Recent Share Price: ¥296
Est Market Cap: ¥5.7 billion ($53 million)
Accounting: Japanese Accounting Standards
Fiscal Year: March 31
Nichiwa Sangyo Co., Ltd. is a Japan-based company mainly engaged in the manufacture and sale of feed mixtures with grains as the main ingredient, for chicken rearing, pig rearing, cow rearing and fish rearing. The Company operates in two business segments.
- Feed (96% Revenue)
- engaged in the manufacture and sale of feed mixtures for livestock farming and fish rearing, as well as the purchase and sale of livestock products.
- Livestock (4% Revenue)
- engaged in the production of chicken eggs and piglets, as well as the rearing of pigs.
The company, founded in 1924, is headquartered in Kobe, Japan.
Margins are razor thin in the feed business and are heavily dependent on prices, (including effects of FX), of U.S. corn, the primary ingredient in their feed, and to soybean meal, an auxiliary ingredient, which is sourced mainly from the U.S. and, to some degree, from South America. Based on their 2016 Annual Report, sales in feed volume increased 12.6%, which revenue increased 12.3% — revealing some pricing pressure.
Insider Ownership
There does not appear to be any significant insider ownership.
| Full name or name | Number of Shares Held (Co.) | Ratio (%) |
| Toyota Tsusho Co., Ltd. | 1,362,000 | 6.54 |
| Tohoku Grain Terminal Co., Ltd. | 1,153,000 | 5.54 |
| (Ltd.) Cargill Japan | 1,000,000 | 4.80 |
| (Ltd.) Minato Bank | 963,200 | 4.62 |
| Co., Ltd. of Tokyo-Mitsubishi UFJ Bank | 923,313 | 4.43 |
| Sumitomo Mitsui Banking Corporation | 923,022 | 4.43 |
| Hyogo Prefecture credit Federation of Agricultural Cooperatives | 849,000 | 4.08 |
| Mitsui Sumitomo Insurance Co., Ltd. | 827,022 | 3.97 |
| Satosangyo (Ltd.) | 535,434 | 2.57 |
| Pacific Grain Center Co., Ltd. | 501,000 | 2.41 |
The basic policy of the company is to pay dividends once a year as the year-end dividend and to pay interim dividends, if possible.
Shares Outstanding, of 20,830,825, less Treasury Shares, of 1,518,500, equates to net shares outstanding of 19,312,325.
| *in millions | 3/31/15 | 3/31/16 | 3/31/17 | 12/31/17 |
| Cash and Short-term Investments | ¥6,648 | ¥7,189 | ¥10,089 | ¥10,022 |
| (0.75 * Accounts Receivable) | ¥7,736 | ¥6,934 | ¥6,100 | ¥7,251 |
| (0.5 * Inventory) | ¥1,126 | ¥1,111 | ¥953 | ¥1,168 |
| Total Liabilities | ¥10,864 | ¥10,475 | ¥10,092 | ¥11,323 |
| NNWC | ¥4,646 | ¥4,759 | ¥7,050 | ¥7,118 |
| NCAV | ¥8,873 | ¥8,991 | ¥10,399 | ¥11,151 |
| NCAV + LT Investments | ¥9,416 | ¥9,385 | ¥10,911 | ¥11,151 |
| TBV | ¥16,191 | ¥16,491 | ¥16,812 | ¥17,266 |
| Enterprise Value | ¥(960) | ¥357 | ||
| Retained Earnings | ¥12,785 | ¥13,130 | ¥13,130 | |
| Dividend Payout | ¥(97) | ¥(97) | ¥(96) | ¥- |
| Shares Outstanding | 19,312,325 | 19,312,325 | 19,312,325 | 19,312,325 |
| P / NNWC | 101% | 95% | 63% | 80% |
| P / NCAV | 53% | 50% | 43% | 51% |
| P / NCAV + LT Investments | 50% | 48% | 41% | 51% |
| P / TBV | 29% | 27% | 26% | 33% |
| NCAV Burn Rate | 17.7% | 1.3% | 15.7% | 7.2% |
| Debt / Equity | 28.2% | 27.7% | 27.2% | 26.4% |
| F-Score | 9 | 7 | 7 | |
| FS-Score | 10 | 7 | 8 | |
| Z-Score | 3.0 | |||
| Beneish M-Score | (3.1) | |||
| EV / Operating Income (5yr) | 0% | |||
| EV / Operating Income (10yr) | 0% | |||
| Operating Income (10yr) | ¥2,467 | |||
| Operating Income (5yr) | ¥2,445 |
Write-Ups:
Motiwala Capital 2017 Annual Letter
Bargain Hunter here
Disclosure: We own shares in Nichiwa Sangyo Co Ltd (2055:TYO)
Leaven Partners 