Category

ESG

Mar 08
0

Daily Brief ESG: Companies that Adequately Disclose Human Capital Must Be Performing Well on Human Capital Investment and more

By | Daily Briefs, ESG

In today’s briefing:

  • Companies that Adequately Disclose Human Capital Must Be Performing Well on Human Capital Investment

Companies that Adequately Disclose Human Capital Must Be Performing Well on Human Capital Investment

By Aki Matsumoto

  • There is concern that if the statements in Annual Securities Report, a legal document, are not questioned as misstatements, they will be left unwritten with no hope of being realized.
  • Most companies didn’t have human capital policy as of last July. It’s welcome that more companies will take this opportunity to shift to a strategy of adding value through growth-investments.
  • Companies  are required to answer  the alignment of management and human resource strategies, whether they can reasonably demonstrate path to future growth in corporate value while investing in human capital.

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Mar 06
0

Daily Brief ESG: Need to Think About How to Make the Market a Place Where Young and Mature Generations Want to Invest and more

By | Daily Briefs, ESG

In today’s briefing:

  • Need to Think About How to Make the Market a Place Where Young and Mature Generations Want to Invest

Need to Think About How to Make the Market a Place Where Young and Mature Generations Want to Invest

By Aki Matsumoto

  • The demand for high-dividend stocks is due to the fact that financial assets are skewed toward the elderly and that the elderly have high demand for high-dividend stocks.
  • The under-40s generation, which seeks growth rather than dividends, focus on U.S. equities. Even if the tax deferral allowance is expanded, they are likely to pass through Japanese equities.
  • For asset building, investing in markets with higher returns is good idea. However, considering the market as source of risk money, Japanese equities and Tokyo market aren’t in good condition.

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Mar 04
0

Daily Brief ESG: What Should a Japanese Company Do to Raise Profit Margin and more

By | Daily Briefs, ESG

In today’s briefing:

  • What Should a Japanese Company Do to Raise Profit Margin, a Prerequisite for Higher ROE?

What Should a Japanese Company Do to Raise Profit Margin, a Prerequisite for Higher ROE?

By Aki Matsumoto

  • TSE, as market operator, should focus on stimulating the market, not informally meddling in the management of listed companies on matters that are not explicitly stated in the listing criteria.
  • Much of the reason ROE has not increased is that OP Margin has not increased. Despite gradual unwinding of cross-shareholdings, Total Asset Turnover slide and Financial Leverage remained unchanged.
  • Increasing OP Margin is prerequisite for ROE to rise. It confirms that the root of the problem is the challenge of using cash for growth investments to create competitive products.

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Mar 02
0

Daily Brief ESG: Is the Challenge of Raising the Stock Price Valuations Ultimately the Quality of Management? and more

By | Daily Briefs, ESG

In today’s briefing:

  • Is the Challenge of Raising the Stock Price Valuations Ultimately the Quality of Management?

Is the Challenge of Raising the Stock Price Valuations Ultimately the Quality of Management?

By Aki Matsumoto

  • Increasing numbers of companies with P/Bs below 1x suggest that they failed to deliver to investors plan that would have increased their corporate value, or that such plan didn’t materialize.
  • While P/B has remained mostly in range, the increase in the number of companies with low P/Bs can be attributed to the widening gap in profitability among companies.
  • If the difference in profitability depends on the development and execution of management strategies, it depends on the quality of management. The appointment of directors will be very important.

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Feb 28
0

Daily Brief ESG: More Important to Keep Prime Market Quality High and more

By | Daily Briefs, ESG

In today’s briefing:

  • More Important to Keep Prime Market Quality High, Not to Give to Listed Companies a Grace Period

More Important to Keep Prime Market Quality High, Not to Give to Listed Companies a Grace Period

By Aki Matsumoto

  • The “transitional measures” were set to expire in 3 years. For companies currently subject to the transitional measures, this will end in March 2025 for companies with March fiscal year-end.
  • Many companies applying the transitional measures that are currently allowed to list on the Prime Market are expected to move to the Standard Market.
  • Listed companies should take the opportunity to carefully consider these listing costs and benefits, as higher practices in corporate governance and disclosure will be required in the future.

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Feb 26
0

Daily Brief ESG: Concrete Measures to Raise ROA Are Needed to Achieve Medium-Term Stock Price Outperformance and more

By | Daily Briefs, ESG

In today’s briefing:

  • Concrete Measures to Raise ROA Are Needed to Achieve Medium-Term Stock Price Outperformance

Concrete Measures to Raise ROA Are Needed to Achieve Medium-Term Stock Price Outperformance

By Aki Matsumoto

  • If TSE were to require companies with low P/Bs to disclose improvement measures, more companies are likely to take immediate action to increase shareholder returns.
  • Reducing equity capital is effective in raising ROE, but simply draining cash accumulated from the past through shareholder returns will not lead to long-term stock price outperformance.
  • Among the components of ROE, ROA improvement is required rather than immediate increase in financial leverage. Companies should disclose their more detailed plans to increase ROA over the medium term.

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Feb 25
0

Daily Brief ESG: Zee Entertainment- Litigations Scare and more

By | Daily Briefs, ESG

In today’s briefing:

  • Zee Entertainment- Litigations Scare

Zee Entertainment- Litigations Scare

By Nitin Mangal

  • Zee Entertainment Enterprises (Z IN) have yet again been bombarded with a corporate hurdle since the NCLT has admitted the company into CIRP relating to Siti Cable Network (SITINET IN).
  • It is found that ZEEL has created provisions in the balance sheet, however it should be noted that the CRIP might lead to cash outflow in future. 
  • Apart from the current CIRP, ZEEL also has other litigation risks that should not be overlooked.

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Feb 24
0

Daily Brief ESG: Companies with High ROA Have High Potential for Corporate Governance and Further ROA Improvement and more

By | Daily Briefs, ESG

In today’s briefing:

  • Companies with High ROA Have High Potential for Corporate Governance and Further ROA Improvement

Companies with High ROA Have High Potential for Corporate Governance and Further ROA Improvement

By Aki Matsumoto

  • Except for the fact that companies with higher ROA tended to have higher ratios of independent directors, there were no significant correlations with many board practices.
  • Companies with high ROA are expected to increase ROA by reducing cross-shareholdings in future, and by improving cash allocation to achieve further growth and shareholder returns on growing cash flow.
  • Companies with high ROA tend to have a high ratio of foreign shareholders, and these companies’ corporate governance is expected to gradually improve in the future, further increasing ROA.

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Feb 22
0

Daily Brief ESG: Dissolving the Parent-Subsidiary Listing Is a Powerful Way to Increase Valuations? and more

By | Daily Briefs, ESG

In today’s briefing:

  • Dissolving the Parent-Subsidiary Listing Is a Powerful Way to Increase Valuations?

Dissolving the Parent-Subsidiary Listing Is a Powerful Way to Increase Valuations?

By Aki Matsumoto

  • While this was a major step forward, it did not adequately explain how Fujitsu would invest the cash from the sale of these non-core businesses in its core businesses.
  • The investment strategy of buying listed subsidiaries with parent-subsidiary listings was shown to be reasonable. The exit risk may be lower when the parent makes the subsidiary a wholly-owned subsidiary.
  • If valuations are enhanced by expectations of increased corporate value through reviews of the parent’s business portfolio, the dissolution of the parent-subsidiary listing is a powerful way to enhance valuations.

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Feb 20
0

Daily Brief ESG: Expected More Companies to Obtain ISO Certification and more

By | Daily Briefs, ESG

In today’s briefing:

  • Expected More Companies to Obtain ISO Certification, Which Would Share Disclosure Information Risk

Expected More Companies to Obtain ISO Certification, Which Would Share Disclosure Information Risk

By Aki Matsumoto

  • Since companies are in the process of raising their own human capital efforts, it’s good to use  ISO 30414 certification as an opportunity to see how well they are doing.
  • Many companies may believe that ISO will share the risk of information at the time of disclosure with respect to the accuracy of the disclosed information.
  • Since perfect information doesn’t seem to be required in the Annual Securities Report for FY3/2023, the information will actually be available for intercompany comparisons starting with that for FY3/2024.

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