Saturday, 18 May 2024


Oasis Calls for Improved Shareholder Return & Votes Against Chairman, Two Directors at Kumagai Gumi By

Natural Gas Inventory +95 bcf vs +88 bcf Expected By

(Stock Code: 1861 JT)

Oasis proposes a dividend of JPY160 per share

Oasis recommends shareholders vote against the reappointment of Chairman Yasunori Sakurano, Sumitomo Forestry alum Tatsuru Sato, and Nomination Committee Chair Shigeru Okada

HONG KONG–(BUSINESS WIRE)–Oasis Management Company Ltd. (Oasis) is the manager to funds that beneficially own over 10% of Japanese construction company Kumagai Gumi Co., Ltd. (1861 JT) (Kumagai Gumi or the Company). Oasis has adopted the Japan FSA’s Principles of Responsible Institutional Investors (a/k/a the Japan Stewardship Code) and in line with those principles, Oasis monitors and engages with its investee companies.

Oasis urges its fellow shareholders to vote FOR its shareholder proposal for a dividend of JPY 160 per share and vote AGAINST the reappointment of Chairman Yasunori Sakurano and incumbent directors Tatsuru Sato and Shigeru Okada at the upcoming 2024 AGM.

Vote FOR the Oasis Proposal

Dividend of JPY 160 per share (currently JPY 130)

In Kumagai Gumi’s new medium-term management plan, the Company projects that its ordinary income will double from JPY 15.7 billion in FY2024/03 to JPY 30 billion by FY2027/03. Yet, despite improving profitability, the Company reduced its ROE target from 12% to 10%. This mismatch of increasing ordinary income coupled with a decreasing ROE target indicates that the Company’s management is not planning on improving capital efficiency. In fact, it’s planning on reducing its capital efficiency. With the projected doubling of ordinary income and the current equity ratio, which is on par or better than its peers, the Company should improve its capital efficiency.

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Kumagai’s construction competitors have formulated dividend policies based on either high dividend-on-equity (DOE) ratios that allow for stable dividends, or higher payout ratios. For example, Obayashi has set a DOE ratio of 5% and Tokyu Construction has set a 4% DOE ratio. Hazama Ando and Nishimatsu both increased their dividend payout ratios to 70%. This compares to Kumagai Gumi’s current dividend of JPY 130 per share, which is equivalent to a payout ratio of 67% and a DOE of just 3.1%, well below peers.

Oasis strongly recommends that Kumagai Gumi set its dividend at a minimum of JPY 160 per share. Kumagai Gumi should adopt a dividend policy that sets the payout ratio at the higher of a minimum of 50%, or a DOE ratio of at…

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