The T. Rowe Price Japan Fund (Trades, Portfolio) recently released its portfolio updates for the fourth quarter of 2020, which ended on Dec. 31.
Established in 1991, the fund is managed by Archibald Ciganer and seeks long-term capital appreciation through investing in the common stocks of companies that are located (or primarily operate) in Japan. The fund's strategy relies on both fundamentals and growth prospects to purchase stocks at favorable prices compared to what they are expected to achieve in the future, with a focus on leading or improving market position, attractive business niche, seasoned management, stable or improving earnings or cash flow and a sound or improving balance sheet.
Based on its investing criteria, the fund made four new buys during the quarter: Hino Motors Ltd. (TSE:7205, Financial), Plaid Inc. (TSE:4165, Financial), WealthNavi Inc. (TSE:7342, Financial) and GMO Financial Gate Inc. (TSE:4051, Financial).
Hino Motors
The fund established a new holding of 1,837,900 shares in Hino Motors (TSE:7205, Financial), impacting the equity portfolio by 1.27%. During the quarter, shares traded for an average price of 885.58 yen ($8.54).
Hino is a Japanese manufacturer of medium and heavy-duty trucks and busses, as well as diesel engines. It is one of the leading producers of diesel trucks in Asia.
On Jan. 18, shares of Hino traded around 887 yen for a market cap of 508.02 billion yen and a price-earnings ratio of 155.4. The GuruFocus Value chart rates the stock as fairly valued.
The company has a financial strength rating of 5 out of 10 and a profitability rating of 6 out of 10. The interest coverage ratio is low at 1.91, but the Altman Z-Score of 2.28 indicates the company is not likely in danger of bankruptcy. The return on invested capital has fallen below the weighted average cost of capital in recent quarters, indicating struggles with remaining profitable.
Plaid
The fund also purchased 404,900 shares of Plaid (TSE:4165, Financial), impacting the equity portfolio by 1.12%. Shares traded for an average price of 3,535.56 yen during the quarter.
Plaid is a financial services company based in San Francisco. It builds a data transfer network that powers fintech and digital finance products using the controversial practice of phishing.
On Jan. 18, shares of Plaid traded around 3,715 yen for a market cap of 132.45 billion yen. The stock is up 1.22% overall since it made its public debut on Dec. 17, 2020.
The company has a financial strength rating of 5 out of 10, but has not yet been ranked on profitability due to lack of available data. Following the initial public offering, it has a cash-debt ratio of 2.33. The operating margin is -26.93%, while the net margin is -30.13%. Plaid is not yet profitable.
WealthNavi
The fund bought 275,900 shares of WealthNavi Inc. (TSE:7342, Financial), impacting the equity portfolio by 0.55%. During the quarter, shares traded for an average price of 2,305.57 yen.
Japan-based WealthNavi provides a range of "long-term, funded, diversified" asset management services to customers, including portfolio building, reinvestment, tax optimization and risk management.
On Jan. 18, shares of WealthNavi traded around 2,826.00 yen for a market cap of 128.97 billion yen. Since it went public on Dec. 22, the stock has gained 45.89%.
The company has a financial strength rating of 4 out of 10. Following its IPO, the company has a cash-debt ratio of 4.91. The operating margin is -132.77%, while the net margin is -132.71%. The company is not yet profitable.
GMO Financial Gate
The fund took a new stake of 39,200 shares in GMO Financial Gate (TSE:4051, Financial), impacting the equity portfolio by 0.53%. Shares traded for an average price of 18,173.10 yen during the quarter.
GMO Financial is a Japanese transaction management and payment processing company that produces and sells cashless payment systems and equipment.
On Jan. 18, shares of GMO Financial traded around 20,340.00 yen for a market cap of 82.92 billion yen and a price-earnings ratio of 263.01. The stock has risen 266.48% since its IPO on July 15, 2020.
The company has a financial strength rating of 9 out of 10 and a profitability rating of 4 out of 10. The company has no debt and an Altman Z-Score of 25.22, indicating a fortress-like balance sheet. During its short history on the public markets, both net income and revenue have grown quarter over quarter, and net income was positive, demonstrating overall profitability.
Portfolio overview
As of the quarter's end, the fund held shares in 60 stocks valued at a total of $1.24 billion. The top holdings were SoftBank Group Corp. (TSE:9984, Financial) with 6.41% of the equity portfolio, Keyence Corp. (TSE:6861) with 4.83% and Hoshizaki Corp. (TSE:6465) with 4.52%.
In terms of sector weighting, the firm was most invested in industrials, technology and communication services.
Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Portfolio updates reflect only common stock positions as per the regulatory filings for the quarter in question and may not include changes made after the quarter ended.
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