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James Li
James Li
Articles (1328)  | Author's Website |

T. Rowe Price Japan Fund Sells 2, Buys 4 in the 2nd Quarter

Fund exits position in Japanese telecom company

The T. Rowe Price Japan Fund (Trades, Portfolio), part of Baltimore-based T. Rowe Price Group Inc. (NASDAQ:TROW), disclosed this week that during the second quarter, the fund exited its position in NTT DOCOMO Inc. (TSE:9437) and slashed its stake in Chugai Pharmaceutical Co. Ltd. (TSE:4519). With the majority of the proceeds, the fund boosted its holding in the following four companies: Hoshizaki Corp. (TSE:6465), Suzuki Motor Corp. (TSE:7269), Fast Retailing Co. Ltd. (TSE:9983) and Mitsubishi Electric Corp. (TSE:6503).

Managed by Archibald Ciganer, the fund seeks long-term capital appreciation through investments in the common stocks of companies with primary operations in Japan. Ciganer looks for companies with the ability to achieve and sustain above-average, long-term earnings growth.

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As of quarter-end, the $810-million equity portfolio contains 57 stocks with a turnover ratio of 18% for the quarter. The top three sectors in terms of portfolio weight are industrials, technology and communication services, with weights of 34.71%, 15.59% and 13.64%, respectively.

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NTT DOCOMO

The fund sold 849,400 shares of NTT DOCOMO, trimming 3.72% of the equity portfolio. Shares averaged 3,086.72 Japanese Yen ($28.89) during the second quarter.

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GuruFocus ranks the Japanese wireless telephone operator’s financial strength 8 out of 10 on the heels of debt ratios outperforming over 81% of global competitors. Other positive investing signs include a strong Altman Z-score of 4.53 and an operating margin that has increased approximately 4.50% per year on average over the past five years and is outperforming over 77% of global competitors.

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Chugai

The fund sold 571,800 shares of Chugai, reducing the position 61.44% and reducing the equity portfolio by 3.08%. Shares averaged ¥4,818.65 during the second quarter.

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A subsidiary of Roche Holding AG (XSWX:ROG), Chugai develops medicines for the Japanese oncology and renal markets. GuruFocus ranks Chugai’s financial strength 10 out of 10 on several positive investing signs, which include robust interest coverage, a high Piotroski F-score of 7 and a strong Altman Z-score of over 28.

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Chugai’s profitability ranks 8 out of 10 on the back of expanding operating margins and high returns on equity. Despite this, the company’s valuation ranks 1 out of 10 as price valuations are near 10-year highs and underperforming over 70% of global competitors.

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The Vanguard Health Care Fund (Trades, Portfolio) also has a holding in Chugai.

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Hoshizaki

The fund added 265,500 shares of Hoshizaki, increasing the position 108.41% and the equity portfolio by 2.81%. Shares averaged ¥8,438.77 during the quarter.

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Hoshizaki manufactures and sells a wide range of food service equipment, including automatic ice machines, refrigerators, dishwashers and beer dispensers. GuruFocus ranks the company’s financial strength 10 out of 10 on several positive investing signs, which include no long-term debt and a strong Altman Z-score of 6.

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Suzuki

The fund added 601,400 shares of Suzuki, increasing the position 131.86% and the equity portfolio 2.54%. Shares averaged ¥3,428.42 during the second quarter.

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GuruFocus ranks the Japanese auto manufacturer’s financial strength and profitability 7 out of 10 on the heels of debt ratios outperforming over 71% of global competitors and margins and returns outperforming over 65% of global auto manufacturers.

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Fast Retailing

The fund added 25,700 shares of Fast Retailing, increasing the position 221.55% and the equity portfolio 1.83%. Shares averaged ¥54,293.90 during the second quarter.

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Fast Retailing sells quality functional apparel items through its UNIQLO retail chain. GuruFocus ranks the company’s profitability 9 out of 10 on several positive investing signs, which include expanding operating margins, a 4.5-star business predictability rank, and three-year revenue and earnings growth rates that outperform over 80% of global competitors.

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Mitsubishi

The fund added 1,021,700 shares of Mitsubishi, increasing the position 79.12% and the equity portfolio 1.65%. Shares averaged ¥1,356.58 during the second quarter.

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GuruFocus ranks the Japanese electrical equipment company’s financial strength 7 out of 10 on the back of interest coverage and debt ratios outperforming over 73% of global competitors.

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Disclosure: No positions.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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