Will 東京機械製作所 [TKS] again revive after a 3rd 3 year decline?

 

  Despite being in the sunset industry of newsprint, the stock is 90% down from its recent '21 high and is somewhat beyond the 4-year cycle of lows seen in late '12, early '16 & early '20, yet has reported book values that have  advanced from  ¥863.6 to ¥925.9 & ¥1,010.9  since 2 years ago while CAR improved 6% points since then to 56.2%, accompanied by uneven yet positive profit figures & rebounding EPS spotted in the most recent 3 consecutive quarters. 

Debt has dropped from miniscule to ZERO and it seems like a prime candidate to either be taken over by its 25% shareholder, a unit of the powerful Yomiuri Shimbun group or subject to a possible ramp as an individual Akihiko Ota, possibly a professional speculator with deep pockets, has been building his stake beyond 9% after first emerging as a 5.1% holder in early '25.  The company itself has been an aggressive purchaser of its own stock, corralling 655,300 shares [ 7.51%], up from 3.2% in 2016. Amazingly, its market cap is 46% below its ¥6.241 billion cash pile in '23, equivalent to ¥715 per share! The FY '25 figure is closer to ¥866 per share, not counting the ¥29 in equities & ¥204 in land !  Total assets are under ¥15 billion, down significantly from ¥58 billion in 1998 but CAR [ @ under 30%] was also roughly half the current figure & book value was only marginally higher. Interestingly, the co. has 35% more assets than in 1976, when the market valued it at ¥7.5 billion versus ¥3.35 billion now.

Other possible catalysts for a rise are the revival of printed newspapers in the coming years due to the negative effect of e-reading on the young generation as seen in a Nordic country, as well as the possible growth from its expansion to India.

The main drawback of this investment is that there is no dividend likely forthcoming to compensate holders for the gestation period, though a payout is not impossible if long-suffering Econach, which paid me a ¥5 dividend, its first since 1969 on improving profitability, is used as a role model.

A conservative target is the  ¥599-639 resistance zone created in 2023, on its last big rebound, followed by ¥798 within 15 months & 28 months respectively.

AI input

Other Glimmers for the Prosperity Run: EUPE , OKA, Azuma 9380, Kossan, Creative, INTC?

                                                                           AI delving into its prospects: