Dialogue between Chori and Strategic Capital | Increase both Chori’s and Toray’s shareholders’ value
What we hope Tosho to improve the shareholders’ value as a shareholder are
1) Increase the value of the overall Toray Group by increasing shareholder value of Chori and
2) Improve corporate governance

Dialogue between Chori and Strategic Capital

 Strategic Capital has engaged in numerous dialogues with Chori in order to increase shareholder value. This includes meetings with management, opinions in writing, AGM attendance and formal shareholder proposals. Click here for a summary of the Q&A and overview of the General Meeting of Shareholders (summary, voting results, etc.). We have had constant dialogue with management regarding capital policy and cross-shareholdings.

 Below is an excerpt from a November 2019 meeting with Kazuo Sakihama, President of Chori. Our impression after the meeting is that the President Sakihama had no regard for the importance of “improving shareholder value”. If he’s unable to change his understanding of shareholder value and continue to remain unaware of shareholder asks, then he should help identify a candidate who can fulfill those duties for Chori.

~Dialogue after explaining to the president, how despite making a profit, if a policy to build capital is adopted, capital efficiency will decrease and shareholder value will suffer~

President Sakihama:I am not a professional manager, I am just thinking of the best way to make money (ed op without thinking capital efficiency). Going forward it will may be something to consider (how to manage to improve shareholder value).

SC Maruki:The stock price has not increased despite good performance.

Sakihama:With the current strategy I question whether increasing performance will cause valuation to continually decrease(※). I’d like to see proof of that.

※When a policy of accumulating equity capital (through a low payout ratio) is adopted, capital efficiency will decrease because capital will increase faster than profits. As capital efficiency declines, valuations fall. Please refer to here for details.

The following is a summary of remarks made at Chori’s AGM.


The 3-year mid-term business plan was mostly met in two years. Profits increased, equity increased but stock price did not increase at all, if anything has fallen. The stock’s valuation continues to decline. This means that the plan formulated by the Company did not improve corporate (shareholder) value.


Just accumulating equity capital, as in the case with Chori, will cause shareholder value to decline steadily. The more management tries to make it easier for themselves, the greater the damage to shareholders.


If there is a good M&A opportunity, at that point, it should be possible to borrow from a financial institution without even needing the cash on hand.


As the parent, is Toray being too laissez-faire with their subsidiaries? No matter what we minority shareholders say, as Toray, with over 50% ownership, remains indifferent, you could say there is no sense of pressure amongst directors below the president resulting in the current valuations.

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