ESG

• Signs of change in companies that have improved their capital profitability and valuations can be seen in their policy shareholdings/total assets. 
• Companies with fewer policy shareholdings, as measured by (policy shareholdings + equity holdings)/total assets, tend to have the best values for valuation, ROE, and ROA, and vice versa.
• To measure the seriousness of reducing cross-shareholdings, as long as the company has the voting right of cross-shareholdings in retirement benefit trust, the deemed shares should be included in cross-shareholdings.

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

• The issue of the discrepancy between disclosure documents in English highly remanded by overseas investors and actual disclosures in English by companies has not been resolved.
• Companies with the highest English language disclosure scores had superior ROE, valuation, market capitalization and foreign ownership, and corporate governance. Companies with the lowest English disclosure scores showed the opposite.
• Through overseas investor engagement, companies are likely to improve its corporate governance practices and has actually taken actions that have led to improved capital profitability.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We view Liberty Costa Rica’s ESG as “Adequate”. The score mirrors our assessment of parent Liberty Latin America (LLA), which discloses ESG-related information on a consolidated basis, without meaningful details on the bond-issuing credit pools that we cover (C&W Communications and Liberty Puerto Rico). 

We assess LLA’s Social and Governance pillars as “Strong” and “Adequate”, respectively, offsetting the “Weak” Environmental score. Controversies are “Immaterial” and Disclosure is “Adequate”. 

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

• Companies that have increased their valuations over the past year are those with higher valuations and have further increased their ROE and ROA, resulting in even higher valuations.
• The difference between the characteristics of companies whose valuations increased and those whose valuations did not change over the past year is the foreign ownership ratio.
• Companies with low foreign ownership have less access to overseas investors’ suggestions for solving individual company problems, which is why they are slow to act to improve capital profitability.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess CABB’s ESG as “Strong”, in line with its Environmental and Governance scores, while the Social score is “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 view Liberty Puerto Rico’s ESG as “Adequate”. The score mirrors our assessment of parent Liberty Latin America (LLA), which discloses ESG-related information on a consolidated basis, without meaningful details on the bond-issuing credit pools that we cover (C&W Communications and Liberty Costa Rica). 

We assess LLA’s Social and Governance pillars as “Strong” and “Adequate”, respectively, offsetting the “Weak” Environmental score. Controversies are “Immaterial” and Disclosure is “Adequate”. 

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

Fedrigoni received a Platinum medal from Ecovadis in 2022 and 2023, which places it in the Top 1% of companies assessed. This is an improvement from the Gold medal received in 2021. 

In addition, the company received a score of 59/100 in 2022 and 61/100 in 2023 from S&P (Top 15% in the Paper & Forest Products sector), which evaluated the integration level of ESG factors in policies and practices to mitigate risk as well as maximise opportunities.

• Shinhan Financial announced that it plans to increase shareholder return ratio to 50%, improve ROE to 10%, and reduce outstanding shares by 50 million+ by 2027.
• Shinhan Financial Group’s new, outstanding shareholder return policy has been one of the most impressive since the roll-out of the Corporate Value Up program in Korea a few weeks ago.
• The improved corporate governance policy is likely to lead to Shinhan Financial Group outperforming other financial stocks in Korea and KOSPI overall in the next 6-12 months. 

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

• It is very difficult to ensure the independence and transparency of a committee when the board of directors is staffed with people who are aligned with the president’s wishes.
• Companies with high ROE have superior corporate governance, due to effective overseas investor’s engagement, while companies with low ROE show unclear policies for improving ROE, despite having formalized board practice.
• To improve the effectiveness of the board, companies should appoint people to the board who will help expand the value of the company, and use engagement with overseas investors etc.

• The high percentage of foreign ownership is a characteristic of companies that have improved capital profitability and increased valuations, which is effective for overseas investor engagement.
• If the system is revised to help collaborative engagement and the identification of substantial shareholders, some of the challenges will be eliminated for both investors and the company.
• To make the engagement more effective, investors should increase active funds and companies should decrease cross-shareholdings.

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

• We need to watch carefully to see whether cash flow will subsequently increase in the projects that the CB issuers have invested their proceeds in.
• Share prices of companies that announce equity financings, including CBs, usually decline. Besides the dilution, another aspect is the effect of the company’s announcement of the sale of its shares.
• In the case of CBs, the company should keep in mind that it sold the conversion rights of its shares for less than their actual call option value.

• Few companies file their annual securities reports prior to AGM, and since they are filed 1-2 days prior to AGM, there’s insufficient time for a thorough review of useful information.
• Profitable companies that gain the support of overseas investors further increase their return on capital through engagement, and the gap between them and those that don’t will continue to widen.
• Since reducing policy shareholdings will reduce the percentage of voting rights that unconditionally favor company proposals, engagement will be more effective and speed up the process of management improvement.

• The fact that institutional investors consider whether a company has zero female board members when voting has led to decrease in the number of companies with zero female board members.
• Since fewer companies have zero female board members but a minority of companies have at least two female board members, achieving 30% female board members seems somewhat of a hurdle.
• While tenure and concurrent service of female board members are problematic, the starting point is to ensure that women have  a 30% voice on the board and to promote diversity.