Client recommendation TKS 東京機械製作所, after halving since its September blowoff, goes limit-up Oct 24th: Will it reprise the '21 rocketing ?

 

TKS's frenetic gyrations in 2021

The stock was touted in this blog on July 25th & I personally put my money squarely where my mouth was

as well, at ¥388.Yesterday, it traded a mere 38,900 shares at the close due to the buy/sell imbalance at the limit up price of ¥563.This is far off the ¥889 zenith last month, but unconscionably low compared to the ¥3,720 summit on 10th Sep '21, just 2 days away from the 4th Anniversary of its, hopefully temporary, '21 high abovementioned. 

That was when there was a lot of brouhaha around Sun Hung Kai-backed shady entity Asia Development Capital [since delisted in Tokyo] clandestinely accumulating over 40% of TKS & the latter vigorously resisting a possible takeover that was likely targeting its large cash pile, via a 'poison pill' defense. Eventually, the buyout attempt was rebuffed & the predator went bust & disappeared after irregularities were discovered. Now, a quarter of the shares are held by the powerful Yomiuri Shimbun group while the ex-predator's 7.56% remnant holding has been acquired by TKS itself as treasury shares.

Early last month, TKS announced a contract awarded by the Japanese Defense Ministry & the shares went limit-up yesterday, after a month-long 48% correction, because said contract was finalized. Defense is one of the hottest sectors in the Tokyo mart in '25 and it may pay off to wait & see if more bidding in this sector by the company will eventuate in the coming months, so I am holding on despite no dividend forthcoming since 2019 ! 

Technically, the price has rounded off a saucer-type bottoming pattern & has a similar MACD indicator crossing over as has occurred 4 years ago & also in late 2012 when the Japanese Nikkei stock index was surging towards 10,000 from below it [ ridiculously cheap compared to the 5-fold inflation in that index in the past 13 years ].Oddly enough, my maiden entry is not far above the stock's 2012 low even though the aforementioned index plumbed a nadir of 8,238.96 that year & is now trading at over 9x that low! This gaping divergence is due to TKS reporting frequent losses within a string of inconsistent results as its newsprint machines fade into obsolescence in tandem with physical newspapers.

 These are exciting times for me, as my ¥ cash balance has gone over  ¥2,857,000 after never having peeked above the ¥1 million mark for the the first 8 years of my participation in Tokyo [ proudly 2 years before the Oracle of Omaha ], ergo multiplying almost fifty-fold in the last 4 months! I have the option of raising it further by 20% next week if I choose to dispose of the five Japanese stocks still sitting on paper gains [ Komai Haltec, Ichikoh, Fujisash, Shinto & TKS] , but I'll probably do it intermittently since the Nikkei has come tantalizingly close to the 50,000 barrier this past week & seems to have the strength to break it by the end of 2025. Overall cash levels has also sailed over $200,000 for the first time since 2022 & debt has shrunk 60% in just the past month & my🎌 stock tally has crossed the hitherto unattained 4-decade mark, on top of besting the total scalps [ including famous names like Toyota, NTT, Omron, Shiseido, Panasonic, Kyocera, Dentsu, Takeda & Subaru ] in my first six years trading there 40-35, bringing the cumulative conquests to 107 as of the time of writing !