OUG Holdings (TYO 8041) - A 0.5x P/TBV Vertically Integrated Seafood Wholesaler in Osaka Trading at 5 P/E and Improving Shareholder Returns
This is a net-net if we count investments as current assets. Company is cheap, implemented a 1.6% DoE policy, and the shareholder register leaves room for activism.
Share Price: ¥3,320
NCAV: ¥ 2,560
NCAV+Investments: ¥4,389
P/E (LTM): 3.95
P/E (FY26 Forecast): 5.43
P/B: 0.5x
Dividend: ¥102 (~3.1%)
Market cap: ¥17.9 billion ($124m USD)
OUG Holdings (TYO 8041) is a vertically integrated seafood group that auctions fresh fish at major markets, runs a nationwide cold-chain for trading, processing, and delivering seafood to stores and restaurants, and farms premium buri and bluefin tuna. Because it controls aquaculture, logistics hubs, and its own truck fleet, it moves product from port to plate faster and fresher than rivals that outsource storage and transport. They currently have dominant market share in Osaka and are slowly expanding to Tokyo.
Source: Koyfin
Why I like OUG:
Dirt cheap: This company is trading at half of book value and below the value of its net current assets + investments. This figure isn’t as “clean” as some other net-nets I wrote up, as a big portion of current assets are “goods & products”. OUG’s actual business is actually quite good with return on equity coming in at above 12% for the last 3 years despite being over capitalized. The business also returned to growth after Covid with revenues in FY25 finally exceeding 2008 levels. Topline has been in decline since 1997 and has finally turned around. Profits have also followed, reaching their highest level ever in both net and operating income. There’s a lot of hard asset value to backstop the cheapness. Land acquired in good locations in Osaka is likely worth significantly more than carrying value.
New dividend on equity policy: Last year OUG Holdings announced a dividend on equity policy of 1.6%, meaning ~1.6% of shareholders equity will be paid out as dividends. This ensures smooth dividend payments in off years and investors can expect rising dividends as book value continues to grow. The current dividend is not bad, but the bet here is that shareholder returns will improve from here. Management also closed 2 unprofitable divisions, unwinded 2 cross holdings, and introduced a new KPI for management compensation tied to improving return on capital.
Diversification: Many dirt cheap companies are automotive parts or niche machinery manufacturers. This one is not. While I own plenty of stocks in those industries, OUG Holdings adds some diversification to the basket. They’re also almost entirely tied to the domestic fortunes of Japan, with domestic sales exceeding 90% of total revenues.
Benefits from tourism: While this is marginal, increased tourism to Japan, Osaka specifically, should add incremental revenue and profits for OUG, which sells both to wholesalers and direct to restaurants, supermarkets, hotels, and convenience store chains.
No blocking insider shareholder: OUG Holding’s largest shareholder is Maruha Nichiro (TYO 1333), a ¥152 billion seafood company, which holds 13.8% of outstanding shares. The remaining top 10 holders are mostly financial institutions. The company was founded as a co-operative back in 1946 and has long ago converted to a regular joint stock company. Management seems to only own a tiny percent of outstanding shares, ~0.6% by my calculation. If you add the OUG Group Employee Stock-holding Association ownership to that, we get ~3%. Activism looks possible.
Fairly consistent profitability: Only 2 losses since the great financial crisis. ¥637m in FY13 and ¥96m in FY18. Both relatively small losses.
Potential risks / downsides:
Over earned in FY2025: FY2025 earnings were strong because of robust shrimp and tuna prices. The company’s FY2026 forecast is for EPS of ¥611.25, down from ¥839 in FY25. Despite the decline, the company remains cheap with a forecasted P/E of 5.4. EBIT margins for FY25 were the highest ever for the company at 1.46%. Wholesale is a majority of their business, so low margins are the norm.
Cheap can stay cheap: This is a risk with any deep value investment. OUG Holdings seems to be signalling that they’re taking improved corporate governance requests from the Tokyo Stock Exchange seriously. Their response included RoE targets of over 8%, better shareholder communication, and improved shareholder returns. The 1.6% dividend on equity policy is a good start, but they need to bump this up to 3% to see their shares re-rate higher. They did buyback shares a few years ago, but they could do a lot more on this front.
Conclusion:
OUG Holdings is cheap, pays a decent dividend, and has responded to the TSE request to improve shareholder returns. Their shareholder returns could be better, but with a dividend on equity policy, shareholders will be rewarded so long as book value continues to grow. This is an above average size position in my Japanese basket.
Disclosure: I own shares in OUG Holdings (TYO 8041). 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. Everything in this post is my own opinion and I could be wrong. Do your own due diligence.
Appendix:
OUG Holdings Corporate Video [English]:
I wonder whether your articles are causing a short-term rise in the price of the respective shares. It's hard to say for sure, because these stocks seem to be really undervalued. Maybe it also has something to do with the demographic situation in Japan (Japanese pensioners, of whom there are more, tend to sell stocks rather than buy them keeping the valuations low. There is hardly any immigration in Japan.). In addition, there has been a strong price momentum and a rise in the stock price in recent months which can also partly explain further price increases. In any case, I have noticed a price increase several times after your publications.