Elite Client Idea #3 (49% Profit in 4 months)
Updated: Dec 1, 2022
Yachiyo Industry Co., Ltd. (TSE ticker: 7298; Price when published: 659 yen)
Yachiyo (‘company’) manufactures automobile parts and is a subsidiary of Honda Motor Company, which holds a 50.5% stake. 90% of its sales are to Honda’s subsidiaries across the world.
It generated sales from China (32% of FY22 revenues), rest of Asia (36%), Americas (18%), and Japan (14%).
The key issues facing the company are lower orders - due to covid-19 restrictions (particularly in China) and a prolonged shortage of semiconductors; as well as higher raw material costs. (These were partially offset by a weaker yen.) It also faces long-term challenges as the industry turns to electric vehicles.
(Although concentration of sales to Honda is certainly a risk, it could also be considered a point in favor of the company serving an entrenched industry player – it currently enjoys stable relations with Honda.)
Want to read more?
Subscribe to www.analyzingbargainstocks.com to keep reading this exclusive post.
Subscribe Now