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


Sears Hometown and Outlet Stores Inc (SHOS:NAQ)

Recent Share Price: $2.18

Average Purchase Price: $1.85

Accounting: US GAAP

Fiscal Year: Feb. 2nd

Market Cap: $49.5 million

I’ve been working on this as my next post, but due to the recent change of events, I will post this as it is and move on. I tried to avoid this stock (and the Sears empire for that matter) for as long as I could due to its perennial history as a value destroyer. But I heard a presentation by Ryan O’Conner at Crossroads Capital last year that nudged me into changing my mind. The three drivers that made me more comfortable at the time were: (1) the inventory on the books has a stronger floor valuation compared to most retailers, (2) the outlet business is a decent business hidden by a really bad hometown business, and most important (3) the closing of the hometown locations do not appear to be costly and free up working capital.

But in the end (as he has a history of showing), Eddie Lampert does not appear to be concerned with maximizing shareholder value, but is more interested in maximizing ESL. The next Warren Buffett? Unless his idea of playing the long game is a generational long game, it sure doesn’t look like it.

Although the returns should work out for us, I think this was a bad decision on my part. There is a long list of not-so-good treatment of shareholders at Sears Holdings (that I was fully aware of) that should have kept me from buying this stock.

A buyout at $2.25 is highway robbery. But I should be thankful they didn’t drive the stock to $0.50 and buy it then or do a takeunder.

Sears Hometown and Outlet Stores, Inc. is a national retailer focused on selling home appliances, lawn and garden equipment, tools, and hardware.

The Company operates through two segments:

  • Sears Hometown and Hardware segment (Hometown)
    • Its Hometown stores are designed to provide its customers with in-store and online access to selection of national brands of home appliances, lawn and garden equipment, tools, sporting goods, and household goods. Hometown segment included 497 dealer-operated stores, 18 franchisee-operated stores, and 34 Company-operated stores, including all eight Buddy’s Home Furnishing Stores.
  • Sears Outlet segment (Outlet).
    • Its Outlet stores are designed to provide in-store and online access to purchase outlet-value products across a range of merchandise categories, including home appliances, mattresses, apparel, sporting goods, lawn and garden equipment, tools, and other household goods, including furniture. Five of the 128 Sears Outlet stores were operated by franchisees.

SHOS became a publicly held company following their October 11, 2012 separation from Sears Holdings Corporation.

Sears Holdings

In 2015, Seritage Growth formed and purchased 235 properties from Sears Holdings and leased all of them (except for the eleven third party properties) back to Sears Holdings, and also purchased the JV Interests.

Following the Chapter 11 bankruptcy filing of Sears Holdings on October 15, 2018, Transform Holdco LLC (“New Sears”) purchased substantially all of the assets owned by Sears Holdings for $5.2 billion. The new company is owned by Edward Lampert’s ESL Investments.

As the folly continues, Old Sears is suing New Sears.

Sears Holdings has been the textbook value trap, even for the most sophisticated value investors. For example, Chou Associates put nearly $50 million into SHLD beginning in 2005. I was interested to learn, however, that the investment was nearly only dead money (not including opportunity cost) due to the material earnings on lending their stock out for short selling.

Chou Associates 2018 Annual Report

Eddie Lampert has a hall-of-fame track record. And when Eddie merged K-mart with Sears, I think value investors assumed Eddie would focus on increasing shareholder value via asset conversion. I don’t think anyone was expecting Eddie to use the assets in an attempt to do a turn-around.

Bruce Berkowitz has been a long time believer in the value opportunity at Sears Holding, but has recently thrown in the towel as well.

Management has given up on Hometown

The Hometown segment has experienced multiple successive years of operating losses that have continued, and are continuing, to worsen. For SHO’s 2014 fiscal year the Hometown segment’s operating loss was $11.9 million, excluding the impact of goodwill impairment. The segment’s operating losses have grown each year since then, and the segment suffered an operating loss for our 2018 fiscal year of  $58.3 million. […] SHO believes that these cost increases and Kenmore and Craftsman availability issues are unlikely to improve in the near term and perhaps longer. We also believe that we have exhausted all of the means at our disposal to turn the segment’s businesses around. We also believe that, regardless of our commercially reasonable efforts to improve the Hometown segment’s operating results (which efforts we intend to continue), the segment likely will continue to experience operating losses.

2018 10-K

Freeing up working capital

Store Activity: 
In the third quarter of 2016, we opened four new stores and closed 12 under-performing stores in Hometown. For the first three quarters of 2016, we opened six stores and closed 51 stores in Hometown and had no openings or closures in Outlet. The Hometown closures, which unfavorably impacted EBITDA $0.6 million during the first three quarters of 2016, are largely part of our previously disclosed intent to close the portion of our Hardware stores and Home Appliance Showrooms that have historically underperformed. We continue to take proactive steps to make the best use of capital and reduce costs. In the fourth quarter of 2016, we anticipate closing approximately 100 locations (90 Hometown segment; 10 Outlet segment) resulting in one-time charges of $17.0 million to $19.0 million related to inventory markdowns, future rent obligations, and impairment of fixed assets. These closings will also free up approximately $30.0 million to $40.0 million of net working capital that can be used more productively.

2016 Third Quarter Press Release


On April 5, the company received a proposal from Eddie Lampert, via Transform Holdco LLC, an entity affiliated with the company’s majority stockholder ESL Investments, to acquire all of the outstanding shares of the company’s common stock not already owned by ESL and its affiliates for a purchase price of $2.25 per share.

This has to be considered a low-ball offer and certainly not in the interest of existing shareholders. I view this offer as another strike against Eddie. (I assume he wants to use Transform Holdco instead of ESL for tax reasons, i.e., to better utilize the NOLs.)

The company granted a special committee of independent directors (Kevin Longino, William Phelan and David Robbins) exclusive authority to review and evaluate the proposal.

The special committee countered at $9.50 per share, which ESL Investments considered “unrealistic”. In addition, the special committee and board communicated to ESL Investments, that, absent a deal, they would move to liquidate the Hometown Division. This must have been a hail-Mary plan, in the hopes of pushing Eddie towards a more reasonable number.

Not surprisingly, on April 15, ESL Investments stepped in and fired board members William Phelan and David Robbins, replacing them with Alberto Franco and John Tober. In addition, they amended the by-laws to prevent any future liquidation without better board representation.

From current Proxy


Completed the sale of a property in Newington, Connecticut. The sale price of the property was $2.8 million net of closing costs, and recorded a gain on the sale of approximately $1.4. Did not sell any owned property in fiscal 2017. There remain a few pieces of hidden property for sale.


  1. Eddie comes in with another low ball offer
  2. See #1


Multiple write-ups on VIC

csinvesting blog [here]

Disclosure: We currently own shares, but are in the process of closing our position. I don’t see the probablity of the buyout going above $2.25 to be very high.

Hengdeli Holdings Ltd (3389:HKG) (HENGY:OTC)

Recent Share Price: HK$0.41

Accounting: Hong Kong Accounting Standards

Fiscal Year: Dec. 31st

Market Cap: HK$1.6 billion ($238 million)

5 Year
3 Year

Hengdeli Holdings Limited operates a retail network comprising: Elegant (high-end brands, acquired 2006), Hengdeli/Watchshoppe (mid-end and mid-to-high-end brands) and single-brand boutiques. Hengdeli has 67 retail outlets, selling watches from more than 50 internationally renowned brands in Hong Kong, Macau (2010), Taiwan (2009) and Malaysia (2018). They also provide integrated after-sales warranty maintenance.

Hengdeli has a strong and intergrated relationship with SWATCH Group, LVMH Group, Richemont Group and Kering Group.

Hengdeli is heavily tied to the Hong Kong market, which has recently seen an improvement in demand.

Recent History


Acquired the watch business of Watchshoppe, a well-known local watch retailer in Malaysia, thereby expanding its operations to Southeast Asia.


Announced in late 2016, plans to sell majority of buisiness. The deal was fair-ish for existing shareholders with the deal valued at approximately one times net asset value.

Sold its mainland Chinese business and it low-end watch and jewelry business in Hong Kong (Harvest Max) to Yu Ping Zhang, the chairman and contolling sharehoder for RMB 3.5 billion. The valuation was based on the unaudited net asset value of the Disposal Group of approximately RMB5.1 billion and the minimum Dividend Payout of RMB1.6 billion. Profit before tax for the disposal group in 2014 and 2015 was RMB 678 million and RMB 365 million, or 5x EBT and 9x EBT respectively.

The proceeds were used to retire USD denominated debt and to pay a special dividend of HK$0.20 per share.


Share price was pushed lower following a report in Next magazine which questioned the following:

  1. Some of the store outlets were either nonexistent or not branded as company stores.
  2. There was negative operating cash flow between 2006–2008 and 2010 despite being profitable.
  3. The company had lost key distribution licenses and exclusive rights for brands like Omega, Rado, Bucherer, Audemars Piguet, Fendi, and Dior.
  4. The company raised US$350 million of senior notes despite holding 3.4 billion yuan in cash as of June 30, 2012.
  5. The company has invested in a bond of 259 millon yuan with an interest rate of 13 percent.
  6. The company made three short-term loans amounting to 720 millon yuan at an interest rate of 11–18 percent.
  7. The chairman has pledged its shares to Swatch for a three-year US$100 million loan for his private business

Bloomberg wrote a follow up article in which Nick Hayek, chief executive officer of Swatch, denied the claim that relationship with Hengdeli was compromised.

Insider Ownership

Yu Ping Zhang1,585,556,50134.00%
Jinbing Zhang452,968,0009.71%
The Swatch Group AG437,800,0009.39%
LVMH Moët Hennessy Louis Vuitton SE230,280,4004.94%
Yong Hua Huang52,172,8001.12%



value and opportunity [here]

Disclosure: We own shares in Hengdeli Holdings Ltd (3389:HKG) (HENGY:OTC)

Sasakura Engineering Co Ltd (6303:TYO) (SKENF:OTC)

Recent Share Price: ¥2,550

Accounting: Japanese Accounting Standards

Fiscal Year: Mar. 31st

Market Cap: ¥7.9 billion ($70 million)

Sasakura Engineering Co., Ltd. is a Osaka-based company engaged in the marine vessel equipment business. Founded in 1949, the company operates in five business segments:

  • The Marine Vessel Equipment segment (¥1,240M Revenue, ¥149M OI) manufactures and sells seawater desalination equipment, heat exchangers, sewage treatment equipment, oily water separators, liquefied natural gas (LNG) ship use ultracold butterfly valves and others.
  • The Land Equipment segment (¥1,494M Revenue, ¥145M OI) manufactures and sells air-cooled heat exchangers, land use ultracold butterfly valves, heat pipe cooling rolls and others.
  • The Water Treatment Equipment segment (¥1,177M Revenue, ¥351M OI) manufactures and sells seawater desalination equipment for land use, reverse osmosis water processors, evaporative concentration devices, ozone evolution devices and others.
  • The Sound Deadening and Air Conditioning Equipment (¥1,109M Revnenue, ¥32M OI) segment manufactures and sells noise control equipment, equipment for ice thermal storage tank systems use and others.
  • The Others segment operates parking lots rental business.
Revenue (in Million)2017
Middle East¥1311.30%¥5104.80%
Published 2016

President, Toshihiko Sasakura, age 65, owns ~48% of common stock.

Largest customer, ~11% of total revenue, is Hitachi Zosen Co. Ltd.

Recent History


Established Sasakura Taiwan Co., LTD.

Began manufacture and sales of Fresh Water Generator series X

Obtained an order for rehabilitation of Al-Jobail Phase 2 C4 MSF Desalination Plant from SWCC of Saudi Arabia


Obtained an order for Expansion of the Existing Shoaiba Phase 2 Desalination Plant (MED-TVC–Type Desalination Plant, 91,200T/D×1 unit) from SWCC of Saudi Arabia


Acquired ALQ Environmental Engineering Co., Ltd. (currently Sasakura ALQ Acoustic Engineering Co., Ltd.) as a consolidated subsidiary.

Launched the Association of Radiant Cooling and Heating Systems of Japan (ARCH) with Toyox Co., Ltd., Inter Central, Inc. and Kubota ChemiX Co., Ltd.


Acquired Arabian Company and Sasakura for Water & Power (currently Sasakura Middle East Company) as a subsidiary through further acquisition of shares.

The Vapor-Compression device with distillation tower, developed in cooperation with Nippon Refine Co., Ltd. won both the Technology Award from the Society of Separation Process Engineers, Japan (SSPEJ) in May, and the Chairman’s Award from the Japan Society of Industrial Machinery Manufacturers (JSIM) in June.

Reverse 1:5 stock split


Company states, “to improve asset management and efficiency” the company has liquidated some of its investment holdings. In most recent quarter reported extraordinary gain of ¥898 million on sale of 3 listed securities (11% of current market cap; cash generation on sale was probably in the range of ¥2 billion). Post-liquidation, the balance sheet reports ¥1,480 million of investment securities held.

It appears recent results have been dragged by poor performance in Saudi Arabia, due to, what appears to be, conservative accounting for loss reserves on their large projects. For the first 3 quarters, a y/y comparison shows a loss of -¥64 million last year versus a gain of ¥558 million this year. This variance appears to be primarily due to their write down of loss reserves of ¥348 million; which appears to show up in higher revenue recognition, whereby improving gross margins materially. Their Land Equipment division also materially contributed to their improvement in operating income.

For the first 3 quarters, y/y, core business orders are up 11.2%; sales are up 2.7%; and order backlog is up 11.8%.


The bottom of the shipbuilding industry looks to be 2016; it appears things are improving for LNG and for shipbuilding in general. For Sasakura, the recovery is slow, but hopefully this provides added stability for the segment.

The company is pushing for inroads into the Chinese market for water treatment via their Tawainese subsidiary. This could lead to some areas of unexpected upside.

From what I can gather, there do not appear to be any major projects scheduled for the Middle East.

All told, the company looks safe and cheap and appears to be doing things that will increase shareholder value.



Bargain Hunter [here]

Disclosure: We own shares in Sasakura Engineering Co Ltd (6303:TYO)

Kawagishi Bridge Works Co Ltd (5921:TYO) (KGBGF:OTC)

Recent Share Price: ¥2,500

Accounting: Japanese Accounting Standards

Fiscal Year: Sept 30th

Market Cap: ¥7.5 billion ($68 million)

Kawagishi Bridge Works Co., Ltd. is a Japanese industrial focused on the design, manufacturing, and site construction of steel frames for steel structures. In addition to the site construction work in eastern Japan, the Company is also involved in the manufacture and sale of precast concrete (PC) products.

The company operates 5 plants for Steel Frame and 1 plant for Precast Concrete.

Segment Revenue20172018
Steel Frame¥18,72395.6%¥24,24294.2%
Precast Concrete¥8644.4%¥1,5045.8%
Steel Frame¥17,06491.2%¥15,39497.9%
Precast Concrete¥1,6408.8%¥3372.1%

Recent History


Announced Reverse 1-to-5 stock split effective March 28.

Insider Ownership

Executive Shareholders
Ryuichi Kawagishi (Chairman)82,4002.75%
Hideo Kanamoto (President)3,5000.11%

At fiscal year-end, investments in passive stocks (17) totaled ¥906 billion.

In addition to stock holdings, the company reports that it owns rental property with a fair market value (calculated by the Company based on the property tax valuation) of ¥1.2 billion.

At ¥2.1 billion, this represents approximately 30% of the current market cap. Although company makes no claim for liquidaion, the passive holdings provide sizable financial safety.


Disclosure: We own shares in Kawagishi Bridge Works Co Ltd (5921:TYO)

Nakakita Seisakusho Co Ltd (6496:TYO)

Recent Share Price: ¥2,790

Accounting: Japanese Accounting Standards

Fiscal Year: May 31st

Market Cap: ¥10.7 billion ($97 million)

NAKAKITA SEISAKUSHO CO., LTD. is a Japanese manufacturer of automatic control valves, butterfly valves and remote controllers for ships and power plants. The Company offers three types of products:

  • Automatic Control Valves (41% Revenue)
    • which include auto actuated valves, servo actuated control valves, remote control valves, cylinder valves, safety valves, air purge-type automatic regulatory equipment, actuators, valves for nuclear plants, superheated steam pressure reducers and attemperators, other special automatic control valves and controlling equipment;
  • Butterfly Valves (32% Revenue)
    • which include manual butterfly valves, remote control butterfly valves, and butterfly valves for low-temperature use
  • Remote Control Devices (27% Revenue)
    • which include cargo handling and ballast remote controllers and remote water level indication and warning equipment for ships.
Plant / ShipUseKind of product
For Plant・Power Plant
・Steel Works
・Desalination Plant
・and etc.
・Control / Shut-off Valve
・Butterfly Valve
For Ship・Cargo line
・Ballast line
・Butterfly Valve
・Valve Remote Control System
・Level Gauging System
・In Engine Room ・Control / Shut-off Valve
  • Number of employees : 346 people.

Recent History


1 for 5 reverse stock split

Capital Allocation

The company has a stated goal of a dividend payout ratio of at least 40%. In the past 3 years, the company has paid out ¥1.3 billion (~12%) in dividends and has bought back over ¥330 million (~3%) in stock.

Regarding the distribution of profits to shareholders, we aim to maintain a steady dividend, and we will strive to achieve the results of that period and forecasts for the following year […] In addition, the Company acquires treasury stock as part of returning profits to shareholders. Although we have reviewed and implemented cancellation and retirement, we would like to consider buying tremendous treasury stock in the future.

2018 Annual Report (Google Translate)

Insider Ownership

Insiders own over 30% of shares outstanding.

Miyata Family 442,00011.50%
Kenichi Nakakita,264,4006.90%
Akihisa Miyata,114,0002.97%
Ikuko Watanabe 114,0002.97%
Tomoko Kurota 114,0002.97%
Hiroko Nakakita 114,0002.97%
Kazuko Miyata 109,0002.84%
Hiroaki Miyata 106,0002.77%
Sumitomo Mitsui Financial Group, Inc.86,0002.24%

Equity Holdings

The company holds over $6 million in stock.

Maruichi Steel Tube Ltd (5463) 120,000 $3,765,622 
KOKUYO CO., LTD. (7984) 72,200 $1,049,457 
KIMURA CHEMICAL PLANTS CO., LTD.(6378) 270,000 $860,714 
Kobelco Eco-Solutions Co Ltd (6299) 40,000 $539,757 
HYOKI KAIUN KAISHA, LTD. (9362) 10,300 $124,809 
Mitsui OSK Lines Ltd (9104) 2,693 $58,508 
Sumitomo Mitsui Trust Holdings Inc (8309) 633 $23,057 
JSR Corp (4185) 1,063 $15,932 
Sanoyas Holdings Corp (7022) 2,640 $4,112 
Naikai Zosen Corporation (7018) 100 $1,246 


Disclosure: We own shares in Nakakita Seisakusho Co Ltd (6496:TYO)

Merchant House International Ltd (MHI:ASX)

Recent Share Price: A$0.12

Accounting: International Financial Reporting Standards

Fiscal Year: Mar. 31st

Market Cap: A$10.8 million ($7.8 million)

Merchant House International Ltd. engages in the design, manufacture, and marketing of home textiles and footwear products.  They are incorporated in Bermuda, listed in Australia, and domiciled in Hong Kong.

It operates through the following segments:

  • The Home Textile segment primarily manufactures kitchen textiles and table linens for import and export.  The Group’s Carsan textile factory in Shunde, China is 100% owned, has been in operation since 2002 employing over 600 workers. In 2017, the company acquired a facility in the U.S. to manufacture textiles, (primarily kitchen and bath towels).
  • The Footwear Trading segment exports work boots and safety shoes. In China, the division operates mainly through 2 Tianjin joint venture factories, (listed on the books at A$11 million).
  • The Footwear Manufacturing segment produces work boots and safety shoes in U.S. and sells directly to domestic customers. Their 2014 Tennessee factory supplies safety boots through direct injection molded soles.

The company was founded by Bic Hing Lee in 1978 and is headquartered in Hong Kong.  Loretta Lee owns 52% of the company.

If the company can right the ship on the footwear manufacturing division, the company would return to profitability.

The Bristol facility is also an unknown.

Sales per Businesses    
 2017 2018 
AUD (in Million) % %
Home Textile40.2355.30%40.2463.30%
Footwear Trading31.6843.50%20.4132.10%
Footwear Manufacturing1.031.40%2.874.50%
Sales per Regions    
 2017 2018 
AUD (in Million) % %
United States71.3398%63.299.50%
China/Hong Kong0.1270.20%0.0370.10%

Recent History


Company guides (for FY2019, ending March 31) at a loss of A$1,000,000 (US$750,000) due to execution issues at Footwear Industries in Tennessee (FIT).


Footwear Trading (Forsan shoe division) was down y/y due to the company’s decision to resign from retailers which are having financial difficulties, (which I assume to be Sears), and “giving up on the low-end margin product lines and moving toward higher value, branded products”. Net profit was A$0.27 million.

Footwear Manufacturing (Footwear Industries of Tennessee) suffered a loss of A$3.3 million reflecting “weak management, and lack of worker training and productivity”.

While the loss was as projected, the plan is for Hong Kong management to take a more active role in overseeing this business. […] For Footwear Industries of Tennessee improving the management will be our top priority in 2018. Numerous American brands continue to be interested in our factory, and we currently have more orders than we can fulfill.

Home Segment recorded profit of A$3.2 million in FY2018.

American Merchant Inc, (Bristol, VA facility) placed orders for the major weaving and finishing equipment which will begin to be delivered in the fourth quarter of this year. Some renovation on the existing building is currently taking place; they anticipate production will begin in the first quarter of 2019. [article]

During the year, the Group spent A$3.4 million (2017: A$1.5 million) on acquisition of property, plant and equipment and A$3.0 million (2017: A$nil million) on other assets under development, mainly for land and building and machineries of US wholly-owned subsidiary, American Merchant Inc.


Acquired plant for $1.9 million in Bristol, VA, for textile manufacturing.  The company expects to invest $19.9 million to get the facility up and running.  The 260,000 sq/ft facility is expected to employ 405 employees.


Discontinued Dividend.


Purchased a 40,000 square foot building in the Jefferson City Industrial Park where it produces men’s leather boots and shoes.   The initial investment, to acquire and equip the plant in Jefferson City,  was $5 million and employs 50 people. [WSJ article]


Blog Posts

Disclosure: We own shares in Merchant House Int’l (MHI:ASX).