Japan Stock Writeups

Central Japan Railway operates the high-speed Shinkansen rail service between Tokyo and Osaka as well as lower-speed local trains in the same region. It also has related merchandise and real-estate businesses. The Shinkansen is faster than air travel on the Tokyo-Osaka route and takes a similar amount of time on the Tokyo-Okayama route (after allowing for airport check-in etc.); it is also considerably kinder to the environment. However, air travel still captures a significant market share on these routes, in particular the Okayama route. The company is well positioned in an area with a growing population and improving economics, has achieved a high return on equity in the past and has shown steady profit growth over the last five years. The current share price is overly depressed as yield-focussed investors have been selling following the announcement of a planned new Tokyo-Chukyo line, which will reduce the level of surplus cash flow over the next 20 years.

Sedol	Type	Price	Date
6183552	Buy	JPY 1,025,454	13 February 2008

Chiba Bank. This regional bank announced strong 1H04 results on the back of an improvement in asset quality. During the downturn Chiba was hit particularly hard due to its extensive exposure to property. Hence on an upturn it has most to benefit. It's 1H04 numbers were upgraded by over 40%. In line with sector expectations consensus believes growth is not sustainable as there will be no improvement in loan growth and the asset quality improvement will dissipate. We think they're wrong. Regional banks such as Chiba have the greatest exposure to the small medium sized corporate sector. This is the sector in Japan that is showing the fastest improvement. We expect FY03/04 and FY03/05 earnings to surprise significantly on the upside.  

Sedol	Type	Price	Date
6190563	Buy	JPY 1033.50	11/04/2006
6190563	Buy	JPY 975.50	28/02/2006
6190563	Buy	JPY 1011.439	28/11/2005
6190563	Buy	JPY 979.531	24/10/2005
6190563	Buy	JPY 825.417	12/09/2005
6190563	Buy	JPY  797.286	16/08/2005
6190563	Buy	JPY 716.980	28/07/2005
6190563	Buy	JPY 724.087	12/07/2005
6190563	Buy	JPY 732.091	30/06/2005
6190563	Buy	JPY 688.5	01/02/2005
6190563	Buy	JPY 688.7	24/01/2005
6190563	Buy	JPY 700.75	16/11/2004
6190563	Buy	JPY 680.20	15/11/2004
6190563	Buy	JPY 696.75	05/11/2004
6190563	Buy	JPY 705.667	04/11/2004
6190563	Buy	JPY 683.90	01/11/2004

Chiyoda's first quarter results made for grim reading, with margins collapsing in the face of their inability to pass on cost-hikes to their customers - the outturn was far worse than management had previously indicated. With margins falling and cashflow tight, we sold.

Chiyoda is a leading global player in the liquid natural gas (LNG) construction industry, with a market share of 45%. Demand for LNG is strong and the company has lucrative contracts in Qatar. In addition Japan is undergoing a large switch away from oil and towards LNG. Chiyoda is well placed to meet this rising demand.

Sedol	Type	Price	Date
6191704	Sell	JPY 2076.59	08/08/2007
6191704	Buy	JPY 2509.00	21/06/2007

Chugai Pharma. Support for the company's earnings will be driven by many new drugs coming through its pipeline, with the company a 50% subsidiary of Roche. As it sells Tamiflu in Japan, it benefits from the government confirming that there is no relationship between Tamiflu and abnormal behaviour in children. This bodes well for winter sales. In addition the company has two new drug launches over the next 12 months which should provide a boost. In November it filed with for FDA approval to sell Actemra (an arthritis drug), with approval in Europe set for December.

Sedol	Type	Price	Date
6196408	Buy	JPY 1837.422	26/11/2007