The T. Rowe Price Japan Fund (Trades, Portfolio) seeks long-term growth by investing at least 80% of its assets in Japanese companies, benefiting from the country’s leading position in the electronic and automobile industries.
Since the fund’s inception in December 1991, the fund has had an average annual total return of 1.46%, compared to a loss of 0.17% for the benchmark Lipper Japanese Funds Average.
As of Aug. 31, most assets were held in the IT Services sector at 23.2% of assets. This is followed by 13% Electronic Appliances and Precision Instruments and 9.3% in Machinery.
During the third quarter, the fund purchased the following five stocks as new additions to the portfolio.
Invincible Investment Corp. (TSE:8963, Financial)
The fund’s largest purchase during the quarter was 5,862 shares of Invincible Investment for an average price of ¥66466.13 per share. The holding has a 1.12% portfolio weighting.
Invincible is an REIT with a portfolio that includes residence, offices, commercial facilities, parking lots and hotels. The stock rose 97% in the past year and currently trades at a PE of 60.95.
In FY 2014, the company had an ROIC of 5.13%, up from 3.3% the year before.
Invincible Investment’s trailing dividend yield is 2.28%, while the payout ratio is a high 98%. This indicates the REIT will likely be unable to maintain the current yield without increasing earnings.
CALBEE Inc. (TSE:2229, Financial)
T. Rowe Price also purchased 87,500 shares of CALBEE for an average of ¥4789.19 per share. The stock now has a 0.97% portfolio weighting.
CALBEE is a Japanese snack food producer that owns more than half of the Japanese domestic snack food market share. Its products are currently available in 11 countries. The stock has risen 11% in the last year, with a current PE of 36.64.
The company’s EPS has grown significantly since 2010 and was ¥105.54 in FY 2015.
CALBEE pays a dividend yield of 0.72% with a 26% payout ratio.
Benefit One Inc. (TSE:2412, Financial)
The fund bought 155,700 shares of Benefit One, an employee benefits consulting firm, for an average of ¥2426.65 during the quarter.
The stock price has jumped 113% over the past year and currently trades with a PE of 41.42. Benefit One earned ¥48.41 per share in FY 2015, up from ¥46.19 the year before.
Benefit One’s operating margin has been consistent at 15% to 16% since 2011. The company’s payout ratio is 48% with a trailing dividend yield of 1.17%.
Kadokawa Dwango Corp. (TSE:9468, Financial)
The fund purchased 75,200 shares of Kadokawa Dwango for an average price of ¥1496.77 per share. The holding has a 0.34% portfolio weighting.
Kadokawa Dwango’s major businesses include publishing, film, operating a video-sharing website and a network of entertainment services. The stock has declined 12% over the last year, and now trades at ¥1,625.
The holding company was formed in October 2014 through the merger of Kadokawa Corporation and Dwango Co. Ltd.
Kyowa Hakko Kirin Co. Ltd. (TSE:4151, Financial)
T. Rowe Price’s fifth purchase during the quarter was 24,000 shares of Kyowa Hakko Kirin for an average of ¥1897.24 per share.
The company manufactures and markets pharmaceuticals in the areas of cancer, allergies, renal anemia and hypertension. Over the past year, the stock price has risen 64% and currently has a PE of 64.91.
In FY 2014, EPS dropped to ¥29.02, down significantly from ¥54.91 the year before. The EPS trend over time is depicted in the graph below.
Kyowa Hakko Kirin has a trailing dividend yield of 0.65% with a 42% payout ratio.
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