Links January 2025
9 investment write-ups, 11 articles and 15 podcast episodes
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Schwar Capital on console maker Nintendo (🇯🇵 7974 JP - US$67 billion)
Dungeon on Square Enix: Part 1, Part 2, Part 3 (🇯🇵 9684 JP - US$4.8 billion)
Rodd & Van Compernolle on Japfa (🇸🇬 JAP SP - US$1.4 billion)
Value Journal on IT distributor Dicker Data (🇦🇺 DDS AU - US$951 million)
Ironic Capital on oil & gas name Karoon Energy (🇦🇺 KAR AU - US$675 million)
Green Investing on Abaxx Technologies (🇸🇬 ABXX CN - US$271 million)
TAMIM on investment platform Praemium (🇦🇺 PPS AU - US$220 million)
The Long Happy on Sharingtechnology (🇯🇵 3989 JP - US$138 million)
SimplerInvestor on Shin Maint (🇯🇵 6086 JP - US$97 million)
My favorite three write-ups from the past month include:
Dungeon Investing introduced Square Enix (🇯🇵 9684 JP - US$4.8 billion) in incredible detail across three long posts: Part 1, Part 2, Part 3. These posts helped me understand the business on a fundamental level. Square Enix owns an incredible library of intellectual property, including Final Fantasy, Dragon Quest and a range of manga comics. The big question is to what extent new CEO Takashi Kiryu will be able to unlock the value from its IP. Dungeon seems skeptical, but at 9.5x 2023 EV/EBIT, the stock isn’t that expensive.
The Long Happy’s post on Sharingtechnology (🇯🇵 3989 JP - US$138 million). The company has a platform called “Seikatsu 110” that connects customers with service providers. It reminds me of PropertyGuru’s service “Sendhelper” in Singapore, which I am an avid user of. There should be network effects in the business. Average selling prices have increased, and the number of queries is also growing nicely. AVI is on the shareholder register, and the CEO is ex-JAFCO, so presumably talented. The P/E is currently 14.1x.
SimplerInvestor on Shin Maint (🇯🇵 6086 JP - US$97 million). It provides maintenance services in Japan, mainly for the restaurant industry. Most services are of an emergency nature: for example, fixing kitchen equipment, plumbing, HVAC units, etc. Revenue has grown at a 15% CAGR and EPS at 32% CAGR. The capital allocation seems average. The stock trades at 14.9x P/E.
(estimated reading time)
Li Lu’s interview on global value investment (1:15 hours) (Chinese language)
Made in Japan: Why I think Japanese SaaS is undervalued (40 mins)
Brian Potter: review of TSMC’s Morris Chang’s autobiography (26 mins)
Dwarkesh Patel’s travel notes from China provide great nuance (17 mins)
James Hay: What he’s learnt from 20 years at Pangolin Asia (12 pages)
Global Stock Picking: There Is No Alternative to HK high yielders (11 mins)
Turtles Research’s 4Q2024 review, owning both JD and ATRenew (10 mins)
Best Anchor Stocks: Is alcohol consumption in terminal decline? (10 mins)
Undervalued and undercovered on platinum group metals (PGMs) (9 mins)
The Great Wall Street’s Shanghai scuttlebutt to see who’s doing well (3 mins)
Taranvir: honest look at some previous Hong Kong small-cap ideas (2 mins)
Made in Japan’s overview of Japan’s SaaS industry was great. The sector trades at 3.7x Price/Sales with 20%+ top-line growth. IT services have been dominated by system integrators coding in COBOL. But now, they are being disrupted on the margin by more nimble SaaS companies. There’s also government support for digitalization, including for medical health records. Investors have been enamored by low-P/B Japanese value stocks in the past two years. However, Made in Japan argues that SaaS companies are more shareholder-conscious and inexpensive, too.
(listening time)
J Mintzmyer discussing shipping, including dry bulk and tankers (2:14 hours)
Founders Podcast on Hyundai’s founder Chung Ju Yung (1:15 hours)
Dan Rasmussen discussing his new book The Humble Investor (1 hour)
Richard Katz on his book The Contest for Japan’s Economic Future (57 mins)
Rob Vinall asking a panel whether China is investable (55 mins)
Asianometry’s interview with Tae Kim on new book The Nvidia Way (54 mins)
Feliz Zulauf is bullish on the Japanese yen and bearish base metals (50 mins)
Eva Dou on her new book The House of Huawei (49 mins)
Ryan O’Connor on Nintendo and its new console, the Switch 2 (43 mins)
Chris Wood believes in a Chinese stimulus, skeptical about PE (39 mins)
Jim Mellon, previously of Regent Pacific, discussing Asian stocks (38 mins)
Jeff Towson on Chinese online travel agent Trip.com (34 mins)
Jake Barfield interviewing Hikari Tsushin’s CEO Hideaki Wada (34 mins)
Bloomberg discussing the success of China’s Luckin Coffee (22 mins)
Sell-side analyst Ben Gilbert with a pitch on Australia’s JB Hi-Fi (6 mins)
The podcast episode I enjoyed the most in the last month was Ryan O’Connor’s breakdown of the entertainment company Nintendo. The company’s new console, the Switch 2, was just released, and there are reasons to think it will be a success. The fact that it will be backwards compatible means there will be many games to play on day 1, hopefully leading to a greater tie-rate. And thanks to a Nvidia Tegra chip, the Switch 2 can finally play AAA games such as Call of Duty. The stock may be fairly valued, but there’s no doubt that Nintendo has a strong position in the global video game market. I will increase my spending on Nintendo products in 2025, and I’m sure many others will too.
