March 16, 2011 - 5:08pm EST by
2011 2012
Price: 400.00 EPS $40.35 $33.00
Shares Out. (in M): 16 P/E 10.0x 12.0x
Market Cap (in $M): 6,492 P/FCF 10.0x 12.0x
Net Debt (in $M): -9,540 EBIT 1,871 1,100
TEV ($): -3,000 TEV/EBIT neg neg

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Sansei Yusoki (6357 JP) is a very cheap Japanese equity.  We bought shares in the recent downdraft and believe it is compelling deep value equity.  A screen for Japanese equities will turn up a large number of stocks like this one.

The company manufactures and provides maintenance service for various conveying machines including elevators, escalators, food conveyers, and amusement rides.  Over 95% of the sales and cash flow come from this business, which is largely domestic.  Also, maintenance is about 50% of the company annual revenue.   The business seems like a reasonably good, stable business.

It's difficult to do due diligence of Japanese small cap companies under normal circumstances.  Of course, the current Japanese crisis makes getting information even more challenging.  However, we can rely on an analysis of the audited financials.  The company has a website with translated financial statements at 

The Bloomberg share count shows 19.332M shares, but after looking at the financials and the news releases, it's clear that the share count net of treasury stock is 16.2M shares.  The company's market cap adjusted for the net shares is 6,492M JPY.  The company has zero debt and cash of 9.54M JPY.  In addition, there's 4.7M of long-term investments on the books.   

EPS in 2010 are 32.66 JPY, for a P/E of about 12x.  The dividend yield is 3.5%, with a 14 JPY dividend expected.  The company's 2010 revenues are expected to be approximately 13,200 JPY, with EBIT of 1,100 JPY and net income of 530 JPY.   2009 revenues were 13,190, with EBIT of 1,872 and net income of 716.

A review of the financials over the past decade show that the company has had a similar level of EPS and dividend payout for the past decade. 

The company trades at 37% of tangible book value.  Book value is comprised of cash, commercial real estate and PP&E.

Insider ownership is 54.3%.

Also, value investor First Eagle owns 1.3M shares as of 12/31/10.

Of course the stock can trade lower than it is currently, but at some point I believe a basket of companies such as Sansei Yusoki will do quite well.  Only a few years ago this same business traded at 3x the current price.


At 37% of tangible book value and with a negative enterprise value, there is no catalyst.  You get a 3.5% dividend while you wait for the paint to dry.
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