As shown in Annexe 1, NTH's share price is significantly discounted relative to its book value per share (BVPS), with the price-to-book ratio (hereinafter referred to as "PBR") remaining at only 0.5 times.

Furthermore, as shown in Annexe 2, NTH's PBR is at the lowest level among its industry peers.

We believe that NTH's substantial holdings of cash, cross-shareholdings, and land are undermining capital efficiency and suppressing its share price valuation. To address this issue, the company must take decisive action by divesting cross-shareholdings and monetizing surplus real estate, such as rental properties. The proceeds should be deployed either toward investments that generate returns exceeding the cost of equity or toward shareholder returns at a level at least equivalent to the cost of equity.

In general, as shown in Annexe 3 (yellow highlight), shareholders' value and enterprise value decrease as the cost of equity ('CoE') and the weighted average cost of capital ('WACC') increase.
In addition, as shown in Annexe 4 (green highlight), the market discounts equity capital and invested capital as ROE and ROIC are lower than CoE and WACC.

We believe that the primary reason for NTH’s low valuation is the combination of an increasing cost of capital (≈ risk and uncertainty) and declining capital efficiency. Consequently, shareholders' value can be improved by reducing the cost of capital and enhancing capital efficiency.

As per Annexe 5, NTH claims that its equity spread is positive. Theoretically, if ROE exceeds the cost of equity, PBR should be above 1x. However, NTH’s PBR remains significantly below this threshold. This suggests that the market perceives NTH’s cost of capital as higher than what the company assumes, implying that the company might be underestimating its risk.

As shown in Annexe 9, it is evident that NTH's management is heavily dependent on Nissan Motor's sales strategy and supply conditions. Furthermore, as mentioned earlier, following the Secondary Public Offering (SPO), Nissan Network—a 92% subsidiary of Nissan Motor—has emerged as the dominant major shareholder. Given this shift in shareholder composition and the increasing uncertainty surrounding Nissan Motor's business environment, the risks associated with NTH's reliance on Nissan Motor have become even more pronounced.

As shown in Annexe 10, there is an indication that NTH may consider selling vehicles from other manufacturers. While NTH already sells some Renault vehicles, expanding to other brands could serve as an effective strategy to reduce its dependency risk on Nissan Motor. However, no concrete plans have been disclosed, leaving the effectiveness of this strategy uncertain.

As shown in Annexe 11, NTH has published materials from its Integrated Report, revealing that it achieved its 2026 target of a 90% electric vehicle (EV) sales ratio for passenger cars three years ahead of schedule, in 2023. Furthermore, the Integrated Report emphasizes NTH’s role as a pioneer in EV sales, stating:

"The NTH group was the first in Japan to start sales of mass production Leaf EVs in 2010. The expertise amassed in EV sales, servicing, and infrastructure over the last 14 years gives our group a tremendous advantage today. This experience solidifies the foundation for us to pursue our role as the front runner in our next stage of business."

However, as indicated in Annexe 12, the concept of "Greenwishing" has emerged. This term describes situations where companies claim to contribute to environmental sustainability, yet their actions lack meaningful impact. For example, even if a company promotes EV sales, if the electricity used to charge these vehicles is derived from coal-fired power plants, the overall reduction in greenhouse gas emissions may be negligible.

To genuinely contribute to the reduction of greenhouse gas emissions through EV sales, it is essential to decarbonize the electricity supply. If NTH aims to uphold its position as a "front-runner" in EV expansion, it must implement concrete initiatives to transition to renewable energy sources. Taking such steps will prevent EV sales efforts from being dismissed as Greenwishing and will also contribute to reducing the cost of equity.

Therefore, we believe that NTH should transparently disclose, in a quantitative manner, its initiatives for transitioning its electricity supply from fossil fuels to renewable energy within the Tokyo area, where it operates.

As shown in Annexe 13, NTH provides QUO Card (a prepaid gift card widely used in Japan) as a shareholder benefit. In contrast, as indicated in Annexe 14, some industry peers offer shareholder benefits linked to their own products and services (hereinafter referred to as "company service benefits"), while others do not implement any shareholder benefit programme at all.

We understand that the primary purpose of shareholder benefit programmes is to secure stable shareholders by discouraging individual shareholders—who hold only a few trading units and primarily seek shareholder benefits—from voting against company proposals or from exercising their voting rights altogether, thereby increasing the approval rate for company-sponsored resolutions.

Another issue with shareholder benefit programmes is the disparity in effective yield when combining shareholder benefits with dividends. Since the same shareholder benefits are provided to both small-lot shareholders and those holding a significant number of shares, including institutional investors, individual investors often enjoy a relatively higher effective yield. As a result, the attractiveness of shareholder benefit programmes tends to increase, particularly among retail investors.

In particular, we view shareholder benefit programmes that rely on cash-equivalent benefits, such as QUO Cards, as problematic. These programmes increase the proportion of shareholders who prioritise receiving benefits over assessing the company’s business strategy, artificially boosting the share price. This mechanism can be considered a form of "doping" in the stock market, where share price appreciation is driven by shareholder incentives rather than the company’s fundamental value.

On the other hand, company service benefits can contribute to fostering brand loyalty and enhancing the company’s business value. By encouraging shareholders to visit company-operated stores and utilise its services, such benefits can promote purchases, increase revenue, and strengthen attachment to the brand. Therefore, shareholder benefit programmes that are expected to contribute positively to business performance should not be categorically dismissed.

In this regard, NTH’s maintenance business, which accounts for approximately one-third of its operating profit, includes vehicle maintenance, inspections, and statutory vehicle inspections, all of which are services directly relevant to individual shareholders. Given the strong compatibility between the maintenance business and company service benefits, NTH should revise its current shareholder benefit programme to leverage its own services instead.