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T. Rowe Price Japan Fund’s Top Five Third Quarter Picks

October 17, 2013
Monica Wolfe

Monica Wolfe

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Over the third quarter the T. Rowe Price Japan Fund purchased 14 new stocks. This brought the total number of stocks held by them to 93 stocks valued at $285 million. This fund seeks long-term growth of capital through investments in common stocks of companies located in Japan.

The following five companies represent T. Rowe Price Fund’s top five stock holdings.

Toyota Motor Corp. (TSE:7203)

T. Rowe Price Japan Fund’s largest position is in Toyota Motor Corp. The fund currently holds on to 218,400 shares of the company’s stock, representing 4.9% of the fund’s total portfolio and 0.01% of the company’s shares outstanding.

Over the past quarter, the T. Rowe Price Fund purchased 4,700 shares of Toyota, representing a 2.2% increase in their holdings. They purchased these shares at an estimated average quarterly price of ¥6273.02. Since then the price per share has increased about 1.9%

T. Rowe Price has held Toyota Motor since 2012Q2 and has seen average gains of 71%. The fund’s historical holding history of Toyota:

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Toyota Motor conducts its business in the automotive industry as well as the finance and other industries. The company’s automotive operations include the design, manufacture, assembly and sale of passenger cars, minivans and commercial vehicles.

Toyota Motor’s historical revenue and net income:

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The top three guru shareholders of Toyota Motor are:

· David Herro: with 3,981,000 shares, representing 1.5% of his portfolio and 0.13% of the company’s shares outstanding.

· Causeway International Value: with 1,314,000 shares, representing 3.2% of their assets managed and 0.04% of the company’s shares outstanding.

· T. Rowe Price Japan: with 218,400 shares, representing 4.9% of their total portfolio and 0.01% of the company’s shares outstanding.

The Peter Lynch Chart suggests that the company is currently overvalued:

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Toyota Motor has a market cap of ¥20247.25 billion. Its shares are currently trading at around ¥6390 with a P/E ratio of 16.60, a P/S ratio of 0.89 and a P/B ratio of 1.57. The company had an annual average earnings growth of 17.30% over the past five years.

Mitsubishi UFJ Financial Group (TSE:8306)

T. Rowe Price maintains its second largest position in Mitsubishi Financial Group. The fund holds on to 1,672,900 shares, representing 0.01% of the company’s shares outstanding and 3.8% of the fund’s total portfolio.

During the third quarter T. Rowe increased its position in Mitsubishi by 37.62%. The guru fund purchased a total of 457,300 shares in the third quarter price range of ¥576 to ¥674, with an estimated average quarterly price of ¥627.17 per share. Since then the price per share has increased about 0.9%.

T. Rowe Price Japan Fund’s historical holding history:

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Mitsubishi UFJ Financial Group is the holding company for The Bank of Tokyo-Mitsubishi UFJ, Mitsubishi UFJ Trust and Banking Corporation, Mitsubishi UFJ Securities Holding, Mitsubishi UFJ Morgan Stanley Securities, Mitsubishi UFJ NICOS, and other companies engaged in the financial businesses.

Mitsubishi’s historical revenue and net income:

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The only two guru shareholders of Mitsubishi Financial are T. Rowe and Matthews Japan Fund.

The analysis on Mitsubishi Financial reports that the price is nearing a 3-year high, its revenue has been in decline over the past three years and its cash flow from operations has a severe divergence from the reported net income.

The Peter Lynch Chart suggests that the company is currently undervalued:

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Mitsubishi UFJ Financial Group has a market cap of ¥8961.53 billion. Its shares are currently trading at around ¥633 with a P/E ratio of 8.00, a P/S ratio of 2.24 and a P/B ratio of 0.76. The company’s dividend yield is currently at 2.00%.

SOFTBANK Corp (TSE:9984)

T. Rowe’s third largest position is in SOFTBANK Corp. The fund holds on to 157,300 shares of the company’s stock. Their position in the company represents 3.8% of their total portfolio.

During the third quarter the fund upped their stake in the company 5.29% by purchasing a total of 7,900 shares. T. Rowe purchased these shares in the third quarter price range of ¥5680 to ¥6980, with an estimated average quarterly price of ¥6333.17, with an estimated average quarterly price of ¥633.17. The price has since then increased approximately 14.3%.

T. Rowe’s historical holding history of SOFTBANK:

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SOFTBANK serves the computer industry by providing information infrastructure and distribution services. It also invests in and maintains a portfolio of Internet-related ventures. The firm holds stakes in more than 400 Internet companies.

SOFTBANK’s historical revenue and net income:

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T. Rowe Price Japan Fund and the Matthews Japan Fund are the only guru-ranked funds that maintain a position in SOFTBANK.

The only warning sign for SOFTBANK reports that the company’s Piotroski F-Score is High, indicating that the company is in a very healthy situation.

Softbank has a market cap of ¥8626.46 billion. Its shares are currently trading at around ¥7240.00.

Honda Motor (TSE:7267)

The fund’s fourth largest position is in Honda Motor where they hold on to 240,700 shares of the company’s stock. Their holding represents 3.2% of their total portfolio and 0.01% of the company’s shares outstanding.

During the third quarter T. Rowe upped their stake 2.25% by purchasing 5,300 shares. They purchased these shares in the price range of ¥3545 to ¥3900, with an estimated average quarterly price of ¥3770.24. Since then the price per share has increased about 4%.

T. Rowe Price Japan Fund’s historical holding history:

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Honda Motor develops, produces, and manufactures motor products, including small general-purpose engines and scooters and specialty sports cars. Its business segments are the motorcycle business, automobile business, financial services business and power product and other businesses.

Honda Motor’s historical revenue and net income:

1381954755472.png

The top three guru shareholders of Honda Motor:

· David Herro: with 9.2 million shares, representing 0.51% of the company’s shares outstanding and 2.1% of his total portfolio.

· Tweedy Browne Global Value: with 1,577,500 shares, representing 0.09% of the company’s shares outstanding and 1.2% of the fund’s assets managed.

· Matthews Japan Fund: with 302,100 shares, representing 0.02% of the company’s shares outstanding and 4.2% of its total portfolio.

The Peter Lynch Chart suggests that the company is currently overvalued:

1381954793370.png

Honda Motor has a market cap of ¥7065 billion. Its shares are currently trading at around ¥3920.00 with a P/E ratio of 19.70, a P/S ratio of 0.69 and a P/B ratio of 1.40. The company had an annual average earnings growth 1.30% over the past 10 years.

Japan Tobacco (TSE:2914)

T. Rowe’s fifth largest position goes to Japan Tobacco where the fund holds on to 241,000 shares of the company’s stock. This position makes up of 3.1% of their total portfolio and 0.01% of the company’s shares outstanding.

During the third quarter T. Rowe purchased 5,400 shares at an estimated average quarterly price of ¥3525.63 per share. Since their increase the price per share has dropped a slight -0.2%.

T. Rowe’s historical holding history:

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Japan Tobacco is engaged in the tobacco business. It operates in the following business segments: Japanese Domestic Tobacco business and the International Tobacco business.

Japan Tobacco’s historical revenue and net income:

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T. Rowe Price Japan Fund is the only guru rated fund that currently holds a stake in Japan Tobacco.

The analysis on Japan Tobacco reports that the company’s revenue has been in decline over the past five years, its operating margin is expanding and its price is nearing a 10-year high.

The Peter Lynch Chart suggests that the company is currently undervalued:

1381956345493.png

Japan Tobacco has a market cap of ¥6397.56 billion. Its shares are currently trading at around ¥3520.00 with a P/E ratio of 18.40, a P/S ratio of 3.06 and a P/B ratio of 3.31. The company had an annual average earnings growth of 1% over the past ten years.

Check out T. Rowe Japan Fund’s complete third quarter portfolio here.

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