About the cost of capital
Investor Relations
Measures to realize management that takes into account the cost of capital and stock price.
Based on the Tokyo Stock Exchange's requirement for "management that is mindful of the cost of capital and stock price," our company considers enhancing corporate value to be one of its key priorities. We are working towards achieving this goal through current situation analysis.
1. Current situation analysis and problem recognition
① Current situation analysis and identification of challenges regarding the cost of capital and capital profitability
Current situation analysis
- Following a shift in capital policy accompanying a review of the medium-term management plan, ROE has been on an upward trend since 2022.
- Current capital costs are estimated to be between 5% and 7% based on analyses using CAPM and earnings yield.
Issue recognition
- We aim to achieve a return on equity (ROE) that consistently exceeds the cost of capital from both business and financial perspectives, thereby increasing market value.
② Current situation analysis and identification of challenges regarding market evaluation
Current situation analysis
- The current P/E ratio is at the same level as the industry average, but the P/B ratio is below 1.
Issue recognition
- The company's stock price growth has recently lagged behind the industry average, and its PBR remains below 1. This situation indicates that its "growth potential" is not meeting market expectations.
2. Overview of the Plan and Initiatives
① Current situation analysis and identification of challenges regarding the cost of capital and capital profitability
Aiming for sustainable enhancement of corporate value, we will ensure business growth through the steady execution of investment plans, while simultaneously improving capital efficiency by enhancing financial leverage and total asset turnover.Furthermore, we will strictly apply the cost of capital as a hurdle rate for investment decisions and pursue returns that exceed this rate to further enhance corporate value.