Palliser Capital Urges SMC Corporation to Unlock Shareholder Value Through ¥600 Billion Buyback

Palliser Capital (“Palliser”), a top 25 shareholder of SMC Corporation (“SMC” or the “Company”),  published a comprehensive plan (“Value Enhancement Plan”) outlining the opportunities available to unlock substantial long-term value at the Company.

To promote market transparency and respond to growing interest from shareholders and other stakeholders, Palliser has made public a detailed presentation titled “Maximising the Value of SMC Corporation – ¥600bn Share Buyback to Catalyse a Valuation Re-Rating.” The presentation sets out Palliser’s assessment of SMC’s unique global leadership in pneumatics across Japan, Korea, Taiwan, China, and North America, identifies the drivers of the Company’s current valuation disconnect, and outlines the tangible, actionable steps needed to address SMC’s persistent undervaluation and unlock its full potential.

Despite SMC’s strong fundamentals, differentiated business model, and competitive advantages — including scale, operational excellence, and specialised advantages in critical production equipment — the Company’s shares are currently trading at their widest discount in the past 10 years. On a price-to-book value basis, SMC trades at a 58% discount relative to global pneumatic peers, and 41% relative to large-cap Japanese factory automation peers.

Palliser’s SMC Value Enhancement Plan comprises three actionable initiatives which, if implemented, could unlock 50% upside to SMC’s current share price while positioning the Company for long-term success:

1. Enhance the utilisation rate of planned capacity investment to drive gross profit margin recovery in the upcoming semiconductor capex super-cycle, with a particular focus on progressing utilisation toward 90% and beyond, while supporting revenue growth potential that remains underappreciated by the market.
2. Catalyse inventory efficiency and restore SMC’s net working capital-to-sales ratio to historic norms, thereby improving cash generation, strengthening capital efficiency metrics, and reinforcing investor confidence in SMC’s operational execution through the cycle; and
3. Implement a disciplined capital allocation policy focused on improving ROE to over 13% and undertake a ¥600 billion share buyback over the next two years, providing greater clarity to investors and reinforcing a compelling equity story that demonstrates leadership in disciplined excess cash deployment ahead of the anticipated revisions to Japan’s Corporate Governance Code later this year.