Apr 16, 2024
SAKATA INX CORP.

SAKATA INX CORPORATION to implement managementthat accounts for capital costs and share priceIn its meeting held February 14, 2024, the Board of Directors of SAKATA INX CORPORATION (“Company”)
resolved to implement the following improvement policies and measures based on its understanding of the current
state of Company capital costs, returns on capital, and share price.
1. Understanding of current state
The Company’s price-to-book-value ratio (PBR) has been below 1.0 since 2018.
We consider the two factors below to be the main causes of this PBR level:(i) Return on equity (ROE) has been trending at roughly the same level as the Company’s cost of equity (6 to 7%).
As a result, returns on capital are not sufficiently above the cost of equity.
(ii) The Group’s efforts to strengthen corporate value and its growth strategies are not sufficiently well understoodamong stakeholders.

PBR(times)ROE(%)
PER(times)

FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2023

1.44

0.95

0.93

0.88

0.72

0.65

0.73

11.4

6.3

5.5

6.9

6.1

5.3

8.1

12.60

15.10

16.90

12.80

11.80

12.30

9.10

2. Improvement policies and measures
In addition to striving to improve returns on capital and pursue sustained growth, the Company recognizes sharing
a persuasive growth vision with stakeholders to be essential to boosting the Group’s corporate value. Accordingly,
we will implement various measures based on the following policies:(1) Profitability enhancements, growth strategy
Achieving our vision and targets by implementing the various strategies and measures described in the long-term
strategic vision and medium-term management plan
(2) Financial and capital strategies
Implementing executive financial and capital strategies reflecting consideration for balancing financial soundness,investment in growth, and returns to shareholders(3) Sustainability strategy
Aiming to contribute to a sustainable society through business activities(4) Strengthening investor relations
Sharing the Group’s persuasive growth vision through dialogue with stakeholders and enhancement of disclosure

1

Nikkyohan Building, 1-4-25, Kohraku, Bunkkyo-ku, Tokyo, 112-0004 https://www.inx.co.jp/

See the Annex for more details.
Additionally, refer to the new medium-term management plan and the briefing materials on the medium-term
management plan 2026.

Contact
Corporate Communications Dept.
Corporate Relations Div.

2E-Mail

inx-prir@inx.co.jp

Nikkyohan Building, 1-4-25, Kohraku, Bunkkyo-ku, Tokyo, 112-0004 https://www.inx.co.jp/

Toward implementation of management that accounts
for capital costs and share price
SAKATA INX CORPORATIONTSE Prime | Securities code: 4633

Current state(ROE [%])ROE(PBR [times])

PBR

1.44

14.0

11.9

1.19

1.50

◼ Although ROE had been trending steadily
through 2017, it has remained low, at roughly thesame levels as the Company’s cost of equity
since 2018.

1.25◼ This is due mainly to lower profitability, which is
attributable to higher-raw-materials prices forprinting inks.

1.27

12.0

11.3 11.4

10.0

1.00

0.88
0.95

8.1

0.72
0.65
The Company’s cost ofequity: 6–7%

0.75

0.73

6.9
6.3

6.1
5.3

4.0

0.25

2016

2017

2018

◼ Low PBR is also attributable to the low level of
persuasiveness of the Group’s growth vision.

0.50

5.52015◼ Low PBR may be due to low returns on capital.

0.93

8.0

6.0

Analysis

2019

2020

2021

2022

2023

We expect improvement of returns oncapital and pursuit of sustained growth tocontribute to improved PBR
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Increasing corporate value
To strengthen corporate value

PBR

ROE

PER

Increasing corporate value

Increasing returns on capital (present)

Pursuit of sustained growth (future)

Policies toward increasing corporate value
Increasing returns on capital

234

Pursuit of sustained growth

Financial and capital
strategies3 Sustainability strategy

Achieving targets of long-term
strategic vision andmedium-term management plan

Balancing financial soundness,investment in growth, and returns
to shareholders

Contributing to asustainable society

Sharing a persuasive growthvisionBusiness profitability
enhancements

Business investment

Implementing sustainability
management

Strengthening dialogue
with stakeholders

New business creation

Returns to shareholders

1Measures

1Profitability enhancements,
growth strategy

24 Strengthening IR

Enhancement of disclosure

Optimal capital structure

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Measures to strengthen corporate value ①

1Profitability enhancements,
growth strategy

Achieving targets of long-term strategic visionand medium-term management plan

Business profitability enhancements

New business creation

We will analyze and evaluate growth potential andprofitability in each business and optimize
invested capital in low-growth and low-profit
businesses, while increasing asset turnover ratio
and maximizing capacity utilization throughefficiency management.

In the four target areas of electronics, energy,
healthcare, and bio-based and non-fossil materials,
we aim to create new businesses to meet society’s
needs based on strategies and tactics formulated
by researching market environments.

Also, we will reallocate resources such as R&D,
capital investment, and human resources topriority businesses that can promise high growthand profitability, aiming for further businessexpansions.
In addition to these efforts, we willadvance M&A activities, new businesscreation, and other initiatives tooptimize the business portfolio.

Also, by proactively using open innovation
including joint R&D with other firms, industryacademia collaboration, and investment instartups to leverage external technologies andideas with high affinity with our technologies andservices, we will generate new value from joint
efforts and accelerate the process forcreating new businesses.

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Measures to strengthen corporate value ②2Financial and capital
strategies

Balancing financial soundness, investment ingrowth, and returns to shareholders

Business investment

Returns to shareholders

Optimal capital structure

Implementing proactive investment
in sustained growth

Considering returns toshareholders to be an importantmanagement topic, we willcomprehensively consider
business results, investment plans,
and the business environment andpay proactive and stable dividends
while acquiring treasury stock withagility.

We will pursue an optimal capital
structure to maximize corporate
value.

To increase returns on capital, wewill enhance the managementfoundations by investing JPY40.0 B
during the period of the current
medium-term management plan
2026 (CCC-II).
We will allocate JPY15.0 B of thisfigure to strategic investment infuture growth.

Based on this policy, we will targeta total payout ratio of 50% or higher
or DOE of 2.5% or higher
during the period of thecurrent medium-term
management plan.

While giving comprehensive
consideration to soundness tomaintain a robust financial
foundation, we will use interestbearing debt with tax-reduction
effects to increase financial
leverage within an appropriate
extent, to lower WACC.
Furthermore, we will improve
capital efficiency
through reducing asset
holdings andcross-shareholdings.

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3 Sustainability strategy

Contributing to a sustainable society
Implementing sustainability management

4 Strengthening IR

Sharing a persuasive growth vision withstakeholders
Strengthening dialogue with stakeholders
Enhancement of disclosure

We will implement sustainability initiatives ascentral parts of our business activities, in areas
such as solutions to environmental issues including
climate change, protecting human rights,
developing rewarding and safe working
environments, and governance, including
compliance and appropriate controls.
We will create social and environmental value bybeing sensitive to the demands of diverse
stakeholders and responding appropriately tochanges in society.

We will establish the Corporate Relations Division toenhance internal and external communication.
We will increase opportunities for dialogue withstakeholders, including meetings with investors andCompany briefings, to permeate understanding of ourgrowth vision.
We will proactively disclose financial information,management strategies, and sustainability
information, and enhance the content of theIntegrated Report, website, and financial
reports to strengthen disclosure in responseto stakeholder needs.
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Note concerning this document

The forward-looking statements in this document are based on information available at the time the document
was prepared and on certain assumptions deemed reasonable, which entail uncertainties. Please note that theinformation in this document is subject to change.

<Contact>
Corporate Communications Department, SAKATA INX CORPORAION
https://www.inx.co.jp/english/contact/

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