In this briefing:
1. FANCL: Playing the Long Game
- The declining and ageing population in Japan has been a major cause for concern to many Japanese companies.
- Fancl Corp (4921 JP), is a relatively small player in the Japanese cosmetics and nutritional supplements space who is expected to benefit from the declining and ageing population.
- Compared to the peer average, EV/Sales discount narrowed down significantly over the course of the last year. But we believe the discount remains the same on a growth adjusted basis.
- Still too small for institutional investors to notice. But we expect them to start noticing the company over the coming years.
- One of the cheapest stocks on a long term forward multiple, as we expect FANCL to sustain its high growth over a long period of time.
We are not sure if Fancl Corp (4921 JP) can ever be in the same league as Shiseido or Kao, but we certainly believe the company doesn’t deserve to be about 10% of the size of Shiseido. Thus, we have a very long-term bullish view on FANCL and expect to see the company’s market cap to double over the next 5-7 years
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