8909 - Shinoken Group Co

[valuepickr]

Any idea why volume is very less
https://seekingalpha.com/symbol/SHIOF

It shows up on TDAmeritrade but isn't actually available. I wonder about other US brokerages.

Thank You !

[SoonParted]

Apparently Raper has already sold due to this:
https://twitter.com/puppyeh1/status/1362563109357973504

Tech companies routinely compensate executives with options and dilutive share creation, so I don't see why this is seen as terrible, that he created 3% more shares to give to charity.  It's certainly a negative, but are such things more common in Japan?

[zuminsan]

Honestly, I was in a panic on why raper sold and was looking through the reasoning. Based on what I read, the treasury shares are the shares that Shinoken group previous purchased with cash and it was sitting in the balance sheet (those shares didn’t get retired so It’s like cash sitting in the balance sheet). So from what I understand, it is a proposal to donate to a scholarship foundation within the shinoken group to incentivize the student workers joining the company after graduation. So the shares are not really newly issued shares but they are pre-existing shares, and I think ceo is proposing to give those shares(like cash) and donate to a company foundation.
Even if that’s the case, I don’t see how that’s changing the story of the company, under-priced Real Estate construction and management company, I am buying based on the fact the strong recurring revenue stream of the management service (5-6 Bil Owner’s earning) and putting 0 value on the real construction/apart/condo side (assuming they build no apart/condo/building and take on no construction project in the future). It’s current market cap is 38 bil yen.
Again, love to hear what others think, maybe my story is completely wrong.
Currently looking into more statistics on the total market Apart/condo construction and hopeful get some ideas on the future prosperity of Shinoken group in Japanese Real Estate. I think it would help to get some idea of the future of Shinoken market cap if we have roughly the total market cap of the apartment/condo construction industry. 

[Spekulatius]

Apparently Raper has already sold due to this:
https://twitter.com/puppyeh1/status/1362563109357973504

Tech companies routinely compensate executives with options and dilutive share creation, so I don't see why this is seen as terrible, that he created 3% more shares to give to charity.  It's certainly a negative, but are such things more common in Japan?

I don’t think share based compensation is that common in Japan, outside of the tech sector perhaps. The problem with this share donation is not that it fundamentally changes the story for this in terms of valuation, it puts in question the managements fairness and capital allocation.
There are plenty of cheap stocks in Japan and they are very easy to find. What is hard to find are cheap stocks with capable management and reasonable capital allocation. I think in this regard, Shinoken is now a bit more of a question mark. Well at least it has a rising dividend going for it, but that alone is unlikely to give shareholders a  reasonable return.

[ACooke]

I don’t think share based compensation is that common in Japan, outside of the tech sector perhaps. The problem with this share donation is not that it fundamentally changes the story for this in terms of valuation, it puts in question the managements fairness and capital allocation.
There are plenty of cheap stocks in Japan and they are very easy to find. What is hard to find are cheap stocks with capable management and reasonable capital allocation. I think in this regard, Shinoken is now a bit more of a question mark. Well at least it has a rising dividend going for it, but that alone is unlikely to give shareholders a  reasonable return.
[/quote]

I agree - i think it's more a matter of perception and a question as to managements moves going forward.
I don't and didn't have overly high standards for management with Japan's corporate culture, i don't think they're needed here, at this price.

To me, 8909 is too cheap for a reasonable/good business with a hand full of growth 'options'. There's not much that needs to go right for this to return north of 10%.

Mohnish speaks highly of the business, and as a 'spawner' with a long track record in this recent interview. Sorry - not certain on the time stamp - closer to the start/middle than the end. It's worth a watch regardless.

https://youtu.be/pUiwBs_N5cE

[Spekulatius]

Another thought is that the transfer of 3% of the shares to a foundation, which I assume is controlled by chairman Shinohara too, is just a move to ensure control now that more and more gaijin show up as shareholders and may make some noise.
Shinohara owns ~18.5% himself, so another ~3% that he controls without really paying anything up sure doesn’t hurt in this respect.

[keerthiprasad]

Why is Shinoken any different than all the other Japanese value traps?

[RetroRanger]

I have the feeling for clarification to a few things here!!

1) Jeremy Raper did not sold because of the 3% share spending , He sold before ( you can read that on twitter) because he saw better opportunities. If you follow Jeremy you know that he is seeking way shorter investment stories than Shinoken.

2) Pabrai even increased his stake on 29.01 . You can check that for yourseld on EBINET ( the japanese filing system) . Pabrais Fund code is E36293. But here is the query for you guy, to find his latest filings EBINET Filings. If you use google translate you can see that he increased the amount . And if you look closely you will find out that Pabrai has this position in 2 different funds, not only his Pabrai Fund, but also in the Dhandoo Fund ( i guess for his daughter)

3) "Why is Shinoken any different than all the other Japanese value traps?" Because Shinoken is undervalued even without growth. It is shown in the latest Report from Jeremy Raper and it is even shown in the latest official Shinoken document (mid-long term view) . So even without any future growth you buy the company for less than its asset value... Also Shinoken is not the typical REIT company. It has spawned different stuff, like life insurance, services per app , customer services like managing contracts . Those "managed services" already make 50% of their profit and has even increased during Covid. This is the future of the company.

And i did not even include their expansion programs in Indonesia ( the first official foreigner REIT )

So it is the typical Pabrai move. You have nearly no downside but high potential upside through this "REaaS = Real Estate as a Service" and expansion program. And you have this spawning potential like they have done over the last years.  Look at their 30 years history: https://www.shinoken.co.jp/en/about/history/

[Spekulatius]

I agree that Shinoken doesn’t look like a typically Japanese value trap, but spawning née business is a very Japanese thing (that’s how the Keiretsu evolved after all) and many companies start new business lines that often waste capital and don’t work out.
Shinoken does better here because their business seems to be working out. Now we we just need a CEO that is friendly to gaijin shareholders.

[shamelesscloner]

I have the feeling for clarification to a few things here!!

1) Jeremy Raper did not sold because of the 3% share spending , He sold before ( you can read that on twitter) because he saw better opportunities. If you follow Jeremy you know that he is seeking way shorter investment stories than Shinoken.

2) Pabrai even increased his stake on 29.01 . You can check that for yourseld on EBINET ( the japanese filing system) . Pabrais Fund code is E36293. But here is the query for you guy, to find his latest filings EBINET Filings. If you use google translate you can see that he increased the amount . And if you look closely you will find out that Pabrai has this position in 2 different funds, not only his Pabrai Fund, but also in the Dhandoo Fund ( i guess for his daughter)

3) "Why is Shinoken any different than all the other Japanese value traps?" Because Shinoken is undervalued even without growth. It is shown in the latest Report from Jeremy Raper and it is even shown in the latest official Shinoken document (mid-long term view) . So even without any future growth you buy the company for less than its asset value... Also Shinoken is not the typical REIT company. It has spawned different stuff, like life insurance, services per app , customer services like managing contracts . Those "managed services" already make 50% of their profit and has even increased during Covid. This is the future of the company.

And i did not even include their expansion programs in Indonesia ( the first official foreigner REIT )

So it is the typical Pabrai move. You have nearly no downside but high potential upside through this "REaaS = Real Estate as a Service" and expansion program. And you have this spawning potential like they have done over the last years.  Look at their 30 years history: https://www.shinoken.co.jp/en/about/history/

Do you happen to know Li Lu's Fund code?