The company has been geared to the capital expenditure cycle of the steel industry. As we expect steel prices to start declining, we expect Shinagawa's earnings growth to slow, and have thus exited.
Shinagawa Refractories. Japan's largest manufacturer of refractories (materials able to withstand temperatures of up to 2000°C, such as fire-bricks, plastics etc.), supplies into steelmakers, petroleum plants and other energy/ceramics industries. The company has been going since 1875 and is well established as the leader in its industry. Apart from being a play on Japanese steel/iron makers capex, the big attraction in the stock is the large land bank that the company has. As at end March 2004, it owned a shopping centre, 2 condo blocks and warehouses with a combined book value of just Y12.3b (Y187/share). One of the condo blocks, with a book value of Y2.5bn, has been estimated to be worth over Y14bn today - hence this company is likely to be sitting on large unrealised property gains. The underlying business is stable and cash-generative and valued attractively with a price to book of 1.0x whilst delivering a return on equity of 6% - together with the significant unrealised property gains this suggests > 20% upside to current levels and makes the stock a buy.
| Sedol |
Type |
Price |
Date |
| 6804466 |
Sell |
JPY 278.882 |
01/02/2008 |
| 6804466 |
Buy |
JPY 482.28 |
11/11/2005 |
| 6804466 |
Buy |
JPY 424.20 |
14/10/2005 |
| 6804466 |
Buy |
JPY 367.691 |
13/06/2005 |
| 6804466 |
Buy |
JPY 343.64 |
01/06/2005 |
| 6804466 |
Buy |
JPY 345.36 |
20/04/2005 |
| 6804466 |
Buy |
JPY 402.971 |
18/03/2005 |
|
