The Matthews Japan Fund (Trades, Portfolio) established five new holdings during the third quarter and exited five other positions.
Managing a portfolio of 57 stocks, fund managers Kenichi Amaki and Taizo Ishida invest in Japanese companies capable of sustainable growth with the goal of achieving long-term capital appreciation. With $3.79 billion in assets under management as of Sept. 30, the fund invests largely in the industrial, consumer cyclical and technology sectors.
The fund invested in Fuso Chemical Co. Ltd. (TSE:4368, Financial), Lasertec Corp. (TSE:6920, Financial), Rohm Co. Ltd. (TSE:6963, Financial), Japan Lifeline Co. Ltd. (TSE:7575, Financial) and Minebea Mitsumi Inc. (TSE:6479, Financial).
Fuso Chemical
The fund initiated a 1.3 million-share stake in Fuso Chemical for an average price of 3,460.15 yen ($30.44) per share, giving it 1.17% portfolio space.
The chemical company has a market cap of 128.52 billion yen; its shares were trading around 3,355 yen on Wednesday with a price-earnings (P/E) ratio of 17.62, a price-book (P/B) ratio of 2.77 and a price-sales (P/S) ratio of 3.46.
The Peter Lynch chart below shows the stock is trading above its fair value.
GuruFocus ranked Fuso’s financial strength 10 of 10 and its profitability and growth 8 of 10. The company’s trailing dividend yield is 1.15% and its forward dividend yield is 1.20%. The dividend payout ratio is 18%.
With 3.71% of outstanding shares, the fund is the only guru invested in the company.
Lasertec
The Japan Fund bought 2.03 million shares of Lasertec for an average price of 1,882.34 yen per share, expanding the portfolio 1.15%.
The manufacturer of semiconductor inspection systems has a market cap of 111.51 billion yen; its shares were trading around 2,484 yen on Wednesday with a P/E ratio of 31.40, a P/B ratio of 4.55 and a P/S ratio of 6.43.
According to the Peter Lynch chart below, the stock is trading above its fair value.
GuruFocus ranked Lasertec’s financial strength 9 of 10 and its profitability and growth 8 of 10. The company’s trailing dividend yield is 1.13% and its forward dividend yield is 1.54%. The payout ratio is 36%.
The fund is the only guru invested in the company, holding 4.5% of outstanding shares.
Rohm
Having previously sold out of Rohm in the first quarter of 2016, the fund established a new holding of 483,400 shares for an average price of 8,845.38 yen per share. The position was given a portfolio weight of 1.15%.
The electronic parts manufacturer has a market cap of 1.11 trillion yen; its shares were trading around 11,140 yen on Wednesday with a P/E ratio of 31.97, a P/B ratio of 1.52 and a P/S ratio of 3.03.
Based on the Peter Lynch chart below, the stock appears to be trading above its intrinsic value.
GuruFocus ranked Rohm’s financial strength 9 of 10 and its profitability and growth 6 of 10. The company’s trailing dividend yield is 1.90% and its forward dividend yield is 2.27%. The payout ratio is 40%.
The fund is the only guru shareholder with 0.46% of outstanding shares.
Japan Lifeline
The fund purchased 747,300 shares of Lifeline for an average price of 5,086.38 yen per share, giving it 1.02% portfolio space.
The medical device manufacturer has a market cap of 202.41 billion yen; its shares were trading around 5,500 yen on Wednesday with a P/E ratio of 33.79, a P/B ratio of 9.42 and a P/S ratio of 5.38.
According to the Peter Lynch chart below, the stock is trading above its fair value.
GuruFocus ranked Japan Lifeline’s financial strength 7 of 10 and its profitability and growth 8 of 10. The company’s trailing dividend yield is 0.55% and its forward dividend yield is 1.24%. The payout ratio is 19%.
With its purchase of 2.01% of Lifeline’s outstanding shares, the fund became the company’s largest guru shareholder. The Wasatch International Growth (Trades, Portfolio) Fund holds 1.25%.
Minebea Mitsumi
After exiting a position in Minebea Mitsumi in the second quarter of 2015, the fund established a 2.3 million-share stake for an average price of 1,830.71 yen per share. The holding was given a portfolio weight of 1.01%.
The electronics manufacturer has a market cap of 868.99 billion yen; its shares were trading around 2,120 yen on Wednesday with a P/E ratio of 15.84, a P/B ratio of 2.60 and a P/S ratio of 1.17.
Based on the Peter Lynch chart below, the stock appears to be trading about evenly with its fair value.
GuruFocus ranked Minebea’s financial strength 6 of 10 and its profitability and growth 9 of 10. The company’s trailing dividend yield and forward dividend yield are both 0.84%. The payout ratio is 11%.
The fund holds 0.55% of the company’s outstanding shares.
During the quarter, the fund exited its positions in NGK Spark Plug Co. Ltd. (TSE:5334), Seven Bank Ltd. (TSE:8410), Kyoritsu Maintenance Co. Ltd. (TSE:9616), Totetsu Kogyo Co. Ltd. (TSE:1835) and Daiken Medical Co. Ltd. (TSE:7775).
The fund sold its remaining 2.06 million shares of NGK Spark Plug for an average price of 20.17 yen per share, impacting the portfolio -1.34%. According to GuruFocus estimates, the firm lost 72% on the investment since the holding was established in the fourth quarter of 2016.
It sold 9.5 million shares of Seven Bank for 2.97 yen per share. The trade had an impact of -1.03% on the portfolio. GuruFocus estimates suggest the fund lost 80% on the investment since initiating the stake in the third quarter of 2016.
The fund divested 1.15 million shares of Kyoritsu Maintenance for an average price of 3,164.17 yen per share. The trade had an impact of -1.02% on the portfolio. According to GuruFocus estimates, the fund has lost 20% on the investment since founding the position in the third quarter of 2015.
The Japan Fund sold 997,600 shares of Totetsu Kogyo for an average price of 3,500.38 yen per share, impacting the portfolio -0.92%. GuruFocus estimates suggest the firm gained 9% on the investment since creating the position in the first quarter.
The fund cut its remaining 1.6 million shares of Daiken Medical for an average price of 7.46 yen per share. The transaction had an impact of -0.36% on the portfolio. According to GuruFocus estimates, the fund lost 95% on the investment since starting the position in the second quarter of 2013.
Disclosure: I do not own any stocks mentioned.
