Interviews with Listed Companies Regarding English Disclosure
GAtechnologies Co.,Ltd.
Founded 10 years ago with the goal of transforming the real estate industry through the power of technology, GA Technologies has been active in investor relations since its initial listing in 2018, turning its attention to overseas investors with expertise in investing in real estate tech companies.
We sat down with Satoko Watanabe, IR Senior Manager, to learn more about the company’s initial approach to English disclosure, its effectiveness, and vision for the future.
Expanding the Scope of English Disclosure to Meet the Goal of Achieving a Higher Ratio of Overseas Investors
What made you decide to take a proactive approach to English disclosure?
Our company was listed in July 2018, and we have actively been engaged in IR activities since the beginning, participating in overseas conferences for securities firms and so on. When attending conferences, we needed to have English-language materials ready to share, so we started by translating our presentation materials on growth potential and financial results from Japanese to English shortly after our initial listing.
You’ve been to be conscious of overseas IR since GA Technologies’ initial listing. Can you tell me a bit more about why that is?
While there are few listed real estate tech companies like our company in Japan, there are several well-known real estate tech companies listed overseas. Therefore, we felt that overseas investors have a deeper understanding of our business model and are more likely to evaluate our business more appropriately, so we set the goal of increasing the ratio of overseas investors as one of our IR targets. We started English disclosure to help us achieve this goal.
You’ve been disclosing in English and Japanese simultaneously, can you tell us about your IR system?
Initially there was only one person in charge of IR, but that increased to two in 2021 and then to the current three. We outsource our English translations, but our IR team is able to complete the English translation checks on the English drafts that are prepared.
What are your thoughts on the scope of English disclosure?
We began English disclosure of earnings reports and earnings presentation materials, with the goal of increasing the ratio of overseas investors to 20% within three years of listing. Subsequently, in response to feedback from overseas investors who were unfamiliar with the real estate situation in Japan, we also translated materials describing the Japanese real estate market and our business model in an easy-to-understand manner, as well as materials explaining M&A transaction's strategic rationale.. In 2021, we also began translating our corporate story and notices of general shareholders meetings into English for new investors. In 2022, we began providing all our timely disclosures on TDnet in English, and we also changed our factbook to include both Japanese and English.
In 2021, you conducted a public offering and are selling to overseas investors, but do you think it would have been difficult to sell to overseas investors without more English disclosure?
Yes, I think so. During the public offering roadshow, we met with dozens of investors in one week, including small meetings, and about half of the investors who agreed to the public offering were people with whom we had met multiple times in the past. I believe this is proof of the importance of making proper English disclosure and communicating with overseas investors on a regular basis.
Choosing not to make an English disclosure is a lost opportunity.
What members of your team are available to meet with overseas investors?
All one-on-many small meetings, etc. are handled by the president; one-on-one meetings are handled on a case-by-case basis, but if an investor wishes to gain a better understanding of our company and see our growth potential, or if they wish to meet our founder, the president will make an effort to meet with them. Also, the first meeting is handled by IR, and if the client wants to hear about detailed financial strategies in the second or subsequent meetings, the CFO will handle the meeting. Who handles the meeting is determined by what the investor wishes to learn.
How do you develop new investors?
For example, we have created a list of investors in domestic and foreign companies that invest in companies of the same market capitalization and in the same sectors as ours, and we approach investors that we have not interviewed in the past with the cooperation of securities firms and others. In addition, there are many opportunities to meet with new investors at conferences organized by securities firms, and we feel that this is an effective way to cultivate new investors. Small meetings with a small number of investors also provide an opportunity to access new investors who are beginning to show interest in our company.
What advantages do you see in English disclosure?
Rather, I believe that not providing English disclosure is a disadvantage for both the company and investors. Investors are extremely busy and do not have time to go to the trouble of translating Japanese, and without English disclosure, the company will not be included in the investment universe of global investors. Even if they do invest, it would be unfortunate if they are forced to discount the valuation, or if they cannot prepare in advance for IR meetings, which would prevent the dialogue from progressing. The market is expanding not only in Japan but also in the rest of the world after a company is listed, but disclosing materials only in Japanese is a waste of opportunity in terms of growth potential and increase in market capitalization through proper stock price evaluation.
We Want More Overseas Investors to Pay Attention to the Japanese Market
What aspects do you pay particular attention to when considering improvement of IR activities?
We believe that to improve IR, it is important to improve the quality of dialogue with investors, so we try to ask questions during our meetings. For example, we frequently discuss whether there is any information missing from financial results presentation materials, what KPIs would make them easier to understand, and what kind of information enhancement would be desirable. We use the insights from these conversations to update our materials. Investor feedback is also reported to management at monthly board meeting, along with reports on IR activities.
What is your policy on English disclosure going forward?
We intend to prepare and disclose corporate governance reports that have not yet been disclosed in English, as well as sustainability reports and other materials that have not yet been prepared even in Japanese. We want to appropriately prepare sustainability reports and human capital data disclosure, which are now required to be included in Annual Securities Reports, and we intend to make English disclosure of such reports when they are prepared in Japanese. In addition, to ensure higher quality English disclosure, the company applied for FinCity.Tokyo’s English disclosure support program and was selected as a recipient. Until now, only summaries of earnings reports have been translated and disclosed in English, but we intend to take this opportunity to translate and disclose the full text in English.
Do you have any advice for companies that are considering starting or expanding their English disclosure?
Again, I think it is a real waste not to disclose materials in English. If you have gone to the trouble of preparing financial results presentation materials in Japanese, it would be more than worthwhile to translate them into English and send them out to the world so that you can communicate your company's situation to as many investors as possible. If it is difficult to start disclosing financial reports in English all at once, it might be better to start by disclosing only excerpts from earnings reports, and then gradually move on to more full English disclosure. I believe that it is a lost opportunity for a company to be excluded from the investable universe simply because it does not make disclosures in English, and if many overseas investors pay attention to the Japanese market, this will eventually lead to an increase in its overall valuation.
(Interview on September 27, 2023)
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