Rengo Co (3941) Investor presentation summary

Capital allocation and investment discipline

• Asset monetization targets ¥60.0bn through sales and reduction of non-core assets and cross-shareholdings.

• Investment decisions increasingly use WACC and ROIC, focusing on profitability and recoverability.

• Capital allocation is shifting from business expansion to capital efficiency and shareholder value.

• Streamlining and divesting low-profit assets to focus on core business areas.

• Five-year plan reallocates free cash flow to shareholder returns and capital efficiency.

Shareholder returns and financial soundness

• Payout ratio set at 40% and minimum DOE at 3% to ensure stable and predictable returns.

• Flexible share repurchases up to ¥40.0bn are considered based on free cash flow and investment opportunities.

• Shareholder returns are provided within free cash flow, avoiding reliance on additional debt.

• Maintaining credit ratings and a stable capital structure is a priority.

• Enhancing value per share through capital reallocation and stable dividends.

Profitability, ROE, and corporate value enhancement

• Vision120 prioritizes ROE improvement, aiming for early recovery to a PBR above 1.0.

• Past investments are reviewed to ensure asset soundness and management efficiency.

• Strategic investments target high-quality growth and improved capital efficiency.

• Initial Vision120 implementation revealed challenges, but commitment to medium- and long-term value enhancement remains.

• Sustained free cash flow generation is a key goal for long-term corporate value.