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Action to Implement Management that is Conscious of Cost of Capital and Stock Price
1. Current situation awareness
The Group resolved to partially revise its current Business Strategy (2025-2028) (hereinafter the “Plan”), which was announced on February 13, 2025, entitled “Establishment of the Business Strategy (2025-2028) and Future Dividend Policy,” and to update its shareholder return policy.
(Target Value)
| FY2024 | FY2025 | FY2026 Forecast | FY2027 Plan | FY2028 Plan | ||||
|---|---|---|---|---|---|---|---|---|
| Result | Result | Prev. | Rev. | Prev. | Rev. | Prev. | Rev. | |
| Sales | 35,528 | 39,012 | 48,000 | 42,000 | 55,600 | 45,500 | 63,400 | 50,000 |
| Operating Profit |
5,365 | 6,465 | 7,500 | 7,500 | 8,700 | 8,700 | 10,000 | 10,000 |
| Operating profit margin |
15.10% | 16.60% | 15.70% | 17.90% | 15.70% | 19.10% | 15.90% | 20.00% |
| Net income | 3,375 | 4,522 | 5,100 | 5,100 | 5,900 | 5,900 | 6,800 | 6,800 |
| ROE | 21.20% | 23.60% | 23.80% | 23.00% | More than 20％ |
23.60% | More than 20％ |
23.90% |
| Dividend Payout ratio |
38.70% | 54.3％* *Incl. ¥5.0 commem. Dividend |
50% | 50% | Considering | 50% | Considering | 50% |
| DOE | - | - | - | 8% | - | 8% | - | 8% |
*During the period of the Plan, the Company positions this period as a “focus period for shareholder return” and will pay dividends targeting the higher of either a dividend payout ratio of 50% or a DOE of 8%. As a standard dividend policy, the Company maintains a payout ratio in the range of 30% to 40%.
The Company recognizes that its cost of equity for FY2025 (ended December 31,2025) is 6.91% as calculated by the CAPM (Capital Asset Pricing Model). In comparison, the Company’s ROE is 23.6%, and, as in the previous fiscal year, it has achieved a level of capital profitability that exceeds its cost of equity.
Regarding its ROE, the Company will continue to maintain a level of “more than 20%” while being conscious of cost of equity.
2. Future initiatives
By maintaining profitability that exceeds its cost of equity and consistently achieving a ROE of more than 20%, the Group aims to gain fair market recognition from the stock market for its business and growth potential and to enhance its corporate value.
The Company places importance on “Capital discipline,” not only generating high profits but also efficiently reinvesting such profits and returning them to shareholders. Based on the following three pillars, the Company aims to achieve fair valuation from the capital markets and enhance its corporate value.
(1) Steady implementation of the “Plan”
Through the steady implementation of the initiatives outlined in the Plan, we will strive to sustain and enhance business growth and profitability, and to achieve our management targets for each planning year.
(2) Enhancement of shareholder satisfaction
Through the steady implementation of the shareholder returns (dividend payout ratio, etc.) outlined in the Plan, we will work on improving shareholder satisfaction.
(3) Proactive IR activities
Regarding financial results briefings and constructive dialogue with shareholders and investors, including those overseas, our Directors will continue to actively take the lead in these initiatives.
Furthermore, with regard to enhancing our IR website and Integrated Report, we will strive to strengthen the dissemination of management information, led by the IR department.
3. Cash allocation
ⅰ) Growth Investment (Highest Priority)
To support the evolution toward a high-profitability structure, the Company will flexibly allocate funds to upfront investments in AI and DX, as well as to new businesses and M&A that contribute to deepening corporate demand.
ⅱ) Shareholder Returns (Special Measures during the Plan Period)
During the period of the Plan, the Company will pay dividends based on the higher of a dividend payout ratio of 50% or a DOE of 8%, maintaining stable shareholder returns. In addition, the ¥8.9 billion allocated for the growth investment budget will be flexibly redirected toward share repurchases and cancellations, depending on the execution of M&A investments, with the aim of optimizing capital efficiency.
ⅲ) Stability of Financial Foundation
We will pursue an optimal capital structure that enhances ROE while maintaining a strong equity capital base.