Tokyo Gas Co., Ltd. Unveils Strategy for Sustained Corporate Value Growth

As Tokyo Gas Co., Ltd. approaches its 140th anniversary in fiscal year 2025, the company prepares to present its action plan aimed at continuous enhancement of corporate value in alignment with the conclusion of its current Medium-Term Management Plan (MTMP). The firm acknowledges the challenges that have led to its price-to-book ratio (PBR) falling below 1.0x since fiscal year 2020, notably raising concerns among investors regarding its capacity to reach a return on equity (ROE) of 8% in the upcoming fiscal year.

In a firm reiteration of commitment, Tokyo Gas has highlighted its goal of achieving an ROE of 8% for fiscal 2025, with aspirations to exceed 10% by around fiscal 2030. This ambitious target comes with an understanding of the unique challenges posed by the requirement of maintaining significant asset levels necessary for stable infrastructure services. However, the utility believes that leveraging its robust domestic customer base and assets will improve profitability and enhance the value of existing operations.

The strategy focuses on cross-selling its gas, electricity, and solutions to reinforce and expand its customer base. Furthermore, the transformation of real estate assets into integrated energy systems is a core aspect of their urban development initiative. Internationally, the company aims to ensure profitability in its shale gas operations while expanding its reach into mid and downstream activities in the United States and LNG trading markets.

To capitalize on growth in various sectors, Tokyo Gas recognizes the essential role of disciplined investment strategies. Learning from previous investments in the shale gas market, the firm plans to approach investments methodically, ensuring that they align with local operating expertise and governance standards. This strategic approach is expected to solidify the shale gas business as a significant contributor to profits in 2025.

Tokyo Gas’s financial strategy complements its growth initiatives, with a flexible capital return policy set with a baseline total return ratio of 40%, while also allowing for opportunistic increases when justified. In an effort to enhance capital efficiency, the company will continue share buybacks in fiscal 2025, mirroring the initiatives begun in 2024 to manage equity levels.

The firm intends to present key themes related to its next MTMP by the end of March, reinforcing its commitment to stakeholder engagement and transparency in decision-making as the company plans its path forward. By successfully implementing this dual approach of stable long-term investments alongside prudent capital management, Tokyo Gas aims to establish a foundation for continuous corporate value enhancement that secures the trust and support of its stakeholders over the medium to long term.

Overall, Tokyo Gas Co., Ltd. is committed to navigating the complexities of the evolving energy landscape with a focus on sustainability and resilience in its operations, ensuring it remains a vital player in providing energy solutions while enhancing shareholder value.