AGM for Kyokuto (2020)
Strategic Capital attended the AGM and expressed our opinions. Please refer here for more details (Japanese only).
The following is a summary of our key points made at the meeting.
●We would like you to understand the true meaning of cost of capital. While, in the medium-term management plan, you wrote that “group management considering cost of capital”, we doubt you truly understand it. For if
truly
understood the cost of capital,
you would not continue to own around 4.6 billion yen in cross shareholdings.
●In regards to your capital policy, the equity ratio was 46% for this term and we question whether it needs to be this high for a trading company.
Instead of simply letting equity capital rise unchecked, the company should make investments that are appropriate for the cost of capital. Simply owning cross-shareholdings will result in a return that is far below the cost of capital and the stock price will not increase. If there is nothing good to invest in, then the surplus should be returned to shareholders to increase the stock’s price.
The proposal we made for a 100% dividend payout ratio was for that purpose. While we withdrew the proposal following the announced dividend of 60 yen, we would like you to
continue to maintain the 100% payout ratio.
