Management Policy
Mid-term Business Policy and Action to Implement Management that is Conscious of Cost of Capital and Stock Price
As of June 21, 2024
〔Action ot Implement Management that is COnscious of Cost of Capital and Stock Price〕
MegaChips Groups aims to achieve both high capital efficiency and healthy financial structure. We will ensure the adequate return of managerial resources based on market conditions, competitive circumstances, and growth opportunities. Regarding capital efficiency, we will strive to understand our own cost of capital and take initiatives that are meaningful of this cost to enhance corporate value in the medium term. We consider ROE and PBR as important indicators representing capital income ratio and a market valuation, respectively.
MegaChips Group’s Return on Equity (ROE) was 5.1% in the fiscal year ended March 2024, which was slightly lower than our recognized cost of capital. We target an ROE level of more than 8%, and to achieve this target in the mid-to-long term, we aim to continuously enhance capital efficiency, ensure the implementation of our mid-to-long term management strategy, and increase profitability. We believe it is necessary to improve capital efficiency and market valuation, including our stock price and PBR, by gaining sufficient understanding from investors regarding our growth strategy through ongoing conversations. Regarding our financial structure, we aim to enhance equity capital to respond to the rapid changes in business circumstances, maintain stable management, and prepare for risks associated with market condition deterioration.
The overview of our mid-to-long term initiatives to enhance corporate value and shareholder value is as follows:
- Growth strategy
We will proceed with measures based on the following mid-term initiatives: We aim to enhance profitability and our business portfolio by strengthening Amusement and ASIC business foundations, and by launching new businesses, including Telecommunications, for mid-to-long-term sustainable growth. - Financial strategy
We will maintain a healthy financial structure that enables flexible and prompt adaptation to changes in business circumstances, supporting mid-to-long-term growth through business structural reform and new business development. We will also conduct proactive and stable profit return based on the following policy, aiming to enhance capital efficiency.
・Regarding the distribution of retained earnings, we will determine the amount of dividends by taking an amount equivalent to at least 30% of the consolidated net income attributable to owners of parent (with special factors subtracted upon due consideration) as the aggregate amount of dividends, while taking the medium-term business outlook into consideration.
・To enhance capital efficiency, we will agilely conduct share repurchases, considering market conditions, share price trends, and financial conditions. - Human resource strategy
We consider the development of human resources to be one of our major agendas for achieving a society where human rights and cultures are respected, and where diverse human resources can actively play their roles. We will take initiatives to provide our employees with opportunities for growth and engagement, promote diversity, offer grand-type scholarships through a foundation established by our founder, and support the development of young human resources who will be the main pillars of the electronics industry. - Improvement of IR activities
We consider the development of human resources to be one of our major agendas for achieving a society where human rights and cultures are respected, and where diverse human resources can actively play their roles. We will take initiatives to provide our employees with opportunities for growth and engagement, promote diversity, offer grand-type scholarships through a foundation established by our founder, and support the development of young human resources who will be the main pillars of the electronics industry.
〔Mid-term Initiatives〕
We develop value-added products and services by combining our accumulated unique technology with the advanced technology and know-hows of other companies, and provide solutions to solve customers' problems.
In the mid-to-long term, we will enhance business portfolio by utilizing the features of three businesses with different business models; Amusement, ASIC, and Telecommunication. Our aim is to increase and stabilize revenues. Furthermore, we will focus on developing new businesses for the future and continue business structural reforms. We will promote advanced joint research and development with universities both in Japan and abroad. Additionally, we will invest in capital and engage in strategic collaboration with startups that possess cutting-edge technology and innovative ideas through a Corporate Venture Capital in the USA. By doing this, we will foster the development of new business opportunities and lead to the creation and commercialization of unique businesses.
- Amusement business
In the Amusement business, our major business, we will focus on continued customer-oriented sales and support activities while taking all possible measures to secure business for the next-generation game console. To ensure stable supply of products, we will strengthen information linkage and production structures with partner companies and outsourced manufacturers, creating solid supply chain system. With a customer-oriented business model, we will further enhance our service, ensure our position as a major supplier, and secure stable sales and revenue.
- ASIC business
In the ASIC business, we will target growth in the industrial equipment and telecom infrastructure fields in addition to our major businesses of consumer devices and OA equipment, continuously striving to expand our business. Moving forward, we will utilize our accumulated expertise of upstream design and analog technology, our leading telecom interface technology, security technology, and image processing technology. We will gradually move into commercialization by developing products for image processing devices, FA devices and telecom infrastructure devices. In addition to the domestic market, we will explore international markets and focus on winning businesses, aiming for continued increase in sales and profits in the mid-to-long term.
- Telecommunication business
In the telecommunication business, we aim to launch a business targeting full-scale mass production in the coming medium term. Specifically, we are collaborating strategically with Australia’s leading company in “Wi-Fi HaLow™”, IEEE-compliant standard of wireless communication technology. By combining our accumulated wired communication technology with Morse Micro’s wireless communication technology, which achieves ultra-long distances of about 1km and low power consumption, we provide LSIs and modules, expanding our business to meet a wide range of customer needs. The target applications include entire sites inside and outside buildings in home networks and factory automation, as well as interfaces for audio transceivers, drones, and wireless surveillance camera networks. We will offer diverse solutions that contribute to achieving services based on customers’ applications and aim to accumulate early sales records focusing on the development of new domestic and international customers.
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