Hoshizaki Corp. (TSE:6465, Financial) is arguably the best ice maker in the world. Sales have been growing and the company has no debt. For the international investor, it is a great stock.
The stock trades for 9,660 yen ($86.39), there are 72.42 million shares and the market cap is 7 trillion yen ($6.3 billion). It takes 111.8 yen to buy one dollar. Earnings per share were 315.74 yen and the price-earnings ratio is 30.6. The dividend is 70 yen and the dividend yield is 0.7%.
Sales were 265.5 billion yen last year, 260 billion yen the year before and 233 billion yen in 2014. Now that’s growth! Free cash flow was 24.9 billion yen last year and the free cash flow yield is 3.56%. The stock is not cheap.
The balance sheet is pristine. There is 160 billion yen in cash and 36.6 billion yen in receivables. The liability side has 20.2 billion yen in payables and no debt.
Operating margins are in the low teens. Return on equity is usually about 11%. Return on invested capital was 11.72% last year.
Hoshizaki makes one of the best ice machines in the world. Look for them, they are everywhere—restaurants, hotels, bars. Like all things, making ice has gone high tech. The goal is to save on energy. Their slogo is “Tough in the Kitchen, Gentle on the Planet.” I like that. The company has won a lot of awards in the U.S., including EPA Energy Partner of the Year. According to the company, Hoshizaki is the only food service company to ever achieve ISO-14001, which is a high set of standards and criteria for environmental management systems.
Of course, the company has ice machines that make squares, cubes, flakes and all other shapes and sizes. The company also makes prep tables and refrigerators. This article from Wired discusses artisanal ice used in high-end cocktails. These bartenders go out of their way to make a good drink. Hoshizaki is mentioned. Its competitors include Welbilt (WBT, Financial), Illinois Tool Works (ITW, Financial) and Middleby (MIDD, Financial). None of these are as big in ice as Hoshizaki.
I was surprised to see the company also manufactures ovens, fryers and microwaves. It also makes specialty refrigerators for vegetables, rice, milk and beer. I have known about Hoshizaki for several years as I have owned a restaurant. I only recently found out the company is publicly traded. Its ice makers always sell quickly at auction and never go cheap. Many restaurants lease their ice machines so that the equipment company will come out and clean the unit periodically.
Quite a bit of the company’s information is in Japanese. That is OK when I can translate it into English, but some of it is difficult to translate. That is a minus against Hoshizaki. The annual report is only 16 pages. Like most Japanese companies, there is a dearth of information. I do not believe the company has cross-holdings with other corporations.
The stock is not traded in the U.S., but I am sure your broker could buy shares in Japan. It is a high-quality growth stock. Great product, growing sales and no debt. You can see why it trades at a P/E of 30. Perhaps management should do an American depository receipt or at least get it to trade over the counter in the U.S.
Disclosure: We do not own shares.
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