Shareholder Proposals for Nippo’s 2024 Ordinary General Meeting of Shareholders

Global ESG Strategy、日邦産業の2024年定時株主総会へ株主提案。企業価値向上へ向け、配当の増額や買収防衛策の廃止などを求める

Press Release

Global ESG Strategy

June 1, 2024

Global ESG Strategy’s Shareholder Proposals for Nippo’s 2024 Ordinary General Meeting of Shareholders
Seeking an Increased Dividend and Abolition of Takeover Prevention Measures, etc. in Order to Increase Corporate Value

Full Press Release

https://prtimes.jp/a/?f=d135781-19-ec11a6334da720724984f5f1905e3b35.pdf

Shareholder Proposal

https://prtimes.jp/a/?f=d135781-19-9715d6e63cc4178131caa1b8b7f47f6f.pdf

Global ESG Strategy (“GES”) is an investment fund managed by Swiss-Asia Financial Services Pte Ltd (“SAFS”) that makes medium- to long-term investments from an ESG (Environment, Social, and Governance) perspective, and as a responsible investor, its management policy is to support the achievement of improvements in medium- to long-term corporate value and shareholder value of Japanese listed companies through constructive dialogue, etc.

In 2023, GES began investing in NIPPO LTD. (“Nippo” or the “Company”, Securities Code: 9913), a company listed on the TSE Standard Market, and has been engaged with the Company since. As of March 31, 2024, the SAFS-managed fund holds approximately 10% of Nippo’s issued common shares, making it a substantial shareholder. As a result of repeated discussions with Nippo management regarding capital market dialogue, which is demanded of listed companies, and the importance of management that is conscious of capital cost and capital efficiency, GES has submitted the following four shareholder proposals (the “Proposals”) to Nippo for the ordinary general meeting of shareholders scheduled to be held in June 2024 for the purpose of improving capital efficiency, abolishing unnecessary takeover prevention measures, and promoting dialogue with shareholders.

Agenda Item 1 (Proposal No. 5): Appropriation of surplus (dividend of 163 yen per share for FY2023)
Agenda Item 2 (Proposal No. 6): Partial amendment of Articles of Incorporation (Policy on Dividend of Surplus; dividend policy of a 100% dividend payout ratio or 10%+ DOE for FY2024 and FY2025)
Agenda Item 3 (Proposal No. 4): Abolition of takeover prevention measures
Agenda Item 4 (Proposal No. 7): Partial amendment of Articles of Incorporation (Handling by Directors of Interviews with Shareholders)

In addition, GES also issued materials outlining its opinions with respect to the details of the shareholder proposals, as well as the issues surrounding Nippo’s business valuation and financial policies and, by extension, how to maximize corporate value.

Swiss-Asia Financial Services Pte Ltd（以下「SAFS」）の運営ファンドであるGlobal ESG Strategy（以下「GES」）は、ESG（Environment（環境）, Social（社会）及びGovernance（ガバナンス））の視点から中長期的な投資を行う投資ファンドであり、責任ある投資家として、建設的な対話等を通じ、日本の上場会社の中長期的な企業価値・株主価値の向上を実現することを後押ししていくことを運用方針としています。

GESは2023年より、東証スタンダード上場の日邦産業株式会社（以下「日邦産業」）（証券コード：9913）に対する投資を開始し、同社へのエンゲージメントを継続してまいりました。2024年3月31日時点においてSAFSの運用ファンドは、日邦産業の発行済み普通株式の約10%を実質的に保有しています。GESは、日邦産業の経営陣との対話を通じて、上場企業として求められる資本市場との対話、資本コスト・資本効率を意識した経営の重視に関して議論を重ねた結果、日邦産業に対し、2024年6月に開催予定の定時株主総会に、資本効率の改善、不必要な買収防衛策の廃止、及び株主との対話の促進を目的とした以下の4つの株主提案（以下「本提案」）を提出いたしました。

議題１（第５号議案）：剰余金処分の件　～2023年度1株当たり配当163円～
議題２（第6号議案）：定款の一部変更の件（剰余金の配当方針について）～2024年度及び2025年度における配当性向100%又はDOE10%以上の配当方針～
議題３（第４号議案）：買収防衛策の廃止の件
議題４（第7号議案）：定款の一部変更の件（取締役による株主との面談対応について）

また、株主提案の詳細、および日邦産業の事業への評価や財務政策に対する問題点について、ひいては企業価値をどのようにして最大化していくかについて、GESの見解をまとめた資料を公表しました。

The materials detail, among other things, the fact that (i) although Nippo is valued comparably to similar companies in terms of PER and PBR (as a result of Nippo’s net cash and deposit holdings reducing its corporate value), it has the lowest level of EV/EBITDA albeit having the highest profit margin in the industry; and (ii) Nippo maintains takeover prevention measures that can easily be operated arbitrarily by management, and function to increase the lack of transparency for the purchase and sale of company shares, such as not being finalized until seeking a judicial ruling even when triggered, and are easily disliked by investors. To resolve these issues, GES has proposed proactive investment and business development, enhanced dialogue with shareholders, the abolition of takeover prevention measures, and large-scale shareholder returns.

By taking appropriate measures, including the adoption of these shareholder proposals, if the net asset distribution rate were 10% and the dividend yield around 3.0%, Nippo’s share price would increase to approximately 5,450 yen (approximately 2.5x the share price as of May 31, 2024).

資料では、①日邦産業はPER及びPBR指標では類似会社並みの水準で評価されているものの、同社が保有する純現預金が企業価値を低めた結果、利益率では業界トップにも関わらず、EV/EBITDAでは業界平均未満の株価評価に甘んじていること、②経営陣が恣意的な運用を行いやすく、発動した場合でも最終的には司法判断を仰ぐまで確定しないなど同社株の売買ルールの不透明さを増すように機能し投資家から嫌気されやすい買収防衛策を維持している点等を指摘しています。これらの課題を解決する方策としてGESは、積極的な投資や事業展開、株主との積極的な対話、買収防衛策の廃止、大幅な株主還元といった選択肢を提示しています。

本株主提案の可決を含む適切な措置を講じることにより、仮に純資産配当率10%とし、配当利回り3.0%程度であった場合には、日邦産業の株式価値は、約5,450円（2024年5月31日現在の株価の約2.5倍）まで上昇することとなります。

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About Global ESG Strategy

Global ESG Strategy ("GES"), an investment fund that is managed by SAFS, makes medium- to long-term investments from an ESG (Environment, Social and Governance) perspective, and its policy is to promote improvements on enterprise value and shareholder value of investee companies through constructive dialogue with investee companies and other means.

About Swiss-Asia Financial Services

SAFS was founded in 2004, and is a Singapore based investment management company that holds a Capital Markets Services (CMS) License under the Singapore Securities and Futures Act (SFA).