This week I'm looking at the Asian small caps market, with a review of some of the top quality Asian stocks with a market cap of under USD 200m.
Asia Pacific markets have some incredibly high quality small caps available to investors, and with governments in South Korea and Japan pushing forwards with corporate governance reforms, we are likely to see many of these companies become more responsive to their shareholders.
On top of that, outside China, the rest of Asia seems to have been performing well economically in 2023. Japan has been having a spectacular run for example. I've been writing about Asian stocks since I was living in Hong Kong in 1994, and while it is not always easy to buy some of these, especially if you live outside the region, it can be worth the extra effort in terms of the upside they can deliver.
1. Renewable Japan [Tokyo:9522]
Renewable Japan engages in the development, generation, operation, and management of renewable energy power plants in Japan. It operates solar, hydro, and wind power generation plants; and offers asset management services for renewable energy power stations. Renewable Japan published financial results for the fourth quarter of 2023 last month, with revenues of JPY 19.14bn and net income of JPY 4m, indicating a significant 283.1% surge in revenues, in addition to a substantial 101.4% rise in EPS compared to the corresponding quarter of the previous year. The share price has slumped in the last 30 days or so, coming off a recent high of around JPY 1400. But it is still up a punchy +179% for the year.
2. Ono Sokki [Tokyo: 6858]
Ono Sokki is a micro-cap specialist engineering company. It specialises in measuring instruments, which it sells in Japan and abroad. For example, it makes automotive test systems, flow meters, GPS speed meters and engine tachometers. Some good numbers came out of the company recently, including a 41% rise in EPS and EBITDA margin up 20%. Revenues are expected to be around JPY 12bn for full year numbers. Return on equity is 3.48% with a PE ratio of 15x. Shares are running hot: up +28.5% in the last 30 days and +32% on a YTD basis. At time of writing the stock was trading at around JPY 591.
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