Toho Co., Ltd.

In the morning session of the Tokyo stock market on July 30, game and entertainment-related stocks were mostly under selling pressure, with 36 of the 99 registered issues rising and 51 falling. Mobile game developer Aiming fell for a third straight day as investors reacted negatively to the previous day's announcement of a double-digit decline in both revenue and profit for the second quarter of the fiscal year ending December 2026. Meanwhile, reports emerged that Morgan Stanley MUFG Securities upgraded Toho from Equal-weight to Overweight and raised its target price from 1,600 yen to 1,800 yen.

Toho rebounded. In its first-quarter earnings released the previous day, operating profit fell 28% to 13.8 billion yen, but the company explained that the decline was due to accounting consolidation adjustments for overseas earnings, and that profit actually increased on a real basis, apparently gaining market understanding.

The Tokyo stock market fell in the morning session on July 16, with the Nikkei Stock Average ending the morning at 66,796.79 yen, down 1,954.72 yen from the previous business day. Following selling of semiconductor-related stocks in the U.S. market the previous day, related issues were sold heavily, and at one point the index fell 2,252.02 yen to 66,499.49 yen. The sharp drop in South Korea's KOSPI also cooled investor sentiment. Among game and entertainment-related companies, of the 99 registered issues, 45 rose, 48 fell, and 6 were unchanged, with sellers in the lead. Earnings announcements divided the market, with Taito and Toho rising sharply while IG Port and Overlap Holdings plunged.

Toho announced on the 15th that its board of directors has resolved a policy to reduce the balance sheet carrying amount of strategic shareholdings by more than 50 billion yen by the end of February 2030 compared with the end of February 2026, and to lower the ratio to consolidated net assets to below 10 percent. The sales will be carried out in stages, aiming to bring the consolidated net asset ratio below 20 percent in the fiscal year ending February 2027. Proceeds from the sales will be allocated preferentially to growth investments and also used for shareholder returns to improve capital efficiency. The company sold all shares of eight listed stocks from the fiscal year ended February 2023 to the fiscal year ended February 2026, leaving ten stocks remaining. The impact of the sales has not been factored into the consolidated earnings forecast for the fiscal year ending February 2027 announced in April.