Keihin reported their full year earnings. Missed their own guide, but it was expected given progress on profit/numbers last Q. On the positive side, Net asset value per share increased much more than EPS due to increased valuation of investment securities (other securities. investments in non listed stock/biz). Net asset per share went up from ¥3,745 to ¥4,324. EPS was ¥313 for the yr. Management Forecast ¥321 for next year. Price today ¥1,987.
~3.5% dividend yield
6.2x management forecast EPS
0.46x book
It's cheap and owns a lot of land. I still own this
Nice writeup - I looked into this ticker a little bit today. I haven't gone back far enough on the numbers but I can tell this will be one of those positions that you buy and throw it in your drawer until something happens. It looks like its cheap and has been cheap for a while but the assets are actually improving over time (more and more being represented by cash due to overcapitalization). Thanks!
It's been cheap recently, but 5-10 years ago, it was about the same price but much lower net income / book value.
I agree though, this one is in the drawer compounding while I collect my dividend financed by 0.75% JPY margin loan. I'm bullish on Japan specifically *now* because of recent Tokyo Stock Exchange rules / push to close these discounts. That on top of the cheap valuation is great
Also, worth mentioning that over the last 20 years, total debt went from ≈¥28bn to now ≈¥7bn, consistent and continuous delivering while cash has built from ≈¥3.3bn to ≈¥8.3bn in same time frame. Do you have any color on customers & concentration? Will dig into RE portfolio a bit and share. Some RE assets are parking lots atm, so not sure if they are generating cash or sitting idle. Activist would be good here.
No customer concentration concern - annual report says no customer is more than 10% of sales. Keihin seems cheap enough I don't need to do a DCF/sum of the parts. Just some back of the napkin math and historical growth. Let me know what you come up with for the RE though, i'm curious!
Great, thanks. You are right. I just like to know how much of a margin of safety there is, gives me confidence (or not) if/when there are hiccups (price or operationally).
Curious what Keihin (9312)'s koto ward (tokyo harbor) logistics properties are worth. The cap rate on well located logistics assets near Tokyo Harbor Looks like 3.5% based on recent ¥30 billion yen transaction. 61% of the value attributed to land (31,723 m2), so ~¥576,868/sqm land value. Keihin has 18,979 sqm of land nearby carried at ¥649m. At the same price per sqm that's ~¥11B. There's value in these logistics names.
Thanks. "The Group's price-to-book ratio (PBR) has been around 0.4 times in recent years, and the PBR has improved. We recognize that doing so is one of our management issues... I've been working on it. As a result, we have maintained a level above 10% for the past two years. Going forward, we will continue to strive to increase the unit sales price by providing high-value-added logistics services. We will aim to further improve ROE by realizing an ideal work environment. In addition, we will continue to implement measures for stable shareholder returns."
Looks like they aren't pulling the obvious lever, buybacks, to boost the P/B and ROE.
Things move slow in Japan on the buyback/shareholder returns front. They're at least talking about it now as required by Tokyo Stock Exchange new rules.
What puzzles me is if they were buying back stock already, the opportunity would not exist. This opportunity exists because they havent' done it yet. New exchange rules are nudging these companies to improve RoE and close P/B discount.
As with any super cheap JP name, this requires patience. My cost to carry this long position is 0.75% JPY margin loan on IBKR. It pays me 3.7% in dividends. I can be patient while company continues to compound book value steadily.
Only immediete catalyst is Tokyo Stock Exchange's push for listed companies to address price/book discounts, but no timeline.
If there was an immediete catalyst, you would not be able to buy a company like Keihin at 0.4x book and 0.5x p/tbv.
Keihin reported their full year earnings. Missed their own guide, but it was expected given progress on profit/numbers last Q. On the positive side, Net asset value per share increased much more than EPS due to increased valuation of investment securities (other securities. investments in non listed stock/biz). Net asset per share went up from ¥3,745 to ¥4,324. EPS was ¥313 for the yr. Management Forecast ¥321 for next year. Price today ¥1,987.
~3.5% dividend yield
6.2x management forecast EPS
0.46x book
It's cheap and owns a lot of land. I still own this
Nice writeup - I looked into this ticker a little bit today. I haven't gone back far enough on the numbers but I can tell this will be one of those positions that you buy and throw it in your drawer until something happens. It looks like its cheap and has been cheap for a while but the assets are actually improving over time (more and more being represented by cash due to overcapitalization). Thanks!
It's been cheap recently, but 5-10 years ago, it was about the same price but much lower net income / book value.
I agree though, this one is in the drawer compounding while I collect my dividend financed by 0.75% JPY margin loan. I'm bullish on Japan specifically *now* because of recent Tokyo Stock Exchange rules / push to close these discounts. That on top of the cheap valuation is great
Beautiful writeup. Thank for sharing mate.
Also, worth mentioning that over the last 20 years, total debt went from ≈¥28bn to now ≈¥7bn, consistent and continuous delivering while cash has built from ≈¥3.3bn to ≈¥8.3bn in same time frame. Do you have any color on customers & concentration? Will dig into RE portfolio a bit and share. Some RE assets are parking lots atm, so not sure if they are generating cash or sitting idle. Activist would be good here.
No customer concentration concern - annual report says no customer is more than 10% of sales. Keihin seems cheap enough I don't need to do a DCF/sum of the parts. Just some back of the napkin math and historical growth. Let me know what you come up with for the RE though, i'm curious!
Great, thanks. You are right. I just like to know how much of a margin of safety there is, gives me confidence (or not) if/when there are hiccups (price or operationally).
Curious what Keihin (9312)'s koto ward (tokyo harbor) logistics properties are worth. The cap rate on well located logistics assets near Tokyo Harbor Looks like 3.5% based on recent ¥30 billion yen transaction. 61% of the value attributed to land (31,723 m2), so ~¥576,868/sqm land value. Keihin has 18,979 sqm of land nearby carried at ¥649m. At the same price per sqm that's ~¥11B. There's value in these logistics names.
Can you please link the document in which they mentioned their undervaluation as I couldn't find it.
The P/B discount? It was mentioned in their latest annual report for the first time:
https://www.keihin.co.jp/wordpress/file/yuhou/202303/76_yuka.pdf
Page 10.
Thanks. "The Group's price-to-book ratio (PBR) has been around 0.4 times in recent years, and the PBR has improved. We recognize that doing so is one of our management issues... I've been working on it. As a result, we have maintained a level above 10% for the past two years. Going forward, we will continue to strive to increase the unit sales price by providing high-value-added logistics services. We will aim to further improve ROE by realizing an ideal work environment. In addition, we will continue to implement measures for stable shareholder returns."
Looks like they aren't pulling the obvious lever, buybacks, to boost the P/B and ROE.
Things move slow in Japan on the buyback/shareholder returns front. They're at least talking about it now as required by Tokyo Stock Exchange new rules.
What puzzles me is if they were buying back stock already, the opportunity would not exist. This opportunity exists because they havent' done it yet. New exchange rules are nudging these companies to improve RoE and close P/B discount.
Hi,
Its a good find, but then what could be the catalyst to realize the value here? How long do you plan to wait for such a catalyst?
Thanks.
As with any super cheap JP name, this requires patience. My cost to carry this long position is 0.75% JPY margin loan on IBKR. It pays me 3.7% in dividends. I can be patient while company continues to compound book value steadily.
Only immediete catalyst is Tokyo Stock Exchange's push for listed companies to address price/book discounts, but no timeline.
If there was an immediete catalyst, you would not be able to buy a company like Keihin at 0.4x book and 0.5x p/tbv.