I summarized the 2012 results in the chart below.
In an earlier post I mentioned the company as a net-net with good earnings. I calculated net-net or net current asset value (NCAV) as current assets minus current liabilities. But Tachibana, and possibly all Japanese companies, reports assets as the sum of the following components:
- current assets
- property and equipment and
- investments and other assets
Tachibana Eletech is an industrial company specializing in supporting manufacturers. The Factory Automation (FA) Division is its main division accounting for almost half of its sales. The other main division is the Semiconductor Division. The Japanese expertise in manufacturing could be very useful for developing Asian countries. And the company is trying to increase exports. However, its Overseas Division is only 17% of sales right now.
For 2013, the company is targeting a 3% increase in revenue and 5% increase in income. In good times this is achievable, however an economic downturn could easily make both numbers negative as was the case in 2009 and 2010.
The company's ROE is 6.8% and its earnings yield is 10.7%. Its dividend yield is 2%. In summary, I think Tachibana 1) has a decent growth story, 2) trades at small P/E multiple and 3) its book value is not priced into the stock. I estimate its intrinsic value as 1450 yen per share. It is trading at 1100 today. To me, investing in Tachibana is a no brainer.
Disclosure: I added to my position in Tachibana after reading their earnings report.