Quick Idea: Japan’s Blue Apron Making Moves To Corner The Market – Oisix Daichi (TYO: 3182)

Thinking Points

  • Oisix Daichi (TYO: 3182) holds a 30% share in a highly niche-y organic vegetable delivery industry in Japan.
  • The company is the result of a recent merger between Oisix and Daichi, the #2 and #3 players in the organic vegetable delivery industry.
  • With large companies entering the market, competitive pressures are on the rise. The CEO, however, thinks this is a good thing.

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Quick Idea: Global Leader In Silicon Wafers And A Bunch Of Other Stuff – TYO: 4063 Shinetsu Chemicals

Thinking Points

  • Shinetsu Chemicals has healthy exposure to various industries and is an industry-leader in many areas.
  • The diversified nature of Shinetsu’s operating businesses helped weather through the 2008/2009 financial mess, though profitability briefly declined.
  • Despite a high cash position (net cash at 10% of market cap), Shinetsu delivered respectable low teen ROIC over the past couple of years.

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Quick Idea: Japan’s Leading Tankless Water Heater Company With Growth In China & USA – Rinnai (TYO: 5947)

Thinking Points

  • Rinnai (TYO: 5947) leads the Japanese water heater market with a 40% market share.
  • However, Rinnai’s Japan share is not the story. Growth outside of Japan has rapidly gained traction over the past few years – particularly in China and the US.
  • As infrastructure in ASEAN countries develop, we can expect Rinnai’s ASEAN revenues to grow as well.

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Quick Idea: Sushi Machine Maker With No Formidable Competitor – Suzumo Machinery (TYO: 6405)

Thinking Points

  • Suzumo Machinery (6405) is well established in a niche sushi machine industry, holding 90% market share globally.
  • Top-line CAGR of 8.7% in the past 9 years, with particularly strong growth in Europe and N. America.
  • Run up in stock price over the past year probably puts Suzumo at fair value today, but further reading on the sushi market is necessary in order to have an educated discussion about continued growth.

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Quick Idea: 30% Global Share In Diaper Production Machines – Zuiko (TYO: 6279)

Thinking Points

  • Zuiko accounts for 30+% of global diaper production machine market and 80+% of Japanese market.
  • Emerging economies go from cloth or no diapers to disposable diapers as disposable income increases.
  • Chinese competition puts price pressure on Zuiko, and it doesn’t look like the company has figured out a solution (other than to expand its Shanghai facility).

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Idea: 50% Global Share In Premium Motorcycle Helmets – Shoei (TYO: 7839)

Thinking Points

  • Shoei has a 50% global share in premium motorcycle helmets.
  • Made in Japan focus makes the company sensitive to currency fluctuations.
  • Key growth areas are in China/SE Asia and US.

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Idea: 60% market share in high growth Japan pet insurance industry – Anicom Holdings (TYO: 8715)

Thinking Points

  • First world Asian countries are not particularly crazy about pets.
  • That said, more Japanese pets are getting their insurance cards.
  • Anicom holds a 60% market share in a Japanese pet insurance industry that’s seen double digit growth over the past several years (at least).

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Idea: 40% Domestic Share In Automotive Rearview Mirrors – Murakami Kaimeido (TYO: 7292)

Talking Points

  • Self-driving cars and camera systems are a thing now, and camera systems are replacing automotive mirrors.
  • With increased competition, the future is tough but not impossible for Murakami Kaimeido, which holds a 40% domestic and 7% global share in automotive rearview mirrors.
  • Murakami’s business performance and price metrics may paint a compelling picture for some investors.

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Housekeeping Note: Future posts will be shorter!

Hi y’all!

Here is a quick housekeeping note regarding future posts on Kenkyo.

I am changing things up. Future posts on Kenkyo will be short, sweet, and probably more frequent. I feel that this would serve you better than my previous writeups. The idea here is to shed some light on interesting Japanese companies that nobody hears about in the western world. I hope this becomes a useful idea sourcing platform for you!

Cheers,

Clay

6121: Takisawa Machine Tool

Summary

  • Over the past decade, inventory levels have greatly increased, resulting in a drag in capital efficiency.
  • Investing in Takisawa at today’s price entails betting on management to quickly improve operational efficiency while assuming higher capital spending in the automotive industry.
  • Overall, Takisawa is technologically competent, but with a few operational problems. With all the pros and cons in mind, Takisawa Machine Tool is worth considering at 114 Yen per share (vs. today’s 177 yen per share).

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