Interviews with Listed Companies Regarding English Disclosure
Arealink Co., Ltd.
Arealink Co., Ltd. has grown to operate approximately 100,000 (rental) storage units, the most in the storage industry in Japan.
The company began full-scale English disclosure around 2011, when overseas investors became major shareholders of the company. In order to broaden its investor base, the representative director is leading efforts to engage in dialogue with new overseas investors.
We spoke with Yasuaki Otaki, Director of the Administration Division and General Manager of the Accounting Department, about the company's overseas IR activities and future direction, as well as its English disclosure methods.
Simultaneously Disclosing English and Japanese is Fair to Shareholders
What prompted you to start English disclosure and IR activities overseas?
English-language disclosure began in earnest around 2011, when U.S. investors became major shareholders. With overseas investors becoming shareholders, the need to communicate with shareholders in English increased, and at the same time, we began to think about how IR should be done.
Our core storage business is relatively rare in Japan, but it is a common service in Europe and the United States, and we began to engage in IR activities overseas, believing that it would be easily accepted by investors in these regions.
What specifically did you do when you first started disclosing in English? Also, what was your thinking behind the fact that you now disclose in English and Japanese at the same time?
It takes a lot of effort and cost to translate all disclosure materials into English at once. We started with the quarterly earnings reports and briefing materials, and then expanded to other timely disclosures such as decision facts.
Simultaneous disclosure in English and Japanese stems from our belief that doing so is fair to shareholders. Nevertheless, we do so to the extent that we can maintain the accuracy of translation based on the disclosure system between Japanese and English.
What is your current process for English disclosure?
I am in charge of investor relations, and I supplement this by collaborating with the accounting department and making effective use of outsourcing. In disclosing information in English, our first priority is to solidify the Japanese language base before translating.
If the Japanese disclosures are systematized, past cases can be used as references to some extent, so there is less need to translate from scratch and revisions can be minimal.
I have heard that the English disclosure can be delayed because in some companies the Japanese disclosure itself is not finalized until the last minute.
It is almost always the numbers that are not solidified until the last minute. Basically, we prepare disclosure documents in Japanese so that only the numbers need to be rewritten.
We feel it is important to improve the accuracy of Japanese in advance.
How do you feel that English disclosure has impacted your dialogue with overseas investors?
With the enhancement of English disclosure, the number of requests for meetings with overseas investors has been increasing. We are working to improve English disclosure even further by interviewing overseas investors about their satisfaction with the English disclosure and suggestions for improvement.
Recently, we have been receiving advice on the content of data to be included in the English disclosures through direct dialogue, and we feel that this dialogue has led to further improvements in the satisfaction level of English disclosures.
Information Dissemination is Important for Changing Evaluation from the Market
What executives do you have that meet with overseas investors?
The president and I handle the one-on-one meetings. Remote meetings have also been increasing. Recently, overseas investors have resumed visiting Japan for meetings in Japan, and conversely, we have visited the U.S. to conduct IR meetings.
We will continue to consider conducting interviews overseas once or twice a year.
You say the president leads the meetings?
In the past, the IR staff alone would sometimes handle this alone.
There was a change in representative directors in March 2023, and some overseas investors have requested to speak directly with the successor representative director to hear directly what his views are.
We believe that a system in which top management engages in direct dialogue is also a key to attracting investor interest. In addition, we believe that the representative director himself should have the opportunity to see the IR scene and disseminate information to stakeholders, which will help him to consider management strategies.
How do you plan to expand your investor base beyond your existing shareholders?
We have hired a research firm in the U.K. to introduce us to overseas investors who invest in small- and mid-cap stocks, and have begun meeting with them.
Many referrals were made to investors in Europe, and in fact, we met with investors in the U.K., which led to new investments.
I understand that you are actively working to expand the base of overseas investors. What is the aim of focusing on overseas IR?
We used to think that if we improved our business performance, our stock price would rise along with it, but now we recognize that it is difficult to raise our name recognition due to our business scale and characteristics, and that market valuation will not change unless we work to disseminate information on our own.
Our ratio of overseas investors is still only about 20%, and we would like to appeal to more overseas investors to attract more investment.
Do you feel there are any differences in the way you deal with domestic and overseas investors?
The overseas investors we meet face to face tend to ask more detailed questions about our performance and the evidence and data for our plans.
In such cases, we try to align complementary data and either make a new disclosure or add elements to existing disclosures.
Currently, we are in a phase of accelerated growth, but we need to focus more on disseminating information about the business aspects of our operations.
Dialogue with Investors Through Overseas IR Activities also Benefits Management
How do you provide feedback to management on matters identified through dialogue?
We communicate this at internal IR meetings. For example, we once received a point of view on foreign exchange risk during an overseas IR meeting, but it was an issue that had not been raised within the company.
The opinions of these overseas investors are reflected in our disclosure materials and help us to consider the direction of our business.
What are your future plans regarding enhanced disclosure?
We are working on an integrated report, which we have not issued before.
In addition, we are considering translating the full text of the Annual Securities Report into English in the future.
Overseas IR has so far focused mainly on the U.S., but we would like to expand our target to Europe and Asia.
Do you have any advice for companies that are considering expanding their English disclosure and overseas IR activities?
Taking the opportunity of English disclosure to go overseas and talk with investors provides an opportunity to think about different issues than when you are in Japan.
Even if the content is not directly related to the formulation of fundraising or management planning, there are aspects that can be beneficial to management.
English disclosure is not a quick fix that will immediately attract overseas investment, but it is important to start with something that can be continued on a steady basis.
(Interview on September 20, 2023)
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