Discovering Koshidaka Holdings And 2 Hidden Small Cap Gems In Japan

Simply Wall St · 10/14 20:33

As Japan's stock markets have shown positive momentum, with the Nikkei 225 Index gaining 2.45% and the TOPIX Index up 0.45%, investors are increasingly interested in small-cap opportunities that could benefit from this favorable environment. In this context, identifying stocks such as Koshidaka Holdings and other hidden gems can be particularly rewarding, especially when these companies exhibit strong fundamentals and potential for growth amid current market dynamics.

Top 10 Undiscovered Gems With Strong Fundamentals In Japan

Name Debt To Equity Revenue Growth Earnings Growth Health Rating
Ohashi Technica NA 1.57% -20.55% ★★★★★★
Kanda HoldingsLtd 30.47% 4.35% 18.02% ★★★★★★
AOKI Holdings 28.27% 0.91% 37.15% ★★★★★★
Toukei Computer NA 5.46% 12.14% ★★★★★★
Uoriki NA 3.90% 6.15% ★★★★★★
Innotech 38.96% 7.08% 6.36% ★★★★★☆
MIRARTH HOLDINGSInc 266.33% 3.00% -2.40% ★★★★☆☆
Ogaki Kyoritsu Bank 139.93% 2.20% -0.27% ★★★★☆☆
Toyo Kanetsu K.K 47.92% 2.34% 15.44% ★★★★☆☆
Hakuto 56.93% 8.02% 27.72% ★★★★☆☆

Click here to see the full list of 731 stocks from our Japanese Undiscovered Gems With Strong Fundamentals screener.

Let's explore several standout options from the results in the screener.

Koshidaka Holdings (TSE:2157)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Koshidaka Holdings Co., Ltd. engages in the karaoke and bath house businesses both domestically in Japan and internationally, with a market cap of ¥91.71 billion.

Operations: Koshidaka Holdings generates revenue primarily from its karaoke business, which accounts for ¥61.25 billion. The company also earns from real estate management, contributing ¥1.59 billion to its revenue streams.

Koshidaka Holdings seems to be a promising player in its industry, with a price-to-earnings ratio of 13.6x, which is below the hospitality industry average of 21.9x, suggesting it trades at good value. The company's net debt to equity ratio stands at a satisfactory 15.4%, having reduced from 69.9% over five years, indicating improved financial health. Recent dividend guidance shows an increase to ¥12 per share for the second quarter and fiscal year ending August 2025, reflecting confidence in future earnings growth projected at 6.5% annually despite last year's negative earnings growth of -5.2%.

TSE:2157 Debt to Equity as at Oct 2024
TSE:2157 Debt to Equity as at Oct 2024

Nojima (TSE:7419)

Simply Wall St Value Rating: ★★★★★★

Overview: Nojima Corporation operates digital home electronics retail stores in Japan and internationally, with a market capitalization of approximately ¥201.52 billion.

Operations: Nojima Corporation generates revenue primarily from its Digital Home Electronics Specialty Store Operation Business, which contributes ¥273.98 billion, and the Career Show Management Business, adding ¥350.30 billion. The Internet Business and Foreign Operation segments also provide significant income at ¥66.93 billion and ¥75.74 billion respectively.

Nojima, a promising player in Japan's retail sector, has seen its earnings grow by 8.3% over the past year, outpacing the industry average of 5.3%. Over five years, its debt-to-equity ratio fell significantly from 105.8% to 37.3%, indicating improved financial health and more cash than total debt. The company repurchased shares worth ¥2.98 billion recently and trades at a substantial discount of 77.9% below estimated fair value, suggesting potential upside for investors seeking value opportunities in this space.

TSE:7419 Debt to Equity as at Oct 2024
TSE:7419 Debt to Equity as at Oct 2024

Mitsubishi Pencil (TSE:7976)

Simply Wall St Value Rating: ★★★★★☆

Overview: Mitsubishi Pencil Co., Ltd. is a company that manufactures and supplies writing instruments in Japan, with a market capitalization of approximately ¥147.92 billion.

Operations: Mitsubishi Pencil generates revenue primarily from its Writing Instruments and Writing Instruments Peripherals Business, which reported ¥78.68 billion in revenue.

Mitsubishi Pencil, a notable player in the writing instruments industry, recently announced a joint venture with Linc Limited to bring advanced Japanese technology to India. This collaboration is expected to leverage Mitsubishi's expertise and Linc's distribution network. Over the past year, Mitsubishi has seen earnings grow by 65.8%, bolstered by a significant one-off gain of ¥5.1 billion. The company also repurchased 325,400 shares for ¥755.74 million between August and September 2024, enhancing shareholder value while maintaining financial flexibility with its debt-to-equity ratio at 14%.

TSE:7976 Earnings and Revenue Growth as at Oct 2024
TSE:7976 Earnings and Revenue Growth as at Oct 2024

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.