During the second quarter, the Matthews Japan Fund (Trades, Portfolio) reduced its stake in COSMOS Pharmaceutical (TSE:3349), selling 55,000 shares at an average price of 19336.5 Japanes yen ($191.19). The reduction had a -0.35% impact on the Matthews Japan Fund (Trades, Portfolio)’s portfolio. The fund now owns 173,100 shares of the company.
COSMOS Pharmaceutical is a regional leader in the retail drugstore industry. It operates drug stores based in Kyushu, the southwesternmost of Japan’s main islands. The company sells daily necessities such as drug medicines, foodstuffs and alcoholic beverages.
According to GuruFocus, COSMOS Pharmaceutical has a 7 of 10 financial rating, with an interest coverage of 226.96, ranking it above 78% of the 360 companies in the global pharmaceutical retailers industry. The company also has a 6 of 10 profitability and growth rating, with an ROE of 18.85%, ranking it above 83% of the 359 companies within its industry.
COSMOS Pharmaceutical has a market cap of 409.85 billion yen, an enterprise value of 414.65 billion yen, a price-earnings (P/E) ratio of 28.49 and a price-book (P/B) ratio of 4.97.
The Matthews Japan Fund (Trades, Portfolio) purchased its original stake of 13,900 shares of COSMOS Pharmaceutical in the third quarter of 2013. Since then, the fund has netted an estimated 30% profit with its investment in COSMOS. It is likely the fund decided to reduce its stake in the second quarter because the company reached its 10-year high in price during the second quarter and the fund likely wanted to cash in on some of its profit.
Below is a Peter Lynch chart that shows COSMOS Pharmaceutical is trading above its intrinsic value.
The Matthews Japan Fund (Trades, Portfolio) was established on December 31, 1998. The fund looks for long-term capital appreciation in companies located in Japan. The fund looks to invest in companies capable of sustainable growth based on the fundamental characteristics of those companies, including balance sheet information, number of employees, size and stability of cash flow, management’s depth, adaptability and integrity, product lines, marketing strategies, corporate governance and financial health.
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Disclosure: Author does not own any shares of this company.
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