Charle Co Ltd (9885:TYO)

Recent Share Price: ¥535

Est Market Cap: ¥8.6 billion ($81 million)

Accounting: Japanese Accounting Standards

Fiscal Year: March 31han_title01

Charle Co. Ltd. is a Japan-based company principally engaged in the wholesale of women’s underwear via door-to-door sales (i.e., home party-style fitting sessions) and mail order. The company was founded in 1975 and is headquartered in Kobe, Japan. The company mainly operates in three business segments.

  • Women’s Underwear & Undergarments (78% Revenue)
    • Beginning 1975
  • Cosmetics (15% Revenue)
    • Begining 2010
  • Health Food Supplements & Beauty Products (5% Revenue)
    • Beginning 2014
  • China (2% Revenue)
    • It appears the company may have exited China in 2013, after having set up shop in 2005.  However, they are again reporting numbers for China so they may have changed their minds or started anew.

Recent History

On December 11, 2017, Charle Co. announced 250,000 shares were repurchased for ¥131,500,000 (¥526 per share).

According to the 3Q17 Report ending December 31, 2017, Treasury Stock increased by ¥131 million.

On November 30, 2016, announced 2,770,000 shares were repurchased for ¥1,285,280,000  (¥464 per share).

On September 1, 2016, announced 309,100 shares were repurchased for ¥140,640,500 (¥455 per share).

According to the 2016 Annual Report, 3.079 million shares were repurchased, lowering outstanding common stock from 19.165 million shares to 16.086 million shares outstanding.  In addition, the board retired all treasury stock held by the company (4.948 million shares).

Insider Ownership

The Hayashi Family are the founders of the company.  In 2008, there was a tender offer completed via a Management Buyout involving the Hayashi Family for the parent company of Charle Co. and subsequently appears to have gone private.  Charle Co. was spun out in 2006 and trades independently.  It does not appear that the Hayashi Family takes an active day-to-day role in running Charle Co. However, due to their sizable ownership, I’m sure they remain involved behind the scenes.

Hiroko Hayashi was succeeded as CEO in 2004.

Shareholders
Name Equities %
Masaharu Hayashi 1,508,925 9.38%
Hayashi Family 1,272,432 7.91%
Itsuha Sezaki 1,014,700 6.31%
Katsuya Hayashi 843,500 5.24%
Hiroko Hayashi 797,699 4.96%
Tatsuya Hayashi 651,000 4.05%
Lam’s YK 556,000 3.46%
Tatsuzo Hayashi 476,000 2.96%
Naoki Hayashi 380,000 2.36%

Other

  • Lease obligations at the end of 2016, were ¥16 million.
  • Has a defined contribution pension plan.  The pension appears to be adequately funded with conservative growth estimates.
  • No significant related party transactions.
  • No stock options issued.
In Millions 3/31/15 3/31/16 3/31/17 12/31/17
Cash and Short-term Investments  ¥12,798  ¥13,748  ¥12,408  ¥13,184
(0.75 * Accounts Receivable)  ¥42  ¥41  ¥49  ¥65
(0.5 * Inventory)  ¥1,816  ¥2,107  ¥1,868  ¥1,816
Total Liabilities  ¥3,258  ¥3,049  ¥2,969  ¥3,101
NNWC  ¥11,398  ¥12,846  ¥11,355  ¥11,964
NCAV  ¥13,914  ¥15,542  ¥13,834  ¥14,268
NCAV + LT Investments  ¥15,548  ¥16,640  ¥14,868  ¥14,803
TBV  ¥19,571  ¥20,298  ¥18,682  ¥18,606
Enterprise Value  ¥(4,169)  ¥(3,155)
Retained Earnings  ¥13,985  ¥11,061  ¥11,087
Dividend Payout  ¥(288)  ¥(345)  ¥(479)  ¥-
Shares Outstanding  19,165,000  19,165,000  16,086,000  15,836,000
P / NNWC 81% 73% 66% 70%
P / NCAV 66% 61% 54% 59%
P / NCAV + LT Investments 59% 57% 51% 57%
P / TBV 47% 46% 40% 45%
NCAV Burn Rate 13.1% 11.7% -11.0% 3.1%
Debt / Equity 0.8% 0.4% 0.5% 0.0%
F-Score 7 7 5
FS-Score 7 8 5
Z-Score  4.1
Beneish M-Score  (4.1)
EV / Operating Income (5yr) -89%
EV / Operating Income (10yr) -41%
Operating Income (5yr)  ¥4,663
Operating Income (10yr)  ¥10,287
Untitled
Disclosure: We own shares in Charle Co Ltd (9885:TYO).
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