English | 世紀東急への株主提案に関する特集サイト 2020
If our proposals are approved and Seikitokyu continues 100% payout ratio, the estimated share price is;
>JPY 1,900(*)
*Calculation based on dividend yield. Please find the detail of calculation in “our shareholder proposals”.

Our shareholder proposals for Seikitokyu (2020)

 Strategic Capital and our fund are shareholders of SEIKITOKYU KOGYO CO., LTD. (hereinafter referred to as “Seikitokyu”). We have executed our shareholders’ right to make shareholder proposals at the AGM held in the coming June as followings.

  1. Disclose cost of capital and calculation basis to improve dialogue
      with shareholders

    ……… Proposal.1(#4 on the convocation notice)

  2. Increase the dividend payout ratio to 100%

    ……… Proposal.2(#5 on the convocation notice)

For more details refer here.

The challenges and solutions are as follows.

1.Low stock valuation

 Seikitokyu’s capital efficiency is lower than the weighted average cost of capital (WACC), resulting in low stock price valuations. Last year we made a proposal to disclose the WACC, which gained 33% of favor votes, but there has been no disclosure by the Company. Seikitokyu declared in opposition to our proposal, that “cost of capital would be reflected in their managerial decision” but no action has been taken over the last year. We are again proposing the disclosure of the WACC and its basis of calculation, thus raising management’s awareness of the cost of capital and promoting effective dialogue with shareholders to improve the stock valuation.

Refer to the following for more information
Low stock valuation and need for dialogue on cost of capital
Medium-term management plan with no description of capital cost
Dialogue to reduce capital costs (anti-trust violations)

2.Change the current capital policy that is reducing ROE

 Seikitokyu’s target of total return ratio is 30%. If Seikitokyu continues its current policy regarding shareholders return, it is inevitable to cause decline of ROE in the future. To prevent this, we would like Seikitokyu to achieve 100% payout ratio.

Refer to the following for more information
Equity capital accumulation and decline of ROE
Dialogue to shift policy away from accumulating equity capital

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