Nichiwa Sangyo Co Ltd (2055:TYO)

Recent Share Price: ¥296

Est Market Cap: ¥5.7 billion ($53 million)

Accounting: Japanese Accounting Standards

Fiscal Year: March 314179851-1466127266861196

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

nichiwasangyo

Write-Ups:

Motiwala Capital 2017 Annual Letter

Bargain Hunter here

 

Disclosure: We own shares in Nichiwa Sangyo Co Ltd (2055:TYO)

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