5965.JP - Fujimak Corp

[writser]

Well, the complete annual contains at least *more* information. Major shareholders, insider ownership, segment splitouts and a splitout of their stock holdings, among others. Granted, maybe it is not all that important. For those interested I uploaded a rough translation here: http://www.writser.nl/fujimak/translated.htm .

I'm starting to like this. Market cap of the company is ~5.3 billion yen, for that you get at the very least:

* 3.4 billion yen in cash (net of all debt)
* 0.9 billion yen in listed stocks.
* 0.4 billion yen in investment properties.
* an operating business generating 0,9 billion of fcf on average over the past 5 years.

Obviously capital allocation is horrible but this is still dirt cheap. Still wondering about the pension situation. If somebody a little more knowledgeable about that could have a look at the footnotes in the uploaded annual report that would be really appreciated.

[Hielko]

Doesn't seem that the pension liability is significant.

[randomep]

Well, the complete annual contains at least *more* information. Major shareholders, insider ownership, segment splitouts and a splitout of their stock holdings, among others. Granted, maybe it is not all that important. For those interested I uploaded a rough translation here: http://www.writser.nl/fujimak/translated.htm .

I'm starting to like this. Market cap of the company is ~5.3 billion yen, for that you get at the very least:

* 3.4 billion yen in cash (net of all debt)
* 0.9 billion yen in listed stocks.
* 0.4 billion yen in investment properties.
* an operating business generating 0,9 billion of fcf on average over the past 5 years.

Obviously capital allocation is horrible but this is still dirt cheap. Still wondering about the pension situation. If somebody a little more knowledgeable about that could have a look at the footnotes in the uploaded annual report that would be really appreciated.

The biggest thing for me is the potential for growth in asia.

But, we should invert the issue. Why is the stock so depressed?

[west]

Well, the complete annual contains at least *more* information. Major shareholders, insider ownership, segment splitouts and a splitout of their stock holdings, among others. Granted, maybe it is not all that important. For those interested I uploaded a rough translation here: http://www.writser.nl/fujimak/translated.htm .

I'm starting to like this. Market cap of the company is ~5.3 billion yen, for that you get at the very least:

* 3.4 billion yen in cash (net of all debt)
* 0.9 billion yen in listed stocks.
* 0.4 billion yen in investment properties.
* an operating business generating 0,9 billion of fcf on average over the past 5 years.

Obviously capital allocation is horrible but this is still dirt cheap. Still wondering about the pension situation. If somebody a little more knowledgeable about that could have a look at the footnotes in the uploaded annual report that would be really appreciated.

The biggest thing for me is the potential for growth in asia.

But, we should invert the issue. Why is the stock so depressed?

Honestly?  It's Japan.  I've thought about why things are so cheap for a long time.  I think it's just psychology (and the lack of an active M&A market).  Kind of like in the 50s when Buffett was starting to invest.  Stuff was cheap because the market hadn't gone anywhere in 2+ decades.  When that kind of stuff happens, people think it's going to stay cheap forever.

The one fear I have with these Japanese stocks though is how long are they going to take to work out?  I know they will eventually, but, say, four or five years (like what Buffett did with the Washington Post) is a long time to wait if you're a normal human.

I guess that's another reason why I'm doing a basket based approach with Japanese stocks...

[frommi]

I noticed that Capex is very high in the last two years, is this because of the expansion?

[writser]

I would guess so. They opened a sales subsidiary in Thailand and factories in Vietnam and Cambodja during the past two years. Also, capex has been slightly on the low side for a couple of years.

[frommi]

Thanks for your ideas, Japan really looks like value investors paradise at the moment.

[Hielko]

Well, the complete annual contains at least *more* information. Major shareholders, insider ownership, segment splitouts and a splitout of their stock holdings, among others. Granted, maybe it is not all that important. For those interested I uploaded a rough translation here: http://www.writser.nl/fujimak/translated.htm .

I'm starting to like this. Market cap of the company is ~5.3 billion yen, for that you get at the very least:

* 3.4 billion yen in cash (net of all debt)
* 0.9 billion yen in listed stocks.
* 0.4 billion yen in investment properties.
* an operating business generating 0,9 billion of fcf on average over the past 5 years.

Obviously capital allocation is horrible but this is still dirt cheap. Still wondering about the pension situation. If somebody a little more knowledgeable about that could have a look at the footnotes in the uploaded annual report that would be really appreciated.

The biggest thing for me is the potential for growth in asia.

But, we should invert the issue. Why is the stock so depressed?

Honestly?  It's Japan.  I've thought about why things are so cheap for a long time.  I think it's just psychology (and the lack of an active M&A market).  Kind of like in the 50s when Buffett was starting to invest.  Stuff was cheap because the market hadn't gone anywhere in 2+ decades.  When that kind of stuff happens, people think it's going to stay cheap forever.

The one fear I have with these Japanese stocks though is how long are they going to take to work out?  I know they will eventually, but, say, four or five years (like what Buffett did with the Washington Post) is a long time to wait if you're a normal human.

I guess that's another reason why I'm doing a basket based approach with Japanese stocks...

I think you are missing a big part of the reason of why stocks are cheap in Japan. They are also cheap because corporate governance sucks (from a shareholders point of view anyway): it's not a coincidence that tons of companies are extremely cash rich. You need psychology to change, but what's probably more important are fundamental changes (culture, laws etc). Abe seems to be trying to push for some change, but as long as shareholders aren't really the full owners of the company I think you are making a mistake to value non-operating assets such as cash and bonds at market value.

[west]

... I think you are making a mistake to value non-operating assets such as cash and bonds at market value.

Hieko, for me at least this is why I also like to pick companies with low P/Es and low P/Bs, with significantly growing BVPS, in addition to the capital structure agnostic approaches like EV/EBIT and ROIC.  For example, Fujimak has a P/E of < 5.0x, while earnings have been growing, and a P/TBV of 0.45x, while BVPS has been growing at ~12%+ per year.  I like to think these add a bit of a catalyst versus, say, JP:6249, which has over 80% of its value in cash and has crazy historic ROICs.  However, its P/E is greater than 20x.

[oddballstocks]

... I think you are making a mistake to value non-operating assets such as cash and bonds at market value.

Hieko, for me at least this is why I also like to pick companies with low P/Es and low P/Bs, with significantly growing BVPS, in addition to the capital structure agnostic approaches like EV/EBIT and ROIC.  For example, Fujimak has a P/E of < 5.0x, while earnings have been growing, and a P/TBV of 0.45x, while BVPS has been growing at ~12%+ per year.  I like to think these add a bit of a catalyst versus, say, JP:6249, which has over 80% of its value in cash and has crazy historic ROICs.  However, its P/E is greater than 20x.

Listen to west, he knows what he's talking about.  I own Fujimak and have been happy with it.  I think the approach of low P/E, low P/B and growing BVPS is probably better than the net-net approach I was initially taking in Japan.