4629.JP-Daishin Chemical

[mjohn707]

Daishin Chemical is a manufacturer of paint thinners based in Tokyo.  According to the japan company handbook they have a 30% share of the domestic market.  At 880 it sells for about 6 times the 7-year average EPS of 140, and about 50% of the book value per share of 1833.  Over the last three years ROIC has been in the 8-10% range.  The company has no net debt.

 

I think it's worth book value or close to book based off the reasonable ROICs. 

 

The stock is very illiquid and trades in 1000 share round lots, so be careful if you decide to buy in!

 

 

 

[lathinker]

mjohn,

 

thanks for posting - seems you are following west's footsteps here.

I looked it up in Damodaran's list of Japanese companies which states:

 

EV/EBIT 2.0

EV/EBITDA 1.3

ROIC 12.1%

Dividend Yield 0% which appears wrong to me as the seem to pay out a bit.

 

I have no problem with the illiquidity but still find it difficult to buy this kind of company "blindly" i.e. without understanding anything of the Annual Report and not being really sure about the business.

Maybe the board could jointly hire a Japanese intern for the purpose of translating some of these reports...  ;)

[frommi]

Thanks for the idea, but i give this one a pass. Main shareholder and CEO has passed away last year according to reuters and someone unrelated to the company has inherited the shares.

 

http://www.reuters.com/finance/stocks/4629.T/key-developments

[west]

mjohn, thanks for posting!

 

Based off the numbers, the company looks pretty good.  And that new shareholder could be a catalyst (maybe he wants to buy out the whole company... which would mean the stock price will probably rise... but equally, if he really did "inherit" the shares, and not purchase his position, maybe his selling will cause the stock to be even more depressed in the future?)

 

For now, I'm going to sit on the sidelines.  For me it's not so much that this isn't a good bet (in the US I'd buy it in a heartbeat), but I think there are much better ones in Japan.  I'm a greedy SOB so I'll pass up fifty-cent dollars if it means I can buy more twenty-cent dollars :)

 

Welcome to the board!

[west]

Final bit of analysis here, just to really hammer in that there is value here (and I'm just picky), check out how much of the company has earned over the last five years in comparison to its current market cap...

[west]

Ok, final final comment, the way operating income and margin have steadily slipped over the last five years does make me nervous that the trend will continue...  Again, probably not a bad bet though.

[mjohn707]

mjohn, thanks for posting!

 

Based off the numbers, the company looks pretty good.  And that new shareholder could be a catalyst (maybe he wants to buy out the whole company... which would mean the stock price will probably rise... but equally, if he really did "inherit" the shares, and not purchase his position, maybe his selling will cause the stock to be even more depressed in the future?)

 

For now, I'm going to sit on the sidelines.  For me it's not so much that this isn't a good bet (in the US I'd buy it in a heartbeat), but I think there are much better ones in Japan.  I'm a greedy SOB so I'll pass up fifty-cent dollars if it means I can buy more twenty-cent dollars :)

 

Welcome to the board!

 

Thanks for the comments.  The reason I posted this idea is that I'm trying to contribute anything I can that hasn't already been discussed since I find the forum to be pretty helpful, and it seems like all of my Japanese net-nets have been discussed already.

 

 

 

 

 

 

[mjohn707]

Anyone else in this name?  I sold my shares today @1557, seems like it's run up a bit