About our Shareholder Proposal to Chori | 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

About our Shareholder Proposal

The shareholder proposals are as follows.

Proposal 1. Election of one director

Proposal 2. Revision of the provisions of articles with regard to a change in business

Proposal 3. Transfer of Important Assets

Proposal 4. Revision of the provisions of articles with regard to the Dissolution of Cross-shareholdings

(Refer to the linked pages for details.)

Proposal to add director who will help improve shareholder value

 Since starting the investment in 2017, Strategic Capital has continued communications with the Company and put forth a number of proposals, including those detailed in 2-4 above, all in the sincere hope of increasing shareholder value. However, given the current composition of the Board of Directors (click here for details) and management policy, it has become increasingly clear that management of Keihanshin does not pursue the improvement of shareholder value. Hence, we decided to exercise our shareholder proposal right to nominate an outside director for election.

 By electing Strategic Capital’s representative, Tsuyoshi Maruki, as an outside director for the Board, he will utilize his knowledge of the capital markets and experience as an activist to dramatically increase the shareholder value of the Keihanshin.

 Please click here for Tsuyoshi Maruki’s profile.

Measures to reflect the fair value of real estate properties in Keihanshin’s shareholder value

 The market value of the real estate properties owned by the Company is 163.3 billion yen, while the book value of those properties is 95.2 billion yen. There is a large unrealized capital gain (for more details click here) that is not being reflected in the current shareholder value.

 To properly realize the potential value of those real estate properties, we proposed that “Keihanshin create a REIT and become a REIT operating company rather than continuing its real estate leasing business” (details here). Our shareholder proposal is aimed to realize the above through the AGM.

<Image of Keihanshin’s business if our proposal is approved>

(Source: Strategic Capital)

”Fair Value” in Shareholder Proposal

 The fair value of ¥ 198.5 billion estimated in the shareholder proposal is calculated from the figures stated in the Keihanshin’s Annual Report as seen below.

 We believe that these figures are conservative. We hope the assets will be sold either to the REIT or 3rd party at a higher price and the proceeds will be used to increase shareholder value.

<Calculation of Fair Value of Real Estate>

(Source: Annual Report)

Our view on cost of equity

Assumptions: g= 3.0%, ROE = 6.2% (1), PBR = 0.62 (2)
Result: 8.2%

Comment: Cost of Equity calculated based on the average stock price from January 6 to May 20 is 8.4%

(1) ROE is calculated by dividing the forecasted net income by equity capital of Mar 2020.
(2) Current PBR is calculated using unrealized gains on real estate for rental purposes. These figures are as of May 20, 2020. See here regarding unrealized gains.

The ratio of favour votes to our proposals

The ratio of favour votes to our proposals is below.
Please see here for details.

(Source: Strategic Capital based on extraordinary report and proxy statement in 2020)

  • 株式会社ストラテジックキャピタル

The lastest updates are
Toray’s AGM in 2020