The Company accurately identifies its cost of capital and, based on this understanding, presents the basic policies for its earnings plans and capital policy while formulating management strategies and business plans, which are disclosed as the Medium-Term Management Plan. To enhance the Company’s medium- to long-term corporate value, the Company believes that the best approach is to steadily implement measures toward the realization of management that is conscious of cost of capital and stock price while achieving the objectives of this Medium-Term Management Plan. Accordingly, the Company aims to continuously expand operating profit, primarily through the development of new opportunities in existing business fields, and to improve return on equity (ROE). ROE has therefore been selected as a key management indicator, and the Company has set a medium- to long-term target of 10%, taking into account its estimated cost of capital of approximately 6–7%. In addition, the Company believes that sustainable growth requires an optimal balance between maintaining financial soundness and providing returns to shareholders. Accordingly, the Medium-Term Management Plan clearly presents a cash allocation plan for the next three years, including growth investments. Furthermore, in order to actively maintain a certain level of shareholder returns that is not significantly affected by short-term performance, the Company introduced a dividend on equity (DOE) with a minimum level of 5%, which has been applied from the year-end dividend for the fiscal year ended March 2023. The formulated management strategies and business plans will continue to be reviewed by the CX Progress Committee, a forum involving members of the Board of Directors and external experts, to accelerate their implementation.
Trends in Cost of Capital and ROE
Policy on Specified Investment Shares
- In terms of business strategy and business relationships with business partners, hold shares only of companies that would provide feedback on our product development and problemsolving. (Sell other shares which cannot be satisfy the above conditions.)
- The BOD verifies the appropriateness of the holding such shares.
- Reduce the shares to less than 20%* of net asset within the next 1 to 2 years.
*Criteria for the exercise of voting rights as defined by many domestic institutional investors and voting advisory.
Establishment of the CX Progress Committee
Since July 2023, the Company has held several study sessions with external experts. By formally naming this forum as the CX Progress Committee, the Company will continue and further develop the discussions, accelerating the implementation of initiatives and linking them to tangible results.
Topics Discussed by the CX Progress Committee