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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: AsianValueInvestor who wrote (51993)	8/5/2013 2:33:59 PM
From: Jurgis Bekepuris	Respond to of 78625

I am not an expert on Japanese companies, Spekulatius knows more about them, so it would be interesting to hear what he thinks. However, with a brief look, this does not seem cheap. TSE page lists ROE 11%, PE 18, PB 1.9. MSN agrees. MSN claims that future PE is 11, but personally I don't use future PEs and I would doubt that number if only single analyst covers the company. Previously discussed AIT corp has better numbers, though it is not directly comparable. Spekulatius's mention Treasure Factory also has better numbers. IMHO, the stock might have been interesting at 4400-4600 level. I think it's not obviously cheap now and would require much more due diligence for investment. Since I am not sure I want to be in Japan macro-wise, I will skip. Thanks for bringing it to our attention and looking forward for more posts from you. Disclosure: I have small positions in ASBRF and AITPF.

To: AsianValueInvestor who wrote (51993)	8/5/2013 5:18:35 PM
From: Paul Senior	Read Replies (1) \| Respond to of 78625

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.

To: AsianValueInvestor who wrote (51993)	8/5/2013 9:20:32 PM
From: Spekulatius	Read Replies (1) \| Respond to of 78625

Pass for me too. My main issue is that it's not cheap enough with an ~18PE. I can buy well managed consumer good companies in the US or Europe for a similar PE. Their near term outlook appears to be muted with slightly declining earnings. The company has not much of an export business (<10% of revenues) and the Japanese consumer goods market has way below average growth. There is only one reason to buy japanese stocks - thy must be very very cheap. 4967.T does not fit the bill for me (not many japanese stocks do after the recent Abenomics fueled runup) so it's a pass for me. Since you are located in HK - do you own any value stocks there? There should be decent bargains there with China in the tank. We don't buy stocks in HK because we are the patsies' usually, but that should not apply to you. But we have been looking: Message 29006174