Nouchi:We had already been taking action under the Midterm Corporate Strategy 2024 framework before the TSE’s request. One of the quantitative targets of Midterm Corporate Strategy 2024 is double-digit ROE, and our analysis indicates that if we can stably maintain double-digit ROE through the promotion of business management systems, then ROE can exceed the cost of equity as required by the stock market. We believe that explaining this to the market will become very important since market trust and expectations for maintaining and improving ROE over the medium to long term will lead to forming a fair share price.

Tatsuoka:I agree with Mr. Nouchi’s thinking that it is important for investors to have a sense of security, expectation, and confidence that ROE will be maintained and improved over the medium to long term. Specifically, since MC currently has sufficient resources to allocate toward investments, I think it will be crucial to thoroughly communicate the profitability of future investments through dialogue with investors and other stakeholders. I also have high expectations from the newly established CSEO position in this area.

Kobayashi:Thank you very much, Mr. Tatsuoka. Currently, we are still seen as a value stock and resources company by the stock market, but I believe that we are in fact a mature company and, in some respects, a growing one. Therefore, in future IR activities, we will begin by firmly presenting MC’s past equity story, that is, how we have evolved the business model and subsequently grown, and we will then carefully convey our future growth potential, including EX investments.

Tatsuoka:For EX investments, MC carefully selects investments
that contribute to the maintenance and improvement of ROE. MC makes strict and disciplined investment decisions with the Board of Directors monitoring such decisions. I believe that clearly explaining this disciplined investment approach will lead to a sense of security toward EX investments, which receives a high level of outside interest in terms of profitability.

Nouchi:Addressing various risks, including geopolitical risks, is becoming increasingly important for maintaining business activities. However, it is precisely because of this highly uncertain macro environment that I think we are in a position to stand out for our superiority in maintaining resilience to downturn effects during recessions. Factors that contribute to my belief include our sufficient financial soundness and cash generating capabilities, as well as our geographically and industrially broad and robust portfolio, which provides diversification benefits.

Kobayashi:To add to Mr. Nouchi’s point, I believe that a robust portfolio is important from the perspective of creating new value that only a conglomerate like MC with a robust portfolio can offer. In an environment of increasing pace of change and difficulty in addressing societal issues, our strength lies in our ability to create new value in response to changes by dynamically switching, combining, and integrating a variety of portfolios. Through a clear explanation of this, I believe that there is room for investors to further evaluate our business portfolio as a whole that generates more value than the sum of each business. In addition to our strengths, I would also like to mention our uniqueness. We are currently proceeding with asset replacement by implementing the Value-Added Cyclical Growth Model, but we recognize that our efforts to circulate assets according to the life cycle of each business are clearly distinct from private equity funds, which replace investment portfolios primarily to acquire capital gains within a limited investment period.

Nouchi:Yes, that is right. Because Japanese sogo shosha companies are often seen as difficult to comprehend in terms of the type of business they are, I feel that it is very important for stakeholders to understand our strengths and uniqueness.

Kobayashi:To maintain and improve double-digit ROE, we will continue to promote initiatives for our business management systems as stated in Midterm Corporate Strategy 2024. We will also carefully present MC’s unique equity story while striving to further enhance dialogue and disclosure with investors and other stakeholders.