Notification Concerning Action to Implement Management
That is Conscious of Cost of Capital and Stock Price2023/12/08 on Japan | Page. 1/2

Friday, December 8, 2023

FOR IMMEDIATE RELEASE
Kanamoto Co., Ltd.
Stock Code 9678
Tokyo Stock Exchange Prime Market, Sapporo Stock Exchange

President and CEO

TetsuoKanamoto<Contact Information>

Director and Corporate Officer, Division
Manager, Accounting Division andGeneral Manager, Public Relations Office

Shun Hirose

Telephone: +81-11-209-1631

Notification Concerning Action to Implement Management
That is Conscious of Cost of Capital and Share Price
Kanamoto Co., Ltd. hereby announces that at a meeting of the Board of Directors held on December 8, 2023, it has
made a deliberation and resolution as follows, based on the request of the Tokyo Stock Exchange regarding action toimplement management that is conscious of cost of capital and share price.
■ Analysis of current circumstances
The current status of the Company is that ROE (return on equity) is less than 8% and PBR (price-to-book ratio) has
fallen below 1x. Accordingly, as stated in “Notice Regarding Revision of the Medium-Term Management Plan”
announced on December 9, 2022, we have set the following numerical targets for 2030: consolidated net sales of ¥225.0billion, consolidated operating profit of ¥20.0 billion, ROE of over 8% and total return ratio of over 50%.
Various calculations are applied to calculate the equity cost of a company. The Company uses the CAPM (CapitalAsset Pricing Model) and based on that, aims to achieve a capital efficiency that exceeds our current capital cost ofapproximately 7%. Wishing to make capital efficiency a priority, the Company plans to increase both the utilization andunit price of our rental assets. Our immediate goal is to quickly recover to an ROE of 8% or over, and then in the medium
to long term, we wish to raise that to 10% or over. At the same time, we will meet our shareholders’ expectations bycontinuing our stable dividend policy and targeting a total return ratio of 50% or higher.
In addition, with the aim of elevating its position in the global industry from its current ranking of eighth to become oneof the global top five through initiatives such as the continued investment in rental assets and human capital, anddomestic and global M&A, the Company will strive to achieve sustained growth.
■ In light of the above analysis, the Company will concentrate on strengthening the following initiatives:(1) Increasing profitability● Reaching our objective for the current fiscal year, which is the final year of the Medium-Term Management Plan
“Creative 60” (fiscal year ended October 31, 2020 to fiscal year ending October 31, 2024)● Achieving our target of “ROE of over 8%” stated in the 2030 Vision ahead of schedule(2) Strengthening the policy for shareholder returns● The basic policy of the Company is to enhance the return of profit to its shareholders while securing internal
reserves necessary for future business development and management structure reinforcement. The Company
will continue stable dividends in conjunction with the 2030 Vision target of “a total return ratio of 50% or higher”
while ensuring financial soundness and also take a flexible approach to buying back its own shares.
(3) Continuing to carry out proactive IR activities● The Company will provide detailed explanations to its shareholders through holding a variety of briefing sessions,along with other approaches, and work to increase the opportunities to deepen shareholders’ understanding ofNotification Concerning Action to Implement Management
That is Conscious of Cost of Capital and Stock PricePage. 2/2

strategies for future growth.
■ Specific measures for increasing profitability(1) Improving the utilization rate of rental assets● The Company will work to improve the utilization rate of rental assets based on future forecasts of DX-related
utilization, concentrating on constantly managing the optimal placement of the rental assets in each region(Hokkaido, Tohoku, Kanto & Koushinetsu, West Japan, and Kyushu) and those held by affiliates.
(2) Implementing consolidation, closing or merging of business offices● We will either consolidate, close or merge business offices that have experienced profitability drops as a resultof intra-group operational redundancy in a region stemming from M&A, and changes in the external environment.
(3) Adjustment of rental unit prices to appropriate prices● The purchase prices are rising for many of our rental assets, most notably our main rental assets of heavymachinery. While providing detailed explanation to our customers, we will adjust the rental unit prices to more
appropriate prices.
* For details, please refer to the attached document.
End2030 Vision
TOP5 in the global construction equipment rental industry

Positioning of the Medium-term
Corporate Management Plan
2020

Emissions from use of fuel/emissions from purchased or acquired
electricity, steam, heat, and cooling
50% reduction by 2030 compared to 2013

Five years of“strengthening the foundation” for 2030

2024

Sales, profit, ROE, total payout ratio, human resources, etc.

2030

2030
Vision Realization

2020 – 2024
Medium-Term Corporate Management Plan “Creative 60”

We will improve corporate value by further strengthen the resilience of our business by developing our business with anawareness of sustainability and by actively responding to various changes in the social environment under the threepriority measures.

2030 Vision
While aiming to build a foundation for sustainable growth, we will contribute to the realizationof a sustainable society as a good corporate citizen that coexists with society.

2030 Numerical Targets
Net sales(Consolidated)

Operating profit(Consolidated)¥225 billion¥20 billion

ROE
Total return
ratioOverOver8%50%

Copyright © 2023 Kanamoto Co., Ltd. All Rights Reserved.

Investment Strategy Cash Allocation
Promote flexible investment strategy that meet actual demand
Cash Allocation
・ In addition to capital investment in rental assets based on demand trends, we will invest resources in growthinvestments from a medium to long-term perspective
・ In order to improve capital efficiency, we will implement proactive and continuous shareholder returns
・ We strive to balance operating cash flow and investment cash flow to maintain financial soundness
・ For growth investment opportunities such as M&A, we will use financial leverage while monitoring financial
soundness

Rental equipment
investment, etc.

Ascertain demand trends, make strategic
investments to achieve sustainable growth andimprove productivity in core domestic
businesses, and strengthen overseas
businesses.

M&A, etc.

Aggressive investment in acquisition of growth
foundation such as new businesses and M&A inorder to improve group value.

Dividend payout andacquisition of treasury
shares, etc.

Continue to pay stable dividends with a target ofa total payout ratio of 50% or more.

Cash flowsEBITDA

Copyright © 2023 Kanamoto Co., Ltd. All Rights Reserved.