Japan's Hoya Corp. (OTCPK:HOCPY)
is what I think a lot of American investors wish more Japanese
companies were like. Hoya focuses on markets where it has strong share
(instead of operating numerous sub-scale businesses), continually looks
to drive out costs and improve margins, and is comparatively eager to
consider M&A and the return of capital to shareholders. It also
happens to operate solid businesses, with the company's legacy
electronics and imaging businesses producing good cash flow and the
health care and medical businesses offering better long-term growth.
Where
Hoya is more like typical Japanese equities is in valuation. Japanese
equities frequently trade with lower implied discount rates, which can
make it hard to find attractively-priced companies by DCF methodologies.
I liked Hoya six months ago
despite some reservations about valuation, and the shares have risen
another 12% since then (about 16% for the Tokyo-listed 7741.T shares).
Hoya doesn't look undervalued, but the company has an opportunity to
make value-building acquisitions today and I'd at least consider keeping
this name on a watch list.
Continue here:
Hoya Corp Managing For Growth *And* Margins
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