Corporate disclosures increasing ahead of April 4 TSE realignment

Jiji Press

17:00 JST, March 29, 2022

TOKYO (Jiji Press) — Companies trading on the Tokyo Stock Exchange are increasingly disclosing their capital and investment strategies ahead of the TSE’s market realignment on April 4.

Firms to be listed on the exchange’s Prime new top-tier section are especially reviewing their business strategies and setting road maps for growth in order to attract investors, as the new market’s listing criteria are stricter than those of the TSE’s current top-tier first section, and companies are finding it necessary to make constant efforts to improve their corporate value.

Daisue Construction Co., currently listed on the First Section, held a briefing in January on its financial results for individual investors for the first time. At the meeting, the general contractor was bombarded with questions about dividends and business strategy, which led to the company starting to think about how to get investors to understand its competitive advantage.

“Investors are viewing us to decide which company they should choose,” a Daisue Construction official said.

Daisue Construction, based in Osaka, is set to be listed on the Prime section, but without meeting requirements such as on market capitalization for free-floating shares under a measure in place during the transition period.

In order to meet the requirements, the firm decided to expand its business domain beyond its mainstay residential condominium operations, and set target figures for investments and dividends.

“We considered steps from the viewpoint of how we can increase shareholders’ funds and reward them,” the official said. “The market realignment provided us with an opportunity to make reviews.

Toyo Machinery & Metal Co. , based in Akashi, Hyogo Prefecture, will also be listed on the Prime section under the transition measure. The company has decided to focus more on dividends for shareholders, and revised up its dividend plans and earnings forecasts.

“Responding to the realignment will lead to growth,” a Toyo Machinery & Metal official said, explaining that the market realignment prompted companies to use funds held as internal reserves for investment.

According to Mizuho Trust & Banking Co., companies are also starting to disclose medium-term business plans as well.

It also said that the contents of such plans are changing, with many of the plans by 500 major firms surveyed last autumn including nonfinancial information such as measures against climate change, as well as long-term growth strategies for the periods through 2050.

“Companies are beginning to feel they have to face the capital market,” an official from the bank’s corporate strategy development department said.