Category

ESG

Feb 01
0

Daily Brief ESG: Board Independence Is Demonstrated by Whether It Is Aligned with Common Shareholder Goal and more

By | Daily Briefs, ESG

In today’s briefing:

  • Board Independence Is Demonstrated by Whether It Is Aligned with Common Shareholder Goal

Board Independence Is Demonstrated by Whether It Is Aligned with Common Shareholder Goal

By Aki Matsumoto

  • While shareholder proposals, including those from activist investors, should be considered from independent perspective, it’s clear that even companies with high-% independent directors don’t necessarily get along with activist investors.
  • Board independence is not a question of the number or ratio of independent directors; rather, it is a question of whether independent directors are truly functioning on the board.
  • If the loss of cash results in missed investment opportunities to expand corporate value, this would conflict with interests of shareholders, so subsequent increases in market capitalization should be verified.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
Jan 31
0

Daily Brief ESG: Using Smartkarma/OWL ESG Analytics to Narrow Down List of Corporate Activism Targets in Korea and more

By | Daily Briefs, ESG

In today’s briefing:

  • Using Smartkarma/OWL ESG Analytics to Narrow Down List of Corporate Activism Targets in Korea
  • China’s Green Loan Market: Fifty Shades of Green

Using Smartkarma/OWL ESG Analytics to Narrow Down List of Corporate Activism Targets in Korea

By Douglas Kim

  • We discuss how to use the OWL ESG Analytics (available on Smartkarma) to narrow down the list of companies that could be the next targets of corporate activism in Korea. 
  • We go through in detail, step-by-step process of how to narrow down the list of companies, using the OWL ESG Analytics. 
  • Corporate activism has been one of the most important, market moving factors moving the Korean stock market this year.

China’s Green Loan Market: Fifty Shades of Green

By Stanley Tsai, CFA

  • The PBOC has extended the use of its policy tools to support the green loan industry as part of the country’s’ drive towards carbon neutrality.
  • China’s green loan market is already the largest in the world, if you agree with its definitions and can look past its limitations.
  • The state of green finance matters to investors, and not just those with explicit ESG mandates. We look at the potential pitfalls in the China.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
Jan 30
0

Daily Brief ESG: Looking Forward to Discussion on How to Improve the Quality of Corporate Governance Practices and more

By | Daily Briefs, ESG

In today’s briefing:

  • Looking Forward to Discussion on How to Improve the Quality of Corporate Governance Practices

Looking Forward to Discussion on How to Improve the Quality of Corporate Governance Practices

By Aki Matsumoto

  • The fact that TSE, which has revised Corporate Governance Code several times, is now discussing improving the quality of corporate governance shows that the governance practices have become a formality.
  • Regarding the expansion of English-language disclosure, there is need to eliminate the mismatch between the documents that companies translate into English and those that overseas investors demand to be translated.
  • Asset owners should keep encouraging asset managers to follow Stewardship Code. Appropriate action by asset managers to deal with the BOJ owned ETFs will encourage changes in the companies.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
Jan 28
0

Daily Brief ESG: Isn’t the Best Catalyst to Facilitate MBOs to Increase Market Metabolism? and more

By | Daily Briefs, ESG

In today’s briefing:

  • Isn’t the Best Catalyst to Facilitate MBOs to Increase Market Metabolism?

Isn’t the Best Catalyst to Facilitate MBOs to Increase Market Metabolism?

By Aki Matsumoto

  • The problem is that many companies have resources but haven’t taken steps to strengthen their profitability, given that multiples have declined due to lower excess earnings than 50 years ago.
  • What is required of TSE isn’t to keep failing students in prime market and lower the quality of the market, but to promote metabolism and raise the quality of it.
  • The best catalyst is an MBO. Serious management’s consideration of what it should do for shareholders is to enhance profitability by leveraging resources, while the other is an MBO.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
Jan 26
0

Daily Brief ESG: Maybe There Are Many Companies in Japan that Have the Resources but Neglect Efforts to Increase ROA and more

By | Daily Briefs, ESG

In today’s briefing:

  • Maybe There Are Many Companies in Japan that Have the Resources but Neglect Efforts to Increase ROA

Maybe There Are Many Companies in Japan that Have the Resources but Neglect Efforts to Increase ROA

By Aki Matsumoto

  • If we read “improved asset efficiency” as “ROA,” it would fit better. ROA, along with ROE, correlates with valuation, and higher ROA can be expected to trigger higher stock prices. 
  • Companies with high ROA tend to have advanced corporate governance initiatives. In Metrical Universe of 1,779 companies, ROA (historical 3-year average) for many of corporate governance metrics are significantly correlated.
  • Whether Japanese stocks are undervalued is another question, but if companies have resources but are neglecting company-wide efforts to increase margins and turnover, activist investors are likely to be interested.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
Jan 25
0

Daily Brief ESG: The Real Goal of a Company that Wants to Remain in Prime Market Is to Remain in TOPIX and more

By | Daily Briefs, ESG

In today’s briefing:

  • The Real Goal of a Company that Wants to Remain in Prime Market Is to Remain in TOPIX

The Real Goal of a Company that Wants to Remain in Prime Market Is to Remain in TOPIX

By Aki Matsumoto

  • Since simply increasing shareholder returns won’t increase corporate value/market cap, it’s more natural to present shareholder return policy together with reasonable earnings target, even when such policy is put forth.
  • In fact, the companies exemplified in the Nikkei article saw share prices rise for companies with positive earnings outlooks and increased conviction that they will meet their medium-term earnings targets.
  • This is  a more serious and urgent issue for transitional companies, as companies with market cap of less than 10 billion yen in October 2023 will be excluded from TOPIX.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
Jan 22
0

Daily Brief ESG: Shortcut to Tension in Japanese Company Management Is Change in Voting Power of BOJ ETFs and more

By | Daily Briefs, ESG

In today’s briefing:

  • Shortcut to Tension in Japanese Company Management Is Change in Voting Power of BOJ ETFs
  • Align Partners’ Lee Chang-Hwan Joins SM Entertainment as a Board Member

Shortcut to Tension in Japanese Company Management Is Change in Voting Power of BOJ ETFs

By Aki Matsumoto

  • METI’s survey confirms that “the number of outside directors has increased, but they aren’t completely independent, as they’re sometimes appointed by people with ties to the company” isn’t incorrect statement.
  • The reality is that the parent companies of Japan’s large asset management companies are financial institutions, and it’s high hurdle to vote against proposals by clients of the parent company.
  • The BOJ is a major shareholder in many companies through its ETF holdings. If the exercise of those voting rights changes, the management of listed companies in Japan should change.

Align Partners’ Lee Chang-Hwan Joins SM Entertainment as a Board Member

By Douglas Kim

  • On 20 January, SM Entertainment announced that Lee Chang-Hwan, the CEO of Align Partners Capital will join the company as a board member. 
  • This will mark one of the first cases of an activist investor becoming a board member of a Korean company which already has a major shareholder.
  • We believe that Lee Chang-Hwan (CEO of APCM) joining SM Entertainment as a board member will have a positive impact on the company to meaningfully improve its corporate governance.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
Jan 20
0

Daily Brief ESG: If ESG Is Related to Improved Corporate Value and more

By | Daily Briefs, ESG

In today’s briefing:

  • If ESG Is Related to Improved Corporate Value, Doesn’t Slow ROE Imply Stalled in Real ESG Efforts?

If ESG Is Related to Improved Corporate Value, Doesn’t Slow ROE Imply Stalled in Real ESG Efforts?

By Aki Matsumoto

  • Japanese companies need to resolve these issues in future, as evidenced by the fact that they have only just begun to resolve issues related to human rights and human capital.
  • There is risk that less accurate disclosure of ESG initiatives may emerge in future. Attention will be focused on annual securities reports that have mandate to include sustainability-related information.
  • The slow growth in ROE raises concerns that ESG efforts are not progressing as expected or are being formally mended, but have not improved enough to positively impact corporate value.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
Jan 18
0

Daily Brief ESG: Is NISSOL (2327) Still a Card to Be Sold for Cash Generation? and more

By | Daily Briefs, ESG

In today’s briefing:

  • Is NISSOL (2327) Still a Card to Be Sold for Cash Generation?

Is NISSOL (2327) Still a Card to Be Sold for Cash Generation?

By Aki Matsumoto

  • With the shrinking domestic market, the steel brokerage business is no longer a profitable business for trading companies, so Nippon Steel needs to strengthen its own sales capabilities.
  • While this TOB will have negative impact on Nippon Steel’s balance sheet and profit margins in the short term, the steel market may be moving more significantly than we think.
  • While it would be better for Nippon Steel to make NISSOL 100% subsidiary, I suspect that NISSOL is still being kept as a card to be sold for cash generation.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free
Jan 17
0

Daily Brief ESG: A Few Students Were Motivated by Assignments from Their Teachers and more

By | Daily Briefs, ESG

In today’s briefing:

  • A Few Students Were Motivated by Assignments from Their Teachers, and They Performed Differently

A Few Students Were Motivated by Assignments from Their Teachers, and They Performed Differently

By Aki Matsumoto

  • Forcing companies to submit ROE targets as measure to counter the fact that half of companies languish below 1x P/B is like a teacher asking students to submit an assignment.
  • If that motivates the management, good for them. However, in our experience, only a small percentage of students are motivated by the teacher’s words and see their performance improve.
  • If companies are asked to submit ROE targets, they shouldn’t simply meet them by changing capital structure through shareholder returns, but should achieve them through investments for future earnings growth.

💡 Before it’s here, it’s on Smartkarma

Sign Up for Free

The Smartkarma Preview Pass is your entry to the Independent Investment Research Network

  • ✓ Unlimited Research Summaries
  • ✓ Personalised Alerts
  • ✓ Custom Watchlists
  • ✓ Company Data and News
  • ✓ Events & Webinars
Sign Up for Free