 Good day, fellow investors! As you have seen in the last video, I'm researching Asian stocks. I'm looking for interesting investments to cover on my stock market research platform and I'm going, as always, through lists. I have found a list of value-invested, value-oriented, Singapore, Asian-focused funds and I'm going through the list of stocks to see, okay, where are they seeing value? Can I find some value for myself to follow? The largest position is Minabia Mitsumi. It's a Japanese precision parts component company that makes from microball bearings, motors that work on your hard drive and all those little little things that go into computers, into cars, all the motors in a car, the locks and things like that. So a very, very interesting company closely related to the economy, demand for cars, demand for cloud computers, etc. But with high potential upside and what they did in the past is really remarkable. They grew sales five times and they plan to grow sales three times, two point five times over the next ten years on a conservative financial basis where they will pay out dividends, do buybacks, return money to shareholders, which is a key component when it comes to Japanese companies as the corporate government's culture is different from American companies. American companies focus on shareholders, Japanese focus on the business. We are building the business. So it's a balance there and also we did a video about Michael Burry, how he says there is an index fund bubble and how companies in Japan are undervalued. So it's a good thing to look at these Japanese stocks. I'm going to give you an overview on what the company does and then also a risk reward investment thesis. So here goes the overview. It's a Japanese manufacturer of precision equipment and components, bearings, motors, sensors and even semiconductors. The company is a fast growing company through 17 acquisition and organic growth. They managed to triple sales and increase operating income five fold over the last 10 years and they plan to continue to do that and do that through acquisitions, organic growth, investing at return on equity higher than 15%. So this is what they did over the past 10 years from 16 countries to 22 countries quadrupled, tripled the number of plants and they have plants in Japan, China, Korea, Southeast Asia, Thailand, Europe, North America, South America. They make all those precision things that are needed and even buffered both precision caster parts a few years ago. So this might be a competitor and this might be a similar company with similar attitudes. For the next three years 50% of the cumulative free cash flow will be allocated to share buybacks and dividends and this is very important because it shows good intentions to shareholders which is a rarity or which is a new things when it comes to Japanese companies. They produce a lot of things. We don't need to go in the details, we'll go into an overview. This is what they did significant growth due to organic growth and mergers and acquisitions added 500 billion yen of revenues, organic growth 270 billion and they plan to continue to do that. They are buying all those companies that are not profitable, that are in a hard place because they can't smaller companies but that can't really turn the corner when it comes to applying new technologies to that all technologies that we are always using. For example one acquisition was Yushin that makes locks, car locks, home locks but they didn't have the technology to make it with motors, with everything that is needed in the current environment. So they bought it and they hope to turn around the company and that's what their message is. We integrate other manufacturers of precision components into the lean mean machine that the company is. For now it's working well, there are ups and downs but we have to see how it fits, how it will work out long term. There will be ups and downs which is also the biggest risk or the biggest opportunity when it comes to investing. There may be a Mitsumi, they acquired Mitsumi a few years ago. It was an interesting thing because the stock price surged before the acquisition was made public so there was a leak in information. So again one day leak but then very interesting how these things happen all around the world. They have business segments, the machined components, ball bearings, rod head fasteners with huge margins 23-25%, return on investment capital 40%, this is the gem, this is the business, they have a leading position in the globe, those micro-micro ball bearings and special fasteners for crazy little things that are motors in your mobile phones etc. They really have an advantage there. However they are investing as you see return on investment capital 30%. However they are investing into much lower margins. Mitsumi, the acquisition, you see it's not really going well, margins have turned negative over the last two quarters and the slowdown so they are not managing to reach those advantages that they have. They think they will work on synergies but I'm a little bit worried about those synergies. It will be with ups and downs and therefore I'm thinking okay it can go down before it goes down. Return on investment capital 11% is much lower than 30% and we know that return on invested capital is what means over the long term. If they can get rid of the products that are low margin and focus on those niches that really do well it could be really another win-win situation but it takes time to develop. Also Mitsumi, negative operating margins lately so it is in a tough spot, the stock has been volatile, will probably remain volatile, motors, lead components, who knows what they are doing, a lot of those tiny, tiny stuff, power supply, adapters, things like that and we'll see how that is implied. You've seen also you can see low, low margins and we'll see if they can improve those margins of the long term. There is a lot of competition, they are not the only ones doing touch sensors, power closure system, flash handles, electric shifters, touch panels and things like that but that's what they are focusing on and if they can keep healthy profitability over the long term and increase the base because those ball bearings are needed also in cloud storage facilities, data storage facility etc. then they might really do good and they have been profitable over the past years and if they continue to do that then that could be really, really good. This is very important, they are going to distribute 50% of the free cash flows in dividends and share buybacks, 50% of the free cash flows will go to mergers and acquisitions and the rest 50% of EBITDA will continue to go to capex, maintenance and growth capex. So you can see here at the price earnings ratio in the teens that you will see further growth, you will see some returns and if they triple the company over the next 10 years then they will be very, very successful like they were over the last 10 years. There will be ups and downs, there have been ups and downs in the stock price over the last 10 years so that's a given but it's a good company to focus on and watch. If you look at return on equity, it has been negative 2010, 2014 but then turned into positive and if they can maintain that or if it goes to negative again and then you can buy when it turns positive again then you have yourself a great deal. To do that you have to cover the stock for a few years, learn what's going, if you fancy what they are doing. However there are free cash flows so there's always positive that that is not that much. They keep their earnings per share there okay price earnings ratio what will be around 15 depending on the earnings volatility so not expensive for the exposure they are offering to all the growth and all the technology developments that will happen. So their current sales are one trillion Japanese yen they plan to increase those sales 2.5 times 2.5 trillion over the next years through acquisitions and increase consequently net income let's say five times. On a current price earnings ratio of what 10-ish 12-ish if they grow at that rate over the next 10 years also the stock will become a five-bagger like it was the case over the last 10 years and they are still a small company so there is still potential for that growth but they have one very very profitable component which is the ball bearings and fasteners which has a return on investment capital of 30% and they are now acquiring all these other companies Ushin the lock maker Mitsumi the electrical parts maker and they try to apply the same standards to those companies. Yes revenues are increasing profits are increasing but we are really in a high cycle a lot of demand for all these things going on and we have to see how are they going to implement what they are doing and keep the same profitability and standards for now it's not going well on the recent acquisition Mitsumi and we'll see how it goes on Ushin as it has some companies and factories in Europe that have to be upgraded improved and they have to reach profitability so we'll see how that fits and Japanese people don't like to withdraw and they might throw good money after bad money until they reach their targets which is something normal for Japanese companies and one reason why it's always different many investors prefer American companies because something is not profitable they cut it immediately cut their losses and go to something else Japanese culture is different and you have to also see it from that perspective however if they grow let's say three times the stock price grows three times over the next 10 years they pay out 50% of cash flow into dividends and buybacks it means that earnings will grow perhaps five times the stock will grow five times so if things go as planned this will be a great return however we have to watch what the management is doing so again a company to put on my covered stock list and watch over time and probably buy when there is really a downturn automotive locks home improvements smart homes it will not be linear it will be up and down and up and down and if you buy at those downs and the market is always focused on the short term I looked at I think seven investment bank reports and everybody is talking about the next few quarters not about the next 10 years so that's an advantage we investors have over Wall Street be it Japanese Wall Street or the rest of the world Wall Street I hope I have given you a good perspective with these two Asian stocks and give it a comparison to the technology stocks that are in the US traded in the US so that you can weigh and see okay what's going on in the world compare it to the risk reward of your other investments and then see how it fits your portfolio don't forget to check my stock market research platform with all my research my portfolio many other such undiscovered global investments that might really give lower risk higher reward potential to your portfolio also check my website with blogs reports my book etc if you have any questions about my platform about anything any financial issues please send me an email I always like to receive your emails to see how you think about this and to have a two-side communication on this channel thank you and I'll see you in the next video