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Japan-Focused Matthews Fund's Top Five Stocks of the First Quarter

Monica Wolfe

Monica Wolfe

119 followers
Matthews Japan Fund (Trades, Portfolio) is a fund which focuses on gaining long-term capital appreciation by investing at least 80% of its total assets in the common and preferred stocks of companies located in Japan. According to the fund’s website, Matthews Japan seeks to invest in companies capable of sustainable growth based on the fundamental characteristics of the companies, including balance sheet information, number of employees, size and stability of cash flow, management’s depth and financial health. The portfolio managers of the Matthews Japan Fund (Trades, Portfolio) are Taizo Ishida and Kenichi Amaki.

Over the duration of the first quarter the fund added three new stocks to their holdings, bringing the Matthews Japan Fund (Trades, Portfolio) portfolio to 62 stocks valued at $439 million. The following five stocks represent the fund’s top five largest holdings as of the close of the first quarter.

Toyota Motor Corp (TSE:7203)

The fund’s largest holding is in Toyota Motor Corp where they maintain 299,400 shares of the company’s stock. This position represents 3.8% of the fund’s total portfolio holdings and 0.01% of the company’s shares outstanding.

Over the past quarter the fund upped their holdings 24.91% by purchasing 59,700 shares of Toyota stock. They purchased these in the quarterly price range of ¥5425 to ¥6420, with an estimated average quarterly price of ¥5916. Since then the price per share has fallen roughly -4.8%.

Matthews Japan’s historical holding history:

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Toyota Motor conducts business in the automotive industry. It also conducts business in finance and other industries. The company's business segments are automotive operations, financial services operations and all other operations.

Toyota Motor’s historical revenue and net income:

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The analysis on Toyota reports that the company has issued JPY1761.9 billion of debt over the past three years, but that its debt level is acceptable. It also notes that the company’s dividend yield is near a 10-year high, its Piotroski F-Score is high and its P/E ratio is near a 5-year low.

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

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Toyota Motor has a market cap of ¥17846.51 billion. Its shares are trading at around ¥5631 with a P/E ratio of 9.70, a P/S ratio of 0.72 and a P/B ratio of 1.26. The dividend yield of Toyota Motor is 2.66%, and the company had an annual average earnings growth of 19% over the past five years.

Orix Corp (TSE:8591)

The fund’s second largest holding is in Orix where they maintain 1,108,800 shares of the company’s stock. This position makes up for 3.6% of the fund’s total portfolio as well as 0.09% of the company’s shares outstanding.

During the first quarter Matthews Japan upped its stake in Orix 27.54% by purchasing a total of 239,400 shares of the company’s stock. They bought these shares in the quarterly price range of ¥1361 to ¥1847, with an estimated average quarterly price of ¥1564 per share. Since then the price per share has dropped roughly -1.3%.

The fund’s historical holding history:

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Orix Corporation provides various products and services to corporate and retail customers in Japan. Its operations are segmented into six - Corporate Financial Services, Maintenance Leasing, Real Estate, Investment and Operation, Retail, and Overseas Business.

Orix’s historical revenue and earnings growth:

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The analysis on Orix reports that the company’s revenue has been in decline over the past five years, its dividend yield is near a 5-year low and P/E ratio is trading at its historical 1-year low.

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

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Orix Corporation has a market cap of ¥2001.38 billion. Its shares are trading at around 1544 with a P/E ratio of 16.90, a P/S ratio of 2.17 and a P/B ratio of 1.09.

Honda Motor Co (TSE:7267)

Matthews Japan Fund (Trades, Portfolio)’s third largest holding goes to Honda Motor where they maintain 419,100 shares of the company’s stock. This position represents 3.4% of their total portfolio holdings as well as 0.02% of the company’s shares outstanding.

During the first quarter the fund increased their position 38.73% by purchasing 117,000 shares of the company’s stock. They purchased these shares in the first quarter price range of ¥3496 to ¥4330, with an estimated average quarterly price of ¥3816 per share. Since then the price per share has dropped approximately -8.9%.

Matthews Japan’s holding history as of the close of the first quarter:

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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:

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The analysis on Honda reports that the company has issued JPY868.3 billion of debt over the past three years and that it has a poor stock buyback record. On the other hand, it also notes that the company has a high Piotroski F-Score and its P/E, P/B and P/S ratios are all trading near historical lows.

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

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Honda Motor has a market cap of ¥6257.56 billion. Its shares are currently trading at around ¥3472 with a P/E ratio of 13.10, a P/S ratio of 0.54 and a P/B ratio of 1.08. The company’s dividend yield is at 2.00%, and they held an annual average earnings growth of 1.10% over the past ten years.

SOFTBANK Corp (TSE:9984)

The fund’s fourth largest position is in SOFTBANK. Matthews Japan holds on to 190,200 shares of SOFTBANK stock, representing 3.3% of their total portfolio.

During the first quarter the fund upped their holdings 25.71% by purchasing 38,900 shares of the company’s stock. They bought these shares in the quarterly price range of ¥7036 to ¥9200, with an estimated average quarterly price of ¥8032. Since then the price per share is trading down about -2.6%.

Matthew Japan’s historical holding history:

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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.

SOFTBANK’s historical revenue and net income:

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SOFTBANK has a market cap of ¥9316.34 billion. Its shares are currently trading at around ¥7819.

Mitsubishi UFJ Financial Group (TSE:8306)

The fund’s fifth largest position is in Mitsubishi UFJ Financial Group. The fund holds on to 2,631,700 shares of the company’s stock, representing 3.3% of their total holdings and 0.02% of the company’s shares outstanding.

During the first quarter the fund upped their stake 30.73% by purchasing 618,600 shares of Mitsubishi’s stock. The fund purchased these shares near the estimated average quarterly price of ¥612, and since then the price per share has dropped an additional -7.5%.

Matthew Japan’s historical holding history as of the close of the first quarter:

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Mitsubishi UFJ Financial Group is the holding company for several financial services business companies which are engaged in the financial businesses. The company's services include commercial banking, trust banking, securities, credit cards, consumer finance, asset management, leasing and many more fields of financial services and have branches in more than 40 countries.

Mitsubishi Financial’s historical revenue and net income:

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The analysis on Mistusbishi reports that the company’s revenue has been in decline over the past three years and that its P/E, P/S and P/B ratios are all trading near historic lows.

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

1399325224057.png

Mitsubishi UFJ Financial Group has a market cap of ¥8015.25 billion. Its shares are currently trading at around ¥566 with a P/E ratio of 6.20, a P/S ratio of 1.84 and a P/B ratio of 0.63.

Check out the Matthews Japan Fund (Trades, Portfolio)’s complete first quarter holdings here.

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