Avant Group revises strategy, targets higher growth and shareholder returns

Avant Group Corporation has updated its policy for management focused on cost of capital and share price, building on previous disclosures. The revised strategy includes an updated PER target of 30x, down from 40x, acknowledging a gap with current levels despite ROE consistently exceeding the 20% target. The company aims for a PBR of 6x and ROE of 20% by transforming its business model to promote higher growth expectations and lower cost of capital, driven by software gross profit.

Key financial targets under the "BE GLOBAL 2028" medium-term plan include doubling revenue and tripling net profit, with a strategic KPI of tripling software gross profit to JPY6 billion. To support this, Avant plans to invest JPY20 billion in growth, optimizing shareholder equity through capital allocation. The updated capital allocation plan increases shareholder returns by JPY1.5 billion or more, allocating JPY5 billion for shareholder returns (FY24-FY28), and up to JPY15 billion for capital investments in M&A and minor investments.

The company is also enhancing its incentive structure, aligning it with corporate value enhancement. Starting FY2024, equity compensation is introduced for employees, with schemes revised for group executive officers and group directors, shifting to restricted stock from FY2025 for group directors. This aims to strengthen the value-creation spiral from human capital to corporate value.