent company, reducing profits and corporate value. The solution to this problem is to eliminate parent-subsidiary listings.
• The elimination of parent-subsidiary listings through TOB will reduce market inefficiencies and improve the quality of TSE-listed companies.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Vallourec’s ESG as “Adequate”. While the Governance, Environmental and Social pillars are “Strong”, the company’s “Material” Controversies weigh on the overall score. Disclosure is “Strong”. 

• The rejection by shareholders of an independent director’s re-appointment reveals the growing influence of proxy advisory firms on institutional investors
• Indian corporate boards appear ill-prepared to engage with stakeholders to provide valuable feedback 
• Stakeholders Relationship Committee of the Board needs to reactivated and re-oriented to engage with stakeholders to improve governance

• The fact that many IPO companies either don’t need to raise capital or don’t share the same goal of going public is the crux of the problem.
• It would be conducive to improving quality of TSE as a whole if companies that cannot share the objectives of a listed company with shareholders are delisted through an MBO.
• An MBO by the founding family would open the door to investment for companies that have been unable to invest for fear of falling into the “value trap.”

• Many LGBTQ have been harassed during their job search, and while hiring managers are under-prepared, Monogatari Corporation is one of the few companies that is committed to LGBTQ human rights.
• Monogatari Corporation believes that the diversity of individuals is the foundation for creating value, and that a series of individual differentiation enhances the company’s competitive advantage as a major differentiation.
• Monogatari Corporation’s high profit margins and sustained growth give hope that the hypothesis that “companies that care about sexual minorities are more profitable” may be supported.

• The “minimum majority of outside directors” is an eye catcher, but it does’t affect most companies because the 1/3 outside director ratio applies if a nominating committee is in place.
• Since companies with majority of independent directors are 12.1% in prime market, the objective becomes to achieve the minimum requirement (1/3 INEDs), and few companies engage in further improving practices.
• Companies with over 50% independent director have extremely superior market values in capitalization, ROE, ROA, and Tobin’s Q. Therefore, the acceleration of increasing independent director ratios should be seriously implemented.

• Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
• We assess Forgital’s ESG as “Adequate”, in line with its Social and Governance scores. The company has a “Weak” score for the Environmental pillar. Controversies are “Immaterial” and Disclosure is “Adequate”. 
• Forgital is a vertically integrated company that focuses on manufacturing forged components for the aerospace and industrial markets.

• Since there’s little opposition to the argument that quarterly securities reports should no longer be mandatory, securities reports in 1Q/3Q are almost identical content to the disclosures to TSE.
• To ensure the reliability of the financial statements submitted to TSE, which are replacing current statutory documents, the requirement of review by auditor could be a solution to the problem.
• In this review, the addition of the cash flow statement and segment information in 1Q and 3Q financial statements is very useful and a step forward.

• Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
• We assess Atalian’s ESG as “Adequate”, in line with its Social score. The company has “Weak” scores for the Environmental and Governance pillars. Controversies are “Immaterial” and Disclosure is “Adequate”. 
• French building-services management company Atalian offers a range of facility management and cleaning services. 

• The carryback of pension obligations and expenses resulting from higher bond yields is a factor in the increase in operating profit.
• While this’ll lead to higher EPS, which should lead to higher dividends and more room for stock price appreciation, there’s concern that inflating the B/S will lead to stagnant ROE.
• In addition, since FY3/2024 profits will be boosted by pension financing factors unrelated to the core business, lower profit growth rate in FY3/2025 will put pressure on the stock price.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).

We assess Techem’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial” and Disclosure is “Adequate”.

International energy services provider Techem offers consumption-based billing services in the sub-metering industry.

• Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
• We view Bite’s ESG as “Adequate”, in line with its scores for the Environmental, Social and Governance pillars. Controversies are “Immaterial” and Disclosure is “Adequate”.
• Bite is a telecommunications service provider with operations in the Baltics. It offers mobile, broadband and pay-TV services in Latvia and Lithuania, and media services in both countries as well as in Estonia.

• Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
• We assess Modulaire’s ESG as “Adequate”, in line with its Governance score. The Environmental and Social scores are “Weak”. Controversies are “Immaterial” and Disclosure is “Adequate”.
• Modulaire is a leading pan-European service provider of modular space, remote accommodation and portable storage solutions, with a fleet comprising c. 267 k units.

• Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
• We assess Borr Drilling’s ESG as “Adequate”, in line with its Environmental, Social and Governance scores. Controversies are “Immaterial”, but Disclosure is “Weak”.
• Borr Drilling is one of the largest pure-play jack-up rig operators, with among the youngest and largest fleets in the jack-up drilling market segment.

• Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
• We assess Peru LNG’s ESG as “Adequate”, in line with its Social and Governance scores. The company has a “Weak” score for the Environmental pillar. Controversies are “Immaterial”, but Disclosure is “Weak”.
• Peru LNG (PLNG) owns and operates a 408 km (254 mile) high-pressure 34-inch natural gas (NG) pipeline that connects the TGP gas pipeline (which transports natural gas from the Camisea Fields) to the company’s liquefaction facility in Peru (the Pampa Melchorita plant; capacity of 4.45 mn tonnes per year), including a related marine terminal used to export liquefied natural gas (LNG).

• The same problem underlies the fact that women are more likely to be part-time/ non-regular workers, as well as the lower percentage of management positions and shorter length of service.
• Setting targets and implementing measures for % of female managerial positions is important, since the higher ratio will narrow the gender wage gap, but this alone is not sufficient.
• It’s necessary to ensure that women have the same position in workplace even if they leave the workforce, and to change social systems and people’s mindset to support child care.