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Late/Mar/2022 – Proposal for DOE implementation

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Hibiki Path Advisors(”Hibiki”)made a presentation (link below) to the management of ARCLAND SAKAMOTO CO., LTD. (“Arcland Sakamoto”) regarding the introduction of stock-based compensation for directors and of Dividend on Equity (DOE) as its dividend policy in late March.

Arcland Sakamoto seemed to particularly understand that the introduction of DOE improves the predictability of dividends, which reassures long-term investors, and we also had an impression that they would seriously consider the introduction of stock-based compensation. It was also positive that we received their comment they would continue to make efforts to catch the attention of investors in Prime market where a vast number of companies are crowded.

Hibiki will continue to hold Arcland Sakamoto from long-term perspective as its valuation P/B approx. 0.65x (as of 28 Apr. 2022) is one of the cheapest levels in the past 10 years, and we believe that the stock price does not properly reflect its potential synergies with VIVAHOME, which are expected to be realized sooner.

Arcland Sakamoto’s dividend policy still remains abstract and its dividend payout ratio is low at 8.7% (as of Feb. 2022).

Hibiki will continue to discuss future measures (inc. dividend policy) with Arcland Sakamoto’s management to improve its market valuation and report back to you in our media, and will keep carrying out our supportive engagement to Arcland Sakamoto!

This document does not constitute an offer, recommendation or solicitation to buy or sell any security or enter into any other transaction. Hibiki does not purport to provide any investment, financial, legal or other expert advice or recommendation in this document.