The stock market has been on an upward trend since the beginning of the year, with the Nikkei Stock Average hitting its highest level since the bubble period every day.

It has been analyzed that one of the reasons behind the increase in investment in Japanese companies is that the Tokyo Stock Exchange has required listed companies to take measures that are conscious of market evaluations.



The TSE has taken a new step.

This is a list of companies that have disclosed specific measures that will lead to higher stock prices.

(Economy Department reporter Hiroaki Tsuboi)

TSE announces company list

On the 15th of this month, the TSE published a list of companies that have disclosed specific measures that will lead to higher stock prices.



The TSE has long considered the problem of many companies receiving low evaluations in the market and has called for action to be taken.

In March of last year, it requested approximately 3,300 companies listed on Prime and Standard to "take measures to realize management that is conscious of capital costs and stock prices."



This time, we have clarified the progress made.

Here are the results.

Including Prime and Standard, 851 companies disclosed.

Looking at the situation of companies in the prime market by industry, the disclosure rate exceeded 80% in the banking, electricity/gas, and steel industries, while it remained at around 30% in the service industry, information and communications industry, and retail industry. Ta.



In addition, the disclosure rate was higher for companies whose PBR (price/book value ratio), which indicates how many times the stock price is compared to the net assets per share, was less than 1x (low market valuation).

Companies with large market capitalization also had higher disclosure rates.

How are companies responding?

How are companies actually responding?



Looking at the announcements made by each company, we can see that they are making efforts to invest in growth, review their business portfolios, and strengthen shareholder returns.

▽Ricoh Structural reform, business selection and concentration


▽Idemitsu Kosan upward revision of ROE (return on equity) target


▽Sanyo Shokai implements flexible share buybacks

Among these, Ricoh, a major precision equipment company, disclosed in November the progress of its ``Corporate Value Improvement Project,'' which it has been working on since May last year.



At this company, the profitability of its main office multifunction device business was sluggish, due in part to an increase in people working from home during the coronavirus pandemic.



Interviews with investors conducted for the project revealed that ``measures other than improving profits through cost cutting have low probability from a market perspective,'' and ``Repeated failures to achieve past targets are lowering confidence in management.'' It is said that severe criticism has been received.

The company expressed remorse for the fact that its management team had not earned sufficient trust from investors.

Furthermore, the company announced that it will consider withdrawing from or selling low-profit, non-core businesses worth 180 billion yen, which accounts for nearly 10% of sales.



In addition to promoting the selection and concentration of these businesses, the company also announced its policy to transform from an OA manufacturer to a digital services company.

Market participants say that one of the effects is that the company has decided to revise its business plan in response to investor criticism.

That company is not on the list

On the other hand, it also became a hot topic that powerful companies such as Toyota Motor Corporation, which ranks first in market capitalization, and Fast Retailing, which operates Uniqlo, were not included in the list.



Regarding this, Toyota Motor Corporation said, ``For many years, we have been working on shareholder returns, employment expansion, and wage increases.We are actively implementing measures such as disseminating growth strategies, reducing cross-shareholdings, and reviewing group cross-holdings. The content is essentially the same.''



Fast Retailing says, ``We comprehensively disclose financial strategies and other information in integrated reports and other documents, and we hold financial results briefings and provide explanations to analysts throughout the year to help customers understand capital returns and growth potential in more detail. "The current ROE and PBR continue to maintain high levels."



TSE has said that this time, it has targeted companies whose disclosure materials include the exact phrase TSE's request is to ``take measures to realize management that is conscious of capital costs and stock prices.''



For this reason, there are cases in which similar initiatives are not included in the list even if they are disclosed.

It is important to keep in mind that being on the list does not mean everything, and there are varying degrees of efforts by companies that are classified as "disclosing."



However, TSE plans to update the list every month and also introduce examples that have received high praise from investors.

If the list becomes more informative and easy to understand, investors may begin to use it as an indicator.

A company's seriousness is questioned

Commenting on the publication of this list, Atsushi Kamio, a senior researcher at Daiwa Institute of Research, said, ``Since the TSE announced last October that it would create a list, some companies made a concerted effort to be listed on the list for the first time. "Isn't that the case?"



Furthermore, he points out that there is a gap in understanding between companies and investors regarding initiatives that lead to higher stock prices.



Chief Researcher Kanda focuses on a survey conducted last year by the Life Insurance Association of 1,200 listed companies and 208 institutional investors.



While companies are focusing on expanding market share and reducing costs in an effort to improve capital efficiency (how efficiently funds raised from investors and banks are used to earn money), some institutional investors are bold. It is said that there is a tendency for companies to request a review of their business portfolio.



Chief Researcher Kanda says that in the future, companies will be required to take the stance of bridging this gap.

Atsushi Kamio, Senior Researcher, Daiwa Institute of Research

Atsushi Kamio, Senior Researcher at Daiwa Institute of Research


, ``Looking at the content disclosed by each company, it is clear from the perspective of investors that they are looking for drastic reforms when analyzing the current situation, such as management issues and profitability evaluations. There are cases where a misalignment has occurred.Listed companies that raise funds from the market must reaffirm their responsibility to grow their businesses and increase capital efficiency, and have strong dialogue with investors to grow together. A can-do attitude is required.”

The rise in stock prices since the beginning of the year is said to be due to investors' growing expectations that Japanese companies' solid performance will continue.



Can companies draw up and implement solid strategies for reform and growth?

The market is paying attention.

Featured plans

On the 22nd and 23rd, the Bank of Japan will hold a meeting to decide on monetary policy.

The market view that large-scale monetary easing measures will be reversed quickly is receding, but it remains to be seen what thoughts on the policy change will be expressed based on the details of the decision and Governor Ueda's subsequent press conference. It gets noticed.



Additionally, in the United States, indicators related to personal consumption, which are important in predicting the direction of the economy and monetary policy, are being announced one after another.