ESG

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

• The percentage of female managers is low, around 10%, so it will take time for internal executive directors to be nominated, and meanwhile companies will be dependent on outside directors.
• Finally, TSE has clearly stated specific numerical targets, so the path to achieving the targets is clear. Now the focus will shift to the content of female board  directors.
• Hiring talented people should be the biggest management challenge, but the appointment of foreign talent has been too slow compared to the globalization of the business.

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

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

• If a company with P/B less than 1 conducts share buyback, its P/B will decrease; if a company with P/B greater than 1 conducts share buyback, its P/B will increase.
• A company with P/B below 1x can be a great value stock if it can demonstrate to investors that it will generate ample cash flow, in addition to repurchasing shares.
• Even if a company’s P/B is well above 1x, it is required to explain to investors whether there are any gaps in its cash flow growth scenario.

• The GPIF employs a “passive enhanced engagement” approach, which is linked to TOPIX and engages in engagement activities with the portfolio companies. This approach should be examined for any challenges.
• The challenge is whether GPIF’s extremely low management fees can engage in deep engagement with a large number of portfolio companies to reduce tracking error from TOPIX.
• GPIF cites its inability to invest in equities in-house and the huge AUM as reasons for its bias toward passive funds. If this is an obstacle, reform should be considered.

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

• While 4% of the number of companies mentioned in annual securities reports regarding P/B, half of companies have P/B of below 1x, which suggests managers still lack sense of urgency.
• Many companies that mention P/B in their annual securities reports rely on share repurchases, and their presentation of strategies to increase cash flow is weak.
• Clearly stating the cost of capital will lead to more appropriate ROE and ROIC targets and disclosure of specific measures to achieve them.

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

• Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
• We assess Banijay’s ESG as “Adequate”, in line with its Social and Governance scores, while the Environmental pillar is “Weak”. Controversies are “Immaterial” but Disclosure is “Weak”.
• Banijay creates and distributes content for television and multimedia platforms. It was founded in 2008 by Stephane Courbit, and has since grown through a string of acquisitions.

• Since so many companies have not prepared for internal female talent, the trend of hiring female independent outside directors will continue for the foreseeable future.
• Metrical studies have confirmed the tendency for the percentage of female board members to show a more significant positive correlation than the number of female board members. 
• This is consistent with the expectation that the increased weight of women board members’ voices on the board will contribute to value creation. 

• The need to obtain investment capital for future business development or the presence of stakeholders with a strong desire to improve asset efficiency may be the catalyst for selling property.
• Of course, cash should be used to return to shareholders, but the stock market expects more profit growth, so higher profit margins and ROE are required.
• The data from Ministry of Finance indicates that cash still hasn’t been spent on investments. Cash appears to be currently being used reluctantly for investments that will generate future profits.