Initiatives for enhancing corporate value
1. Measures for enhancing corporate value
G-7 Holdings <7508> aims to accelerate profit growth through maintaining and increasing ROE levels and actively investing in growth, including sustainability efforts in order to enhance market expectations and improve market valuation (P/E ratio). The company has already been able to consistently maintain ROE levels that exceed the shareholder capital cost (5-8%) and the PBR has been above 1, but the P/E ratio has been ranging from 10 to 16 times, highlighting the importance of increasing profit growth rate for enhancing corporate value.
Regarding the capital allocation approach for the two periods from the fiscal year ending March 2025 to March 2026, the plan includes allocating approximately 22 billion yen for growth investments (including 12 billion yen for M&A, 6 billion yen for new store openings and new businesses, and 4 billion yen for store renovations), and expecting around 4.5 billion yen for shareholder returns. The estimated operating cash flow generated during these two periods is about 16 billion yen, with any shortfall covered by interest-bearing debt. Specifically, about 5 billion yen has been allocated for the previous two M&A deals, and the remaining budget of 7 billion yen will be used as new M&A funds.
Planning to implement a progressive dividend of over 40 yen per share with a dividend payout ratio of 30% or more
2. Shareholder return plan
Regarding the dividend policy until the fiscal year ending March 2026, the company plans to continue with the progressive dividends (dividend payout ratio of 30% or more, dividend of over 40 yen per share). The planned dividend per share for the fiscal year ending March 2025 is 40.0 yen (dividend payout ratio of 31.4%), the same as the previous period. With nine consecutive years of dividend increases up to the fiscal year ending March 2024 and a plan for shareholder returns of about 4.5 billion yen (around 50 yen per share as dividend) over the next two periods, there is a good chance of further dividend increases if the performance continues to progress well.
(Written by FISCO guest analyst, Jo Sato)
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