January 25, 2024
Name of Company
Representative

K A G A E L E C T R O N I C S C O ., LT D .
Ryoichi Kado,
Representative Director, President & COO(Stock Code: 8154 Tokyo Stock Exchange, Prime Market)
Yasuhiro Ishihara,
Contact
Senior Executive Officer
Head of Administration Headquarters
Tel: +81-(0)3-5657-0111

Action to Implement Management that is Conscious of
Cost of Capital and Stock Price
KAGA ELECTRONICS CO., LTD. (the “Company”) hereby announces that the Board ofDirectors adopted a resolution on January 25, 2024, regarding its policy on action toimplement management that is conscious of the cost of capital and stock price, as
described below, with the aim of sustainable growth and medium- and long-term
corporate value enhancement.
1. Current Situation
The Company has established its Medium-Term Management Plan 2024 for the threeyear period from the fiscal year ended March 2023 to the fiscal year ending March
2025. Under its basic policies – “further reinforcement of profitability,” “reinforcementof management base,” “creation of new businesses,” and “promotion of SDGsmanagement” – the plan sets management targets for the fiscal year ending March2025, the final fiscal year of the plan, for KPIs comprising net sales, operating income,and ROE, as follows.

Net Sales

Management Targets for FY2025/3
750 billion yen
Organic growth: 600 billion yen
Including new M&As: 150 billion yen

Operating Income

30 billion yen or higher

ROE

stable 10％ or higher

In the fiscal year ended March 2023, the first fiscal year of the plan, the Company
continued to set new record highs for net sales and each level of profit while also
recording its highest-ever ROE, which indicates capital efficiency. This was partly due tothe tailwind provided by global supply shortages of semiconductors and electroniccomponents. Against the backdrop of this strong performance, the announcement of
the financial results for the fiscal year ended March 2022 sparked a clear upward trend
in the Companyʼs stock price, which had previously stagnated at discount levels. Since
February 2023, the Companyʼs PBR has maintained a stable level of over 1.0.
-1-FY2020/3(Results)

FY2021/3(Results)

FY2022/3(Results)

FY2023/3(Results)

FY2024/3(Forecasts)

Net Sales443.6

422.3

495.8

608.0

550.0

Operating Income
Profit attributable toowners of parent

10.0

11.4

20.9

32.2

25.0

5.8

11.3

15.4

23.0

18.0

ROE (%)

7.6

13.5

15.7

19.6

13.3

Stock prices (yen)

1,702

2,480

3,255

5,010

-

PBR (times)

0.58

0.75

0.87

1.05

-

（billion yen）

Note: Stock price and PBR are calculated based on the closing value on the final day ofeach fiscal year.

2. Views on ROE
ROE can be divided into three components: net income margin, financial leverage, andtotal asset turnover. As shown below, the Company has set a “stable 10% or more,”with a consciousness of the cost of shareholdersʼ equity, as its management target ROE
under the Medium-Term Management Plan. This is premised on the Companyʼs viewthat it will be able to achieve an ROE of between 12% and 15%, estimated from its
most recent performance and future outlook.
The most recent results for ROE have easily exceeded the Companyʼs estimated cost ofshareholdersʼ equity, which is approximately 7% to 8%.
FY2020/3(Results)

FY2021/3(Results)

FY2022/3(Results)

FY2023/3(Results)

FY2025/3(Outlook)

Net profit margin (%)

1.3

2.7

3.1

3.8

3.0~3.5

Financial leverage (times)

2.7

2.6

2.6

2.4

2.0~2.5

Total asset turnover (turns)

2.1

1.9

1.9

2.2

Around 2.0

ROE (%)

7.6

13.5

15.7

19.6

12.0~15.0

6.6

8.1

7.5

8.1

10.0

<Reference>
Cost of equity(%)

3. Future Initiatives
The Company will steadily implement the measures formulated under Medium-Term
Management Plan 2024, further strengthening and accelerating these measures tocontinue to achieve robust results. This will enable it to receive a proper valuation of its
business growth potential and earnings potential from the stock market and continue toimprove its PBR. Its main measures are the following four points.
Measure (1): Steadily implement Medium-Term Management Plan 2024
The Company will engage in maintaining and improving business growth and profitability
through the steady implementation of the various measures established in the MediumTerm Management Plan, aiming to achieve the management targets in the final fiscal
year of the plan.
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Measure (2): Enhance shareholder satisfaction
The Company will engage in enhancing shareholder satisfaction through the steady
implementation of the shareholder return policy established under the Medium-Term
Management Plan (1. consolidated dividend payout ratio of 25–35% as a measure ofstable dividends, 2. pay special dividends as performance-linked dividends, and 3.
flexibly and strategically implement share repurchases).
Under the next medium-term management plan, the Company will further deepen
discussions aimed at further advancing and enhancing shareholder return measures.
Measure (3): Promote sustainability management
The Company has engaged in CSR and ESG activities for some time. The SDGs
Committee, chaired by the President & COO, will play a central part in deepening theseactivities and promoting sustainability management Group-wide.
In the fiscal year ending March 2025, specifically, the Company will engage inquantifying greenhouse gas emissions and formulating reduction targets, and aim toenhance ESG evaluation through external institutions such as the TCFD and CDP.
Measure (4): Maintain and further strengthen proactive IR activities
The Company will further deepen the regular communication of management
information that it has implemented for some time, centered on the Investor Relations& Public Relations Department, which is a section specializing IR. These activities
include company briefing sessions, financial results briefings, and other IR events forinvestors, as well as communication through the Companyʼs IR site, Integrated Report,and media (economics journals and specialist magazines). In addition, the President &COO will play a central role in energetically undertaking constructive dialogue withshareholders and investors, including those overseas.
The opinions and other comments received through these IR activities will be shared inmeetings of the Board of Directors and utilized, including in the review of management
strategy.

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