A 110 Year-Old Business for 3x FCF
Also trading at 0.6x TBV with a growing dividend.
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Today’s business has operated for 110 years.
It generates more than ¥50bn of annual revenue.
It has approximately one year of revenue already secured through signed contracts.
The balance sheet contains ¥7.84bn of cash equivalents and another ¥1.59bn of investment securities.
The entire thing can currently be purchased for approximately ¥11.66bn, in market cap terms.
After adjusting for cash, investments, debt and leases, the enterprise value is approximately ¥4.02bn.
This all gives us the following valuation ratios:
NCAV Ratio = 1.2
TBV Ratio = 0.6
EV/FCF Ratio = 3.1
P/FCF Ratio = 8.9
The operating business has generated an average owner-FCF of roughly ¥1.31bn over the last five years.
That operating business is also pretty durable and consistently cash-generative.
In other words, I would happily buy this business in the real world.
Let’s take a look….