Shareholder return strategy: No. 1<3562> changed its shareholder return policy along with the publication of the new mid-term management plan "Evolution 2027" and showed the direction of significantly strengthening shareholder return. So far, we have aimed for stable dividends (30% dividend payout ratio as a guide), but in the future, we plan to implement stable and continuous shareholder dividends based on a policy of aiming for a 30% dividend payout ratio, regardless of changes in annual performance. A notable feature is that we have set a minimum dividend of the previous year's annual dividend per share and will continue to increase dividends, which is a significant enhancement of shareholder return and can also be evaluated as a expression of confidence in profit growth. Moreover, we have a policy of "flexibly implementing under financial discipline" for acquiring our own shares, showing a more proactive stance.* *Considering the gap between our own perception of the stock price and the market evaluation, ROE, capital efficiency, and CF level, we have a policy of implementing it flexibly. Dividends for the fiscal year ending February 2024 will increase by 1 yen from the previous year, as expected at the beginning of the period, to 33 yen per share (mid-term dividend of 16.5 yen and year-end dividend of 16.5 yen). We also acquired 340,000 shares of our own stock (with a purchase price of 397 million yen). Despite the anticipated decline in profits for the fiscal year ending February 2025, we are expected to follow the policy of increasing dividends every period and issue a dividend of 1 yen per share (a commemorative dividend for the 35th anniversary of our founding), with an expected increase of 2 yen from the previous year to 35 yen per share (mid-term dividend of 17.5 yen and year-end dividend of 17.5 yen).

Regarding the dividends of Nippon Electrical Engineering (1723), the basic policy is to pay out surplus dividends twice a year at mid-term and year-end. The decision-making body for these surplus dividend payouts is the Board of Directors for mid-term dividends and the Shareholders' Meeting for year-end dividends. The company's capital policy is to implement a balanced capital policy that takes into account 'growth investment', 'shareholder returns', and 'financial soundness' with the goal of achieving a consolidated ROE of 10% or more for long-term corporate value improvement. In particular, regarding shareholder returns, the company plans to implement a progressive dividend (assuming an ROE of 10% and a DOE of 4%, the dividend payout ratio will be 40%) based on the standard of 4% DOE (unless there are significant events that affect performance), and also conduct flexible share buybacks. Therefore, the dividend per share for the March 2024 period was 184.0 yen (mid-term dividend of 76.0 yen and year-end dividend of 108.0 yen (ordinary dividend of 88.0 yen and commemorative dividend of 20.0 yen for the 20th anniversary of the listing)). For the March 2025 period, there will be no commemorative dividend, but the ordinary dividend is scheduled to be 176.0 yen per share (mid-term dividend of 82.0 yen and year-end dividend of 94.0 yen), an increase of 12.0 yen per share, and the dividend payout ratio will exceed 30% for both periods.

(Author: FISCO guest analyst Nobumitsu Miyata)