In today’s briefing:
- Increasing Profitability to Gain Support from Overseas Investors Is a Condition for Higher Valuation
Increasing Profitability to Gain Support from Overseas Investors Is a Condition for Higher Valuation
- Even after the TSE’s request for a P/B increase, it is not possible to raise valuations simply on the expectation of a P/B increase without improving profitability.
- Most companies have cash allocation challenges. Companies with higher profitability will accumulate even more cash on hand, so higher level of shareholder return will further positively impact ROE and ROA.
- Some of the companies that have reduced valuations include those with relatively high ROE and ROA, so there are small-cap stocks with reduced valuations and increased investment opportunities.
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