We analyze and evaluate the current situation regarding measures to realize management conscious of cost of capital and stock price, and update our future approach once every half-year for improvement.
Management Conscious of Cost of Capital and Stock Price / Dialogue with Shareholders and Investors
Latest Initiatives
Current recognition
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| Item | Unit | FY2017.3 | FY2018.3 | FY2019.3 | FY2020.3 | FY2021.3 | FY2022.3 | FY2023.3 | FY2024.3 | FY2025.3 | FY2026.3 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| ROA | ％ |
5.9 |
6.0 |
5.9 |
4.5 |
- |
- |
- |
3.6 |
3.8 |
3.9 |
| ROE | ％ |
10.9 |
10.5 |
10.0 |
6.4 |
- |
- |
4.1 |
7.6 |
8.0 |
8.4 |
| PBR | x |
1.42 |
1.33 |
1.33 |
0.98 |
1.17 |
1.12 |
1.12 |
1.22 |
1.17 |
1.34 |
| ROIC | ％ |
5.7 |
5.7 |
5.6 |
4.2 |
- |
- |
- |
3.3 |
3.5 |
3.7 |
ROE
- We recognize that our cost of equity is around 6 to 7%, based on calculations from CAPM and the inverse of the PER, as well as discussions with shareholders and investors.
- We aim to further improve ROE to 10% or more in FY2032.3, which is the KGI target of “To the Next Stage” 2034, and will reduce the cost of equity and expand the equity-spread by enriching discussion with shareholders and investors.
PBR, PER
- Due to rising expectations for growth after the announcement of “To the Next Stage” 2034, the PBR remains at the same level as before COVID-19.
- Since PBR is the product of ROE (rate of return) multiplied by PER (growth expectations), we aim to improve PBR through both enhanced rate of return and increased growth expectations.
ROIC, WACC
- JR East's weighted average cost of capital (“WACC”) is calculated to be around 3.5%, reflecting the increases in the cost of equity and the cost of debt.
- Return on invested capital (ROIC) is similar to return on assets (ROA : operating income to total assets), so we aim to expand the ROIC-WACC spread by working to improve ROA in each of our dual axes of Mobility and Lifestyle solutions.
- In Mobility, assets are expected to increase to a certain extent due to investments in safety, etc. However, we will improve ROA and ROIC by improving top line to increase profits in addition to optimization of assets. In Lifestyle Solutions, we will improve ROA and ROIC by increasing profitability and asset turnover through further growth of existing businesses, the acceleration of the real estate rotation business, etc.
Action to Implement Management that is Conscious of Cost of Capital and Stock Price
- The framework of action to implement management that is conscious of cost of capital and stock price is outlined below.
- In light of our Group being in a capital intensive industry as well as our Group’s characteristic of engaging in the business of holding assets of a highly public nature, and therefore difficult to dispose, aim to improve ROE and PBR through improvement of ROA.
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For details of specific initiatives, please refer to the Latest Initiatives materials.
