Latest news with #JapanStewardshipCode
Yahoo
4 days ago
- Business
- Yahoo
Ascender Capital Calls for Improved Capital Allocation Policy at Argo Graphics Inc (7595)
Argo Graphics operates a superior, stable business but remains severely undervalued Ascender calls for the cancellation of treasury shares from the SCSK TOB announced on 9 May 2025 and the sale of its cross-shareholding in SCSK Ascender opposes re-election of CEO and Chairman Ascender has filed Shareholder Proposals for the June 2025 AGM TOKYO, May 28, 2025--(BUSINESS WIRE)--Ascender Capital Limited ("Ascender Capital"), a Hong Kong-based investment firm focused on high-quality businesses across Asia, is a long-term investor in Japan's software and system integration sector, where it has allocated over half of its assets in recent years. The firm actively monitors more than 100 publicly listed companies in the space and has met with the management teams of over 50 since 2015. Ascender Capital has a strong track record of constructive engagement with companies to enhance long-term corporate value. In line with the objectives of the Japan Stewardship Code and global best practices, we have been engaging with Argo Graphics Inc. ("Argo Graphics" or "the Company") (ticker 7595) since December 2023, urging the Chairman and the Board to improve capital allocation and corporate governance. Ascender Capital is a long-term shareholder of Argo Graphics, currently holding approximately 2% of the Company's shares. Strong Operations Undermined by Poor Capital Allocation Since 2015, Argo Graphics has increased its operating margin from 7.3% to 14.7%, leading to 16% annual growth in operating income. Over the same period, cumulative free cash flow of ¥40 billion has largely accumulated on the balance sheet, unused. FY3/2025 was another strong year: revenue rose by 16.9%, operating income increased 11.2%, and FY3/2026 guidance targets a further 5.4% increase in operating profit. We commend management for these solid operational results, which reflect deep relationships with its large corporate clients and the pricing power of its core partners, Dassault Systèmes and IBM — whose software solutions command high switching costs and deliver strong value. Unfortunately, shareholders have seen limited benefit. The ¥45 billion in operating cash flow generated over the last decade has mostly remained idle. Excluding excess capital (defined as more than three months of SG&A) and new business capex, we estimate the Company's true ROE could exceed 100% — largely above the current 14% — and a testament to the company's business quality. The increase in the dividend payout from 32% to 40% — applicable only from next year — and the lack of any commitment to cancel the 20% of shares being repurchased in the Tender Offer Bid ("TOB") announced on 9 May 2025 are both disappointing. The market's negative reaction to these announcements reflects growing shareholder dissatisfaction — a clear rejection of the Chairman and Board's out-of-touch decisions and their failure to constructively engage with our proposals. Valuation Disconnect Despite its strong fundamentals, Argo Graphics trades at only 14x P/E — a 26% discount to the System Integrators (SI) sector average of 19x. After cancellation of the TOB shares, the P/E would drop to 11x, and the discount widen to 41%. This double discount is clearly not a reflection of business quality. It stems from ineffective capital allocation, persistent overcapitalization, and a governance structure in urgent need of reform. Shareholder Proposals Ahead of the upcoming June 2025 AGM , Ascender Capital submitted the following proposals in the interest of all shareholders: Dividends:a. Declare a special dividend of ¥218 per share to normalize the cash balance relative to operational needsb. Distribute a year-end dividend of ¥182 per share for the year ending 31 March 2025, resulting in a 75% payout ratio for FY3/2025 - a sustainable level reflecting Argo Graphics' asset-light model Expand buybacks by up to an additional 4.5 million shares (20% of shares outstanding), and immediately cancel all treasury shares, in line with best practices from Sumitomo Corp Even after implementing these measures and completing the SCSK TOB, the Company would still retain over ¥5 billion in cash and investments— well in excess of any reasonable operational requirements. Moreover, annual operating cash flow before dividends of more than ¥5 billion will continue to replenish reserves and fully support future investments, including the planned Hokkaido data center. Supporting Analysis No financial justification for maintaining such an overcapitalized balance sheet. As of March 2025, Argo Graphics' net cash and long-term investments were equivalent to 7.8 years of SG&A — an excessive buffer for a company with a 15-year record of uninterrupted positive cash flow, including during the Global Financial Crisis, the Tōhoku Earthquake, and the COVID-19 pandemic. Past M&A success was achieved with just ¥1.5 billion over ten years. Future deals of similar scale can be comfortably funded through operating cash flow or modest debt. The ¥10–15 billion cited by management as necessary in its mid-term plan is not justified. Cross-Shareholding with SCSK Argo Graphics continues to hold a ¥13 billion stake in SCSK. Now that SCSK has unwound its investment in Argo Graphics, a reciprocal sale should follow. SCSK trades at a P/E of 30x, with strong liquidity (¥2.6 billion daily), and a sale would align with Japan's governance code and regulatory guidance on reducing cross-shareholdings. We call on the Company to immediately sell this stake and redeploy the proceeds toward shareholder returns. Misuse of Treasury Shares and Cross-Shareholding Must End Following the TOB, the Company's treasury shareholding — which already stands at 4.7% — will rise to 25%. Yet management refuses to commit to cancelling these shares, in direct contradiction to best practice - as demonstrated by companies such as Sumitomo Corp. This mirrors its historical pattern: despite past buybacks, the number of shares outstanding has barely declined. The Company also facilitated the sale of the same TOB stake from founding shareholders to SCSK in 2008, entrenching cross-shareholding and management complacency. Governance Breakdown and Shareholder Disregard The CEO and Chairman's lack of constructive engagement over the past two years, and the Board's superficial dismissal of our shareholder proposals — as stated in its 19 May 2025 response — reflect a fundamental misunderstanding of capital allocation and a troubling disregard for fiduciary responsibility. Now that SCSK has exited, Argo Graphics no longer has a controlling shareholder and should be even more fully accountable to its public shareholders. We are also concerned by the absence of a credible succession plan. Chairman and CEO Yoshimaro Fujisawa is now 82 years old — nearly 20 years older than the average age of CEOs in the sector — and has chaired the Board since 2007. In light of these concerns, we oppose his reappointment , and call for a strengthened Board that aligns with the governance standards expected of a modern Japanese company in 2025. Further Information More details are available in the News section of our website or through these direct links: - Shareholder proposals in English Shareholder Proposals - ENG - Shareholder proposals in Japanese Shareholder Proposals - JPN - Improvement Plan for Argo Graphics Presentation and benchmarking - ENG DISCLAIMER Ascender Capital is the investment manager of private funds (the "Ascender Capitals Funds") that own shares in Argo Graphics. Ascender Capital has created this communication to enable fellow shareholders to carefully monitor how sincerely the board of directors and management of Argo Graphics address our concerns, listen to shareholders' views and endeavor to increase the value of Argo Graphics shares in the best interest of all shareholders. Ascender Capital is not and should not be regarded or deemed in any way whatsoever to be (i) soliciting or requesting other shareholders of Argo Graphics to exercise their shareholders' rights (including, but not limited to, voting rights) jointly or together with Ascender Capital, (ii) making an offer, a solicitation of an offer, or any advice, invitation or inducement to enter into or conclude any transaction or (iii) any advice, invitation or inducement to take or refrain from taking any other course of action (whether on the terms shown therein or otherwise). Further, this communication and information to be found on its Website do not purport to recommend the purchase or sale of any security nor do they contain an offer to sell or a solicitation of an offer to buy any security. Nothing in this communication or on the Website is intended to be, nor should it be construed or used as, investment, tax or legal advice. This communication and the Website exclusively represent the opinions, interpretations, and estimates of Ascender Capital in relation to Argo Graphics' business and governance structure. Ascender Capital is expressing such opinions solely in its capacity as an investment adviser of the Ascender Capital Funds. View source version on Contacts English release Jean-Charles TisserandEdouard Mercierinfo@ +852 3758 2608 Japanese release Ashton ConsultingTokyoascender@ +81 3 5425 7220 Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
4 days ago
- Business
- Yahoo
Ascender Capital Calls for Improved Capital Allocation Policy at Argo Graphics Inc (7595)
Argo Graphics operates a superior, stable business but remains severely undervalued Ascender calls for the cancellation of treasury shares from the SCSK TOB announced on 9 May 2025 and the sale of its cross-shareholding in SCSK Ascender opposes re-election of CEO and Chairman Ascender has filed Shareholder Proposals for the June 2025 AGM TOKYO, May 28, 2025--(BUSINESS WIRE)--Ascender Capital Limited ("Ascender Capital"), a Hong Kong-based investment firm focused on high-quality businesses across Asia, is a long-term investor in Japan's software and system integration sector, where it has allocated over half of its assets in recent years. The firm actively monitors more than 100 publicly listed companies in the space and has met with the management teams of over 50 since 2015. Ascender Capital has a strong track record of constructive engagement with companies to enhance long-term corporate value. In line with the objectives of the Japan Stewardship Code and global best practices, we have been engaging with Argo Graphics Inc. ("Argo Graphics" or "the Company") (ticker 7595) since December 2023, urging the Chairman and the Board to improve capital allocation and corporate governance. Ascender Capital is a long-term shareholder of Argo Graphics, currently holding approximately 2% of the Company's shares. Strong Operations Undermined by Poor Capital Allocation Since 2015, Argo Graphics has increased its operating margin from 7.3% to 14.7%, leading to 16% annual growth in operating income. Over the same period, cumulative free cash flow of ¥40 billion has largely accumulated on the balance sheet, unused. FY3/2025 was another strong year: revenue rose by 16.9%, operating income increased 11.2%, and FY3/2026 guidance targets a further 5.4% increase in operating profit. We commend management for these solid operational results, which reflect deep relationships with its large corporate clients and the pricing power of its core partners, Dassault Systèmes and IBM — whose software solutions command high switching costs and deliver strong value. Unfortunately, shareholders have seen limited benefit. The ¥45 billion in operating cash flow generated over the last decade has mostly remained idle. Excluding excess capital (defined as more than three months of SG&A) and new business capex, we estimate the Company's true ROE could exceed 100% — largely above the current 14% — and a testament to the company's business quality. The increase in the dividend payout from 32% to 40% — applicable only from next year — and the lack of any commitment to cancel the 20% of shares being repurchased in the Tender Offer Bid ("TOB") announced on 9 May 2025 are both disappointing. The market's negative reaction to these announcements reflects growing shareholder dissatisfaction — a clear rejection of the Chairman and Board's out-of-touch decisions and their failure to constructively engage with our proposals. Valuation Disconnect Despite its strong fundamentals, Argo Graphics trades at only 14x P/E — a 26% discount to the System Integrators (SI) sector average of 19x. After cancellation of the TOB shares, the P/E would drop to 11x, and the discount widen to 41%. This double discount is clearly not a reflection of business quality. It stems from ineffective capital allocation, persistent overcapitalization, and a governance structure in urgent need of reform. Shareholder Proposals Ahead of the upcoming June 2025 AGM , Ascender Capital submitted the following proposals in the interest of all shareholders: Dividends:a. Declare a special dividend of ¥218 per share to normalize the cash balance relative to operational needsb. Distribute a year-end dividend of ¥182 per share for the year ending 31 March 2025, resulting in a 75% payout ratio for FY3/2025 - a sustainable level reflecting Argo Graphics' asset-light model Expand buybacks by up to an additional 4.5 million shares (20% of shares outstanding), and immediately cancel all treasury shares, in line with best practices from Sumitomo Corp Even after implementing these measures and completing the SCSK TOB, the Company would still retain over ¥5 billion in cash and investments— well in excess of any reasonable operational requirements. Moreover, annual operating cash flow before dividends of more than ¥5 billion will continue to replenish reserves and fully support future investments, including the planned Hokkaido data center. Supporting Analysis No financial justification for maintaining such an overcapitalized balance sheet. As of March 2025, Argo Graphics' net cash and long-term investments were equivalent to 7.8 years of SG&A — an excessive buffer for a company with a 15-year record of uninterrupted positive cash flow, including during the Global Financial Crisis, the Tōhoku Earthquake, and the COVID-19 pandemic. Past M&A success was achieved with just ¥1.5 billion over ten years. Future deals of similar scale can be comfortably funded through operating cash flow or modest debt. The ¥10–15 billion cited by management as necessary in its mid-term plan is not justified. Cross-Shareholding with SCSK Argo Graphics continues to hold a ¥13 billion stake in SCSK. Now that SCSK has unwound its investment in Argo Graphics, a reciprocal sale should follow. SCSK trades at a P/E of 30x, with strong liquidity (¥2.6 billion daily), and a sale would align with Japan's governance code and regulatory guidance on reducing cross-shareholdings. We call on the Company to immediately sell this stake and redeploy the proceeds toward shareholder returns. Misuse of Treasury Shares and Cross-Shareholding Must End Following the TOB, the Company's treasury shareholding — which already stands at 4.7% — will rise to 25%. Yet management refuses to commit to cancelling these shares, in direct contradiction to best practice - as demonstrated by companies such as Sumitomo Corp. This mirrors its historical pattern: despite past buybacks, the number of shares outstanding has barely declined. The Company also facilitated the sale of the same TOB stake from founding shareholders to SCSK in 2008, entrenching cross-shareholding and management complacency. Governance Breakdown and Shareholder Disregard The CEO and Chairman's lack of constructive engagement over the past two years, and the Board's superficial dismissal of our shareholder proposals — as stated in its 19 May 2025 response — reflect a fundamental misunderstanding of capital allocation and a troubling disregard for fiduciary responsibility. Now that SCSK has exited, Argo Graphics no longer has a controlling shareholder and should be even more fully accountable to its public shareholders. We are also concerned by the absence of a credible succession plan. Chairman and CEO Yoshimaro Fujisawa is now 82 years old — nearly 20 years older than the average age of CEOs in the sector — and has chaired the Board since 2007. In light of these concerns, we oppose his reappointment , and call for a strengthened Board that aligns with the governance standards expected of a modern Japanese company in 2025. Further Information More details are available in the News section of our website or through these direct links: - Shareholder proposals in English Shareholder Proposals - ENG - Shareholder proposals in Japanese Shareholder Proposals - JPN - Improvement Plan for Argo Graphics Presentation and benchmarking - ENG DISCLAIMER Ascender Capital is the investment manager of private funds (the "Ascender Capitals Funds") that own shares in Argo Graphics. Ascender Capital has created this communication to enable fellow shareholders to carefully monitor how sincerely the board of directors and management of Argo Graphics address our concerns, listen to shareholders' views and endeavor to increase the value of Argo Graphics shares in the best interest of all shareholders. Ascender Capital is not and should not be regarded or deemed in any way whatsoever to be (i) soliciting or requesting other shareholders of Argo Graphics to exercise their shareholders' rights (including, but not limited to, voting rights) jointly or together with Ascender Capital, (ii) making an offer, a solicitation of an offer, or any advice, invitation or inducement to enter into or conclude any transaction or (iii) any advice, invitation or inducement to take or refrain from taking any other course of action (whether on the terms shown therein or otherwise). Further, this communication and information to be found on its Website do not purport to recommend the purchase or sale of any security nor do they contain an offer to sell or a solicitation of an offer to buy any security. Nothing in this communication or on the Website is intended to be, nor should it be construed or used as, investment, tax or legal advice. This communication and the Website exclusively represent the opinions, interpretations, and estimates of Ascender Capital in relation to Argo Graphics' business and governance structure. Ascender Capital is expressing such opinions solely in its capacity as an investment adviser of the Ascender Capital Funds. View source version on Contacts English release Jean-Charles TisserandEdouard Mercierinfo@ +852 3758 2608 Japanese release Ashton ConsultingTokyoascender@ +81 3 5425 7220 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Wire
4 days ago
- Business
- Business Wire
Ascender Capital Calls for Improved Capital Allocation Policy at Argo Graphics Inc (7595)
TOKYO--(BUSINESS WIRE)--Ascender Capital Limited ('Ascender Capital'), a Hong Kong-based investment firm focused on high-quality businesses across Asia, is a long-term investor in Japan's software and system integration sector, where it has allocated over half of its assets in recent years. The firm actively monitors more than 100 publicly listed companies in the space and has met with the management teams of over 50 since 2015. Improving capital allocation at Japanese software companies Share Ascender Capital has a strong track record of constructive engagement with companies to enhance long-term corporate value. In line with the objectives of the Japan Stewardship Code and global best practices, we have been engaging with Argo Graphics Inc. ('Argo Graphics' or 'the Company') (ticker 7595) since December 2023, urging the Chairman and the Board to improve capital allocation and corporate governance. Ascender Capital is a long-term shareholder of Argo Graphics, currently holding approximately 2% of the Company's shares. Strong Operations Undermined by Poor Capital Allocation Since 2015, Argo Graphics has increased its operating margin from 7.3% to 14.7%, leading to 16% annual growth in operating income. Over the same period, cumulative free cash flow of ¥40 billion has largely accumulated on the balance sheet, unused. FY3/2025 was another strong year: revenue rose by 16.9%, operating income increased 11.2%, and FY3/2026 guidance targets a further 5.4% increase in operating profit. We commend management for these solid operational results, which reflect deep relationships with its large corporate clients and the pricing power of its core partners, Dassault Systèmes and IBM — whose software solutions command high switching costs and deliver strong value. Unfortunately, shareholders have seen limited benefit. The ¥45 billion in operating cash flow generated over the last decade has mostly remained idle. Excluding excess capital (defined as more than three months of SG&A) and new business capex, we estimate the Company's true ROE could exceed 100% — largely above the current 14% — and a testament to the company's business quality. The increase in the dividend payout from 32% to 40% — applicable only from next year — and the lack of any commitment to cancel the 20% of shares being repurchased in the Tender Offer Bid ('TOB') announced on 9 May 2025 are both disappointing. The market's negative reaction to these announcements reflects growing shareholder dissatisfaction — a clear rejection of the Chairman and Board's out-of-touch decisions and their failure to constructively engage with our proposals. Valuation Disconnect Despite its strong fundamentals, Argo Graphics trades at only 14x P/E — a 26% discount to the System Integrators (SI) sector average of 19x. After cancellation of the TOB shares, the P/E would drop to 11x, and the discount widen to 41%. This double discount is clearly not a reflection of business quality. It stems from ineffective capital allocation, persistent overcapitalization, and a governance structure in urgent need of reform. Shareholder Proposals Ahead of the upcoming June 2025 AGM , Ascender Capital submitted the following proposals in the interest of all shareholders: Dividends: a. Declare a special dividend of ¥218 per share to normalize the cash balance relative to operational needs b. Distribute a year-end dividend of ¥182 per share for the year ending 31 March 2025, resulting in a 75% payout ratio for FY3/2025 - a sustainable level reflecting Argo Graphics' asset-light model Expand buybacks by up to an additional 4.5 million shares (20% of shares outstanding), and immediately cancel all treasury shares, in line with best practices from Sumitomo Corp Even after implementing these measures and completing the SCSK TOB, the Company would still retain over ¥5 billion in cash and investments— well in excess of any reasonable operational requirements. Moreover, annual operating cash flow before dividends of more than ¥5 billion will continue to replenish reserves and fully support future investments, including the planned Hokkaido data center. Supporting Analysis No financial justification for maintaining such an overcapitalized balance sheet. As of March 2025, Argo Graphics' net cash and long-term investments were equivalent to 7.8 years of SG&A — an excessive buffer for a company with a 15-year record of uninterrupted positive cash flow, including during the Global Financial Crisis, the Tōhoku Earthquake, and the COVID-19 pandemic. Past M&A success was achieved with just ¥1.5 billion over ten years. Future deals of similar scale can be comfortably funded through operating cash flow or modest debt. The ¥10–15 billion cited by management as necessary in its mid-term plan is not justified. Cross-Shareholding with SCSK Argo Graphics continues to hold a ¥13 billion stake in SCSK. Now that SCSK has unwound its investment in Argo Graphics, a reciprocal sale should follow. SCSK trades at a P/E of 30x, with strong liquidity (¥2.6 billion daily), and a sale would align with Japan's governance code and regulatory guidance on reducing cross-shareholdings. We call on the Company to immediately sell this stake and redeploy the proceeds toward shareholder returns. Misuse of Treasury Shares and Cross-Shareholding Must End Following the TOB, the Company's treasury shareholding — which already stands at 4.7% — will rise to 25%. Yet management refuses to commit to cancelling these shares, in direct contradiction to best practice - as demonstrated by companies such as Sumitomo Corp. This mirrors its historical pattern: despite past buybacks, the number of shares outstanding has barely declined. The Company also facilitated the sale of the same TOB stake from founding shareholders to SCSK in 2008, entrenching cross-shareholding and management complacency. Governance Breakdown and Shareholder Disregard The CEO and Chairman's lack of constructive engagement over the past two years, and the Board's superficial dismissal of our shareholder proposals — as stated in its 19 May 2025 response — reflect a fundamental misunderstanding of capital allocation and a troubling disregard for fiduciary responsibility. Now that SCSK has exited, Argo Graphics no longer has a controlling shareholder and should be even more fully accountable to its public shareholders. We are also concerned by the absence of a credible succession plan. Chairman and CEO Yoshimaro Fujisawa is now 82 years old — nearly 20 years older than the average age of CEOs in the sector — and has chaired the Board since 2007. In light of these concerns, we oppose his reappointment , and call for a strengthened Board that aligns with the governance standards expected of a modern Japanese company in 2025. Further Information More details are available in the News section of our website or through these direct links: - Shareholder proposals in English Shareholder Proposals - ENG - Shareholder proposals in Japanese Shareholder Proposals - JPN - Improvement Plan for Argo Graphics Presentation and benchmarking - ENG DISCLAIMER Ascender Capital is the investment manager of private funds (the 'Ascender Capitals Funds') that own shares in Argo Graphics. Ascender Capital has created this communication to enable fellow shareholders to carefully monitor how sincerely the board of directors and management of Argo Graphics address our concerns, listen to shareholders' views and endeavor to increase the value of Argo Graphics shares in the best interest of all shareholders. Ascender Capital is not and should not be regarded or deemed in any way whatsoever to be (i) soliciting or requesting other shareholders of Argo Graphics to exercise their shareholders' rights (including, but not limited to, voting rights) jointly or together with Ascender Capital, (ii) making an offer, a solicitation of an offer, or any advice, invitation or inducement to enter into or conclude any transaction or (iii) any advice, invitation or inducement to take or refrain from taking any other course of action (whether on the terms shown therein or otherwise). Further, this communication and information to be found on its Website do not purport to recommend the purchase or sale of any security nor do they contain an offer to sell or a solicitation of an offer to buy any security. Nothing in this communication or on the Website is intended to be, nor should it be construed or used as, investment, tax or legal advice. This communication and the Website exclusively represent the opinions, interpretations, and estimates of Ascender Capital in relation to Argo Graphics' business and governance structure. Ascender Capital is expressing such opinions solely in its capacity as an investment adviser of the Ascender Capital Funds.
Yahoo
15-05-2025
- Business
- Yahoo
Oasis Announces a Second Campaign -- A Decade After the First -- to Create A Better Kyocera
*Over the last ten years, Kyocera has underperformed its peers with its stock price lagging, profitability deteriorating, and ROE declining *Kyocera's diversification strategy has resulted in its failure to maximize on its core competencies, missing substantial opportunities in high growth markets *The Company continues to operate loss-making businesses and invest heavily in technologies that have little chance of achieving a material return on investment *Kyocera has recently announced restructuring plans to head off risks of low approval at the upcoming AGM, but these plans are inadequate *Oasis urges Kyocera to implement seven key changes to dramatically boost its operating performance and raise returns on capital More information available at HONG KONG, May 15, 2025--(BUSINESS WIRE)--Oasis Management Company Ltd. ("Oasis") is manager to funds that beneficially own shares in Kyocera Corporation (6971 JP) ("Kyocera" or the "Company"). Oasis has adopted the Japan FSA's "Principles of Responsible Institutional Investors" (a.k.a. the Japan Stewardship Code) and in line with those principles, Oasis monitors and engages with its investee companies. Oasis first approached Kyocera in 2015 with proposals to divest loss-making businesses and reduce cross-shareholdings in order to achieve a much-needed turnaround, but the Company failed to implement any of these suggestions. Since then, Kyocera's stagnation and weak performance has only become more evident, to the frustration of all stakeholders. Support for Kyocera's management plummeted at its Annual General Meeting (AGM), with the approval rate for the Company President falling from 96% in 2015 to just 65% in 2023. In response, management has recently announced reforms, including divesting underperforming businesses (representing 10% of revenue), selling one-third of its KDDI shares, and implementing JPY400bn in buybacks over the next four years. Unfortunately, we believe these reforms are inadequate and do not address the Company's key issues. Whilst Kyocera has excellent technical capabilities in its core businesses, including Ceramic Packages and Fine Ceramic Components, Kyocera has failed to maximize on opportunities in its core businesses due to over diversification and subsequent lack of focus. Managing such a diverse array of businesses has made agile decision-making nearly impossible and has limited Kyocera's ability to develop effective business strategies. As a result, Kyocera has fallen behind its specialist competitors as reflected by its effectively flat stock price over the last ten years compared to Maruwa Co., Ltd., TDK Corporation, and Ibiden Co., Ltd., which saw gains of +1,118%, +191%, and +159% respectively over the same period. Kyocera's plan to sell one-third of its KDDI holdings and implement a JPY400 billion buyback over the next two years appears to be reactionary rather than carefully considered. Kyocera owns cross-shareholdings of over JPY1.7 trillion, including its 15.29% stake in KDDI, and received a total dividend of almost JPY50 billion in the last fiscal year. We believe that, in the short-term, Kyocera should use a mix of leverage and sales of cross-shareholdings to finance JPY1 trillion of buybacks over the next four years. Without deeper reforms, Kyocera's ROE will likely remain under 5% and cross-shareholdings, as a proportion of shareholders' equity, will remain far above the ISS threshold of 20% of net assets, leading to lower approval ratings as shareholders demand ever increasing accountability for operational performance, capital efficiency and improved corporate governance. To address these issues, Oasis urges Kyocera to implement the following seven-point plan: Divest non-core businesses amounting to over JPY660 billion of revenue. Exit the Organic Packages to prevent further losses. Restructure its KAVX subsidiary to achieve higher margins in line with peers. Stop losses by halting investment into GaN and millimeter-wave technologies which have little potential to produce material returns. Focus on its core business such as ceramics to capture untapped opportunities. Commit to aggressive M&A to reinforce core businesses. Announce a buyback program of JPY1 trillion over the next four years, amounting to approximately 37% of the Company. By implementing this plan, we believe that the stock could see an upside of over 90% from current levels. Seth Fischer, Founder & Chief Investment Officer of Oasis, said: "Kyocera's excessive diversification has prevented it from long realizing its full potential. The Company continues to support underperforming businesses while failing to prioritize investment and growth opportunities within its best businesses such as ceramics packaging, and the automotive and semiconductor sectors. With cross-shareholdings still accounting for 53% of its net assets and an ROE of just 0.8%, the time for meaningful change is now. Management needs to address the twin problems of over-diversification and over-capitalization of its balance sheet by exiting underperforming businesses, leaning into its best growth opportunities, and taking a much more ambitious stance on unwinding cross-shareholdings to improve returns on capital." Full details can be viewed on the homepage of All stakeholders are encouraged to contact Oasis at info@ *** Oasis Management Company Ltd. manages private investment funds focused on opportunities in a wide array of asset classes across countries and sectors. Oasis was founded in 2002 by Seth H. Fischer, who leads the firm as its Chief Investment Officer. More information about Oasis is available at Oasis has adopted the Japan FSA's "Principles for Responsible Institutional Investors" (a.k.a. the Japan Stewardship Code) and, in line with those principles, Oasis monitors and engages with our investee companies. The information and opinions contained in this press release (referred to as the "Document") are provided by Oasis Management Company ("Oasis") for informational or reference purposes only. The Document is not intended to solicit or seek shareholders to, jointly with Oasis, acquire or transfer, or exercise any voting rights or other shareholder's rights with respect to any shares or other securities of a specific company which are subject to the disclosure requirements under the large shareholding disclosure rules under the Financial Instrument and Exchange Act. Shareholders that have an agreement to jointly exercise their voting rights are regarded as Joint Holders under the Japanese large shareholding disclosure rules and they must file notification of their aggregate shareholding with the relevant Japanese authority for public disclosure under the Financial Instruments and Exchange Act. Except in the event that Oasis expressly enters into the agreement as a joint holder requiring such disclosure, Oasis does not intend to take any action triggering reporting obligations as a Joint Holder. The Document exclusively represents the opinions, interpretations, and estimates of Oasis. View source version on Contacts For all inquiries, please contact:Taylor Hallmedia@ Sign in to access your portfolio
Business Wire
15-05-2025
- Business
- Business Wire
Oasis Announces a Second Campaign -- A Decade After the First -- to Create A Better Kyocera
HONG KONG--(BUSINESS WIRE)--Oasis Management Company Ltd. ('Oasis') is manager to funds that beneficially own shares in Kyocera Corporation (6971 JP) ('Kyocera' or the 'Company'). Oasis has adopted the Japan FSA's 'Principles of Responsible Institutional Investors' (a.k.a. the Japan Stewardship Code) and in line with those principles, Oasis monitors and engages with its investee companies. Oasis first approached Kyocera in 2015 with proposals to divest loss-making businesses and reduce cross-shareholdings in order to achieve a much-needed turnaround, but the Company failed to implement any of these suggestions. Since then, Kyocera's stagnation and weak performance has only become more evident, to the frustration of all stakeholders. Support for Kyocera's management plummeted at its Annual General Meeting (AGM), with the approval rate for the Company President falling from 96% in 2015 to just 65% in 2023. In response, management has recently announced reforms, including divesting underperforming businesses (representing 10% of revenue), selling one-third of its KDDI shares, and implementing JPY400bn in buybacks over the next four years. Unfortunately, we believe these reforms are inadequate and do not address the Company's key issues. Whilst Kyocera has excellent technical capabilities in its core businesses, including Ceramic Packages and Fine Ceramic Components, Kyocera has failed to maximize on opportunities in its core businesses due to over diversification and subsequent lack of focus. Managing such a diverse array of businesses has made agile decision-making nearly impossible and has limited Kyocera's ability to develop effective business strategies. As a result, Kyocera has fallen behind its specialist competitors as reflected by its effectively flat stock price over the last ten years compared to Maruwa Co., Ltd., TDK Corporation, and Ibiden Co., Ltd., which saw gains of +1,118%, +191%, and +159% respectively over the same period. Kyocera's plan to sell one-third of its KDDI holdings and implement a JPY400 billion buyback over the next two years appears to be reactionary rather than carefully considered. Kyocera owns cross-shareholdings of over JPY1.7 trillion, including its 15.29% stake in KDDI, and received a total dividend of almost JPY50 billion in the last fiscal year. We believe that, in the short-term, Kyocera should use a mix of leverage and sales of cross-shareholdings to finance JPY1 trillion of buybacks over the next four years. Without deeper reforms, Kyocera's ROE will likely remain under 5% and cross-shareholdings, as a proportion of shareholders' equity, will remain far above the ISS threshold of 20% of net assets, leading to lower approval ratings as shareholders demand ever increasing accountability for operational performance, capital efficiency and improved corporate governance. To address these issues, Oasis urges Kyocera to implement the following seven-point plan: Divest non-core businesses amounting to over JPY660 billion of revenue. Exit the Organic Packages to prevent further losses. Restructure its KAVX subsidiary to achieve higher margins in line with peers. Stop losses by halting investment into GaN and millimeter-wave technologies which have little potential to produce material returns. Focus on its core business such as ceramics to capture untapped opportunities. Commit to aggressive M&A to reinforce core businesses. Announce a buyback program of JPY1 trillion over the next four years, amounting to approximately 37% of the Company. By implementing this plan, we believe that the stock could see an upside of over 90% from current levels. Seth Fischer, Founder & Chief Investment Officer of Oasis, said: " Kyocera's excessive diversification has prevented it from long realizing its full potential. The Company continues to support underperforming businesses while failing to prioritize investment and growth opportunities within its best businesses such as ceramics packaging, and the automotive and semiconductor sectors. With cross-shareholdings still accounting for 53% of its net assets and an ROE of just 0.8%, the time for meaningful change is now. Management needs to address the twin problems of over-diversification and over-capitalization of its balance sheet by exiting underperforming businesses, leaning into its best growth opportunities, and taking a much more ambitious stance on unwinding cross-shareholdings to improve returns on capital." Full details can be viewed on the homepage of All stakeholders are encouraged to contact Oasis at info@ *** Oasis Management Company Ltd. manages private investment funds focused on opportunities in a wide array of asset classes across countries and sectors. Oasis was founded in 2002 by Seth H. Fischer, who leads the firm as its Chief Investment Officer. More information about Oasis is available at Oasis has adopted the Japan FSA's 'Principles for Responsible Institutional Investors' (a.k.a. the Japan Stewardship Code) and, in line with those principles, Oasis monitors and engages with our investee companies. The information and opinions contained in this press release (referred to as the "Document") are provided by Oasis Management Company ('Oasis') for informational or reference purposes only. The Document is not intended to solicit or seek shareholders to, jointly with Oasis, acquire or transfer, or exercise any voting rights or other shareholder's rights with respect to any shares or other securities of a specific company which are subject to the disclosure requirements under the large shareholding disclosure rules under the Financial Instrument and Exchange Act. Shareholders that have an agreement to jointly exercise their voting rights are regarded as Joint Holders under the Japanese large shareholding disclosure rules and they must file notification of their aggregate shareholding with the relevant Japanese authority for public disclosure under the Financial Instruments and Exchange Act. Except in the event that Oasis expressly enters into the agreement as a joint holder requiring such disclosure, Oasis does not intend to take any action triggering reporting obligations as a Joint Holder. The Document exclusively represents the opinions, interpretations, and estimates of Oasis.
