I generally want my writeups to be shorter. Bundling a few ideas into multiple quick pitches may be a good way to do it. No need to state every obvious thing that investors can easily look up on their own if they find the broad themes interesting.
We got a ballpark idea what the Wood One NZ forestry assets are worth, though not entirely. Rayonier announced they sold their NZ Forestry assets today. In their slide presentation their implied value per 'productive acre' was $5,313 NZD, convert that to hectacre and its $13,123 NZD.
in 1992 these were $3,617 NZD per hectacre, so they have appreciated.
About half of Rayonier assets were freehold. Freehold are worth more since they have more carbon tax credits. A bit over 1/4th for Woodone are freehold. Also not sure what split productive acre vs non productive is for Wood One.
Just using the headline 13,123 per hectacre figure, Wood One's 40,000 are worth $524.9m NZD or ~¥44 billion JPY. This is a lot, but also way too high for Wood One given their lower % of freehold vs lease. We also don't know the 'productive' / unproductive split of their acreage. Thus the figure is over stated.
This is a tiny position so im not digging too deep here!
Nice write ups! As someone just getting into japanese net nets this is great for me to read and understand the area better.
have you had much luck determining insider ownership? I can't find that sort of info on tikr at least. also where do you see management intention to do buybacks?
A general remark: While P/E (Price-to-Earnings) is a widely used valuation metric, it may be beneficial to also consider EV/EBIT(DA) as a complementary fundamental ratio. Some research suggests that P/E ratios alone might have limited predictive power for future stock performance. For instance, a comprehensive 30-year study titled 'Valuation Multiples: Identifying Undervalued Stocks From 1987 to 2017' (available at: https://scholarworks.uni.edu/cgi/viewcontent.cgi?article=1140&context=mtie) examines this limitation. EV/EBIT can provide additional insight as it accounts for a company's debt levels and overall capital structure, potentially offering a more complete picture of valuation compared to using P/E ratios in isolation.
why are you using an AI language model to think? did you actually think this yourself or outsource your brain to AI like a dumbass? its annoying to see these blatantly ai generated replies.
Of course I think that myself. I only use AI models to improve the wording as I am not a native English speaker. The EV/EBIT(DA) fundamental is well supported and has been tested by Tobias Carlisle for example. Further, I don't know if low P/E works at all, because you can easily find that simple fundamental in seconds anywhere e.g. with screeners etc. Every fool can buy shares with a low P/E. Therefore, why should this work ?
I hear you. I think it's more than just low P/E. There is a major cultural change happening in the Japanese investment world where big valuation gaps are being closed in a number of ways. I think most of the pitches are of low price to book companies, where the asset value is considerably higher than current value. These companies will either get activist attention, get bought out by bigger companies or announce big share buybacks to realise the value. It's not quite the same as just buying low PE companies, but it's definitely important to be selective and pick the ones where the valuation gap is likely to get closed.
Hey Altay, not sure if you’re familiar with Natoco 4626.T or not (you probably are but i haven’t seen you post about them).
If not, it might be worth a look.
They’re not too dis-similar to Daishin Chemical but IMO look like a slightly better business just looking at their margins etc., especially their ‘Fine Chemicals’ segment.
I can see back to 1990 and in that time they’ve only lost money once (in 2009).
They trade at about 70% of NCAV and at ~ a 15% discount to net cash (no interest bearing debt).
P/BV is 0.45 (I didn’t look closely at property or securities).
Since 1990 they’ve grow revenue at 2%, NI at 4.5% and BV at5.2%.
L10Y they’ve grown Rev at 3.3%, NI at 4.65%, BV at 3.75%,NCAV at 4.7% and Cash at 6%.
Dividend is current 3.9%. No buybacks or dilution (7,544,700shares out).
NCAV is 54% Cash, 33% Accounts Rec, 13% Inventory.
10yr avg. FCF I’ve got at about Y835 (Cash from Ops minus Capex minus intangibles spend).
10yr avg. Net Income is like Y1500.
That leaves them at about 12 x current earnings or ~7 x 10year avg.
I see your point. On the other hand, I find HK stocks trading at a ridiculous P/E of 3 and very low P/B and high dividend yield (e.g. Keck Seng Investments Hong Kong Ltd (0184)). I think not much can go wrong here.
I generally want my writeups to be shorter. Bundling a few ideas into multiple quick pitches may be a good way to do it. No need to state every obvious thing that investors can easily look up on their own if they find the broad themes interesting.
Thanks I like the quick potch format
We got a ballpark idea what the Wood One NZ forestry assets are worth, though not entirely. Rayonier announced they sold their NZ Forestry assets today. In their slide presentation their implied value per 'productive acre' was $5,313 NZD, convert that to hectacre and its $13,123 NZD.
in 1992 these were $3,617 NZD per hectacre, so they have appreciated.
About half of Rayonier assets were freehold. Freehold are worth more since they have more carbon tax credits. A bit over 1/4th for Woodone are freehold. Also not sure what split productive acre vs non productive is for Wood One.
Just using the headline 13,123 per hectacre figure, Wood One's 40,000 are worth $524.9m NZD or ~¥44 billion JPY. This is a lot, but also way too high for Wood One given their lower % of freehold vs lease. We also don't know the 'productive' / unproductive split of their acreage. Thus the figure is over stated.
This is a tiny position so im not digging too deep here!
Nice write ups! As someone just getting into japanese net nets this is great for me to read and understand the area better.
have you had much luck determining insider ownership? I can't find that sort of info on tikr at least. also where do you see management intention to do buybacks?
For a quick look I use https://www.buffett-code.com/company/7898/mainshareholder
Replace 7898 in the url with the ticker of your choosing. This info is also available on every annual and semi anual report.
A general remark: While P/E (Price-to-Earnings) is a widely used valuation metric, it may be beneficial to also consider EV/EBIT(DA) as a complementary fundamental ratio. Some research suggests that P/E ratios alone might have limited predictive power for future stock performance. For instance, a comprehensive 30-year study titled 'Valuation Multiples: Identifying Undervalued Stocks From 1987 to 2017' (available at: https://scholarworks.uni.edu/cgi/viewcontent.cgi?article=1140&context=mtie) examines this limitation. EV/EBIT can provide additional insight as it accounts for a company's debt levels and overall capital structure, potentially offering a more complete picture of valuation compared to using P/E ratios in isolation.
why are you using an AI language model to think? did you actually think this yourself or outsource your brain to AI like a dumbass? its annoying to see these blatantly ai generated replies.
Of course I think that myself. I only use AI models to improve the wording as I am not a native English speaker. The EV/EBIT(DA) fundamental is well supported and has been tested by Tobias Carlisle for example. Further, I don't know if low P/E works at all, because you can easily find that simple fundamental in seconds anywhere e.g. with screeners etc. Every fool can buy shares with a low P/E. Therefore, why should this work ?
I hear you. I think it's more than just low P/E. There is a major cultural change happening in the Japanese investment world where big valuation gaps are being closed in a number of ways. I think most of the pitches are of low price to book companies, where the asset value is considerably higher than current value. These companies will either get activist attention, get bought out by bigger companies or announce big share buybacks to realise the value. It's not quite the same as just buying low PE companies, but it's definitely important to be selective and pick the ones where the valuation gap is likely to get closed.
Hey Altay, not sure if you’re familiar with Natoco 4626.T or not (you probably are but i haven’t seen you post about them).
If not, it might be worth a look.
They’re not too dis-similar to Daishin Chemical but IMO look like a slightly better business just looking at their margins etc., especially their ‘Fine Chemicals’ segment.
I can see back to 1990 and in that time they’ve only lost money once (in 2009).
They trade at about 70% of NCAV and at ~ a 15% discount to net cash (no interest bearing debt).
P/BV is 0.45 (I didn’t look closely at property or securities).
Since 1990 they’ve grow revenue at 2%, NI at 4.5% and BV at5.2%.
L10Y they’ve grown Rev at 3.3%, NI at 4.65%, BV at 3.75%,NCAV at 4.7% and Cash at 6%.
Dividend is current 3.9%. No buybacks or dilution (7,544,700shares out).
NCAV is 54% Cash, 33% Accounts Rec, 13% Inventory.
10yr avg. FCF I’ve got at about Y835 (Cash from Ops minus Capex minus intangibles spend).
10yr avg. Net Income is like Y1500.
That leaves them at about 12 x current earnings or ~7 x 10year avg.
10 x current FCF and about 13 x average.
Insiders own about 28% through the Kayusa family.
Yep, i've seen it and like it! I have over 100 names in the cheap jp basket. It's a big basket!
Do you also buy stocks from Hong Kong or other Asian countries? Stocks in Hong Kong are also partly very cheaply valued.
Nope. HK stocks too much political risk for my liking. I would buy SK stocks if IBKR (my broker) had access to it.
I see your point. On the other hand, I find HK stocks trading at a ridiculous P/E of 3 and very low P/B and high dividend yield (e.g. Keck Seng Investments Hong Kong Ltd (0184)). I think not much can go wrong here.
BTW, the asset manger GMO likes Japanese stocks, see here: https://www.gmo.com/europe/research-library/three-reasons-were-overweight-japanese-equities_insights/