Report by Yuka Marosek
Despite its small size (¥76bn M/Cap), ESPEC dominates the environmental testing industry in Japan with a 60% domestic market share and a 30% global share. Environmental testing is often mandated by international standards, as well as national and industry regulations, and product development companies must conduct it. Thus, the company supports pretty much all new product launches. For this global niche status, ESPEC trades at a P/E of 14.3x and P/B of 1.3x. Its dividend yield is 2.5%. The test equipment leader, Shimadzu, trades at a P/E of 21x and P/B of 2.4x. In her latest report, Yuka Marosek looks at whether this valuation gap is justified.