■Pharma Foods' Growth Strategy ＜2929＞
5. Shareholder return policy
Regarding return of profits to shareholders, the basic policy is to actively enhance dividends, etc. as return measures for shareholders while actively expanding investment in research and development, advertising, and M&A, etc. under a business policy that balances corporate growth and profitability. Based on this policy, considering the balance between promoting growth investment, ensuring financial soundness, and strengthening shareholder returns, a total return ratio of 20%, including share repurchases, is used as a guideline for shareholder return measures. The dividend forecast for the fiscal year ending 2024/7 is 20.0 yen (10.0 yen at the end of the 2nd quarter, 10.0 yen at the end of the fiscal year), with dividends reduced by 2.0 yen from the previous fiscal year, and the expected dividend payout ratio is 31.7%. Furthermore, the company comprehensively considered improvements in financial conditions and prospects for realizing appropriate profits, determined that stock prices were discounted, and acquired 874,100 shares of treasury stock (1,000 million yen) from 2024/1/9 to 1/19. The total return ratio, including this, is 87.2%.
Furthermore, in order to work to improve ROIC (return on invested capital), reduce shareholder capital costs, and raise growth expectations, we will promote profit acquisition by strengthening CRM policies that make use of the customer base, restructuring business portfolios by developing new businesses and products, expansion of research and development, equipment, and human capital investment, and active use of M&A in order to work on improving growth expectations. Furthermore, we are working to increase corporate value by increasing opportunities for dialogue with the stock market and investors (participation in IR fairs, holding online business briefings, implementation of small meetings, English support for disclosure materials) and strengthening ESG (environment/social/governance) management (enhancement of non-financial information disclosure, etc.).
Strengthening sustainability management
6. sustainability management
It can be said that the company's business is in line with the SDGs (Sustainable Development Goals) in terms of developing and selling functional materials and products for food and cosmetics related to life activity and health maintenance from naturally derived raw materials. The “Basic Sustainability Policy” was formulated in December 2021, and ESG management and SDGs initiatives are being strengthened. As a comprehensive health maintenance support company, we have set up a sustainability vision called “Valuable Abundance and Valuable Health at the Age of 100,” and strive so that the company's business growth can contribute to the realization of a sustainable society. “Improving people's quality of life,” “upcycling unused resources,” and “respecting diversity” are set as materials (priority issues), and we aim to achieve a sustainability vision and further improve corporate value through responding to these materialisms.
As a topic, joint research on improving cognitive function through “diet” began in 2022/4 with the vascular dementia specialist team at the National Cardiovascular Disease Research Center (National Research Institute). With “brain function cocktails” containing GABA, we aim to remove waste products from the brain, promote cerebral blood flow, activate brain neurons, etc. Also, in 2023/3, it was certified as an “Excellent Health Management Corporation 2023 (Large Corporation Division)” by the Ministry of Economy, Trade and Industry as an excellent corporation that actively works on health management. Also, in 2024/2, they will participate in the “Health Management Alliance” (established in 2023/6), and promote health management through practical efforts and sharing know-how. Additionally, they will be exhibiting at the Osaka Pavilion under the theme “Eggs Save Earthlings” at the Osaka-Kansai Expo scheduled to be held in 2025.
Medium- to long-term growth potential due to drug discovery and advanced use of eggshell membrane materials
7. Our point of view
Since the company's profit level changed drastically due to the release of the “Pneumo (R) hair growth agent,” there are voices in the market that position it as a mail-order-related company. However, the essence of the company is a biotechnology company based on the development concept of the three elements “immunity,” “aging,” and “nerves,” which are related to life activity and health maintenance. We highly value the company's ability to search for functional materials, develop functional products, and even create new markets that make advanced use of drug discovery and eggshell membrane materials, and we believe that medium- to long-term growth potential is also high. Also, as part of efforts aimed at improving corporate value, it was launched to strengthen dialogue with the stock market and investors, which is also an evaluation material. Going forward, I would like to continue to pay attention to the progress of the “Bio Manufacturing Revolution Promotion Project” project (“fiber,” “battery material,” and “biostimulant”) associated with the contract with NEDO, and the “autoimmune disease project,” which has a license agreement with Mitsubishi Tanabe Pharma.
(Author: FISCO Visiting Analyst Masashi Mizuta Exhibition)