Nippon TV and Aigan as interesting valuation plays

As can be seen in the stock chart over the past 3 decades, Nippon TV shares  have been fluctuating relatively wildly and yet, it has been a conservatively managed company all along, with little or no debt.

After going as low as ¥ 38.5(¥770 then)in '71, in 1976, which is as far back as I have data for, it was fluctuating between an adjusted ¥ 80 and ¥ 120, while sporting an NTA of around ¥ 75 and a dividend payout of  around ¥ 2. Fast forward about 15 years to the height of the bubble era, it went from a ¥ 935 peak in '84 to a low of less than ¥ 500(¥10,800 then) in '86 before soaring to a bubble peak of ¥ 1,955 (¥39,100 then) at the dawn of the nineties. The other peak & valley prices , adjusted for a share split in 2012, can be seen in the chart above.

I have taken the trouble to peruse the balance sheets around the time of the market lows in '99, '03, '09, '12 and recently.

The shareholder equity has gone from¥ 12.2 bil in '76, ¥ 89.5 bil  in '90 to ¥ 253 bil in '00, ¥ 327 bil in '03,  ¥ 397 bil in '09, ¥ 438 bil in '12 and ¥ 655 bil currently, meaning the shares were >40-70% overvalued in '76, 400-475% overvalued in '90, 6% undervalued in '03, 50% undervalued in '09, 40% undervalued in '12  and around 41% undervalued now.


Based on NTA, the stock traded up a peak of just under 10X NTA in the dot.com boom, was 6% undervalued in '03, 50% undervalued at the October '08 bottom, 42% so at the '12 lows and around half its NTA (based on the latest figure of ¥ 2,902 in the September report) now.

In terms of Grahamian net-net(current assets net total liabilities), it actually shows the lowest figure since '00 (¥ 267 then,¥ 228 in '03 ¥ 322 in '09, ¥ 289 in '12 and ¥ 196 currently).

However, digging further into the finer numbers the company's 1) investment securities and 2) land holdings has increased significantly:


1) ¥ 16 bil in '00, ¥ 56 bil in '03, ¥ 107 bil in '09 ,¥ 151 bil in '12 and ¥ 360 bil now (¥ 1367/shr), presumably fueled by a huge rise in its top two holdings(Recruit Hlgs & Hakuhodo DY, which alone account for ¥ 549  per share based on today's closing

2)¥ 425/shr in '00, ¥ 436/shr in '03, ¥ 437/shr in '09 ,¥ 525/shr in '12 and ¥ 635/shr now.

I'm not sure if the latter figured takes into account the rise in the general level of land prices in Japan since the bottom in '02/'03 (?) or is it the cost of the land in the books plus new acquisitions :

With reports that condominium prices in Tokyo are re-approaching heights of the bubble era seen in '89, its not unreasonable to believe that its land portfolio stands to reap good gains, although details are short.

Still, it is interesting to note that its second biggest shareholder, Yomiuri Telecasting, has raised its stake by 570,000 shares in the last 2 years while foreign portfolio manager Orbis Investment has upped its bets by an even larger 4,642,132 shares in the same timeframe, to 9,951,799 shares or a 3.77% holding.

Chukyo TV B'casting has also entered the Top 10, together with Massachusetts Financial, together accounting for 9.628 million shares, likely having added 5 million shares between them since 2017. Also, local fund house Nomura Asset M'gt has accumulated another 2.96 million shares, raising its stake from 4,614,499 to 7,578,555 shares.

Though it's trading at an EPS of below 10, the recent financial disclosures reveal sharp drops in net profit, presumably as its TV business suffers from competition from NetFlix and YouTube.

Still, I picked this stock to replace Nishishiba Electric in my Japanese portfolio as a value play!

The second stock Aigan Co Ltd was also bought, after a 2-year hiatus when I hesitated going in  at a mouth-watering ¥ 217 below its net cash back then of ¥ 220 , and despite a long decline had given way to a significant flatlining in late '16 to early '17. It proceeded to relentlessly rise to almost ¥ 870 in the next four months! Such are missed opportunities!

This time, I have decided to get in early, with the net-net at ¥ 296 and net cash at ¥ 140 per share, together with my chart-based prediction that the Nikkei index will soon head for its Fibronacci 61.8% retracement of the lost 2 decade decline from 38,957 to 6,994 pegged at around 26,000 to 27,000 points, last seen in 1991!

Nishishiba Electric Trade

Genting Berhad is the LARGEST allocation among my over 200 portfolio stocks

1. It's 52.7% stake in Genting S'pore ( M$17.95 bil ) and 49.4% stake Genting M'sia (M$9.14 bil) alone is > M$3 bil higher than its entire market cap of M$24.08 bil (the gap was as high as M$5 bil when I tripled my stake in Sep/Oct to maximise my portion of the recent dividend). This is not including its stake in Genting Plantations, profitable Genting Energy and soon to launch Resorts World Las Vegas.

2.The NTA is hovering near all time highs of M$9.03 (versus mkt price of below M$6.00 when I was tripling my investment in it). Since its listing in Dec '71, its share price had only dipped below its NTA briefly in '98, '01,'09, late '15 and '16. But since a raft of bad news hit the company late last year, it has traded well below its NTA, with the gap widening to as much as M$3.44 when the price touched a decade low of M$5.59 in October. One of those bad news has since been reversed with the resumption of the scheduled opening of the outdoor theme park in Genting Highlands.

3. At its recent low, the prospective dividend yield of 3.4% exceeded the risk-free bank time deposit rate of 2.95% for short-term deposits.

4. Its borrowings(which are marginally less than its cash equivalents) are predominantly fixed-rate bonds that mature between 2 & 10 years from today.

5. Trading at an undemanding 12X free cash flow per share(48.8 sen). 

6. During the major low of '98(M$1.20), its revenue was averaging 600-700 mil per quarter and its EPS was just under 3 sen per quarter. At its recent low of M$5.59, the comparable figures were 5000-5500 mil per quarter & 10-15c per quarter, implying that this is a low price compared to that shopping opportunity of a lifetime! Comparative analysis of operating cashflows in 2000, 2006 and 2009 implies fair value of no less than M$7.21 currently.

Chartwise, it has U-turned from a 10 year low of M$5.59 with a 70+% probability as indicators on the weekly & daily timeframes show bullish crossovers on MACD & Stochs, not to mention persistent bullish divergences in the RSI on all timeframes. The current monthly candle looks similar to the situation both in Sep '98 and Apr '01 and a little like Aug '15

British American Tobacco(M)'s 1998 bottom