Value Conscious Capital Management
Current Assessment
The Company believes that generating return on equity (ROE) in excess of the cost of shareholders’ equity is important for improving corporate value. The Company evaluates the cost of shareholders’ equity to be around 4–5.5% in its external assessment (*) based on the CAPM. We acknowledge the gap between our current valuation and investor expectations, and will strive to align our understanding through dialogue with our investors.
Meanwhile, the Company’s ROE against this was 9.3% in the previous fiscal year (fiscal year ended February 28, 2025), and the Company has been able to achieve return on capital that exceeds the cost of shareholders’ equity. In addition, the Company’s PBR currently stands at approximately 2.5x to 3x and its PER has been trending above 28x, exceeding the Prime Market average. The Company believes that it has received a certain degree of recognition from the stock market in terms of growth potential and other factors.
Evaluation by Plutus Consulting Co., Ltd.
Reference: CAPM calculation assumptions
-Beta 0.40~0.70
-Market risk premium 6.0%
-Risk‑free interest rate 1.5%
Targets and Initiatives
Based on the above evaluation, the Company believes that promoting various initiatives in line with the goals and strategies set forth in the TOHO VISION 2032 Group Management Strategy and the TOHO Mid‑Term Plan 2028 will lead to further enhancement of the Group’s corporate value.
The TOHO VISION 2032 Group Management Strategy has set a target ROE of over 10% on a sustainable basis in the Long‑term Vision 2032, while the TOHO Mid‑Term Plan 2028 has set a numerical target of achieving ROE of 9% or higher. To achieve these ROE targets, we have clarified our policies on growth investments and shareholder returns, and outlined our capital allocation approach in the TOHO Mid‑Term Plan 2028.
In addition, from 2025, the Company has introduced a "performance‑linked share remuneration plan" into its executive remuneration, linking it to the respective targets for ROE and operating profit, as well as ESG goals, set out in the TOHO Mid‑Term Plan 2028.
Furthermore, the Company will further strengthen its IR framework and enhance its disclosure materials, while the leadership team takes the lead in engaging in dialogue with investors, aiming to reduce the cost of shareholders’ equity. In addition to improving profitability by promoting growth strategies, we will continue to improve capital efficiency through appropriate shareholder returns and strive to achieve sustainable return on capital that exceeds the cost of shareholders’ equity.