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!