Negative effect due to excess of cash equivalent and too much preparation of liquidity | 淺沼組への株主提案に関する特集サイト
If our proposals are approved and Asanuma continues 100% payout ratio, the estimated share price is;
>JPY 10,000(*)
*Calculation based on dividend yield. Please find the detail of calculation in “our shareholder proposals”.

Negative effect due to excess of cash equivalent and too much preparation of liquidity

Asanuma’s cash and securities (hereinafter referred to as “cash-equivalent”) apparently remain at the same level. However, its net-cash which is defined as “cash-equivalent after deduction of interest-bearing debt and expected tax payment for the sales of securities” has been increasing and the truth is that Asanuma accumulates its net-cash.
Although cash-equivalent decreased in December 2018, this was due to the switching to cash payments and seasonality.

Change of Asanuma’s Net-cash, interest-bearing debt and cash equivalent

(Source:QUICK ASTRA MANAGER)

Asanuma’s capital-to-asset ratio declined to 8% temporary as the business condition worsened in the past. After that, the capital-to-asset ratio rose to 41% owing to improvement of performance, and now Asanuma’s financial basis has become very solid. In the Three-year Medium-term Plan of Asanuma (hereinafter referred to as “Medium-Term Plan”), Asanuma states to target capital-to-asset ratio in FY2020 as following (“capital-to-asset ratio” and “equity ratio” are exactly same meaning in Japanese).

“Equity ratio is to be maintained at the 40% level in order to assure a stable financial base.”

Although there is seasonality as stated above, Asanuma has almost achieved the target level of capital-to-asset ratio.

Asanuma’s capital-to-asset ratio in 6 years

(Source:QUICK ASTRA MANAGER)

Asanuma announced 1bil share buyback program (Asanuma expresses this as “purchase of treasury stock” in the linked page) in November 2018. The current net-cash still accounts more than half of Asanuma’s market capitalisation.

If such low shareholders’ return continues without sizable investment plans, it leads to further accumulation of cash.

Negative effect of accumulated cash is lowering of capital efficiency and decline of EV.
The more a company holds non-operating assets, the less efficiently its capital is used.
As following calculation, Asanuma’s EV as of 18th April 2019 was negative 129 mil. It is much smaller than Asanuma’s market capitalisation of 19,995 mil.

EV=market capitalisation+{interest-bearing debt-(cash equivalent-expected tax)}
      =19,995 mil+{11,791 mil -(33,291 mil-1,376 mil})
      =-129 mil

Breakdown of Asanuma’s EV

(Source:QUICK ASTRA MANAGER, financial items are as of end of December 2018 and market capitalisation was as of 18th April 2019)

Please note that Asanuma’s EV is 12,425 mil as of 22 May 2019. As an example of Asanuma’s attitude toward accumulated cash, Asanuma provides its cash equivalent such as cross shareholdings as collaterals for the bank borrowing and guarantee for its commitment line of 10,000 mil. However, Asanuma has not executed borrowing on the commitment line yet.
Holding cross shareholdings in order to keep a commitment line that is never used is obviously against the improvement of capital efficiency, which is a mission imposed on listed companies.

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