I know you recently covered Itochu, which I currently own and appreciate your further research on the company, which has a huge stake in Family Mart. I wanted to get your thoughts on a competitor in the convenient store space, Seven & i Holdings Co ($3382.T).
The company's performance sine the analysis is more or less flat, which is remarkably well in these bearish times. However, my opinions in it still stands: The stock is too expensive for its growth and profits, and is likely held up by its brand-name & stable performance.
Oh thank you so much! I am fairly new to your content and so I haven't gone back that far yet but will definitely check out this analysis! Thank you again and keep up the great work!
I don't have a particular company in mind, but I'm interested in the hearing aid market. FDA recently approved prescription-free OTC hearing aids enabling new companies to enter healthcare markets. With Japan’s notorious aging population, there might already be some good companies that hold the potential to ride this new opportunity.
I thought I just read somewhere that Singapore's GIC etc is buying or looking at Japanese hospitality properties in anticipation for normalized tourism...
Not a stock, but I'd love to know what's the most leveraged bet against the Japanese stock market or individual stock if a large scale earthquake devastates the Tokyo region.
It's bound to happen, and would be good to prepare to hedge against it
Very interesting! I might try to write a full piece on it, but this is my hot take right now:
I think the 2011 Fukushima disaster is a good preview of what we might see: An extreme disruption to production, energy and internal supply-chains, but at the end of the day a great buying opportunity. Also, this time Japan has minimized any nuclear meltdown risks (could still happen, but very very unlikely).
Japan is the world's most prepared country for earthquakes and almost any scenario has been planned for. I'd say that in any scenario except with an earthquake larger than anything Tokyo has ever experienced, the city will recover within a year.
It reminds me a bit of Shinoken (8909), & hoping it’ll be profitable for me as Shinoken was.
Trailing P/E of 6.4, a dividend yield of over 13% after tanking recently, ROE of 22%, & a current ratio of 9!
I read that a big reason behind Shinoken’s low valuation was a few real estate scandals, such as Leo Palace, crushing investor confidence in real estate stocks, & am wondering if Dear Life is in the same boat as Shinoken.
Z Holdings! As one of the biggest tech firms in Japan, how has the merger been holding up and what can we find out about their management, strategy, and where Japanese internet products are going?
Wow, Z Holdings is definitely interesting! Owning Yahoo! Japan, Line & PayPay, it is perhaps the most influential IT-company in Japan.
However, with a P/E of 40x and a equity ratio of less than 50%, it is definitely not a value-stock, but considering how influential this "behind the scenes" company is, I want to dig a bit furher. Might have a stock-analysis up on it in a few weeks, but don't hold your breath :P
Sure, it justifies the P/E more than for let's say a manufacturing company, but I'd argue it's still a very relevant metric. There is no certainty that PayPay will be a profitable venture and with an equity ratio at around 38% (https://www.nikkei.com/nkd/company/kessan/?scode=4689), increasing interest rates could be detrimental to their bottom line.
I was wondering if you are able to see the profits for the different business segments? I can only find the revenue, but no margins per segment or profits 😑
Hey ! Thanks for your work. I would be interested in better understanding all the JR companies whether or not they would be value trap : JR west and JR east for instance. Also in comparaison with other rail companies Odakyu, Kintetsu … I would think those companies get their money from real estate, but I can notice there are not all evolving in the same trends.
Hitachi also would be interesting in a context of the world looking at growing and expanding their rail system for more sustainable means of transportation. Hitachi is definitely well positioned with recent acquisition in Europe (Ansaldo Breda ..) and might sell more and more trains in the future.
TOEI (4816) would be interesting to have a look at too in comparaison to Disney or Nintendo.
As I am an avid transit fan (even have a little transit blog: https://lovetransit.substack.com/), I've been thinking about this a lot!
However, the only company that shows up on my value-screener (reasonable P/E and relatively ok growth) is Hitachi. The issue with Hitatchi is that its railway-division only represents 13% of its total revenue (Under mobility - https://www.hitachi.com/IR-e/financial/segment/index.html). Might still do an analysis of the company, but as it's so massive, it's a gigantus task I'm still postponing😫.
Regarding TOEI, interesting take! I'll look into it!
Was it you or Michael Fritzell who already profiled Don Don Donki or the parent company? The grand opening in KL during COVID was nuts! https://www.youtube.com/playlist?list=PLqc3Bk5x3NwUH7QyLb79CbZMIi6DOsv5a BUT I have noticed they have culled alot of products and its now easier to walk around the store than when it was first opened... Always crowded with Chinese shoppers rather than Muslim Malays...
Also https://mitsui-shopping-park.com.my/ just opened here recently - they have one in Shanghai while Family Mart and Korean chain CQ are rapidly expanding...
I'm always amazed how Japanese retailers are able to copy their concepts to the dot, even in countries with completly different standards.
As Japanese retailers are some of the very few companies that have managed to expand abroad in recent decades, their stocks tend to be overvalued (Fast Retailing, Jins Holdings Inc spring to mind). However, many of the biggest retailers are owned by trading companies (like Mitsui), which can be quite interesting. I've written about ITOCHU previously, which does own FamilyMart & the Japanese rights to Paul Smith, Converse etc., so that can be an interesting way to get exposure.
Must be! I have a headhunting client that's involved in retail + its a business that ordinary people can understand very easily (my mother and probably most women are experts 😀) as you can visit their stores and see what they are doing right or wrong... same with F&B...
In Malaysia, a local group called Valiram operates many of the mall store franchises or JVs (e.g. Victoria's Secret is or was theirs) as they know the local market - I guess what ITOCHU does in Japan then. The Halal issue and importation is very complex here and yet Don Don Donki (and Family Mart - almost as good as Taiwan) seem to be doing well at their first store BUT Isetan has struggled since Covid, they closed the 1 Utama store, plus Aeon (the supermarkets-hypermarts) is restructuring (local management problems etc - last I heard a new team was being sent in from Japan to straighten them out). On the other hand, the Korean specialty retail fashion concepts brought here by Lion Group (Parkson Dept Store) stumbled badly - I guess they could not figure out local consumers or how to position Korean fashion with them... 🤷♂️
Have you done Yamazaki Baking? They are like Mexico's Bimbo - massive and I think they own alot of other chains or brands e.g. Four Leaves in Singapore, Sun Moulin bakery in Isetan etc
Dear Rai, would be really interested in a write up on the Japanese Coca Cola bottler (2571). Been intrigued by the European, Turkish and Mexican bottlers and figured from 2571's latest investment presentation that they are going through some sort of restructuring.
Maybe! That company was very overhyped around a year ago with the whole semiconductor craze, but its come down over 44% this year and is trading at quite reasonable levels now.
It's P/E of around 6x is actually crazy, especially when Döhler trades at around 16x and Symrise at around 34x...
Haven't done much research yet, but most competitors seem to have higher growth rates. However, all companies in the industry seem to have very low equity ratios. Do you know what that's about?
Nope, it was pending on my list to dd. I will look at it if i can find some time soon. (i looked very quickly in the past and didn't see any red flags, that's why i suggested here) There is Givaudan and IFF they also trade at +30P/E. Even after past years drop.
I would be very interested in a post on some of the small & mid-caps that trade at a negative enterprise value (market cap below the sum of net cash & investment securities) but still seem like good businesses (here defined as ROCE > 25% [EBIT / (NWC + PP&E)] and positive 10-year growth in both revenues and EBIT). For example:
4365 (Matsumoto Yushi-Seiyaku Co.)
4628 (Sk Kaken Co.)
9872 (Kitakei Co.)
1879 (Shinnihon Corporation)
4212 (Sekisui Jushi Corporation)
6459 (Daiwa Industries Ltd.)
7472 (TOBA, Inc.)
I could understand if companies in secular decline or with poor competitive positions trade at negative EVs, but the above list doesn’t fit that description.
I'm so happy to hear this and have already my eyes on Daiwa industries as we speak, but will definitely check out the others. I'm actually analyzing a company right now with a P/B of around 0.6 called Eizo. Will hopefully be an interesting read for you 😊
Tough one. Would likely take more than a month to go through their balance sheets 😅
I did however see quite a good analysis on the company written by "Aother Mountain's Rock Investing". His summarizing words are something I completly agree with: "As Toshiba is a legacy company with a storied history, and potentially stubborn management, underperformance over the past decade can be attributed to the lack of digital optimizations. As Toshiba continues to get rid of unnecessary assets and improves harmony between the entire company, financial performance could see tremendous improvements. The company could also be bought!"
I know you recently covered Itochu, which I currently own and appreciate your further research on the company, which has a huge stake in Family Mart. I wanted to get your thoughts on a competitor in the convenient store space, Seven & i Holdings Co ($3382.T).
I actually did a stock-analysis in March of Seven & I Holdings Co (check it out here: https://www.konichivalue.com/p/the-kings-of-convenience-7-eleven-1ff).
The company's performance sine the analysis is more or less flat, which is remarkably well in these bearish times. However, my opinions in it still stands: The stock is too expensive for its growth and profits, and is likely held up by its brand-name & stable performance.
Oh thank you so much! I am fairly new to your content and so I haven't gone back that far yet but will definitely check out this analysis! Thank you again and keep up the great work!
I don't have a particular company in mind, but I'm interested in the hearing aid market. FDA recently approved prescription-free OTC hearing aids enabling new companies to enter healthcare markets. With Japan’s notorious aging population, there might already be some good companies that hold the potential to ride this new opportunity.
Not really deep value but Shiseido Is a potential recovery play in normalised tourism, for which I dont really know the long term prospects.
I thought I just read somewhere that Singapore's GIC etc is buying or looking at Japanese hospitality properties in anticipation for normalized tourism...
Not a stock, but I'd love to know what's the most leveraged bet against the Japanese stock market or individual stock if a large scale earthquake devastates the Tokyo region.
It's bound to happen, and would be good to prepare to hedge against it
https://www.asahi.com/ajw/articles/14308878
Very interesting! I might try to write a full piece on it, but this is my hot take right now:
I think the 2011 Fukushima disaster is a good preview of what we might see: An extreme disruption to production, energy and internal supply-chains, but at the end of the day a great buying opportunity. Also, this time Japan has minimized any nuclear meltdown risks (could still happen, but very very unlikely).
Japan is the world's most prepared country for earthquakes and almost any scenario has been planned for. I'd say that in any scenario except with an earthquake larger than anything Tokyo has ever experienced, the city will recover within a year.
How about Dear Life (3245)?
It reminds me a bit of Shinoken (8909), & hoping it’ll be profitable for me as Shinoken was.
Trailing P/E of 6.4, a dividend yield of over 13% after tanking recently, ROE of 22%, & a current ratio of 9!
I read that a big reason behind Shinoken’s low valuation was a few real estate scandals, such as Leo Palace, crushing investor confidence in real estate stocks, & am wondering if Dear Life is in the same boat as Shinoken.
Z Holdings! As one of the biggest tech firms in Japan, how has the merger been holding up and what can we find out about their management, strategy, and where Japanese internet products are going?
Did a quick review of Z here https://emergingvalue.substack.com/p/tech-value-quick-world-tour-2-japan?utm_source=substack&utm_campaign=post_embed&utm_medium=web&s=w
Wow, Z Holdings is definitely interesting! Owning Yahoo! Japan, Line & PayPay, it is perhaps the most influential IT-company in Japan.
However, with a P/E of 40x and a equity ratio of less than 50%, it is definitely not a value-stock, but considering how influential this "behind the scenes" company is, I want to dig a bit furher. Might have a stock-analysis up on it in a few weeks, but don't hold your breath :P
the accounting PE is not relevant in Zholdings case. much depreciation + PayPay losses
Sure, it justifies the P/E more than for let's say a manufacturing company, but I'd argue it's still a very relevant metric. There is no certainty that PayPay will be a profitable venture and with an equity ratio at around 38% (https://www.nikkei.com/nkd/company/kessan/?scode=4689), increasing interest rates could be detrimental to their bottom line.
I was wondering if you are able to see the profits for the different business segments? I can only find the revenue, but no margins per segment or profits 😑
Hey ! Thanks for your work. I would be interested in better understanding all the JR companies whether or not they would be value trap : JR west and JR east for instance. Also in comparaison with other rail companies Odakyu, Kintetsu … I would think those companies get their money from real estate, but I can notice there are not all evolving in the same trends.
Hitachi also would be interesting in a context of the world looking at growing and expanding their rail system for more sustainable means of transportation. Hitachi is definitely well positioned with recent acquisition in Europe (Ansaldo Breda ..) and might sell more and more trains in the future.
TOEI (4816) would be interesting to have a look at too in comparaison to Disney or Nintendo.
As I am an avid transit fan (even have a little transit blog: https://lovetransit.substack.com/), I've been thinking about this a lot!
However, the only company that shows up on my value-screener (reasonable P/E and relatively ok growth) is Hitachi. The issue with Hitatchi is that its railway-division only represents 13% of its total revenue (Under mobility - https://www.hitachi.com/IR-e/financial/segment/index.html). Might still do an analysis of the company, but as it's so massive, it's a gigantus task I'm still postponing😫.
Regarding TOEI, interesting take! I'll look into it!
Was it you or Michael Fritzell who already profiled Don Don Donki or the parent company? The grand opening in KL during COVID was nuts! https://www.youtube.com/playlist?list=PLqc3Bk5x3NwUH7QyLb79CbZMIi6DOsv5a BUT I have noticed they have culled alot of products and its now easier to walk around the store than when it was first opened... Always crowded with Chinese shoppers rather than Muslim Malays...
Also https://mitsui-shopping-park.com.my/ just opened here recently - they have one in Shanghai while Family Mart and Korean chain CQ are rapidly expanding...
Not me sadly 😅. Could it be this analysis you are referring to: https://www.asiancenturystocks.com/p/deep-dive-2002-7-pan-pacific-international ?
I'm always amazed how Japanese retailers are able to copy their concepts to the dot, even in countries with completly different standards.
As Japanese retailers are some of the very few companies that have managed to expand abroad in recent decades, their stocks tend to be overvalued (Fast Retailing, Jins Holdings Inc spring to mind). However, many of the biggest retailers are owned by trading companies (like Mitsui), which can be quite interesting. I've written about ITOCHU previously, which does own FamilyMart & the Japanese rights to Paul Smith, Converse etc., so that can be an interesting way to get exposure.
Must be! I have a headhunting client that's involved in retail + its a business that ordinary people can understand very easily (my mother and probably most women are experts 😀) as you can visit their stores and see what they are doing right or wrong... same with F&B...
In Malaysia, a local group called Valiram operates many of the mall store franchises or JVs (e.g. Victoria's Secret is or was theirs) as they know the local market - I guess what ITOCHU does in Japan then. The Halal issue and importation is very complex here and yet Don Don Donki (and Family Mart - almost as good as Taiwan) seem to be doing well at their first store BUT Isetan has struggled since Covid, they closed the 1 Utama store, plus Aeon (the supermarkets-hypermarts) is restructuring (local management problems etc - last I heard a new team was being sent in from Japan to straighten them out). On the other hand, the Korean specialty retail fashion concepts brought here by Lion Group (Parkson Dept Store) stumbled badly - I guess they could not figure out local consumers or how to position Korean fashion with them... 🤷♂️
Have you done Yamazaki Baking? They are like Mexico's Bimbo - massive and I think they own alot of other chains or brands e.g. Four Leaves in Singapore, Sun Moulin bakery in Isetan etc
Dear Rai, would be really interested in a write up on the Japanese Coca Cola bottler (2571). Been intrigued by the European, Turkish and Mexican bottlers and figured from 2571's latest investment presentation that they are going through some sort of restructuring.
Tokyo Electron (8035)!!
Maybe! That company was very overhyped around a year ago with the whole semiconductor craze, but its come down over 44% this year and is trading at quite reasonable levels now.
I'll have a look :D
Takasago International. I am wondering why it is at low multiples compared to western flavour and fragrance companies.
It's P/E of around 6x is actually crazy, especially when Döhler trades at around 16x and Symrise at around 34x...
Haven't done much research yet, but most competitors seem to have higher growth rates. However, all companies in the industry seem to have very low equity ratios. Do you know what that's about?
Nope, it was pending on my list to dd. I will look at it if i can find some time soon. (i looked very quickly in the past and didn't see any red flags, that's why i suggested here) There is Givaudan and IFF they also trade at +30P/E. Even after past years drop.
I would be very interested in a post on some of the small & mid-caps that trade at a negative enterprise value (market cap below the sum of net cash & investment securities) but still seem like good businesses (here defined as ROCE > 25% [EBIT / (NWC + PP&E)] and positive 10-year growth in both revenues and EBIT). For example:
4365 (Matsumoto Yushi-Seiyaku Co.)
4628 (Sk Kaken Co.)
9872 (Kitakei Co.)
1879 (Shinnihon Corporation)
4212 (Sekisui Jushi Corporation)
6459 (Daiwa Industries Ltd.)
7472 (TOBA, Inc.)
I could understand if companies in secular decline or with poor competitive positions trade at negative EVs, but the above list doesn’t fit that description.
Appreciate your work!
I'm so happy to hear this and have already my eyes on Daiwa industries as we speak, but will definitely check out the others. I'm actually analyzing a company right now with a P/B of around 0.6 called Eizo. Will hopefully be an interesting read for you 😊
How about an outlook of Toshiba?
Tough one. Would likely take more than a month to go through their balance sheets 😅
I did however see quite a good analysis on the company written by "Aother Mountain's Rock Investing". His summarizing words are something I completly agree with: "As Toshiba is a legacy company with a storied history, and potentially stubborn management, underperformance over the past decade can be attributed to the lack of digital optimizations. As Toshiba continues to get rid of unnecessary assets and improves harmony between the entire company, financial performance could see tremendous improvements. The company could also be bought!"