A Durable Business for 5x FCF and 0.65x TBV
Also includes an activist-friendly free-float and a 5% shareholder yield.
I found a way to access Bloomberg’s no.1 competitor for 90% less. Here’s how →
Imagine being offered an entire company for ¥9.98b.
Inside the business are net-tangible assets that are be worth around ¥15.5b in an orderly, real-world sale (0.65x TBV).
There is virtually no debt.
The operating business generates roughly ¥800m of sustainable owner-FCF each year, on average.
The enterprise value is ¥4.08b.
This works out at just 5.1x owner-FCF.
Or a cash yield of almost 20%.
The business has operated for 76 years.
Revenue, OCF, and Owner-FCF are all higher than they were five years ago.
Its products are embedded inside important manufacturing processes and customers still need what it sells.
But todays price implies that the operating business is worthless and will be dead in roughly 5 years.
The company is also buying back shares below tangible value and cancelling them.
Most interestingly, the ownership structure is not permanently locked behind a controlling family or entrenched management.
There is enough genuine free float for an activist to build influence, particularly if gradual market purchases are combined with an off-market deal for an existing block.
Let’s take a look...