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Matthews Japan Fund's Top Second Quarter Holdings

Monica Wolfe

Monica Wolfe

127 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 second quarter the fund added five new stocks to their holdings, bringing the Matthews Japan Fund (Trades, Portfolio) portfolio to 60 stocks valued at $445 million. The following five stocks represent the fund’s top five largest holdings as of the close of the second quarter.

Toyota Motor Corp (TSE:7203)

The fund’s largest holding is in Toyota Motor Corp where they maintain 346,100 shares of the company’s stock. This position represents 4.7% 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 15.6% by purchasing 46,700 shares of Toyota stock. They purchased these in the quarterly price range of ¥5314 to ¥6084, with an estimated average quarterly price of ¥5683. Since then the price per share has increased roughly 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 ¥1919 billion of debt over the past three years, its price is near a 5-year high and its Piotroski F-Score is high.

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

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Toyota Motor has a market cap of ¥19465.53 billion. Its shares are trading at around ¥6137 with a P/E ratio of 10.60, a P/S ratio of 0.76 and a P/B ratio of 1.34. The dividend yield of Toyota Motor is 2.66%, and the company had an annual average earnings growth of 20.20% 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 4.1% of the fund’s total portfolio as well as 0.08% of the company’s shares outstanding.

During the second quarter Matthews Japan did not alter their holdings in Orix. The fund last changed their holdings in the first quarter, and since then the price per share is trading up about 8.3%.

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 operating margin is expanding, its P/E ratio is trading at near a 1-year low and its cash flow from operations has severe divergence from its reported net income – this might mean that the company is not receiving payments from its customers.

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

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Orix Corporation has a market cap of ¥2162.74 billion. Its shares are trading at around ¥1693.50 with a P/E ratio of 11.50, a P/S ratio of 1.49 and a P/B ratio of 1.12. The company had an annual average earnings growth of 25.60% over the past five years.

Mitsubishi UFJ Financial Group (TSE:8306)

The fund’s third largest position is in Mitsubishi UFJ Financial Group. The fund holds on to 2,631,700 shares of the company’s stock, representing 3.6% of their total holdings and 0.02% of the company’s shares outstanding.

Matthews Japan did not alter their holdings in Matthews Japan over the past quarter. The last move the company made was in the first quarter when they added shares. Since their addition the price per share has dropped -3.7%.

Matthew Japan’s historical holding history as of the close of the second 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 per share has been in decline over the past five years, its Piotroski F-Score is low and its cash flow from operations has severe divergence from its 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 ¥8637.99 billion. Its shares are currently trading at around ¥615.60 with a P/E ratio of 8.50, a P/S ratio of 8.50 and a P/B ratio of 0.63. The company had an annual average earnings growth of 2.40% over the past five years.

Sysmex Corporation (TSE:6869)

The fund’s fourth largest holding is in Sysmex Corporation where they maintain 346,400 shares of the company’s stock. This position makes up for 2.9% of the fund’s total assets managed as well as 0.17% of the company’s shares outstanding.

The Matthews Japan Fund (Trades, Portfolio) did not alter their position over the duration of the second quarter, but since they added to their holdings during the first quarter the price per share is trading up about 36.2%.

The fund’s historical holding history:

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Sysmex Corporation is engaged in the manufacturing and sale of laboratory testing instruments and reagents for clinical laboratories worldwide.

Sysmex Corporation’s historical revenue and net income:

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The analysis on Sysmex Corporation reports that the company’s revenue per share has been in decline over the past five years, it holds enough cash to cover all of its debt and its price is near a 10-year high.

Sysmex Corporation has a market cap of ¥828.69 billion. Its shares are currently trading at around ¥4040 with a P/E ratio of 39.20, a P/S ratio of 4.48 and a P/B ratio of 5.51. The company had an annual average earnings growth of 1.30% over the past five years.

Daikin Industries (TSE:6367)

Matthews Japan’s fifth largest position is in Daikin Industries where they hold on to 182,400 shares of the company’s stock. This position makes up for 2.6% of their total portfolio as well as 0.06% of the company’s shares outstanding.

The fund did not alter their holdings over the past quarter. They bought into the company during the first quarter of 2014 and since then the price per share is trading up about 23%.

The fund’s holdings as of the close of Q2:

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Daikin Industries is engaged in manufacturing air-conditioning systems and fluorochemical products. It operates in five divisions: Air Conditioning and Refrigerator, Oil Hydraulics, Defense Systems, Chemicals and Computer Graphics systems.

Daikin Industries’ historical revenue and earnings growth:

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The analysis on Daikin reports that the company has shown predictable revenue and earnings growth, its operating margin is expanding, its dividend yield is near a 10-year low and its price is near a 10-year high.

Daikin Industries has a market cap of ¥2085.7 billion. Its shares are currently trading at around ¥7180 with a P/E ratio of 22.20 and a P/S ratio of 1.17. The company had an annual average earnings growth of 4.70% over the past ten years.

GuruFocus rated Daikin the business predictability rank of 3-star.

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

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