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AltayCap's avatar

Continuous Compounding put together a useful excel file for Nissin Corp, you can read his writeup/grab the excel file here: https://continuouscompounding.substack.com/p/fellow-substacker-spotlight-altaycap

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generalsandworkouts's avatar

Great post as usual, Altay. Thanks as always for sharing your thoughts on these names. A few quick notes after looking at this:

1. I had a slightly different share count. The May 9 announcement notes that the company had 19,058,798 shares outstanding at March 31 excluding treasury shares. This checks out with the post-buyback announcement which noted that the 4.5MM shares bought back were 23.61% of the total share count (4.5 / 19.058798 = 0.2361). That suggests the share count post buyback should be 14,558,798. Let me know if I've missed something here.

2. The balance sheet at March 31 showed book value of 102.2B yen but of that 5.6B is attributable to non-controlling interests. After subtracting that, we are left with 96.6B. If we then subtract the 14B for the buyback, the adjusted book value is 82.6B. Using the share count above, that would suggest book value of 5,673 yen per share, which is slightly lower than your number, and a P/B of 0.79.

3. Nissin looks cheap on a P/E basis but less cheap on a EV/EBIT basis. It looks like they had roughly 28.9B in cash and 23.3B in debt at March 31, which implies net cash of about 5.6B. If you add the cost of the buyback (14B yen) it would imply net debt of 8.64B yen. That would suggest an enterprise value of 73.8B which is 8.1x the forecast operating profit of 9.1B. Operating income might not be the best way to look at this company, but I'd be concerned about using P/E here as net income is forecast to be higher than operating income for FY25.

Would be interested to hear if you have any thoughts on the above — and sorry for the long comment!

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