Actions for Realizing Management That Emphasizes Cost of Capital and Stock Price

Furthermore, since the announcement of our Long-Term Vision 2035 and Medium-Term Management Plan 2030, we have actively engaged in dialogue with shareholders and investors, and we recognize that market understanding of our planned portfolio transformation and growth strategies is steadily advancing. Against this backdrop, our price-to-book ratio (PBR) has hovered above 1.0x.

However, we recognize that reaching a PBR above 1.0x is not the end goal. Rather, it is essential that we strive to attain the corporate value we aspire to through sustainable earnings growth and continuous improvements in capital efficiency.

To boost the P/E ratio (growth expectations), we will continuously communicate our growth strategies anchored in addressing social issues as presented in our Long-Term Vision 2035 alongside the concrete progress under Medium-Term Management Plan 2030. At the same time, we will further strengthen constructive dialogue with shareholders and investors. Furthermore, by steadily delivering results through our growth strategies and disclosing these achievements in a timely and transparent manner, we will strive to enhance market understanding and valuation of our sustainable growth potential.

By maximizing corporate value through these initiatives, we will meet the expectations of all our stakeholders, including shareholders and investors.

Under TC Compass, we are driving initiatives for business portfolio transformation and implementing growth strategies, as well as strengthening our management foundation to support this change. To achieve sustainable enhancement of corporate value, we are advancing transformations across key areas—human resources, governance, and risk management—thereby building a resilient corporate structure capable of responding flexibly and swiftly to a rapidly changing business environment.

In our human resource strategy, designed to foster a corporate culture that embraces challenges, we are reviewing our personnel and evaluation systems while strengthening the development and acquisition of specialized talent. Furthermore, we are creating an environment where diverse individuals can perform to their full potential, thereby reinforcing our human capital to support sustainable growth.

In terms of governance, we are enhancing both the oversight and executive functions by introducing a C-suite structure. At the same time, we are establishing a swift and effective decision-making framework built from the perspective of group-wide optimization.

Furthermore, by utilizing a Risk Appetite Framework (RAF), we visualize the risk-return profile of each business unit to allocate capital based on growth potential, profitability, and capital efficiency. This approach enables us to balance appropriate risk-taking with enhancing capital efficiency.

We are also promoting a digital strategy centered on AI and data utilization to accelerate productivity improvements and new value creation. Through the refinement of operational processes and the realization of data-driven management, we aim to strengthen our competitive advantage and boost earnings power.

We position fostering awareness of capital efficiency as a management priority. In support of this objective, we have introduced the ROIC spread, a metric that reflects both the cost of capital and risk-return, into the performance evaluation systems of all divisions, firmly embedding capital-efficiency-driven management across the organization.

Reflecting their specific business characteristics, each division strives to generate returns exceeding the cost of capital (ROIC > WACC). We promote business operations with a strong consciousness of capital efficiency that permeates down to the frontline level. Through these initiatives, we aim to improve company-wide ROE and achieve the sustainable enhancement of corporate value.

Furthermore, we are accelerating the optimization of our business portfolio through the continuous monitoring of profitability, growth potential, and capital efficiency. Simultaneously, we are strengthening the allocation of management resources to growth and strategic businesses expected to yield high profitability and generate robust future cash flows. These encompass FMV leasing, MRO, data centers, battery storage, and corporate investments. Moving forward, we will continue to transition toward a business portfolio that seamlessly aligns growth with capital efficiency.