Sunday, February 16, 2014

Riken Keiki Reports Great Q3 Earnings, Fujimak Not So Good

Riken Keiki
Price¥ 874
Market Cap¥ 20.29 B
($ 198 M USD)
P/E TTM8.2 x
Div yield1.9 %
P/BV0.70
Price/Netnet1.02
ROE8.6 %
Riken Keiki (TSE:7734) reported earnings improved 40% for the first 9 months this year versus last year. The company makes gas detectors and related equipment for industrial use. Sales were up and cost of goods were down. This shows good management of operations.

The company's year-end earnings projection of ¥ 76 / shr did not change, but I think that is a bit conservative. Book value increased 5% over the last 9 months.

Fujimak (TSE:5965) reported disappointing earnings that caused the stock to drop 10%. Fujimak makes commercial grade kitchen equipment. The company reported earnings that came 30% lower than this point last year. I believe the report indicated that the fast food segment was a major contributor to the poor results. Overall, sales were up 10%. But high raw material costs offset the sales gains. Also, SG&A costs were significantly higher than last year. The comprehensive earnings was better at 10% lower. Like many other Japanese companies, Fujimak benefited from gains in its investment holdings in yen.


Fujimak
Price¥ 800 B
Market Cap¥ 5.24 B
($ 51 M USD)
P/E TTM5.1 x
Div yield2.0 %
P/BV0.58
ROE11.55 %
The company did not change its current year earnings projection of ¥ 130 which would give the company a 6.3x earnings multiple for the year. For now I am not panicking.

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2 comments:

  1. AdibFebruary 17, 2014 at 8:07 AM

    Hi,

    Are you owning these due to cheap on earnings or net net? Looks like the latter is a net net. the former maybe cheap on earnings but not a net net... could you expand on that or is that covered in the original posts about these.

    I like your blog

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  2. bovinebearFebruary 17, 2014 at 3:28 PM

    Thanks!
    I look for Japanese companies with a few simple criteria. One is small cap, all of them are in the $50-250M range. One is earnings, all of my 3 Japanese companies have ROE around 10%. I don't want a compnay with like 4% ROE. And being netnet is a bonus or at least close to it.

    I also look for japanese companies in industries where the Japanese traditionally excel, i.e., manufacturing and tech. All of these companies work in some niche fields in manufacturing. So it wouldn't be easy for a chinese or some other low cost company to intrude into their turf.

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