Obayashi saw a significant increase in its shares after upping its fiscal-year dividend forecast and setting higher mid-term return goals.
Share Price Surge
On Tuesday morning, shares were up 18% at 1,716.5 yen, following an initial surge of 20%.
Ambitious Goals
The construction company aims to achieve a return on equity of 10% or more by the fiscal year starting April 2026, a significant increase from the 5.7% projected for the year ending March. Previously, Obayashi targeted an ROE of 8% for the medium term.
Increased Dividend Distribution
In addition to its ambitious ROE goals, Obayashi plans to distribute about 5% of shareholders’ equity as dividends annually, up from its previous target of 3%.
Financial Projections
For the fiscal year ending March, Obayashi intends to pay a total of Y72.00 in dividends per share, a notable increase from the previous forecast of Y42.00. Despite an estimated 24% decrease in net profit to Y59.00 billion due to various factors, including increased labor costs, the company’s revenue is anticipated to grow by 15%.
Market Response
Obayashi’s market performance was influenced by its operating profit margin and return on equity, resulting in a previously undervalued stock price relative to its book value.
Industry Trends
The Tokyo Stock Exchange’s call for listed companies to enhance returns on shareholders’ capital last year has prompted various firms to boost dividends and engage in share buybacks, reflecting a broader industry trend.