In today’s briefing:
- ROE and Valuations of Japanese Stocks Will Improve Through Dissolution of Parent-Subsidiary Listings
ROE and Valuations of Japanese Stocks Will Improve Through Dissolution of Parent-Subsidiary Listings
- It’s no surprise that some companies consider the dissolution of parent-subsidiary listings as a swift and effective measure to raise ROE. However, not every listed subsidiary will be TOB.
- TOB of a high-profitability subsidiary can have significant impact on both the denominator and numerator of the parent company’s ROE because it uses more cash and will improve profit margins.
- Even if the “significance of parent-subsidiary listings” is disclosed, few investors believe that the listed subsidiary’s independence is fully ensured, and the dissolution of parent-subsidiary listings will eventually follow.
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