Report by Churchill Research

Since inception, Mike Churchill’s Japan II portfolio has outperformed the Nikkei by 23.6 percentage points - the portfolio was started in Nov 2020 with the idea of screening the entire Japanese equity universe once a year. Mike picks 100-or-so names for the first cut, then narrows that down to the 30 most attractive. Every year the portfolio is completely sold off and re-stocked with those 30 best ideas. Top performers last year included Nippon Steel Trading, Nakayama Steel and Torishima Pump Mfg. One stock he is particularly keen on is Shinnihon Corp, describing the homebuilder as “so insanely cheap it's ridiculous”. TP ¥1,235 (70% upside).

Consumer Discretionary

Report by Churchill Research

This homebuilder must be one of the cheapest stocks in Japan - Michael Churchill says, “You could buy all the shares, shut down the business tomorrow and walk away with $150m in cash, plus another $100m as you sold off the inventory". P/B is at an 8-yr low; management has provided strong guidance for fiscal 2023; operating margins have been running at c.14% for several years and cash has been piling up on the balance sheet. Guidance is for a 22 yen/share dividend (3% yield) but they could comfortably pay 100 yen/share (13% yield). 12-month TP ¥1306 (75% upside).