Hibiki Path Advisors Sent an Open Proposal Letter to Zenkoku Hosho Co., Ltd. (7164) on Measures to Improve Corporate Value and ROE

TOKYO–(BUSINESS WIRE)–Hibiki Path Advisors (“Hibiki”) is a Singapore-based engagement investment company focusing on Japanese equities. Hibiki, through customer accounts, own shares of Zenkoku Hosho Co., Ltd. (“Zenkoku”).

Market valuation of Zenkoku’s stock has been on a downward trend past few years although it has successfully continued to expand its business as well as its value-per-share (Book value-per-share).

Historically, Zenkoku started as a guarantor for public loans in 1981, and subsequently expanded into the housing loan guarantee business of private financial institutions in 1997. Taking advantage of its independent positioning, it has grown rapidly by expanding its client network, and in 2019, it became the top in Japan with a guaranteed loan balance exceeding 13 trillion yen. In 2020, it also acquired a A-range credit rating, which proves that its financial base is solid. The current loan guarantee balance reached 15.4 trillion yen (at the end of the 22/3 fiscal year), an absolute top position with market share of 8.2% (estimated) of domestic private housing loans. We understand that Zenkoku is a growing company and we are one of its supporting shareholders.

We analyzed the situation deeply, organized it into two key issues; superficial issues (on IR expression) and essential issues (on ROE PBR relationship) before sending a proposal letter to Board of Directors outlining various measures to tackle these issues. In particular, we proposed (i) significant changes in capital policy including implementation of minimum 70% payout ratio, and (ii) to improve on their asset management as key agenda to prevent the decline in Return-on-Equity.

We urge the management team to take this proposal from a minority shareholder with sincerity and consider this proposal thoroughly, which, we believe, is beneficial to all shareholders of Zenkoku, including management, employees and business partners. We are hereby publicizing the letter as we would also like other shareholders to consider these measures independently and utilize it in your respective discussion with the management of Zenkoku.

(Letter to Zenkoku Hosho Co., Ltd. on 26/08/2022)

http://www.hibiki-path-advisors.com/en/message/2022/post-3175/

29,8, 2022

Contacts

Hibiki Path Advisors

Director and Chief Investment Officer

Yuya Shimizu

www.hibiki-path-advisors.com
[email protected]