Our proposal in previous dialogues
We proposed Chori 1) to accomplish high leverage by using borrowings, 2) to employ an appropriate usage of borrowings such as distribution to shareholders and improve capital efficiency, and etc.
As our presentation material below, the average capital-to-asset ratio of the same sector (wholesale trade) in TOPIX is 33%, but Chori’s is 43% in the current quarter.
Chori belongs to wholesale trade sector and other companies in that sector utilize higher leverage in their business. Chori needs to improve its low leverage.
（Source：Tokyo Stock Exchange）
Distribution to shareholders and reasonable acquisitions can improve capital efficiency after increasing financial leverage by borrowings.
We introduce some options of distribution to shareholders although, considering the composition of shareholders, it depends on the intention of the largest shareholder (Toray).
As Chori’s trading volume is small, we proposed Tender Offer and other option rather than share buyback from the market. Of course, other than share buyback, big increase in dividends can be executed regardless of the trading volume and it improves capital efficiency, too.