Welcome to the thread, AsianValueInvestor.
I'll also pass on Kobayashi.
That decision is based on my style of investing, and what I'm looking for. Others may have a different opinion on the company/stock.
It's nice that the dividend has increased every year for many years. However, the dividend yield seems to be about 1.5%. Given what you say, "High returns on unlevered tangible equity, near debt-free balance sheet, strong cash flow, margins and earnings growth (net income grew consecutively for 15 years...), and "Not your typical Japan run company focused on customers, employees, suppliers and finally, shareholders", the low yield doesn't give me any reassurance that this is not just another Japanese company that gives low priority to stockholders. For me to buy shares, for a "stockholder-friendly" company, especially one from the Japanese culture, I'd like to see a higher yield, if funds are available.
I don't mind dull, boring companies-- companies that have niche products that have limited market. I've owned pharma companies that have had these characteristics. If margins are good, then I want to see low p/e for such. Perhaps that's not the correct view; it's my view though. Kobayashi has too high a p/e for me.
To me, I like to see dull, boring companies with simple balance sheets, and metrics I'm used to and can understand. I'll give you that your analysis will be more detailed and maybe better than mine, and that my view might be, or is, totally wrong. For me though, if the primary way that I have to view the undervalued nature of Kobayasi is by something called "high returns on unlevered tangible equity" where "Returns on tangible invested capital defined as normalized operating income divided by (non cash working capital (i.e. less interest bearing short term debt, current capital leases, short term cash, etc) plus tangible fixed asset)" -- well that is just too much of a stretch for me. If the company's undervalued, it's just not obvious enough for me. And I guess I would expect it to be. So I'll pass on this one.
Just my opinion, and I've been wrong many, many times. |
