Hibiki Path Advisors has Requested the Board of Directors of Tomoe Corporation (1921) for a Complete Overhaul of the Medium-Term Management Plan and Establishment of a Special Committee

TOKYO–(BUSINESS WIRE)–Hibiki Path Advisors (“Hibiki” or “We”) is a Singapore-based investment management firm that manages capital for clients in Japan and overseas with a long-term perspective. In pursuit of this objective, we began acquiring shares of Tomoe Corporation (“Tomoe” or the “Company”) last year and have continued to manage this investment. From the perspective of improving the corporate value and maximizing the common interests of shareholders, we submitted a shareholder proposal at this year’s General Shareholder Meeting. However, as the Company has yet to demonstrate a genuine commitment to addressing its core challenges to enhancing corporate value, we have formally requested the following to the Board of Directors.

• A complete overhaul of the Medium-Term Management Plan
• Establishment of a Special Committee composed of external directors and independent third parties to evaluate alternatives, including considerations on remaining publicly listed versus pursuing privatization
• If the Company chooses to remain publicly listed, decisive action on non-core assets and excess capital (specifically, the early sale of real estate assets and cross-shareholdings, coupled with a large-scale share repurchase and dividend payout)

As we noted in our previous publication, the Company is widely recognized and highly respected in the construction industry for its technological capabilities as the “Tomoe of the Diamond Truss”. Nonetheless, the current management team lacks the incentives to enhance corporate value, leaving critical issues in capital policy unaddressed, with P/B trading below 1.0x for many years. Moreover, Tomoe holds unrealized gains on real estate assets not reflected on the balance sheet, with an estimated value of JPY 39.9 bn after tax (based on the official appraisal values disclosed in the Company’s securities report for FY 3/25). When adjusted for this, the Company’s P/B stands at a mere 0.6x (based on the closing share price of JPY 1,522 on 30^th September).

In its November 2024 release titled “Measures Toward Management Conscious of Capital Cost and Stock Price (Japanese Only)”, the Company indicated their perception as below:

1) Shareholders’ equity, the denominator of ROE, has been on an upward trend

2) Net assets (i.e., shareholders’ equity) —the denominator of P/B—have been increasing faster than the share price, making it a significant challenge to implement measures that effectively boost the stock price

However, in the “Revised Medium-Term Management Plan (Japanese Only)” disclosed in May 2025, Tomoe sharply cut the ROE target from 10% down to 5%, effectively slashing it in half—despite acknowledging the challenges outlined above. By lowering such a critical KPI without implementing measures to meaningfully enhance corporate value, the Company has demonstrated a stance that we, as shareholders, find deeply regrettable. We strongly urge management to reconsider its approach.

We seek constructive dialogue; however, given that requests for meetings with the Company’s directors have been declined, we have submitted this request from the perspective of improving the corporate value and maximizing the collective interests of shareholders. We therefore strongly urge Tomoe to provide some indication of its position regarding our proposals—via a press release or other public means—at the time of its upcoming interim results announcement.

(Letter to the Board of Directors of Tomoe Corporation)

https://www.hibiki-path-advisors.com/engagement/post-5081/

Sincerely,

* In the event of any discrepancy or conflict between the English and Japanese versions, unless otherwise noted, the meaning of the Japanese language version shall prevail unless otherwise expressly indicated.

* This post does not constitute a solicitation for an offer to acquire or recommend the purchase or sale of specific securities, or advice on investment, legal, tax, accounting, or any other matters.

Contacts

Hibiki Path Advisors

Representative Director

Yuya Shimizu

www.hibiki-path-advisors.com
info@hibiki-path-advisors.com