On August 23, Hibiki Path Advisors (hereinafter referred to as “we”) held an interview with the management and executives of Kawai Musical Instruments Manufacturing Co. Ltd(hereinafter referred to as “Kawai”).
We have long pointed out that one of the reasons why the P/E ratio of the Company’s stock price is still in the 7-8x range, which is excessively low compared to its major competitors, is that the capital market does not fully recognize the Company’s capabilities. To overcome this cognitive bias, we have been proposing fundamental improvements to their IR disclosure strategy, including the presentation of KPIs that are easy for sell/buy side analysts to follow on an ongoing basis (see letter sent on May 8. (Proposal to Enhance Kawai’s Corporate Value))
We analyzed their IR materials for the past 10 years, made several suggestions, and had a fruitful exchange of views with them. Although there is an issue in regards to industry-wide reliable data not being availabe, we would like to continue our discussions on how should Kawai deal with the capital market as one of the leaders in the industry. We hope to introduce some of the contents of this engagent discussion in our video presentation at a later date.
One of the most valuable take-aways from this meeting was that there was a clear indication of drastic change in Kawai’s approach to branding strategy as a “total” piano manufacturer. Unlike Yamaha, which is a comprehensive “music” company, and Steinway, which specializes in high-end “grand” pianos, Kawai is an all-rounder in pianos. Management teams as well as key executives of different markets (US, Europe, Asia) in Kawai seemed to have been in deep discussion regarding the brush-up of branding and corporate image as the “global total piano maker”. With this we can feel, although Kawai is already a well recognized global brand, there are still huge room to improve. This meeting we had with Kawai executives was constructive, and we would like to continue to engage with them.
There is a space in Hamamatsu station within Shinkansen gate, where a Shigeru Kawai SK-EX concert hall grand piano, Kawai’s top-of-the-line brand, is on display for the public to freely play (the piano is very popular, and It’s rare to see the seat is open). Our Chief Investment Officer Shimizu, was able to enjoy the wonderful sound of the piano, even though he is not very good at playing it!
SK-EX played by Yuya Shimizu
(1st movement from J.S. Bach Partita #1 B flat Major)
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