6479: Minebea Mitsumi

Summary

  • Minebea Mitsumi is currently not a buy at 1,620 yen per share (5/9/2017 closing), but would be a compelling investment as 715 yen per share.
  • Key driver for Minebea Mitsumi is its Machine Component segment, particularly its industry-leading miniature ball bearing business.
  • Minebea Mitsumi’s investor sentiment is likely driven by explosive revenue growth in smart phone LED backlight business (50% CAGR between 2013-2016).
  • Key near-term drivers are: consistent performance in Machine Components, technological tail-end profits from smart phone LED backlights, and healthy Nintendo Switch sales.
  • Minebea Mitsumi was recently formed through the merger of Minebea and Mitsumi Electric.

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9436: Okinawa Cellular

Summary

  • Okinawa Cellular is not currently a buy, but investors ought to follow share prices periodically for buying opportunities at 2,600 yen per share (vs. current 3,555 yen per share).
  • Regional focus provides Okinawa Cellular with a strong market position in an Okinawan mobile carrier market, which accounts for less than 1% of the Japanese mobile carrier market.
  • Although the company is focused on being nimble and open to moving into industries unrelated to the mobile carrier market, its primary growth area today is in its fiber internet business.

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2659: San A

Summary

  • San A is not currently a buy, but investors ought to follow share prices periodically for buying opportunities at 3,200 yen per share (vs. current 5,010 yen per share).
  • Strong regional moat provides San A with Japanese retail industry-leading business performance with ROE at 10.35%  (10 Year Average: 9%).
  • Franchising opportunities likely to lead to continued earnings growth.

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2353: Nippon Parking Development

Summary

  • NPD has a solid track record for business performance (10 year ROIC 16%).
  • Recently, Parking Lot business has been relatively stable, Ski resort business experienced short term headwinds, and Theme park business is just getting started.
  • Long term competitive advantage for NPD’s Parking Lot business is unclear and competition in the industry is only intensifying.
  • At today’s 155 yen per share, NPD isn’t a buy. However, I will revisit NPD at 100 yen per share, or at signs of meaningful improvement in NPD’s Parking Lot business’ competitive positioning.

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Tech In Japan: Augmented Reality Keeps Construction Industry Focused On Cutting Once

Summary

  • With Japan’s population decline, a labor-intensive Japanese construction industry is facing a labor shortage.
  • Japanese construction companies are looking at augmented reality (AR) to eliminate labor waste.
  • The Japanese construction industry has an opportunity to convert labor shortage problem into fuel for AR technology advancement.

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5101: Yokohama Rubber Report (Abridged)

Summary

  • New tire manufacturers (mostly from China) have taken significant market share from the low to mid tier tire markets over the past 10 years.
  • Yokohama is expanding into industrial tires, increasing production capacity, and focusing on OE business to fend off the new and strengthening competitors.
  • Overall, Yokohama’s financials are healthy and business performance is decent (10-Year average ROE roughly 9%).
  • However, shares are not particularly cheap or expensive at today’s 1,974 yen per share price.
  • Yokohama will look more interesting at 1,400 yen per share.

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Tech In Japan: Stop And Smell The (Virtual) Roses

Summary

  • Virtual Reality (VR) is extending beyond visual and audio.
  • Video game industry development of smell VR might benefit from commercialization in physical retail and e-commerce.
  • There are a couple of investable companies with smell VR technology that should be followed.

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Tech In Japan: Panasonic’s Next Gen Home And Community

Summary
  • Panasonic is exploring what the next generation of homes and communities look like.
  • Logistical integration, sharing, and communication play a major role.
  • Investors can gain from innovations produced out of Japanese population problems.

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Tech In Japan: Take Your Toilet To The Cloud

Summary

  • The IoT movement has inspired a couple Japanese companies to take your toilet to the cloud.
  • Early detection and preventive care has become the name of the game in the healthcare industry.
  • Japanese toilets will save Americans a lot of money, if Americans would open up to bidets.

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7453: Ryohin Keikaku: Exceptionally Simple.

Summary

  • Seasoned corporate culture and a purely functional product focus has driven rapid growth, both domestically and internationally, for Ryohin.
  • Balance sheet is squeaky clean and business performance metrics like ROE remains strong (15% – ish ) compared to peers.
  • Exceptional corporate culture, clean balance sheet, and strong business performance is already built into share price – the bet is on continued rapid growth.

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