Mid-term management plan which does not contribute to shareholders' value | 極東貿易株式会社 2020
極東貿易
If our proposals are approved and Kyokuto continues 100% payout ratio, the estimated share price is;
>JPY 3,000(*)
*Calculation based on dividend yield. Please find the detail of calculation in “our shareholder proposals”.

Mid-term management plan which does not contribute to shareholders’ value

 On May 27th 2019, Kyokuto released a new medium-term management plan (Plan). The term of the Plan is 5 years with the following targets.

(Source:Kyokuto’s Mid-term management plan “KBK Breakthrough 2023”

 We find the Plan lacking in two areas.

 First, the Plan does not increase shareholder value.

 Kyokuto’s targets in the Plan suggest that equity capital will build up and shareholder value will decline. (See “Disregarded shareholder value“)

(Source:Strategic Capital)


 Second, the Plan lacks concrete strategies. Not only did Kyokuto’s previous mid-term management plan fail to improve shareholder value, Kyokuto also failed to achieve the targets set in it. Kyokuto concludes the reason for the miss was “lack of execution to achieve the strategies”.

The Plan also lacks concrete strategies which raises concerns that Kyokuto will again “fail to achieve the targets because of the lack of execution” and “fail to provide information to investors appropriately”.

(Source:Kyokuto’s Mid-term management plan “KBK Breakthrough 2023”

On November 26, 2019, Kyokuto announced that, in order to optimize its business portfolio, it would start reducing the business relating coal fired power generation equipment. However, how such downsizing of the business will contribute to capital efficiency, which is the information investors would like to know most, was not disclosed. We expect Kyokuto to provide specific explanations to investors.

(Source:Q2 Financial Results Presentation for FY Ending March 2020

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This website is for AGM in 2020. Please find our latest proposal in 2021 here.

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