あさお慶一郎(衆議院議員 神奈川4区)

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Things to do before listing Japan Post Holdings on the stock exchange

2014年07月09日 (水)

Net assets of Japan Post Holdings are 12.4 trillion yen


The Japanese government is going to list the shares of Japan Post Holdings Co., Ltd., on the stock exchange as early as fiscal year 2015, and to sell off a portion of its holdings. At present, the net assets of Japan Post Holdings amounts to 12.4 trillion yen, a sum calculated by subtracting liabilities from the book value. Japan Post Holdings has just one shareholder, the government. The fact that the government holds 100% of the shares means that each of the 130 million citizens of Japan owns approximately 100,000 yen of the net assets of Japan Post Holdings on a per capita basis in shares alone.


A public offering will only amount to about 2.2 trillion yen


Japan Post Holdings owns 100% of the shares of Japan Post Bank, which has net assets with a book value of 11 trillion yen. In other words, most of the 12.4 trillion yen Japan Post Holdings net assets are from Japan Post Bank. The question is how much shares of Japan Post Holdings, with its net assets of 12.4 trillion yen, will fetch when listed and sold on the stock exchange. In the case of a company with potential for profit growth, the share price will be its current income multiplied by a factor of ten or more. In the case of Japan Post Holdings, however, a large part of its profit is dependent on the Japan Post Bank, and its growth potential is not expected to be particularly large. The net profit target of Japan Post Bank is 220 billion yen. When estimating the number of years’ worth of profit that will be used to determine share prices, it is useful to look at a similar industrial category for reference. The closest comparison to the Japan Post Bank are the megabanks where the average megabank share price is about ten times the profit. In other words, since the Japan Post Bank earns about 220 billion yen per year, its market capitalization can be expected to be about 2.2 trillion yen. When net assets of 12.4 trillion yen are offered publicly for shares priced at just 2.2 trillion yen, this may cause a serious problem.


Reduce capital by five trillion yen and use that to fund earthquake reconstruction


What should be done to resolve this problem?
Simply speaking, five trillion of the 11 trillion yen in the Japan Post Bank should be paid into the national treasury before listing Japan Post Holdings on the stock exchange. The Japan Post Bank is capable of reducing its capital by about 5 trillion yen while still leaving sufficient capital to cover interest rate volatility risk and credit risk. By doing so, 5 trillion yen in extraordinary revenue can be transferred to the government through Japan Post Holdings. In order to ensure that the money is definitely returned to the people, this capital reduction procedure should be executed while the Japanese government is the sole shareholder. Doing this can create a solid source of funds for earthquake reconstruction. I am committed to submitting such proposals on economic policy to the government on a continuing basis.

Keiichiro Asao
Member of the House of the Representatives

 

 

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