Asagami Corporation (TYO 9311) is an Example of Widespread Undervaluation of Land on Japanese Balance Sheets. Disparity Between Book & Market Value is 3x Market Cap On Just 3 Properties
Asagami Corporation (TYO 9311) is an Example of Widespread Undervaluation of Land on Japanese Balance Sheets. Disparity Between Book & Market Value is 3x Market Cap On Just 3 Properties
Asagami Corporation (TYO 9311) owns 3 warehouses on Tokyo Harbor with land carried on its books at ¥7.9 billion. These properties alone are likely worth closer to ¥29.5 billion. These assets account for less than half of the company’s land assets, but are worth multiples of the current market cap of just ¥7.16B.
I enjoyed reading your well written, insightful writeup on Asagami, especially because I began my career (now retired) as a warehouse and land holdings analyst in Japan. It's seems so obscure today. Your reasoning is solid, but in my experience, most of the Japanese market does not care about land in general most of the time, and industrial land in particular. In the 1980s Japan experienced a liquidity boom when they lowered interest rates and created an easy money situation. This caused investors to look at the many companies which had bought land 100 or more years ago and re-evaluate them. The stock prices of stock exchange listed companies including but not limited to warehouses, movie theatres, real estate firms, and railroads, went through the roof. Investors at that time also analyzed the large stock portfolios of listed companies, most of which were carried at book value. Although Japan has easy money now, this has not been happening and I feel that without some kind of catalyst, it may be a long wait for these deeply discounted latent assets to be realized.
thanks for sharing! from your X bio I presume you're based in Turkey? Would you be interested in wiritng about Turkish small caps that're highly illiquid as well. English-speaking Fintwit has extensive knowledge on Pabrai's RYGYO and CCOLA, but there are really interesting holdcos and REITS with hidden tangible assets, which would incidentally come more prominent now that these companies are the brink of inflation accounting.
For those curious about potential rents, https://www.takase.co.jp/atc this property, ~5,600 sqm of land on this property is rented annually by that company for ¥1B. While not a perfect comp, it gives an idea what the Asagami and other nearby properties could rent for.
Hi there, thank you very much for this great analysis. I am wondering if you could provide me with further detail on this comment: "I tend to ignore the value of land as its difficult to monetize" - what makes Japanese land hard to monetise?
Thank you for the writeup. Can you just check your logic on a per sqm? You derived the value at 1.9 million Yen, what would be like $12,600 per square meter. Don't you think this is high, especially for a warehouse?
I’m in a few Japanese names and although I agree with you point about a handful of them being cheap i have difficulty pairing that up with companies that are going public for <1x book.
I enjoyed reading your well written, insightful writeup on Asagami, especially because I began my career (now retired) as a warehouse and land holdings analyst in Japan. It's seems so obscure today. Your reasoning is solid, but in my experience, most of the Japanese market does not care about land in general most of the time, and industrial land in particular. In the 1980s Japan experienced a liquidity boom when they lowered interest rates and created an easy money situation. This caused investors to look at the many companies which had bought land 100 or more years ago and re-evaluate them. The stock prices of stock exchange listed companies including but not limited to warehouses, movie theatres, real estate firms, and railroads, went through the roof. Investors at that time also analyzed the large stock portfolios of listed companies, most of which were carried at book value. Although Japan has easy money now, this has not been happening and I feel that without some kind of catalyst, it may be a long wait for these deeply discounted latent assets to be realized.
thanks for sharing! from your X bio I presume you're based in Turkey? Would you be interested in wiritng about Turkish small caps that're highly illiquid as well. English-speaking Fintwit has extensive knowledge on Pabrai's RYGYO and CCOLA, but there are really interesting holdcos and REITS with hidden tangible assets, which would incidentally come more prominent now that these companies are the brink of inflation accounting.
For those curious about potential rents, https://www.takase.co.jp/atc this property, ~5,600 sqm of land on this property is rented annually by that company for ¥1B. While not a perfect comp, it gives an idea what the Asagami and other nearby properties could rent for.
Source: Annual report Takase
Hi there, thank you very much for this great analysis. I am wondering if you could provide me with further detail on this comment: "I tend to ignore the value of land as its difficult to monetize" - what makes Japanese land hard to monetise?
Thank you for the writeup. Can you just check your logic on a per sqm? You derived the value at 1.9 million Yen, what would be like $12,600 per square meter. Don't you think this is high, especially for a warehouse?
I’m in a few Japanese names and although I agree with you point about a handful of them being cheap i have difficulty pairing that up with companies that are going public for <1x book.