Author Topic: 7444:JP-Harima-Kyowa  (Read 3488 times)

mjohn707

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7444:JP-Harima-Kyowa
« on: October 23, 2014, 06:13:05 PM »
Harima-Kyowa is wholesaler of cosmetics based in Himeji City, Japan.  At the recent price of 1199 yen per share it trades for 7x the 7-year average EPS of 166, 6x the 2014 EPS of 192, and 50% of tangible book value.  Sales and earnings have been on a general upward trend over the last 7 years.

Over the last 6 years ROIC has been in the 8-10% range.  The debt to equity ratio as of the 2014 year-end was 8.3%, although it appears that debt balances fluctuate during the year.  The company has no net debt if you consider cash and long-term investment balances.

Share counts are stable (which seems to be typical of Japanese companies) and inventory and receivable balances have been pretty stable as a percentage of sales over the last 6 years.

I think itís worth book value or close to book based off the ROIC and favorable earnings trend.

The company trades in 100 share lots on the Tokyo Stock Exchange.  According to the Japan Company Handbook only about 22,000 of 5,441,000 shares outstanding are held by foreign investors.  Shares are pretty illiquid with only 680 shares changing hands on average over the last 10 days, so make sure you use limit orders!
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mjohn707

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Re: 7444:JP-Harima-Kyowa
« Reply #1 on: March 17, 2017, 05:45:08 AM »
If anyone else is in this one, I sold my shares today for 1888, up about 55% over my cost
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writser

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Re: 7444:JP-Harima-Kyowa
« Reply #2 on: March 17, 2017, 05:54:31 AM »
I wasn't, but well done. Please keep us posted. Quite a bit of (upside) movement in some of the Japan value stocks lately. Maybe I'll update a few topics as well.
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.

mjohn707

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Re: 7444:JP-Harima-Kyowa
« Reply #3 on: March 17, 2017, 06:06:27 AM »
I wasn't, but well done. Please keep us posted. Quite a bit of (upside) movement in some of the Japan value stocks lately. Maybe I'll update a few topics as well.

Thanks, I've sold about half or so of my Japanese positions recently because the prices have all moved up.  Are you finding anything new in Japan?
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writser

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Re: 7444:JP-Harima-Kyowa
« Reply #4 on: March 17, 2017, 06:22:09 AM »
No, but haven't looked very hard either. Don't have much spare cash at the moment. I have sold some Murakami in the recent runup and am considering selling Fujimak and Okayama paper.

But to be fair I haven't even bothered to check the latest filings for most of my Japanese holdings.
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.

hillfronter83

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Re: 7444:JP-Harima-Kyowa
« Reply #5 on: March 17, 2017, 06:37:35 AM »
I wasn't, but well done. Please keep us posted. Quite a bit of (upside) movement in some of the Japan value stocks lately. Maybe I'll update a few topics as well.

Thanks, I've sold about half or so of my Japanese positions recently because the prices have all moved up.  Are you finding anything new in Japan?

I'm looking at Semba, a recent IPO of construction/landscaping company. It's not a net-net, but close with a lot of cash on balance sheet. And its return on capital is decent.

mjohn707

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Re: 7444:JP-Harima-Kyowa
« Reply #6 on: March 17, 2017, 07:09:00 AM »
No, but haven't looked very hard either. Don't have much spare cash at the moment. I have sold some Murakami in the recent runup and am considering selling Fujimak and Okayama paper.

But to be fair I haven't even bothered to check the latest filings for most of my Japanese holdings.

I sold Murakami, own Okayama too but holding for now.  I never check the filings either
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mjohn707

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Re: 7444:JP-Harima-Kyowa
« Reply #7 on: March 17, 2017, 07:09:49 AM »
I wasn't, but well done. Please keep us posted. Quite a bit of (upside) movement in some of the Japan value stocks lately. Maybe I'll update a few topics as well.

Thanks, I've sold about half or so of my Japanese positions recently because the prices have all moved up.  Are you finding anything new in Japan?

I'm looking at Semba, a recent IPO of construction/landscaping company. It's not a net-net, but close with a lot of cash on balance sheet. And its return on capital is decent.

Thanks, I'll take a look
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NeverLoseMoney

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Re: 7444:JP-Harima-Kyowa
« Reply #8 on: March 17, 2017, 07:48:59 AM »
I almost bought Solcom (1987.JP) and think it looks very cheap. The issue for me is that they are transitioning to a 100 share board lot from the current 1000 share lot. All Japanese companies that currently have 1000 share lots have to do this. The deadline is October 1, 2018.

Anyway, Solcom seems to be doing a 1-for-5 reverse split concurrently with this change. From what I understand, if you own fewer than 5 shares, the company will sell those shares in the open market and ultimately give you the proceeds. It is all described in a press release from February 14, 2017.

I think this event might limit the upside in the near term, as people wait for this change to occur. Also, I wonder if the price will fall when the company sells the shares of investors with less than 5 shares in the open market. That's why I've decided to wait for now.

Some details about Solcom:

FT.com description: The Company operates in three business segments. The Construction segment is engaged in the design, construction and maintenance of outdoor communication equipment construction works, Internet protocol (IP) network construction works, and information communication works for mobile communications facilities. The Sales segment sells office automation (OA) equipment and materials for information communications works, as well as develops and sells software. The Others segment is involved in the real estate-related business, as well as security, transportation and leasing businesses.

Market cap: 8.0 billion Yen.
Price / NCAV: 0.59x (I included long-term investments in the calculation)
Price / BV: 0.32x

Cash: 4.6bn, long term investments: 5.1bn, debt: 1.1bn, total liabilities: 10bn. There might be pension liabilities, I haven't dug into the financial statements.

Free cash flow is a bit lumpy. The company seems to be consistently profitable though, and trading at 8.4x earnings, but 2016 did look a little stronger than previous years. The dividend yield is 2.6% and the company has made some small share buybacks in the past.