jemn Posted March 23, 2021 Share Posted March 23, 2021 Been doing research on shinoken for the past week and have come across a Japanese real estate forum where they discuss Shinoken's services. Here is the thread: https://www.e-mansion.co.jp/bbs/thread/41830/res/3201-3218/ I recommend doing some scrolling to get an idea of how both tenants and landlords feel about shinoken. You can use google translate extension for chrome to automatically translate for you. Some clients (both landlords and tenants) are happy but most are not. Tenants are upset with the poor construction quality (thinness of walls - u can hear the other tenants) and the unfair price of the utilities. However, occupancy rates show these complaints aren't too big of an issue. Regardless, it seems most people are unsatisfied with shinoken. Most importantly, some landlords and prospective landlords express that shinoken is 'a scam' selling unprofitable investments to inexperienced RE investors. This tactic is sort of reflected by their ads which state: "Create an asset of 200 million yen from an investment of 1 million yen." Shinoken's service is legitimate but many people see it as unprofitable and therefore predatory. They point to high land prices as the reason why investing in apartments (via shinoken) is likely to be unprofitable. These high prices are of course the result of Japanese tax laws and low interest rates. They go on to say that no professional real estate investors are buying apartments now due to these high land prices - instead its only retail people that get roped in by shinoken. They point out an incentive structure where real estate salespeople recommend/sell shinoken properties to salarymen even though they know they are unprofitable (to make a commission). If this is true, I dont know how sustainable growth will be for shinoken via selling apartments to salarymen buyers.. maybe thats a contributing factor to the creation of the reit (much less so than tightening in lending to salarymen)? Im of course taking these comments with a big grain of salt, however, as an outsider it is good to get an idea of what locals think about the company. Poor buyer/potential buyer sentiment (which has nothing to do with the scandal) is my main takeaway from this / concern. I know the discount makes some of these concerns less important but I am interested in the long term prospects here. Take a look (make sure u view multiple pages not just the first) and lmk what u think. Link to comment Share on other sites More sharing options...
jemn Posted March 23, 2021 Share Posted March 23, 2021 Attached below are translations of some interesting posts from that forum Link to comment Share on other sites More sharing options...
Spekulatius Posted March 23, 2021 Share Posted March 23, 2021 ^ jemn- great first and second post and your sleuthing is pretty valuable if one considers investing here. Welcome to this board! Link to comment Share on other sites More sharing options...
samwise Posted March 24, 2021 Share Posted March 24, 2021 Retroranger, What’s common in all those cases? A possible conflict of interest. One set of shareholders own the Yieldco , another company manageCo makes decisions on acquiring assets, then earns based on amount of assets owned or sold. The manageCo has incentives to buy marginal assets which help its earnings but may not be the best for Yieldco. Not saying it is happening here, but it’s the same setup with similar incentives. Similar to what jemn describes for individual investors, but at institutional scale. Link to comment Share on other sites More sharing options...
RetroRanger Posted March 24, 2021 Share Posted March 24, 2021 First of all jemn, great approach with researching japanese message boards :) While researching myself and digging through some stuff i find it amazing how far we can get as non japanese speaker with google translate. It is so much help! I have to say i am a shameless cloner and to make my answer very "dumb" , i believe in the analysis skills of Mohnish Pabrai and also he often uses local sources to make his investments ( like in turkey with reysas ). So my first part of confidence comes from that, the second one comes from the current price which offers a MoS :) Now to the user comments. There are over 1000 pages of content. So most comments will be just a "snapshot" of the opinion of people. In Germany we have a company called "Vonovia". It is a good business in terms of investing but i would never ever rent or buy something from them. Because you get poor quality, the rents are high as fuck and the flats can be amazing OR a total desaster. Many posts you quote are related to problems in the market itself ( beeing overpriced etc ). You will always find people complaing . Just look up comments of a good 5 star hotel. If you scroll through everything there will be always people complaining the food is to salty, the walls are too thin. You also showed many "good" quotes from them. I dont think most of these problems are related to shinoken , they are related to the whole market itself, the lack of space, the price, personal situation. ALso we need to seperate between the people living inside the flats and the landloards getting rental income . It is more important ( for us ) that the landlords are happy and they seem to write many good posts ( "i get good rental income from shinoken etc") So its good to keep an eye on this, but i would not make a decision based on that or mark it as a red flag. In overall terms shinoken has a good reputation and like samwise said, i dont think the founder will ruin that name. Of course there is always the risk of a conflict of interest but this company exists now for 30 years ! If they did not mess that up till now, why should they do now? Link to comment Share on other sites More sharing options...
shamelesscloner Posted March 25, 2021 Author Share Posted March 25, 2021 With regard to reviews we need a baseline for comparison. How does Shinoken stack up against alternatives? I presume most folks who go out of their way to share feedback on Shinoken are going to have strong feelings, and it's probably difficult to induce strong feelings toward the upside in this industry. I'm not sure if Japan has the equivalent of Net Promoter Scores (NPS) but that could be an instructive way to compare. Link to comment Share on other sites More sharing options...
jemn Posted March 25, 2021 Share Posted March 25, 2021 Shinoken board cancels disposal of treasury stock and approves buyback of 1.45% (500m yen) Translation makes the 'cancellation of the disposal' resolution unclear. Am I misreading this? if not, cheers! ;D cancellation_of_disposal.pdf Link to comment Share on other sites More sharing options...
TheThinkingInvestor Posted March 25, 2021 Share Posted March 25, 2021 With regard to reviews we need a baseline for comparison. How does Shinoken stack up against alternatives? I presume most folks who go out of their way to share feedback on Shinoken are going to have strong feelings, and it's probably difficult to induce strong feelings toward the upside in this industry. I'm not sure if Japan has the equivalent of Net Promoter Scores (NPS) but that could be an instructive way to compare. I will do some more digging. I am also going to try to schedule a call with a family friend who is an American ex-pat working in construction in Japan. He has been there for decades is likely knowledgable about the industry and shinoken. If I am able to get in touch with him, I will update you all on what he says. Want to note that I am not meaningfully concerned with the message board posts or REIT incentives. I am just trying to poke holes in this (and to little avail!) . I started buying Tuesday and will continue to accumulate ;D. Thanks for highlighting that board. I was checking the board on my phone and it was a bit of a crapshoot. Would love to hear about any insights from your buddy when you get them! I'm also accumulating as I don't think those reviews are damning enough for the investment thesis to be wrong. Thanks again! Link to comment Share on other sites More sharing options...
misterkrusty Posted March 25, 2021 Share Posted March 25, 2021 I'm pretty sure but not certain the use of treasury shares for scholarships was not approved. Link to comment Share on other sites More sharing options...
RetroRanger Posted March 25, 2021 Share Posted March 25, 2021 Yes , i translated it to and they withdraw the request BUT they want to communicate the reason better to shareholders so it could be just a temporary withdrawal. It is still a normal thing in Japan to Finance foundations like that. I guess with the increase in international shareholders they need to communicate that fact better. Also the 1,45% payback is nice! Link to comment Share on other sites More sharing options...
Madalin.C Posted April 3, 2021 Share Posted April 3, 2021 (edited) On 3/25/2021 at 11:21 PM, RetroRanger said: Yes , i translated it to and they withdraw the request BUT they want to communicate the reason better to shareholders so it could be just a temporary withdrawal. It is still a normal thing in Japan to Finance foundations like that. I guess with the increase in international shareholders they need to communicate that fact better. Also the 1,45% payback is nice! They bought back shares? Also they published new news on their Japanese version site, bit I don't understand what they want to do Edited April 3, 2021 by Madalin.C Link to comment Share on other sites More sharing options...
RetroRanger Posted April 3, 2021 Share Posted April 3, 2021 You can easily translate IT with Google translate 1. Details of the resolution of the Board of Directors held on March 25, 2021 (1) Types of shares to be acquired Our common stock (2) Total number of shares that can be acquired 500,000 shares (upper limit) (Ratio to the total number of issued shares (excluding treasury stock): 1.45%) (3) Total acquisition price of shares 500,000,000 yen (upper limit) (4) Acquisition period March 29, 2021 to May 31, 2021 2. Cumulative number of treasury stock acquired based on the above resolution of the Board of Directors (as of March 31, 2021) (1) Total number of shares acquired: 0 shares (2) Total amount of acquisition price 0 yen Also some Stocks had Been Sold as compensation Disposal of treasury stock as transfer-restricted share compensation for officers and employees Summary of disposal (1) Disposal price ¥ 1,267 per share (2) Total disposal price 177,253,300 yen This part was interesting: Since the amount will be the same as the market price or higher than the market price, the person subject to the allocation of the treasury stock disposal We do not think that it is a particularly advantageous price for us. Link to comment Share on other sites More sharing options...
MattR Posted April 7, 2021 Share Posted April 7, 2021 According to Google Translator on their japanese homepage - they created a new subsidiary with 160.000 USD to help young disabled people. What is more important are their financial results: - Ordinary Income was down 5,8% to 8.490 million yen. - Net Income was up 1,3% to 5.952 million yen - Operating profit was down 8,9% at 8.885 million yen President Shinohara said, "Corona had a great influence in the previous fiscal year. We revised our earnings forecast downward during the fiscal year, but we were able to land almost as planned, so I think we did our best in a harsh environment." Aso for the segments: Real Estate sales decreased 8,5% to 51.996 million yen. Although there was a decrease - the number of renal management units and the number of condominium management units increased by 15,4% to 19.247 million yen. Also the energy business saw an increase by 11,4% to 2.884 million yen and serviced housing increased by 8,4%. Service apartments overseas under the "Sakura Terrace" (not sure if correctly translated) brand increased by 18,1% to 152 million yen. In the current fiscal year they expect sales to increase in the real estate business due to the addition of assets of approximately 20 billion yen - so sales will increase 10,3% to 105 billion yen and operating income will increase 0,2% to 8,9 billion yen. Profit is expected to increase 0,1% to 8,5 billion yen and net income is expected to increase 0,8% to 6 billion yen. Personally I am not sure how I should feel about it. On the one hand it seems Corona impacted them less than other real estate companies, but on the other hand this year doesn't look to be a standout year. Link to comment Share on other sites More sharing options...
RetroRanger Posted April 7, 2021 Share Posted April 7, 2021 This outlook was already known through their latest report yes the outlook ist very conservative ,but most important their Service concept ist working and increasing . And we still trade at a discount , so growth is not important (to me) atm. Link to comment Share on other sites More sharing options...
Luma21 Posted April 19, 2021 Share Posted April 19, 2021 (edited) I'm new in this thread. I was looking for their annual reports in their website, but I didn't find them. Where can I look? Another question: Does anyone know what was the reason behind the spike in Operating cash Flows ( 258Mm for 2019 and 116.6Mm for 2020)? Edited April 19, 2021 by Luma21 Link to comment Share on other sites More sharing options...
MattR Posted April 19, 2021 Share Posted April 19, 2021 4 minutes ago, Luma21 said: I'm new in this thread. I was looking for their annual reports in their website, but I didn't find them. Where can I look? Here it is on their site: https://www.shinoken.co.jp/ I think the current annual report is only available in Japanese. I used google translate and translated the PDF. Other than some formatting errors and some weird fill words it works pretty. well. Link to comment Share on other sites More sharing options...
Luma21 Posted April 19, 2021 Share Posted April 19, 2021 (edited) 16 minutes ago, MattR said: Here it is on their site: https://www.shinoken.co.jp/ I think the current annual report is only available in Japanese. I used google translate and translated the PDF. Other than some formatting errors and some weird fill words it works pretty. well. What do you think are the main reasons behind their high operating cash flows ( 258Mm for 2019 and 116.6Mm for 2020)? Do you think all the info reported in Gurufocus (in $) are reliable? Edited April 19, 2021 by Luma21 Link to comment Share on other sites More sharing options...
RetroRanger Posted April 19, 2021 Share Posted April 19, 2021 https://www.shinoken.co.jp/press_ens/get_img/179/file1_path/20201111_179.pdf You can find here, what are all the segments for their income and so on cash flow. Link to comment Share on other sites More sharing options...
Jakusimo Posted May 4, 2021 Share Posted May 4, 2021 (edited) A few good articles of Japanese economy by Horizon Kinetics and Lyn Alden https://www.lynalden.com/economic-japanification/ Horizon-Kinetics-Japan-Special-Opportunity-White-Paper_April-2021_Final-v2-5.pdf Edited May 12, 2021 by Jakusimo Updated the document Link to comment Share on other sites More sharing options...
RetroRanger Posted May 4, 2021 Share Posted May 4, 2021 Great readings, thank you Link to comment Share on other sites More sharing options...
MattR Posted May 6, 2021 Share Posted May 6, 2021 Shinoken just released that they bought back more than 100,000 shares again. I am still buying, even without growth shinoken looks cheap. Link to comment Share on other sites More sharing options...
RetroRanger Posted May 6, 2021 Share Posted May 6, 2021 (edited) Yes, they are a buyback machine its funny their english IR page is mostly useless for news Edited May 6, 2021 by RetroRanger Link to comment Share on other sites More sharing options...
RetroRanger Posted May 10, 2021 Share Posted May 10, 2021 Shinoken gives a slight Covid update (but just in terms of safety instructions). Sadly Japan is still heavily impacted by COVID (only 4% of people there totally vaccinated). For translation use google translate works fine. https://www.shinoken.co.jp/presses/get_img/540/file1_path/20210510_540.pdf Link to comment Share on other sites More sharing options...
misterkrusty Posted May 10, 2021 Share Posted May 10, 2021 company hasn't seen any major impact on operations as of yet Link to comment Share on other sites More sharing options...
RetroRanger Posted May 10, 2021 Share Posted May 10, 2021 7 minutes ago, misterkrusty said: company hasn't seen any major impact on operations as of yet Yes i know. Was just a General comment and sad to see for Japan. Link to comment Share on other sites More sharing options...
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