Cost of Capital Management
Cost of Capital Management
Management Policy and Quantitative Targets focused on Cost of Capital and Capital Profitability.
Quantitative Targets
Price-to-Book Ratio (PBR)
> 1.0x
Market valuation remains above net assets.
Return on Equity (ROE)
≥ 8%
Ensure profitability equal to or greater than the cost of capital
Management Priorities
- Balancing profitability improvement in existing businesses with growth investments
- Consideration of business portfolio expansion through M&A
- Ongoing review of appropriate shareholder returns (dividends, share buybacks, etc.)
Initiatives to Realize Management Conscious of the Cost of Capital and Stock Price
In accordance with the "Cost of Capital Management (Principle 5-2)" stipulated in the Corporate Governance Code, our company recognizes the importance of allocating management resources with an awareness of the cost of capital and capital profitability, in order to meet the expectations of investors and other stakeholders and achieve sustainable growth and mid- to long-term corporate value enhancement.
Specifically, we aim to maintain a PBR of 1x or higher and a Return on Equity (ROE) of 8% or higher (or a level above WACC reflecting the market's expected rate of return).
Meanwhile, as a corporate group in a growth stage, we have established a basic policy of making proactive growth investments to create new business opportunities and acquire external growth opportunities. While being mindful of the Cost of Capital and share price, in situations deemed necessary for mid- to long-term corporate value enhancement, we will engage in dialogue with stakeholders and implement strategic investments not constrained by single-year financial results, thereby promoting management aimed at further maximizing corporate value.
Cost of Capital Management Metrics
| Fiscal Period | FY2022 | FY2023 | FY2024 | FY2025 | FY2026 |
|---|---|---|---|---|---|
| Revenue (Millions of Yen) | 1,144 | 1,543 | 1,842 | 2,167 | 2,558 |
| Revenue Growth Rate | 31.8% | 34.9% | 19.4% | 17.6% | 18.1% |
| Operating Income (Millions of JPY) | 47 | 396 | 407 | 402 | 251 |
| Operating Income Margin | 4.1% | 25.7% | 22.1% | 18.6% | 9.8% |
| Comprehensive Income (Net Income) (Millions of Yen) | 79 | 283 | 301 | 243 | 97 |
| ROE | 20.6% | 38.2% | 28.7% | 18.4% | 6.7% |
| WACC | 15.6% | 10.2% | 7.8% | 4.6% | 5.2% |
| Financial Leverage (x) | 2.0 | 1.4 | 1.8 | 1.7 | 1.9 |
| Total Asset Turnover (times) | 1.4 | 1.3 | 0.9 | 0.9 | 0.9 |
| Equity Ratio | 48.7% | 66.7% | 54.6% | 55.8% | 52.3% |
| Adjusted Net Assets per Share (JPY) | 148.06 | 273.61 | 386.10 | 483.00 | 520.37 |
| Adjusted Year-End Share Price (JPY) | 880 | 2,038 | 1,406 | 1,155 | 1,238 |
| PBR (times) | 5.9 | 7.4 | 3.6 | 2.4 | 2.4 |
Source: EDINET, Bloomberg. For financial indicators, please refer to Financial Highlights.