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).

Sanwa Technos aims to achieve an early realization of a PBR of more than 1.0 times, and has announced the strengthening of its shareholder return policy as one of its initiatives. As for the dividend policy, it aims to maintain stable dividends (never reduced since its over-the-counter listing), while taking into consideration the balance between the investment funds necessary for sustained growth and improvement of corporate value, and financial soundness for risk preparedness, and to provide profit returns according to the consolidated performance from a medium to long-term perspective, targeting a dividend payout ratio of 25-35%. Based on the same policy, it implemented a 5.0 yen increase in dividend per share compared to the previous year to 95.0 yen (dividend payout ratio of 28.8%) for the fiscal year ending March 2024. For the fiscal year ending March 2025, under its policy of strengthening shareholder returns, it plans to increase the regular dividend by 5.0 yen to 100.0 yen, and in addition, add a commemorative dividend of 10.0 yen for the company's 75th anniversary, making it 110.0 yen (same 69.0%) for the fourth consecutive year of dividend increases, in addition to introducing a shareholder benefit system as another measure aimed at increasing stable individual shareholders. QUO cards will be given to shareholders who hold 100 or more shares as of the end of March, with gift amounts varied depending on the holding period and the number of shares held: 1,000 yen worth of QUO cards for shareholders holding less than 500 shares for no more than 2 years; adding the long-term holding benefit※ (worth 1,000 yen) for shareholders holding for 2 or more years and presenting them with a QUO card worth 2,000 yen. For shareholders holding 500 or more shares, they will receive a QUO card worth either 2,000 yen or 3,000 yen. If we calculate the investment yield combining dividends and shareholder benefits based on the stock price on May 14th (2,232 yen), it will be in the 5% range for shareholders holding 100 shares, making it an attractive investment target for income gain purposes.

In order to increase the number of stable individual shareholders, the company has implemented a new shareholder benefit system. Shareholders who own 100 or more shares as of the end of each March will be given a QUO card according to the number of shares held and the holding period. For shareholders holding less than 500 shares for no more than 2 years, they will receive a QUO card worth 1,000 yen, and for shareholders who have held shares for 2 years or more, a long-term holding benefit※ (worth 1,000 yen) will be added and they will receive a QUO card worth 2,000 yen. For shareholders holding 500 or more shares, they will receive a QUO card worth either 2,000 yen or 3,000 yen. If we calculate the investment yield combining dividends and shareholder benefits based on the stock price on May 14th (2,232 yen), it will be in the 5% range for shareholders holding 100 shares, making it an attractive investment target for income gain purposes.

※The condition for receiving the long-term holding benefit is that they are recorded or registered continuously five times or more with the same shareholder number on the shareholder registry as of the end of March and September each year. Shareholders who continuously hold shares from the end of March 2023 will be entitled to the long-term holding benefit from the first year.

Although the company aims to achieve a PBR of more than 1.0 times, its PBR was in the 0.7x range for the fiscal year ending March 2024, with net assets per share of 3,174 yen. While it was in the 0.4x range at the end of March 2020, it has gradually increased its level by improving ROE and strengthening shareholder returns. Therefore, we believe that it is possible to achieve a PBR of more than 1.0 times if we continue our efforts to maintain and improve ROE, actively return profits to shareholders, and conduct IR/SR activities for raising awareness.

(Written by FISCO guest analyst, Jo Sato)