Be Brave Inc. Announces Its Views on PEGASUS Co., Ltd.'s May 13, 2026 Disclosure and Stock Price Decline

Be Brave Inc., the managing partner of an ESG investment business union, has announced its views as a shareholder regarding the basic policy of the new medium-term management plan and the policy on large-scale purchase activities disclosed by PEGASUS Co., Ltd. on May 13, 2026.

Reference Material on PEGASUS Stock Price Trends After the May 13, 2026 Disclosure

Summary of Our Opinion Statement

We have expressed our views as a shareholder of your company regarding the basic policy of the new medium-term management plan and the policy on large-scale purchase activities disclosed by PEGASUS Co., Ltd. on May 13, 2026.

In this opinion statement, we first point out that, when indexing the closing price on May 13, 2026, as 1,000, your company's stock price was 622 as of June 5, 2026, significantly underperforming the Nikkei Stock Average (1,053) and TOPIX (1,008) over the same period. While we recognize that the decline in your company's stock price is not solely attributable to the May 13 disclosure, we interpret the subsequent stock price trend as reflecting the market's harsh assessment of your board of directors' management decisions.

Furthermore, we do not aim to acquire 20% or 30% of your company's shares, nor do we seek to obtain control of your company. What we have consistently communicated in our dialogue with your company is the correction of the PBR below 1x, improvement of capital efficiency, enhancement of shareholder value, and the realization of management conscious of capital costs and stock prices as required by the Tokyo Stock Exchange.

In this opinion statement, we point out that your company's characterization of our statements during the meeting on February 20, 2026, as if they were intended to acquire 20% or 30% of shares or to gain control, risks causing misunderstanding regarding our investment purpose and the intent of our dialogue. In particular, we request a specific explanation of how the content of the meeting, as understood through Mr. Yoshihide Okada who handled the meeting, was organized by your board of directors and used as a basis for this response policy.

Additionally, we believe that your company's main businesses, the Apparel Machinery business and the Automotive business, are not currently viewed by the market as having high growth expectations. Therefore, we argue that there is little economic rationality in leaving low ROE and a PBR below 1x unaddressed without specifically demonstrating reinvestment opportunities that exceed the cost of capital, and that a review of capital allocation, including the return of surplus capital to shareholders, should be specifically presented.

Moreover, we point out that while your company has set early achievement of ROE over 9% and PBR over 1x as goals, it has postponed the release of the detailed medium-term management plan until the end of October 2026 while introducing this response policy first. This appears to be a postponement of accountability and can be seen as positioning shareholder demands for improved capital efficiency as a 'control acquisition risk' to block discipline.

We request your company's board of directors to withdraw this response policy, or at least always subject the activation of defensive measures to shareholder meeting approval, to disclose early the quantitative plan to achieve ROE over 9% and PBR over 1x, to disclose the definition and amount of surplus cash deposits and non-business assets, and to disclose quantitative information on capital allocation policy and ROIC by business segment. We also request a response and explanation regarding the stock price decline and underperformance against major market indices since May 13, as well as the relationship between our explanations to Mr. Yoshihide Okada and the content disclosed externally in this response policy, by June 22, 2026, in writing, through timely disclosure, or by other means verifiable by shareholders.

This opinion statement does not request shareholders to delegate the exercise of voting rights to us or any third party, nor does it request the submission of proxies. We ask shareholders to exercise their voting rights based on their own judgment and responsibility.

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This release and attached documents are opinions and comments based on public information as a shareholder of the company and do not recommend the acquisition, sale, or holding of specific securities. Furthermore, they do not request shareholders to delegate the exercise of voting rights to us or any third party, nor do they request the submission of proxies. We ask shareholders to exercise their voting rights based on their own judgment and responsibility.