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Capital Policy
The Company recognizes that the cost of equity is 10% with reference to the following, and we would like to maintain an ROE that exceeds the cost of equity.
Specifically, we have set a target of ROE of 17% or more in the fiscal year ending February 2028, the final year of the Fourth Medium-Term Management Plan, compared to the 16.6% in the fiscal year ending February 2025. In addition, in the long term, we envision a level that should be maintained at 15%~18%, which exceeds the cost of shareholders' equity in a stable and continuous manner.
Approach to the cost of shareholders' equity
- Questionnaire method
- When we interviewed institutional investors, many of them said it was about 10%.
- CAPM Method
- Risk-free rate (1.1%) + β value (1.33) × market risk premium (6%) ≈ 9%
- Earnings Yield Method (reciprocal of PER)
- The P/E ratio of the Company's stock fluctuates between 8 times and 9 times → Therefore, 1/8 = 12.5%, 1/9 = 11.1%
Concrete initiatives to uphold ROE
During the period of the Fourth Medium-Term Management Plan, we will prioritize growth investments and aim for profit growth, while gradually increasing the dividend payout ratio to 40% (36.2% in the fiscal year ended February 2025).
In addition, to prevent the expansion of working capital and capital adequacy ratios, we will consider the flexible implementation of treasury shares as a cash flow adjustment valve.
Long-term image of ROE
| 2025 End of February | 2028 End of February | Long-term image | ||
|---|---|---|---|---|
- Net income ÷ net assets - Net assets are the average value at the beginning and end of the fiscal year | 16.6％ 26.1 billion yen / 153.7 billion yen | 17% or more | 15～18％ | Stable and continuous ROE exceeding cost of equity |
A. Net income - Net income ÷ net sales |
12.2％ 26.1 billion yen / 213.2 billion yen |
12.3％ 37 billion yen / 300 billion yen | 10～12％ | Reference: Net profit margin for the fiscal year ending February 2028 at the following rates USD 130 yen, GBP 164 yen, EUR 141 yen → 10.6% USD 140 yen, GBP 177 yen, EUR 147 yen → 12.3% |
B. Net asset turnover ratio - Sales/Total Assets - Total assets are the average value at the beginning and end of the period | 1.03x 213.2 billion yen / 207.9 billion yen | 1.10x | 1.10 times more | Cash and deposit level: About 2~2.5 months of monthly sales Number of months of inventory turnover: about 5 months |
C. Financial Leverage - Total assets ÷ net worth Both are average values at the beginning and end of the fiscal year | 1.32x 207.9 billion yen / 157.3 billion yen | 1.30x Equivalent to a capital adequacy ratio of 77% | 1.30 times or more | Capital adequacy ratio remains at the same level Flexible implementation of share buybacks Utilization of borrowed funds as necessary |