(Translation)

April 26, 2024
To whom it may concern,
Company Name:

Morita Holdings Corporation

Representative:

Shinichi Kanaoka ,President

Securities Code:6455
Tokyo Stock Exchange (Prime Market)

Contact Person:

Shinya Murai, Director and Managing
Executive Officer(Phone: +81-6-6208-1910)

Announcement Regarding Action to Implement Management that is
Conscious of Cost of Capital and Stock Price

Morita Holdings Corporation at the meeting of its Board of Directors held on April 26, 2024,
resolved on action to implement management that is conscious of cost of capital and stock
price.
Please see the attached “Action to Implement Management that is Conscious of Cost ofCapital and Stock Price” for details.

Action to Implement Management that is
Conscious of Cost of Capital and Stock Price
April 26, 2024

Securities Code: 6455

https://www.morita119.com/en/© 2024 MORITA HOLDINGS CORPORATION

∎ Analysis of Current Situation（1/3）
Sales and profits deteriorated due to COVID and chassis supply delays, etc.

ConsolidatedFinancial
financial Results
results
Consolidated
Net sales (left axis)
Operating profit (right axis)
Net income (right axis)― Operating profit marginbillion JPY

100

Stock Price / PBRbillion JPY

End-of-period stock price

JPY

MultipleEnd-of-period PBR

20 2,00095

2.0
1,787

878584

1,663

8180

1,637

16
10.2%

10.5%

1,500

9.9%

9.7%

1.5
1,330
1,236

60

128.9

9.5

8.9

1.07

1.04

1,000

1.0

8.1
40

8

7.0

6.2%

6.2
5.4
200.796.00.67

5.1
4.0500

0
FY20

FY21

FY220.540
FY190.70

FY2300.0
FY19FY20

FY21

FY22

FY23© 2024 MORITA HOLDINGS CORPORATION

2∎ Analysis of Current Situation（2/3）
Market valuation declined due to loss of profit margin superiority amid expectations offinancial leverage utilization

Net Income Ratio

PBR = ROE x PER
ROE has not exceeded the cost of shareholders’ equity in

10%

recent years and is not in line with the medium-term targets.

8.0%

5%

4.9%

4.5%

0%

PBR / ROE
PBR

6.3%

6.4%
3.7%

PBR

Morita HD
Manufacturing industry
7.4%
6.5%
5.5%

FY19

ROE

FY20

FY21

FY22

FY23

ROE

Total Asset Turnover

1.4

14%

1.2Mid-Term
12%
Targets

Morita HD
Manufacturing industry

1.07

1.04

1.00.750.690.68

0.73

0.65

0.67

0.66

0.68

FY20

FY21

FY22

FY2310%0.79

10.2%
0.80.678.4%
0.6

1.00.70

8%

Cost of Capital ※：5%~7%

6.9%

6.7%

0.46%

0.22%

0.00%
FY20

FY21

FY22FY23※ Cost of capital is calculated based on CAPM (reference value)
Risk-free rate

Yield on 10-year
government bonds＋

Beta (β) sensitivity

Risk premium

Risks specific to theCompany

Average of historicalmethod and implied
method×0.74

0.0
FY194%

4.9%

FY190.5

Financial Leverage
Morita HD
Manufacturing industry

4.0
2.3

2.3

2.2

2.2

1.7

1.6

1.5

1.5

1.5

FY19

FY20

FY21FY22FY232.00.0© 2024 MORITA HOLDINGS CORPORATION

3∎ Analysis of Current Situation（3/3）
Failed to achieve growth due to unexpected changes in the external environment
PBR = ROE x PER
PER is stable but under industry average

PERMultiple

Morita HD

Prime/manufacturing industry

35
30.6
30
25

22.2

20
14.8

14.8

1510

14.6

13.0
10.8

11.9

10.5

50
FY19FY20FY21

FY22FY23© 2024 MORITA HOLDINGS CORPORATION

4∎ Action Policy
Steady implementation of strategies that lead to improvements in PBR components
PBR component

Net Income Ratio

ROEPER

Growth strategy

Financial strategy∎ Improve profitability throughniche-top strategy∎ R&D investment for
products and services highvalue-added∎ Make capital investments toimprove productivity

Total Asset Turnover∎ Reduce strategic
shareholdings withinsufficient significance forholding∎ Reduction of non-businessassetsFinancial Leverage∎ Implement long-term
investments that also use
debt

Expectations for Growth∎ Develop market throughniche-top strategy∎ Promote dialogue withinvestors∎ Cash allocation to supportgrowth strategies© 2024 MORITA HOLDINGS CORPORATION

5∎ Growth Strategy
Strategy to expand and develop niches with two growth vectors,
starting from the core niche-top(Area/customer segment)

Customer“Niche-top Strategy”

Niche-top
Provided value(Solutions)© 2024 MORITA HOLDINGS CORPORATION6∎ Factors Supporting Growth Strategy
Safeguarding lives and the environment. Securing peace of mind.
Technology, powered by visionary challenge.

Ability to create customer value∎ Strategic R&D∎ Open innovation∎ Synergies within group∎ Solution development/proposal
capabilities

GrowthStrategy

Management resources∎ Human resources for global growth∎ R&D center∎ Cash∎ Brand StrengthCore competences
1. Advanced disaster prevention-related technologies torespond to diverse disasters
2. Technology for application of mechatronics to disasterprevention and environmental solutions
3. Worldwide network of sales and services© 2024 MORITA HOLDINGS CORPORATION

7∎ Shareholder Return Policy∎ Dividend Policy
The basic policy is to maintain and increase stable dividends whilestrengthening the financial position and corporate infrastructure, with a target
DOE (dividend on equity ratio) of 2.5% or more.

∎ Acquisition and Cancellation of Treasury Stocks
Acquisition:

Implement flexibly to improve the capital ratio and as one of theshareholder return measures to complement the dividend policy
from a medium- to long-term perspective, taking into accountthe business environment, stock price trends, and financialconditions.

Cancellation: The ratio of treasury stocks shall be capped at around 10% of
the total number of stocks issued, and any portion exceeding

the maximum shall, as a rule, be cancelled.
© 2024 MORITA HOLDINGS CORPORATION

8∎ Cash Allocation
FY23-25
Cash Allocation
Cash-in∎ Flexibly control financial leverage,
including use of interest-bearing debt

∎ Reduce strategic shareholdings withinsufficient significance for holding∎ Reduce other non-business assets∎ Generate cash through market
development, product enhancements,
and productivity improvements∎ Generate cash through CCC
improvements

Borrowings
11 billion JPY

Reduction of nonbusiness assets
4 billion JPY

Cash-out

Growth strategy
investment
20 billion JPY∎ Accelerate R&D investment for
products and services high valueadded∎ Recruit and develop human capital inline with business strategy∎ Increase capacity and improve
efficiency of overseas production
sites∎ Promote synergies between Moritaand Bronto∎ Expand business through M&A

Investment forexisting businesses
10 billion JPY∎ Make capital investments to improve
productivity∎ Maintain and renew of manufacturing
facilities

Shareholder return
15 billion JPY[Dividends]∎ Continue and improve stabledividends with a target DOE of 2.5%
or more[Stock buybacks]∎ Implement flexibly, taking into
account the business environment,etc.

Operating C/F
30 billion JPY© 2024 MORITA HOLDINGS CORPORATION

9