Totetsu Kogyo (1835) Investor presentation summary

Financial performance and capital efficiency

• Cost of capital has risen to about 7%, while ROE has recovered post-pandemic and is trending upward, currently at 10.2%.

• Market valuation metrics show a PER of 14.4x and PBR of 1.39x, with PBR and stock price improving alongside earnings growth.

• The company aims to maintain ROE above 10% over the medium to long term, consistently exceeding the cost of capital.

Strategic initiatives and growth investments

• Action Plan 2029 targets net sales over ¥190 billion and sustained ROE above 10%, with a focus on ESG and non-financial KPIs.

• Growth investments include ¥20 billion in human resources and ¥50 billion in technology and mechanization, especially for large-scale railway projects.

• Expansion into three business areas—railways, railway-related sectors, and public/private enterprises—is being strengthened.

Shareholder returns and capital allocation

• Dividend policy targets a DOE of 3% or more, with progressive dividends regardless of short-term performance.

• Dividends have steadily increased, reaching 150 yen per share, reflecting a commitment to stable and proactive shareholder returns.

• Capital allocation balances growth investment with returns, maintaining a disciplined approach.