I Emailed my Portfolio Companies Asking About TSE Reform Compliance. Here Are Their Responses
As I’ve shared on Substack and X, I’ve been sending emails to every company in my Japanese portfolio that hasn’t complied with the Tokyo Stock Exchange (TSE) request to improve corporate governance. It’s a simple, polite email asking companies why they aren’t on the exchange’s monthly published ‘good’ list of companies that have complied so far. That ‘good’ list is overwhelmingly large companies, but small companies are complying. Just at a slower pace.
In 1 week I’ve already heard back from 6 companies and I’ll be sharing their responses below. I encourage everyone who owns stock in any company not currently on the TSE good list to reach out to the company via email and ask them why they aren’t on it and inform them of the TSE request.I used ChatGPT to write an email in Japanese and linked the TSE request as well as the TSE good list and asked why they aren’t on it. This requires minimal effort and can only help.
Given how ignored and tiny many of these companies are, I suspect I may have been the only investor to reach out in some time.
Sanko Techno (TYO 3435)
This company outright told me that they plan on complying with the TSE request and even gave me a specific date when they expect to make it on the TSE’s good list. This was surprising! I added to my position a bit after this reply.
Shareholders should expect a plan for demonstrating that ‘management that is conscious of capital costs and stock prices’ in May 2024 with the company’s next medium term plan.
Sanyo Industries Ltd (TYO 5958)
This company acknowledged the TSE request and that they plan on disclosing their response in the future.
Canare Electric Co Ltd, (TYO 5819)
Canare acknowledges that they’ve been asked specifically for numerical targets by the TSE and for those targets to be disclosed to shareholders. The company is ‘considering efforts to increase PBR to 1x’ and will be making a public disclosure when they’re ready.
Nankai Plywood (TYO 7887)
They disclosed that they’re analyzing the situation and formulating a plan to comply with the TSE requests, but can’t elaborate specifically to me.
Nippon Yamamura Glass (TYO 5210)
This is a new entry into the cheap Japanese basket which I haven’t written about before. They acknowledge the request and are considering ways to address it.
Sonocom (TYO 7902)
They acknowledge the TSE request and are in the process of coming up with a plan of improvement.
While all of these responses, except the one from Sanko Techno, were generic, it is reassuring to hear 1) they aren’t ignoring me and chose to reply and 2) they acknowledge the TSE request and say they’re working on a plan. These don’t sound like responses that intend on ignoring the TSE request.
I’ve added to my Sanko Techno (TYO 3435) position based on their reply. Many ‘plans’ to comply with the TSE requests fall short of making meaningful change, but a decent plan can lead to quick share price increases. Onamba (TYO 5816) went up 40% in just a few days after announcing their plan. I suspect companies that unveil any kind of improved governance plan will see an improvement in share price.
Once again, I encourage others to reach out as well. This can only help and takes minimal effort.
Appendix: Here’s the email I sent. Please do not copy/paste it and have ChatGPT write up your own. It only takes a minute.
件名:東京証券取引所の新規制への準拠に関するお問い合わせ
[Company Name] 経営チーム 様
お世話になっております。[Company Name] の継続的な支援者および投資家として、東京証券取引所(TSE)による規制の発展に注目しております。ご存知の通り、TSEは2023年3月31日に、プライム市場およびスタンダード市場に上場している企業に対し、資本コストおよび株価を意識した経営実施の重要性を強調するガイドラインを発表しました。この取り組みは、透明性と戦略的な財務計画の重要性を今日のビジネス環境において強調しています。
https://www.jpx.co.jp/news/1020/20230331-01.html
[Company Name] がTSEの新しい指針に公に準拠していることを示す企業の公式リストに現在含まれていないことに気づき、[Company Name] の立場と今後の計画に関して敬意を持ってお問い合わせすることにしました。TSEの要請に準拠している企業のリストはこちらで確認することができます:https://www.jpx.co.jp/equities/follow-up/02.html。私たちは、貴社がこのリストに名を連ねることを心より願っています。
[Company Name] の顧客、ビジネスパートナー、そして広く社会による見方は、こうした事項に対する私たちのスタンスによって影響を受ける可能性があります。TSEの取り組みは、規制遵守の問題だけでなく、持続可能で責任あるビジネス慣行へのコミットメントとしても見られています。[Company Name] がこれらのガイドラインに沿っていることを確実にすることは、ステークホルダーとの信頼と誠実さを維持するために重要です。
[Company Name] の持続的な成功と成長への信念と真剣な関心から、この件について書かせていただいています。TSEの要請に沿うことで、私たちの企業が責任ある経営と財務の透明性のリーダーとしての評判をさらに固めることができます。
[Company Name] がTSEのガイドラインに準拠する計画に関して、何か洞察または計画を共有していただけますか?貴社のフィードバックを大変感謝し、[Company Name] の卓越性と持続可能なビジネス慣行へのコミットメントを投資家やステークホルダーに再確認するのに役立ちます。
この件にご注意を払っていただき、[Company Name] の価値を高めるためのご努力に感謝申し上げます。貴社からのご返信を楽しみにしており、[Company Name] の更なる成功への道のりを引き続き支援していきたいと思っています。
敬具、
Disclosure: I own shares in all of the stocks mentioned in this article. None of this is investment advice. Everything in this post is my own opinion and I could be wrong. Do your own due dilligence. The largest position in my Japanese basket is less than 2.5% of my entire portfolio. Most positions are less than 1%. I take a diversified basket approach to this theme.
Edit 03/27/2024: Forgot to include Sonocom (TYO 7902) which replied well before this article went up. I updated the post.
I love this use of chatgpt. I've only used it in generating code. I'm not a Japanese speaker at all so if this does a better job than Google translates that very encouraging. I'm going to look through my JP holdings this week and see if I need to do this.
Thanks!
Was surprised by the depth of the response by Sanko Techno. Looking forward to their medium term plan which will include their response to the TSE and plans to comply.