Oasis Message to our Fellow Kumagai Gumi Shareholders
Shareholders must take action for ACCOUNTABILITY NOW at Kumagai Gumi
Under Japan’s Stewardship Code, it is our duty as shareholders to hold management accountable and engage in order to improve
The time for change and a better Kumagai is NOW
Having failed to achieve targets year after year and having overseen the destruction of corporate value, shareholders must stop giving Kumagai’s management the benefit of the doubt and finally hold them truly accountable for failing all stakeholders. With ROE below 5% and the Company trading below its book value with little prospect of future improvement, Oasis makes the following recommendations for the upcoming Annual General Meeting:
1. VOTE AGAINST the nomination of President Yasunori Sakurano
-Deterioration of Kumagai’s core business
-ROE slumping to just 4.7% and trading at just 0.77x of book value
-Frequent failures in achieving initial guidance over the last five years
-Failed investments
-Failure to generate synergies from the capital alliance with Sumitomo Forestry
-Failure to maintain proper controls and oversight, as highlighted by the recent testing scandal
2. VOTE AGAINST the nomination of Director Tatsuru Sato
-Despite the existence of the capital alliance between Kumagai and Sumitomo Forestry, Sumitomo Forestry has prioritized Kumagai’s competitors (Haseko, Maeda and Kajima) in joint development projects over Kumagai.
-Kumagai is giving preferential treatment to Sumitomo Forestry over other shareholders by giving it a representative on the board of directors. This must not stand.
3.VOTE FOR 20% buyback (JPY23BLN of buyback)
-Resolve low valuation (0.7x PBR and 4.7% ROE)
-Kumagai has JPY55BLN of idle assets and significant headroom to increase leverage.
-Remedy the dilution from the failed third-party allotment to Sumitomo Forestry.
4.VOTE FOR JPY188 dividend per share
-Kumagai has the financial ability to pay JPY8.2BLN of dividend per year.
-Increasing the dividend will refocus Kumagai’s management on its core business and work to improve margins.
5.VOTE FOR establishment of strategic review committee to address the capital alliance with Sumitomo Forestry and poor investment plan
-Strategic review of the investment plan and the capital alliance
-As the capital alliance is failing to benefit Kumagai, the Company should look to either dissolve the capital alliance, or seek to become a fully owned subsidiary of Kumagai
-Kumagai needs to review its entire investment plan and disclose details so that shareholders can understand the true returns on investments and the extent of the delays
