Listed below are the 16 Japanese companies that currently compose my “basket” (portfolio-within-the-portfolio) of Japanese net-nets, which I refer to as “JNets”. While most of my picks were classic Benjamin Graham-style companies trading for 2/3rds or less of their Net Current Asset Value (current assets minus total liabilities), some were selected on the basis of being a Net Cash Bargain (trading below the value of the company’s cash minus total liabilities) or as a Cash Bargain (profitable company with no debt trading for less than the cash on the balance sheet).
Strictly speaking, a Net Cash Bargain is a more conservative valuation than a Net Current Asset Value Bargain as there are more assets in front of the liabilities, while a Cash Bargain is a less conservative valuation (it may or may not be an NCAV Bargain) but typically you are getting a higher quality company with stronger earnings power as a result. As Graham noted, equities can be analyzed much like bonds and the true safety of a bond comes from the underlying company’s earnings power, not necessarily the asset values which are a worst-case fall back measure to protect against loss.
The figures in the list below are all in Yen, typically in millions of Yen besides the per share price. At the time of purchase, the approximate exchange value of the dollar against the Yen was 1 USD = 78 JPY. All figures and prices are the most recent available at time of purchase.
For comparative purposes, I summarize at the end of the list the metrics for the entire basket (as if it was a conglomeration of 100% of the equity of all companies included) as well as on an average basis as a representative for an individual company within the basket.
Links in the name of each company take you to their website, if available. Links in the symbol of each company take you to their Bloomberg business bio page, if available.
16 Japanese Bargain Shares (Net-Nets, Net Cash and Cash Value)
Name: Sakai Trading Symbol: 9967 Industry/product: imports, exports, and wholesales chemical products, synthetic resins, and electronic materials Market Cap (Ym): 2,210 Share price (Y): 235 Debt (Ym): 0 Cash (Ym): 2,851 EV/EBIT (10yr avg): 12.3x NCAV (Ym): 4,973 Name: Shinko Shoji Co. Ltd Symbol: 8141 Industry/product: sells electronic parts and equipment such as integrated circuits (IC) and semiconductor devices, liquid crystal (LC) display modules, condensers, ferrite cores, coils, power supplies, thin film transistor (TFT) thermal printers, head magnets, transformers, motors, sensors, and connectors Market Cap (Ym): 16,905 Share price (Y): 625 Debt (Ym): 3,000 Cash (Ym): 10,610 EV/EBIT (10yr avg): 12x NCAV (Ym): 41,899 Name: KSK Co Ltd Symbol: 9687 Industry/product: develops computer software for various systems related to telecommunication and LSI (Large Scale Integration), provides data processing services for government and insurance group, sells OA (Office Automation) equipment and computer peripheral Market Cap (Ym): 3,300 Share price (Y): 450 Debt (Ym): 0 Cash (Ym): 4,461 EV/EBIT (10yr avg): 1.6x NCAV (Ym): 4,926 Name: Daichii Kensetsu Symbol: 1799 Industry/product: constructs railways mainly for East Japan Railway, constructs infrastructure such as sewage facilities, tunnels, and waterways, builds commercial, institutional, and residential buildings Market Cap (Ym): 15,124 Share price (Y): 685 Debt (Ym): 151 Cash (Ym): 17,230 EV/EBIT (10yr avg): 2.3x NCAV (Ym): 19,099 Name: Choukeizai Sha Symbol: 9476 Industry/product: publishes economics, finance, law, accounting, and tax related books and periodical magazines and business related books, operates a planning center which handles advertising on publishes, provides design & production services for sales promotion pamphlets Market Cap (Ym): 1,434 Share price (Y): 326 Debt (Ym): 0 Cash (Ym): 2,501 EV/EBIT (10yr avg): -0.1x NCAV (Ym): 2,933 Name: CLIP Corp Symbol: 4705 Industry/product: operates a network of cram schools in Nagoya, operates soccer school and lunch box delivery services Market Cap (Ym): 4,022 Share price (Y): 886 Debt (Ym): 0 Cash (Ym): 5,029 EV/EBIT (10yr avg): 0.1x NCAV (Ym): 4,196 Name: Noda Screen Symbol: 6790 Industry/product: processes electrical components such as plastic package substrates and printed circuits boards (PCBs), through a subsidiary, manufactures and sells screen stencils and fluoride chemical products Market Cap (Ym): 2,849 Share price (Y): 27,000 Debt (Ym): 0 Cash (Ym): 3,641 EV/EBIT (10yr avg): -0.2x NCAV (Ym): 4,146 Name: Kitakei Co Ltd Symbol: 9872 Industry/product: wholesales housing materials and home furnishings based in the Kansai area, sells housing facility products such as bathroom units, wooden building materials, special wooden products, housing equipment, veneer boards, chemical products, and housing preservative agents Market Cap (Ym): 2,963 Share price (Y): 296 Debt (Ym): 0 Cash (Ym): 5,045 EV/EBIT (10yr avg): 16.8x NCAV (Ym): 5,133 Name: Ryosan Co Ltd Symbol: 8140 Industry/product: distributes electronic components, such as integrated circuits (ICs), electronic tubes, semiconductor elements, and personal computers, manufactures heat sinks Market Cap (Ym): 47,582 Share price (Y): 1,387 Debt (Ym): 172 Cash (Ym): 36,452 EV/EBIT (10yr avg): 7x NCAV (Ym): 92,515 Name: Daiken Co Symbol: 5900 Industry/product: manufactures and sells metal and other material parts for building construction and exterior products including curtain rails, exterior panels, garages, and bicycle parking units, provides installation of these products and real estate leasing service Market Cap (Ym): 2,245 Share price (Y): 376 Debt (Ym): 0 Cash (Ym): 1,753 EV/EBIT (10yr avg): 5.4x NCAV (Ym): 4,375 Name: Ryoyo Electro Corporation Symbol: 8068 Industry/product: wholesales electronic components including semiconductors, sells workstations, personal computers, and printers, operates offices in Singapore and Hong Kong, trades semiconductors from Mitsubishi Electric Market Cap (Ym): 22,205 Share price (Y): 771 Debt (Ym): 0 Cash (Ym): 28,443 EV/EBIT (10yr avg): 1.6x NCAV (Ym): 54,847 Name: Nihon Dengi Symbol: 1723 Industry/product: designs, constructs, and maintains integrated building management systems for air-conditioning, security, and electrical facilities, develops integrated production systems for industrial factories Market Cap (Ym): 4,805 Share price (Y): 586 Debt (Ym): 0 Cash (Ym): 6,313 EV/EBIT (10yr avg): 4.3x NCAV (Ym): 8,613 Name: Odawara Engineering Symbol: 6149 Industry/product: manufactures automatic coil winding machines including micro motor, coreless motor, universal motor, and stepping motor type, provides reconstruction, repair, and parts replacement services for its winding machines Market Cap (Ym): 4,154 Share price (Y): 650 Debt (Ym): 0 Cash (Ym): 5,411 EV/EBIT (10yr avg): 2x NCAV (Ym): 6,423 Name: Natoco Co Ltd Symbol: 4627 Industry/product: manufactures and sells various types of paints including paints for metals, building materials, and auto repair, manufactures high polymer compounds which are used as material for liquid crystal displays Market Cap (Ym): 4,414 Share price (Y): 603 Debt (Ym): 0 Cash (Ym): 5,403 EV/EBIT (10yr avg): 5x NCAV (Ym): 6,967 Name: Fuji Oozx Symbol: 7299 Industry/product: manufactures automobile engine parts such as valves, valve adjusters and rotators, has subsidiaries in Korea, Taiwan, and the United States Market Cap (Ym): 6,189 Share price (Y): 301 Debt (Ym): 0 Cash (Ym): 6,884 EV/EBIT (10yr avg): 1.6x NCAV (Ym): 11,623 Name: Excel Co Ltd Symbol: 7591 Industry/product: sells electronic products, such as liquid crystal devices (LCD), semiconductors, and integrated circuits (IC), including thin film transistor (TFT) modules, TFT-LCDs, cellular phones, car navigation systems Market Cap (Ym): 6,208 Share price (Y): 683 Debt (Ym): 0 Cash (Ym): 6,679 EV/EBIT (10yr avg): 4.7x NCAV (Ym): 18,574 Total Basket Market Cap (Ym): 129,974 EV (Ym): -15,499 10yr avg EBIT (Ym): 27,046 Debt (Ym): 3,323 Cash (Ym): 148,796 NCAV (Ym): 291,244 EV/EBIT (10yr avg): -0.57x P/NCAV: 0.45x P/Net cash: 0.89x P/Cash: 0.87x EBIT yield (EBIT/Mkt Cap): 21% Representative Company (Avg) Market Cap (Ym): 8,123 EV (Ym): -969 10yr avg EBIT (Ym): 1,690 Debt (Ym): 208 Cash (Ym): 9,300 NCAV (Ym): 18,203
A House Rises 