Mansei Corporation (TYO 7565): A Consistently Profitable 8 P/E Net-Net That Did a Massive 29% Share Buyback—and No One Noticed

Mansei has been profitable 19 of the last 20 years. They're a technology trading company specializing in electrical machinery, industrial systems, electronic devices, and facility equipment

Source: Mansei Corporation Homepage

• Stock Price: ¥3,650

• Market Cap: ¥5.9 billion

• NCAV: ¥8 billion

• NCAV+Inv Securities: ¥9.1 billion

• P/E (2025 Guidance): 8.49

• P/B: 0.53

• Dividend Yield: 2.5%

Among Japan’s deep-value net-nets, Mansei Corporation (TYO 7565) stands out as a glaringly overlooked gem. Despite buying back 29% of its outstanding shares on November 6, 2024, the market has barely reacted. The stock remains stagnant—down slightly since the buyback—highlighting just how obscure this ¥6 billion market cap company is. Its Yahoo Finance Japan message board (the best gauge of retail investor interest) had only five posts in all of 2024, the last of which was in May. No one is talking about it on X either. 

We have a rare trifecta here with 1) a consistently profitable company, 2) net-net valuation, and 3) a massive buyback. The fact that no one is talking about it is a bonus.

While there are many net-nets in Japan, this is the first time I’ve seen one buy back a huge chunk of shares and get zero market reaction. Besides being cheap it’s also consistently profitable. There’s a lot to like here, but this isn’t an actionable idea for anyone running a sizable portfolio as Mansei Corporation’s entire market cap is just ~$39m and is thinly traded.

The company has been profitable every year for the last 20 years except for a tiny loss in 2009.

Given the absurd valuation starting point, buying back 29% of outstanding shares—executed at ¥3,800 per share—significantly enhances shareholder value:

• Book Value Pre-Buyback: ¥13.8 billion (¥6,032 per share)

• Buyback-Adjusted Book Value: ¥11.27 billion (¥6,940 per share)

• Net Income Forecast: ¥730 million (adjusted EPS: ¥431)

• Shares Outstanding: Decreased from 2,287,646 to 1,623,846

The buyback also boosts earnings per share significantly. Net income is expected to come in at ¥730m or ¥431 per share. The official forecast shows ¥319, but that’s because it uses the old share count which hasn't been adjusted for the buyback.

With the release of the company’s most recent earnings report on Nov 5, 2024 the company raised its operating profit and net income forecasts for the year by 5.6% and 37.7%. The raised forecast suggests things are going well in the near term.

Dividends have steadily been increasing, rising from ¥56 in FY 2022 to ¥71 in 2023, and ¥95 in 2024. The final dividend for this year has not been announced yet, but I suspect it should at least match last year, giving us a yield of 2.5%. Dividend payout ratio has averaged ~30% over the last 5 years. If they pay out a similar percentage this year the payout should be ~¥129 (3.5%)

Who sold them the shares?

A little over half the repurchased shares (17.38%) came from Black Clover Limited, a fund run by a Japanese value investor. Black Clover accumulated most of their shares over the last 4 years at an average price of ~¥2,900 (based on their own disclosures). Most of their shares were acquired off market in large blocks.

While I can’t read into Black Clover’s intentions here, I think they sold to the company at a premium to deploy cash into another opportunity. This was one of their smaller positions. Being able to quickly liquidate their position for a gain of 30% is a win for them. Remember, the cost of borrowing in Japan is cheap with margin rates below 1%, so a 30% return in JPY is a win for them. 

Nikko Sangyo, another large shareholder, reduced their stake from 11.66% to 9.25% by tendering 116,500 shares. The remaining 150,000 shares were acquired from everyone else.

Ok. It’s Cheap. What does the company actually do?

Mansei Corporation, founded in 1947, operates as a technology trading company specializing in electrical machinery, industrial systems, electronic devices, and facility equipment. Its core business spans selling, designing, and maintaining electrical and electronic systems. Their recent focus has been on automation and they help deploy these systems for their clients. Learn more about their business here.

The core business has been pretty good, with return on equity coming in at 8% last year, but only 5% and 3.4% in the previous two years. Return on equity remains low because the company is extremely over capitalized. Reducing equity via additional buybacks and dividends will immediately boost return on equity. The recent 29% buyback should help.

Risks

The only obvious risk here is that Mansei’s business fundamentally falls apart. This isn’t likely as the company just raised their profit forecast for the year and has been around since 1947. They’ve been profitable for 19 of the last 20 years too.

Another risk is that management does something stupid with their massive cash hoard like over-paying for an acquisition, but given the company’s history of frugality, this isn’t likely.

The primary risk is that no one cares and that the company stays cheap forever. In which case, the only way to get a return would be through dividends. The most likely outcome for shareholders is that the company muddles along until management or a private equity group takes them private.

Conclusion:

Mansei Corporation is a tiny, illiquid stock trading at a net-net valuation, with a history of profitability, consistent dividends, and a transformational 29% share buyback. While it lacks hidden assets or significant activist potential, its straightforward valuation—backed largely by cash and receivables—makes it too cheap to ignore.

For deep-value investors with patience and a willingness to hold illiquid names, Mansei is a textbook example of a mispriced microcap. It’s a durable business that deserves a place in any basket of cheap Japanese stocks.

Disclosure: I own shares in Mansei Corporation (TYO:7565). The security could be sold at any point in time without prior notice. This is a small position as part of a broader basket of cheap Japanese companies so I haven’t dug too deep into this name. If I missed anything important, feel free to share in the comments. None of this is investment advice. This is an extremely illiquid stock and not suitable for most investors. Everything in this post is my own opinion and I could be wrong. Do your own due dilligence.