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).

Hatena <3930> recognizes that returning profits to shareholders is an important management issue and intends to decide profit-sharing measures by taking into account the financial condition, performance, cash flow situation, future funding needs, etc. However, for the time being, the focus is on strengthening internal reserves, prioritizing funds for enhancing corporate structure, investments for business expansion, etc., and believes that enhancing corporate value through profit growth is the best way to return value to shareholders. Therefore, the policy is to continue withholding dividends for the time being.

It is expected that the company will turn to increased sales and profits after the July 2025 period, but the recent stock price has been in the lowest range since listing due to continued poor performance over the past 1-2 years, with PBR persisting at less than 1 (Net assets per share at the end of July 2024 period is 866.28 yen). We believe that skepticism about the company's profit growth scenario is one of the reasons for the low stock price, and it is expected that if favorable earnings trends are confirmed in future quarterly financial results, such concerns will be dispelled, increasing the company's visibility in the stock market.

(Written by FISCO guest analyst, Jo Sato)