In the second of an occasional series on top-rated Japanese stocks we look at Tsukada Group [TYO:2418], which operates in the hotels and hospitality sector in Japan. The company is set to benefit from the reopening of Japan post-pandemic, potentially also from all those weddings which were put on hold!
Tsukada focuses on the bridal, hotel, wellness and relaxation markets. It reports a "slow recovery trend" as travel restrictions are eased and spend per wedding picks up. Fiscal year ended December 31 2022 the group reported consolidated net sales of JPY 51.6bn, which is up 54.6% year on year. Operating income was JPY 2.97bn, compared with a loss of JPY 6.3bn a year earlier.
We really like the look of this stock and are adding it to our longer term buy and hold portfolio at JPY 417. We think it easily has scope to head out to JPY 600+. On top of this we also anticipate a further strengthening of the yen against the pound as the Bank of Japan takes its foot off the pedal later in Q2. GBP and USD investors could therefore capture some additional upside.
Some of this has to be attributed to various subsidies made available to companies in this space in Japan, but Tsukada says it has also faced inflationary costs caused by the sharp deterioration in the yen and higher tax expenses from its parent company.
Shares are up a staggering 50% in the last 12 months and 20.5% YTD but there is still more to come. We note heavy buying from investors from the start of this year and don't expect that to change near term.
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