Shinnihon Corp (1879.T)

“In many cases, the company might have significant cash or stock holdings that make up a lot of the stock price… I want to see evidence that the company is investing to grow the business, buying back stock, paying dividends, or making accretive acquisitions.”

Michael Burry, September 4, 2019

In a 2019 interview with Bloomberg, Dr. Burry disclosed some of his Japanese holdings and was quoted in the article on characteristics he’s looking for in Japan. Using Dr. Burry’s quote as a checklist for finding mispriced assets, I decided to review his position, which he initiated in 2020, in Daisue Construction (1814.T) and apply his checklist to his own position and compare that to Shinnihon Corp (1879.T) of today. Although the two businesses are slightly different, they are both in the Construction & Engineering industry and so offer a reasonable comparison.

Significant Cash

Below is the Daisue balance sheet Dr. Burry was most likely looking at. Although not a net-cash stock (i.e., cash greater than total liabilities), the balance sheet would easily fall under the category of significant cash with a negative enterprise value at the time of purchase.

Daisue Construction (1814.T)

Shinnihon has a negative enterprise value as well but also has more cash on hand than total liabilities. So I would put Shinnihon slightly ahead on this one, but both companies would pass the test for significant cash.

Shinnihon Corp (1879.T)

Stock Holdings

At the time of Dr. Burry’s purchase, Daisue listed about ¥915 million in stock holdings.

On September 9, 2020, Dr. Burry filed a large shareholding report with EDINET once his position (536,700 shares outstanding) of shares owned triggered the 5% Rule. The report states that he added 27,100 shares during the previous 60 days. He presumably bought the other 509,600 shares in Q2 (Fiscal Q1).

Based on a reasonable approximation, I’ll guess his average purchase price was around a market cap of ¥8.4 billion. ¥915 million in stock holdings is about 11% of the market cap. At 11%, I would assume this was a contributing factor in the buy decision.

With a market cap of ¥42.6 billion, Shinnihon has about ¥580 million in stock holdings (or less than 2% of the market cap), so Daisue easily wins on this metric.

However, 11% of the market cap is not a huge number when compared to other Japanese stocks. Many small regional banks trade at a market cap that is a half or a third (sometimes even less) of the value of their stock holdings. For an industrial company, consider TYK Corp (5363.T), a net-net, with a market cap of ¥11.8 billion that has 56% of its market cap, or ¥6.6 billion, in stock holdings.

TYK Corp Stock Holdings as of March 31

Investing to Grow the Business

Either using depreciation as a proxy or using the long-term average ratio of PPE to sales, it does not appear that Daisue was investing (or spending growth capex) to grow the business and that capex was primarily deployed for maintenance capex. Also, I could not find any significant news in 2020 that announced any growth initiatives for Daisue.

Daisue Construction Total Cap Ex

In Shinnhihon’s case, although they have spent ¥293 million in the past 2 years on capex, which is considerably more than they have in the previous 7 years, it still is not enough to move the needle significantly.

I would say both fail on this criteria.

Buying Back Stock

No activity on this for either company. Both fail on this criteria.

Paying Dividends

Shinnihon has a yield of 2% and a 5-year average yield of 1.6%. It’s payout ratio is 11.3% with a 5-year average payout ratio of 11.2%

Daisue had a yield of around 4% with an average payout ratio of around 18%. Due to the significant stock price declines during that time, the yield had risen materially. When Dr. Burry purchased the stock, dividends held steady at ¥20 and have increased in recent years. It is most likely that Dr. Burry saw this prior to his purchase.

In general, I don’t see anything spectacular here for either company since almost every company in Japan offers a dividend. However, if Dr. Burry bought with a yield at 4% this would have been on the higher end of yields offered at that time.

Although both companies pass this test, I would give the edge to Daisue.

Accretive Acquisitions

Neither company has made any significant acquisitions.


Of the 6 criteria mentioned by Dr. Burry, Daisue passed 3 of the 6 and Shinnihon passes 2 of the 6. Looking at the stock price performance of both companies, starting around the time of Dr. Burry’s purchase, we see that performance trended closely between the two until Daisue broke out in November 2021 when it released results–resulting in a 90% return for Daisue while Shinnihon traded flat.

The pop in Daisue’s stock price is somewhat puzzling (compared to that of Shinnihon) because their report in November was not spectacular, only that the company showed a rebound from the Covid-induced lows. When looking at revenue, we see that Daisue surpassed its 2020 level in two years, whereas it appears Shinnihon will do it in 3 years. Also, although the overall trend in revenue growth is better at Shinnihon, coming out of the Covid environment, Daisue is growing revenue quicker which may be attracting more attention to the stock. So maybe this is something Dr. Burry anticipated and was betting on.

From a quality perspective, Shinnihon is just better across the board. Combined with stronger long-term results, Shinnihon shows greater consistency and profitability.

At the end of the day, Dr. Burry clearly saw something beyond the 3 criteria met by Daisue in 2020. It will be interesting to watch how the company does going forward, as Dr. Burry continues to hold the stock (having only trimmed his position size). (Scion is currently below the 5% threshold, so it’s also possible he is already completely out.)

Disclosure: We own shares in Shinnihon Corp (1879.T) and in TYK Corp (5363.T). Leaven Partners, LP may hold any securities mentioned on this blog and may buy or sell these securities at any time.


Nankai Plywood Co Ltd (7887:TYO)

Recent Share Price: ¥5900

Accounting: Japanese Accounting Standards

Fiscal Year: Mar. 31st

Market Cap: ¥5.9 billion ($52 million)

Industry: Basic Materials / Hardwood Veneer & Plywood

Although it’s not too difficult to find Japanese companies trading below liquidation value, it is a bit tricky to find one with consistent revenue growth for over 10 years. From 2012, a conservative estimate of revenue growth for Nankai Plywood is a tad bit more than 5% per annum. I can hear the yawns already! But for an ultra cheap stock that’s a lot of revenue growth.

Nankai Plywood manufactures and sells primarily fabricated wooden materials for residential home use. On the side, they also sell electric wires and electrical equipment.

Following is a quick look at some highlights since 2012:

  • 2012: Opened factory in Indonesia
  • 2013: Launched new partition shelving FIXUS
  • 2014: Established NP ROLPIN in France and launched LIVUS
  • 2016: Closed office in Shanghai (opened 2011)
  • 2017: Launced “Storage Life NANKAI” and opened Tokyo showroom
  • 2020: Opened Nagayo showroom
  • 2021: Opened Osaka showroom

The downside on the revenue growth is that it has sucked up the excess cash flow to get there and then some. It reminds me of the Charlie Munger joke about all of the profits lost on the balance sheet.

We tend to prefer the business which drowns in cash – it just makes so much money that one of the main characteristics of it is the amount of cash coming in. There are other businesses, like the construction equipment business that my old friend John Anderson ran. He used to say: ‘you work hard all year, and at the end of the year there’s your profit – sitting in the yard.’ There was never any cash, just more used construction equipment. We tend to hate businesses like that.

Charlie Munger
Change in Working Capital ¥        -4,483,318,000  ¥        -8,578,483,000 
Net Income ¥         3,402,168,000  ¥         4,393,669,000 
D&A ¥         2,552,018,000  ¥         4,994,077,000 
Other non cash charges ¥            136,222,000  ¥         1,222,901,000 
Capex ¥        -3,963,172,000  ¥        -7,513,978,000 
Owner Earnings ¥        -2,356,082,000  ¥        -5,481,814,000 
Dividends ¥           -483,330,000  ¥           -831,744,000 

Usually, I’m more attracted to cheap stocks with a nice FCF yield. This one, on the other hand, offers little in that regard but does sport a stock trading at 1/3 of TBV with a 5-year and 10-year TBV growth of a bit under 3%, respectively. Profitability metrics are on the passable side. Gross profit to total assets is reasonable; it doesn’t knock the cover off the ball, but for this type of stock it’s not bad. The other negative, at least for me, is that 90% of revenue is domestic. I typically like to see more international exposure, but their presence in Western Europe is a plus.

On November 10th, the company announced full year (March 2022) forecasts of ¥20 billion in revenue, ¥1.8 billion in operating profit and ¥1.2 billion in net profit–all new company highs. So a forward P/E of around 5 with a history of revenue growth. It’s not bad. Life could be a lot worse.

Disclosure: We own shares in Nankai Plywood Co Ltd (7887:TYO). Leaven Partners, LP may hold any securities mentioned on this blog and may buy or sell these securities at any time.

Ming Fai International Holdings Ltd (3828:HKG)

Recent Share Price: HK$ 0.49
Accounting: HKAS
Fiscal Year: Dec. 31st
Market Cap: HK$359.8 million ($46.3 million)
Industry: Consumer Non-Cyclical / Personal Products

Founded in 1980, Ming Fai is primarily in the business of what are called amenity products for the travel and leisure industry. Ming Fai manufacturers and distributes small bottles of lotion, conditioner, and shampoo found complimentary in hotel rooms, among other various disposable products. On airlines, for example, they make the travel kits that are occasionally handed out to business or first class travelers on long-haul flights. The company has production facilities in Shenzhen, China, in addition to India and Cambodia.

Ming Fai is on my “David Webb Watchlist” and has finally been beaten down to levels where I take interest. For the past few years, small-caps have severely underperformed large-caps in the Hong Kong market–not to mention the widening gap between value vs growth. Needless to say, a small-cap value stock like Ming Fai has been taken out to the woodshed. To add insult to injury, the severe slowdown in the travel and leisure industry, due to COVID, has frankly left this company for dead.

The short-term outlook for Ming Fai does not look good. With a company leveraged to the travel and leisure industry, how could it not? They reported a loss in the first half of this year on severely reduced revenue and suspended their dividend.

However, I think the long-term outlook is much better than what is currently reflected in the stock price. My personal view is that COVID will not cause an indefinite structural change in the travel and leisure industry. The travel and leisure should return to its mean levels over time and Ming Fai appears to be a reasonable bet at these prices given my long-term bias. However, the longer long-term is another story. It is difficult to say what the metaverse will be and whether (almost) everything happens virtually in the future–and when that future will be. But until that “digital utopia” is realized, Ming Fai offers a lot of value for the price.

Ming Fai has excess working capital of around HK$200 million, give or take, depending on how you want to do the math. On an adjusted market cap of HK$160 million, you are buying a company with an average 5-year free cash flow of HK$30 million–nearly a 20% FCF yield.

In 2019, they did over HK$2 billion in revenue (and over HK$126 million in EBIT). The question is how long will it take Ming Fai to get back to HK$2 billion in revenue? And in the mean time, what will earnings look like? These are difficult questions to answer of course. In their half-year report, the company noted that the United Nations World Tourism Organization calculated that international tourism dropped by approximately 65% from January 2020 to May 2021. Since then, Ming Fai reported, in their 2021 interim report, that international travel is picking up but is “fragile and uneven”. But the trend has been positive, both in China and internationally, and Ming Fai expects more of the same over the next year. Further, they reported that, in China, domestic air seat capacity has already exceeded pre-crisis levels.

Hospitality Supplies

For the first 6 months, ending June 2021, revenue increased 14.5% (from the first 6 months of 2020) to HK$447 million, making this division one of the lone bright spots for this year. Gross profits increased as well, while margins compressed. Their global client base is well diversified and includes a stable of well-known brands: Four Seasons, Cathay Pacific, Mandarin Oriental, MGM Grand, and Sheraton, for example. By geography, 52% of revenue came from China, followed by Hong Kong (17%), Asia Pacific ex-China (13%), North America (10%), Europe (5%), and Australia (2%)

Operating Supplies and Equipment

For the first 6 months, the OS&E business generated HK$73 million with gross profit of HK$17 million (23%). In 2014, the company established this division to leverage their existing client relationships by broadening their product offerings–which is basically anything else found in a hotel and hotel room, e.g., linens, pillows, small appliances, hotel equipment, etc.

Health Care and Hygienic Products

For the first 6 months, revenue was HK$77 million, with gross profit of HK$9 million (12%). Recently, this segment branched out to produce disposable infection control products (hand sanitizers, sprays, wipes, masks, etc.), but also continues to market health care and hygienic products under their self-labeled brands “Pasion”, “everybody LABO” and “MING FAI”.


Ming Fai trades below liquidation value and one-third of tangible book (with 5-year and 10-year TBV CAGR of 3% and 4.5%, respectfully). The business is not great, but it’s not bad either and certainly is good enough for the price. Management has made some operational blunders over the past 10 years, but they act trustworthy. And you get David Webb’s endorsement. All in all, the company will do well if things revert towards a sense of normal and you get a well-capitalized balance sheet to wait it out.

Disclosure: We own shares in Ming Fai International Holdings Ltd (3828:HKG). Leaven Partners, LP may hold any securities mentioned on this blog and may buy or sell these securities at any time.

GDH Guangnan Holdings Ltd (1203:HKG)

Recent Share Price: HK$ 0.74
Accounting: HKAS
Fiscal Year: Dec. 31st
Market Cap: HK$671.6 million ($86.3 million)
Industry: Basic Materials / Steel

Incorporated in 1982 and based in Hong Kong, GDH Guangnan Holdings Ltd. (GDH) is primarily a manufacturer of steel-related products that are used for the packaging of consumer staple-related goods and is heavily invested in the pig business. Although based in Hong Kong, GDH is a PRC company–operationally speaking. I can see the red flags immediately going up: PRC, SOE, Pig Business… PASS! And I can’t say I really blame you. Who wants to get involved with that! On the other hand, those dividend checks keep rolling in and it’s hard to find evidence of shareholder abuse. Also, GDH has a solid long-term working arrangement with POSCO, a quite reputable Korean steel mill. And the company is cheap. Pretty darn cheap. However, remind you, this is based on a diversified approach, i.e., 30 to 60 stocks. There is a chance of being blindsided, so risks of this nature need to be handled with diversification.

We care about the country where the company is run. There is a disadvantage being outside of the US. A few years ago we were looking to invest in either PetroChina or Yukos in Russia. We ended up picking PetroChina because the political situation was more stable. It turned out to be a good decision. I care about the country and the geopolitical environment I am investing in. The whole company was selling for $35 billion. It was selling for one-fourth of the price of Exxon, but was making profits equal to 80% of Exxon. I was reading the annual report one day and in it I saw a message from the Chairman saying that the company would pay out 45% of its profits as dividends. This was much more than any company like this, and I liked the reserves. If it were a US company, it would sell for $85 billion; it’s a good, solid company. I don’t understand the Chinese culture like I understand the US culture. However it said right in their annual report that they will payout 45% of their earnings as dividends, basically they say if they make money they will pay it out. I invested $450 million and its now worth $3.5 billion. I decided I’d rather be in China than Russia. I liked the investment climate better in China. In July, the owner of Yukos, Mikhail Khodorkovsky (at that time, the richest man in Russia) had breakfast with me and was asking for my consultation if they should expand into New York and if this was too onerous considering the SEC regulations. Four months later, Mikhail Khodorkovsky was in prison. Putin put him in. He took on Putin and lost. His decision on geopolitical thinking was wrong and now the company is finished. PetroChina was the superior investment choice. 45% was a crazy amount of dividends to offer but China kept its word. I am never quite as happy as I am in the US, because the laws are more uncertain elsewhere, but the point is to buy things cheap. Russia is just a bad geopolitical environment. On the other hand, China has kept their word on paying the dividends. In fact, when the dividends check comes in, it is calculated out 10 or so decimals, these guys keep their word. I don’t know the tax laws in China, but you can buy a good business cheap.

Source: Student Visit 2007 URL:

Tinplating (2020 Revenue: HK$ 2,115.6 million, HK$ 8.7 profit; 2019 HK$ 2,022, HK$ 36.1 m profit)
This segment produces and sells tinplate and related products used as packaging materials for food processing manufactures. GDH Zhongyue, 100% subsidiary, (located in PRC) has an annual output capacity of 290,000 tons tinplate, 80,000 tons of tin-free steel (TFS), and 140,000 tons of blackplate (cold-rolled steel plate).

In 2006, the group formed an alliance with POSCO Co. to establish a joint-venture: GDH Zhongyue Posco. GDH has a 66% interest in the JV and POSCO has a 34% interest. The JV has an annual output capacity of 200,000 tons. The products are used for the packaging of beverages, food, medicine, and chemicals. In the first half of this year, GDH reported 72% of revenue from this division with 159,640 tons of tinplate products produced–a 15% increase y/y. Year over year revenue was up 44% with profit up 140%. On the negative, ex-PRC revenue declined due to increased competition, supply chain constraints and the cancellation of the export rebate policy on chrome-plated iron.

Fresh & Live Foodstuffs (2020 Revenue: HK$ 321.0 million + HK$ 81.9 million distribution = HK$ 403.0 m, HK$113.3 profit; 2019 HK$ 326.4 rev / HK$ 49.2 profit)
This segment distributes, purchases, and sells fresh and live foodstuffs. The name of the game here is pig farming. GDH has a wholly-owned subsidiary, GDH Food, a 65% interest in GDH Food Foshan, a 51% interest GDH Trading, a 13% interest in Hubei Jinxu and a 34% interest in Guangdong Baojin.
In the first half of 2021, this division contributed about 28% to total company revenue. The company reports that the pig market is seeing increased demand as China emerges from Covid but experienced some headwinds in rising costs and pricing pressure in some instances. The company highlighted the new slaughter business and the chilled meat wholesale and retail business in the PRC as growth centers. GDH claims an overall market share of live pigs in Hong Kong at 47%. Also, the company reported that GDH Food Foshan has begun construction of a meat processing plant in Nanhai District, Foshan City which they expect to be operational by early next year–with a capacity of processing (slaughtering) 2.18 million pigs, 73,000 cattle, and 90,000 sheep per year.

The company focuses on the Guangdong-Hong Kong-Macao greater bay area and has increased capital injections on vertically integrating their business from breeding to processing to cold storage and distribution. The company has expressed interest in expanding into retail with plans to set up a number of retail chain stores in the greater bay area for meat and non-staple food businesses.

Property Leasing (2020 Revenue: HK$ 19.4 million, HK$ 12.8 profit; 2019 HK$21.3 rev, HK$15.3 profit)
This segment leases office and industrial premises. For 2020, the properties were listed on the books at an appraised value of HK$ 450 million. The properties leased are plant and dormitories at the GDH Zhongyue production facilities and office units in Hong Kong

  1. 29/F, Shui On Centre, 6–8 Harbour Road, Wan Chai, Hong Kong
  2. Land, buildings and structure of GDH Zhongyue (Zhongshan) Tinplate Industry Co., Ltd., 25 Yanjiangdongyi Road, Torch Development Zone, Zhongshan, Guangdong Province, the PRC.

Risks. Guandong Holdings, a private state-owned enterprise, has a 59% interest in the company. Guandong Holdings also has interests in Guangdong Investment (270) and Gurandong Tannery (1058), among other interests.

Change in Working Capital HK$      (138,806,000) HK$        760,933,000 
Net Income HK$        416,770,000  HK$     1,129,906,000 
D&A HK$        373,313,000  HK$        824,695,000 
Other non cash charges HK$      (155,109,000) HK$      (385,440,000)
Capex HK$      (151,140,000) HK$      (462,952,000)
Owner Earnings HK$       345,028,000  HK$    1,867,142,000 
Dividends HK$      (163,368,000) HK$      (349,348,000)

Disclosure: We own shares in GDH Guangnan Holdings Ltd (1203:HKG). Leaven Partners, LP may hold any securities mentioned on this blog and may buy or sell these securities at any time.

McCoy Global Inc (MCB:TOR)

Recent Share Price: CAD$0.44

Accounting: IFRS

Fiscal Year: Dec. 31st

Market Cap: CAD$12.0 million ($9.1 million)

Industry: Energy / Oil Related Services and Equipment

McCoy Global’s primary business is selling hydraulic power tongs for onshore and offshore rigs. The company claims to be the market leader and reports to have the largest installed base in the world.

Sales per region
CAD (in Million)2019
United States & Latin America $               23.98 45%
Middle East & Africa $               13.85 26%
Europe & Russia $               10.00 19%
Asia Pacific $                 3.21 6%
Canada $                 2.36 4%

The power tongs are used to connect and disconnect tubing at the wellhead at the proper torque, which is better and safer than connecting by hand. Every active rig, both onshore and offshore, will need a threading device–so financial results for the company are heavily correlated to active rig counts and footage drilled. The piece that comes in contact with the pipe is called a die, which wears out eventually and needs to be replaced. The video below is of a working power tong by Eckel, a competitor to McCoy, but gives you an idea of how this works.

McCoy is looking to lead in the technological advances in their niche field of expertise. This is evident in their purchase of DrawWorks last year. The video below is of their new threading system.

Overall, McCoy is looking to keep up their R&D spend to improve cloud based services for their customers. The thinking here is to push for better technology at the wellhead to allow customers to reduce their headcount at each wellhead and allow rigs to be monitored and run more remotely.

Recent History


Given the pain in the energy sector, McCoy has worked to reduce working capital needs and tightened the belt on operating expenses. Their Q3 results make for 5 quarters of positive EBITDA (and 7 of the last 8). If they can eke out positive cash flow when it’s this bad, their ability to remain solvent looks promising. (But who knows for sure.)

McCoy recently secured a new US$2.5 million line of credit to support working capital needs and refinanced its existing US$2.4 million note with a US$3.4 term facility to extend maturity and pay for their R&D they want to spend.

November Investor Presentation


McCoy completes the first phase of their “Digital Technology Roadmap” with the introduction of two new products: Virtual Threadrep and Calcert Technology. McCoy states they spent $1.9 million in 2019 on these cloud-based products..

Effective October 2, acquired DrawWorks LP for $7.8 million ($5.8 million cash, $1.9 million note) and booked $3.6 million to goodwill and $2.6 million to intangibles. McCoy points out DWCRT, a new type of a casing running tool, as an example of technology driven product offerings they are excited about.


Acquired 3PS, a maker of torque sensors, for $8 million.


My calculated M-Score for 12/31/2019 is acting quite funny. It appears to be coming from a blow-out in the Asset Quality Index (AQI) with a score of 17.43. Two things may be causing this: (1) the acquisition of DrawWorks put $3.6 million in goodwill and $2.6 million in intangible assets (which they called Acquired IP) on the books in 2019 and (2) McCoy capitalized R&D expense of $2.2 million as IP. Due to write-offs of capitalized R&D in 2018, Intangible assets and Goodwill went from $9 thousand to $8.1 million–that’s quite the move.

Change in Working Capital $       32,041,000  $      (15,117,000)
Net Income $      (66,778,000) $      (10,374,000)
D&A $       21,498,000  $       46,968,000 
Other non cash charges $       10,393,000  $       46,033,000 
Capex $      (10,679,000) $      (46,152,000)
Owner Earnings $      (13,525,000) $       21,358,000 

Cannell Capital (Carlo Cannell) owns 12% of shares outstanding. It’s always nice to see a respected value shop in a name.

What happens to oil prices is the obvious unknown.


Value Investors Club

Disclosure: We own shares in McCoy Global Inc (MCB:TOR). Leaven Partners, LP may hold any securities mentioned on this blog and may buy or sell these securities at any time.

Cofidur SA (ALCOF:PAR)

Recent Share Price: €294

Accounting: French Accounting Standards

Fiscal Year: Dec. 31st

Market Cap: €11.4 million ($13.5 million)

Industry: Technology / Printed Circuit Boards

Cofidur SA is electronics manufacturer that works as a subcontractor to predominately French companies in a variety of industries. Information is quit difficult to come by, but with €16 million in the bank and a €11 million market cap, I’m willing to make some acceptions.

In what was a blood-bath for the first half of this year, with their plants practically sitting idle, Cofidur secured a €5 million loan guaranteed by the state (which I presume to be at favorable terms) and took a negative EV valuation at the start of the year to over €5 million EV at the half-way point. The company followed through with their €8 dividend which is a good sign, but the future is quite uncertain. (The company stated in their first half report that they remain confident given their cash level.)

The Laval and Périguez sites are therefore practically at a standstill, only a few rare productions remain to meet customer demand and the company is implementing the measures adapted to this decrease in activity (taking leave, partial unemployment, etc.) as well as those making it possible to limit the impact on cash flow (deferral of expenses, social security, bank maturities, etc. ) Given this assumption, the first half of 2020 will necessarily be significant decline compared to 2019 (It is still too early to quantify the impact) but the current cash level of the company allows us to remain confident to approach the second half of the year.

Cofidur Press Release (Google Translate)

I cannot find information on their concentration of customers. I have also been unable to ascertain if French Accounting Standards mandate reporting customers that contribute over 10% to revenue, for example (as is the case in the U.S.). Any help on this would be appreciated!

Segment RevenueFranceEuropeUSAOther
2019 (in millions)€61.2€4.50€2.3

I have read that they own their factory in Montpellier, but I have been unable to verify this. The depreciation schedules do not provide help either. Their sites in Laval (where they are headquartered) and in Périgueux appear to be leased. In their 2019 annual report they list €687K in rental contracts on the balance sheet, which they report “mainly concerns real estate at Laval sites and Périgueux”.

In 1998, Cofidur issued approximately €28 million in convertible bonds. Since then, through buybacks and conversions, it has been reduced to a negligible redemption value of €254,000 (conversion ratio: 1 share for 200 bonds).

Cofidur reports no material off-balance sheet commitments.

Cofidur has a share buyback program in place with a max purchase price of €350 per share and up to 10% of shares outstanding, or 3,867 shares. No sign of activity on this though, as the program has been sitting dormant for the past few years. There is a history of share buybacks, so all is not lost.

From the 2019 annual report, EMS Finance is the majority shareholder of Cofidur, with over 50% and over 2/3rds voting rights.. (EMS Finance was established by management to protect itself from the takeover bid of Olane.) In 2019, it appears that the 4 member company was reduced to 3 members (Henri Tranduc, Philippe Broussard, and Serge Villard) with the buyout of Thierry Richli for €5ooK. It is reported that at the 2019 member meeting the buyout was due to Thierry’s retirement. With EMS Finance controlling approximately 50% of Cofidur, and assuming (1) Thierry Richli controlled 25% of EMS Finance, and (2) the purchase price of €500K is accurate, this may provide very interesting insight on the value management places on Cofidur. My assumption is that there is additional information out there that would better explain these numbers.

We accumulated the majority of our shares in the first half of this year. Management appears to have done a nice job allocating resources and making sensible decisions with the company’s capital over the greater part of 5 years. If they continue to make similar decisions in the future, the stock, at current prices, has a good chance of working out favorably over the next 5 years.


Change in Working Capital €   2,300,000  €       679,000 
Net Income € 10,124,000  €  18,423,000 
D&A €   6,858,000  €  15,511,000 
Other non cash charges € (3,783,000) €   (5,675,000)
Capex € (5,115,000) € (12,568,000)
Owner Earnings € 10,384,000  €  16,370,000 


Liquidation Almanack


Johan Wigert (and 2017)

TES Optimal Value Investing

Disclosure: We own shares in Cofidur SA (ALCOF:PAR). Leaven Partners, LP may hold any securities mentioned on this blog and may buy or sell these securities at any time.

Somar Corp (8152:TYO)

Recent Share Price: ¥1,741

Accounting: Japanese Accounting Standards

Fiscal Year: Mar. 31st

Market Cap: ¥3.4 billion ($31 million)

Industry: Basic Materials / Plastics Material and Resin Manufacturing

Somar Corporation is a Japanese manufacturer of primarily resin products for various industrial uses (e.g., smartphones, automotive parts). In their environmental division, they make various cleaner and disinfectant products, as well as chemicals used in the papermaking business. In the food division, they make food additives (mainly thickening stabilizers) and dehydrated vegetables. The also have small interests in managing golf courses (with Nagatsuta Corp, Sink Co., and Tama Kosan Co.), a real estate rental management business (Soya Co.), and an insurance agency business (Sowawa).

[Nagatsuta Corporation is a wholly owned subsidiary of Think Corporation. Sink Co., Ltd. is a wholly-owned subsidiary of Sakai. Tama Kosan Co., Ltd. is a wholly owned subsidiary of Soya.]

The company was founded in 1943 by Tadashi Masutani to produce tatami mats.

In addition to their Japanese operations, they have 8 subsidiaries (Hong Kong, Zhuhai (China), Taiwan, Thailand, India, U.S., Europe, and Vietnam)

The Sotani Family owns 15% of the company. President, Futoshi Sotani, owns 10,600 shares personally.

Revenue JPY (in million)20182019%
Revenue per region JPY (in million)20182019%
  1. Industrial Materials
    • Coating Products
      • Film for electronic parts, precision parts, industrial materials, design & copying
    • Resin Products
      • Resins for electrical insulation, adhesives and sealing resins for electronic components
    • Electronic Materials
      • Circuit board materials, circuit forming materials, functional films
    • Functional Resin
      • Thermosetting resin, thermoplastic resin, additive for resin
  2. Environmental Materials
    • Industrial disinfectants, industrial fungicides and other fine chemicals
    • Papermaking
      • Paper coating binders & paper-related chemicals (slime control agents, preservatives, water retention aids)
  3. Food Materials
    • Food Ingredients
      • Thickening stabilizer (e.g. guar gum), dehydrated vegetables (e.g., onion, garlic), food additives


A lot of the companies I’m looking at seem to be using similar phrasing, so it’s hard to get a read on it. I don’t know how Brexit affects a lot of these Japanese microcaps, but apparantely it does!

[The Company] is supported by relatively strong overseas economies in the first half under the government’s continued economic measures and the Bank of Japan’s monetary easing policy improvements in business performance, employment and income conditions continued, and the Japanese economy maintained a moderate recovery trend. In the seconde half of the year, the US-China conflict, especially the US-China trade friction, the UK’s exit from the EU; as a result of geopolitical risks that continue in the Middle East and East Asia, the global economy slowed down clearly. However, the country’s economy is gradually changing to a downward phase, and it is in a difficult situation that does not allow foresight.

2019 Annual Report (Google Translate)

Recent History


Established Somar Vietnam Co., Ltd. (currently a non-consolidated subsidiary) in Hanoi, Vietnam.


Obtained IATF 16949 certification, an international standard for the manufacturing industry in the automotive industry.
Established Somar Europe BV (currently a non-consolidated subsidiary) in North Holland, the Netherlands.


Established Somar North America Corporation (currently a consolidated subsidiary) in New York, USA.


Change in Working Capital ¥      (1,953,313,000) ¥  (1,751,556,000)
Net Income ¥          430,745,000  ¥  (2,310,039,000)
D&A ¥       2,202,858,000  ¥   6,525,032,000 
Other non cash charges ¥       2,213,367,000  ¥   2,509,298,000 
Capex ¥      (1,180,360,000) ¥  (9,304,143,000)
Owner Earnings ¥       1,713,297,000  ¥  (4,331,408,000)

Disclosure: We own shares in Somar Corp (8152:TYO). Leaven Partners, LP may hold any securities mentioned on this blog and may buy or sell these securities at any time.

Sanko Co Ltd (6964:TYO)

Recent Share Price: ¥428

Accounting: Japanese Accounting Standards

Fiscal Year: Mar. 31st

Market Cap: ¥4.3 billion ($40 million)

Industry: Basic Materials / Electrical Equipment & Components

Established in 1963, Sanko Co., Ltd. manufactures precision components primarily for the automotive industry. The Company operates under five divisions.

As of March 31, the Company had two subsidiarys, a 100% owned production facility in Thailand (Thai Sanko Co, Ltd.) and Sanko Trading USA.

Segment Revenue (JPY, in millions)FY2109y/y growth
Automotive Products (e.g., auto electronics)¥9,56512.8%
Housing Equipment (e.g., electric power meters)¥2313.6%
Digital Consumers (e.g., digital cameras)¥1,60314.8%
Office Equipment (e.g., printers)¥2909.3%

The company pointed out Brexit uncertainties, the Chinese economy and Sino-US relations as headwinds, but still expects solid growth from their automotive division. The company believes it is well positioned for the growth in demand for auto electronics with an emphasis on EV and hybird vehicles in their annual report.

Major Customers (JPY, in millions)20182019 %
Osakidenkikogyo Co., Ltd.¥2,146¥1,77113%

The Tamura family have a controlling interest in the company.

Major ShareholdersShares%
Tamura Shoji Co., Ltd. (Tamura Family)3,045,00033.75%
Masanori Tamura – Chairman2,000,00022.17%

The company has over ¥1 billion in LT Investments, but much of the value is in unlisted companies and information on this is difficult to come by via google translate.

Public HoldingsSharesJPY (in millions)
Hachijuni Bank Co., Ltd.437,650¥200
Mizuho Financial Group183,238¥31
Japan Institute of Metals Co., Ltd.1,000¥1
Osakidenkikogyo Co., Ltd.15,782¥10


Disclosure: We own shares in Sanko Co Ltd (6964:TYO). Leaven Partners, LP may hold any securities mentioned on this blog and may buy or sell these securities at any time.

NKK Switches Co Ltd (6943:TYO)

Recent Share Price: ¥4,770

Accounting: Japanese Accounting Standards

Fiscal Year: Mar. 31st

Market Cap: ¥3.9 billion ($37 million)

Industry: Industrials / Switchgear Manufacturing

NKK Switches Co., Ltd., formerly NIHON KAIHEIKI IND. CO., LTD., is mainly engaged in the manufacture and sale of various industrial switches. The company offers illuminated, process sealed, miniature, specialty, surface mount and LCD programmable switches. The company also manufactures toggle, rocker, pushbutton, slide, DIProtary, keypad and keylock switches.

The company was established in 1953 by then chairman, Shigeo Ohhashi. The Ohhashi family remains deeply involved in the company via operations and ownership.

YK Big Bridge*132,00016.0%
Hiroshige Ohhashi – Europe & China Sales29,3003.5%
Naoko Ohhashi28,0003.3%
Chizuko Ohhashi20,1002.4%
Tomoshige Ohhashi – President19,2002.3%
*May be part of Ohhasi family

The Company operates in three business segments (company and five subsidiaries). The Asia segment is involved in the assembly processing of switch products in China, and the sale of products in Hong Kong, China, and rest of Asia.

  • NKK Switches of America, Inc. (Scottsdale, AZ)
  • NKK Switches Hong Kong Co., Ltd. (Hong Kong) 2004
    • 2015 – China (Shanghai) Hirakiseki Co., Ltd
  • NKK Switches Mactan, Inc. (Philippines)
    • 3rd production base circa 2015
Revenue – JPY (in million)20182019%
United States¥2.499¥2,41432%
Largest Customers by Revenue- JPY (in million)20182019%
Chiyoda Electronic Equipment Co., Ltd.¥1,470¥1,43818%
Nippon Denka Industries¥1,036¥99513%

The company has developed a medium-to-long term plan of pushing global growth beginning in 2017 called “Change100” [google translate].

The company aims to break away from mere switch sales, from the “design process” of Kawakami to “production process” of the downstream.

This 4-year initiative to accelerate international growth is not gaining traction, based on the numbers. Management has sited a slowdown in China and trade disputes as headwinds. They also point to increasing raw material costs, rising labor costs (in China and Japan), and costs due to the “Mactan plant construction”.

Because of this, the company has lowered their 4-year goal from ¥10 billion in revenue and a 10% operating margin to ¥9 billion in revenue and a 7.8% operating margin (¥700 million). As of recent annual report, order backlog is at ¥8.4 billion.

Reverse stock split 1-10 in 2017

The company holds ~¥1 billion in common securities which is ~10% of TBV.

The company owns rental real estate that generated non-operating income of ¥10 million in 2018 and has an estimated market value of ¥391 million which is ~4% of TBV.


Disclosure: We own shares in NKK Switches Co Ltd (6943:TYO)

Marufuji Sheet Piling Co Ltd (8046:TYO)

Recent Share Price: ¥2,200

Accounting: Japanese Accounting Standards

Fiscal Year: Mar. 31st

Market Cap: ¥8.8 billion ($81 million)

Industry: Basic Materials / Construction Material Wholesale

Marufuji Sheet Piling Co., Ltd. is a wholesaler of construction materials. They sell, store and transport items such as, steel sheet piles, steel plates, H-shaped steel, architectural steel processed products and reinforced soil wall products.

It operates through the following divisions: Sales, Factory, and Transportation.

  • The Sales division engages in the procurement and sale of steel and construction materials.
  • The Factory division manages the production, processing, and maintenance of construction-related products.
  • The Transportation (Fuji Transport) division provides product transportation services.
JPY (in Million)2017%2018%
Transportation Contract3,0099.1%3,1129.4%
Processing Consignment2,6378%2,5907.9%

The company was founded by Ryozo Fujimori in 1926 and is headquartered in Tokyo, Japan.

Their largest customer is Kajima Corporation, (one of oldest and largest constrution companies in Japan), which represented a little over 15% and 10% of total revenue in 2017 and 2018, respectively.

The company has two pieces of investment property on their books (¥1.5 billion) which they do not use in normal operations. One (land only) in the Kanagawa Prefecture and the other (land and building) in Fukushima Prefecture. Company also has ¥1 billion in LT Investments.

The Tokyo Olympics (2020) is putting added doubts in the near-term prospects, as investors may be concerned with possible lack of new projects. Low insider ownership is another concern.

In 2017, did a 1:10 reverse split. In 2018, bought back shares and put in treasury.

In the end, too cheap to ignore.


Disclosure: We own shares in Marufuji Sheet Piling Co Ltd (8046:TYO