Description
(all in US$)
RHJ is a diversified holding company, managed by Tim Collins and Leonhard Fischer, focused on creating long-term value for its shareholders by acquiring and operating businesses. The Company’s portfolio consists of five controlling ownership interests, three investments in associates and several non-controlling minority ownership interests.
The interests in Asahi Tec Corporation (“Asahi Tec”), Honsel International Technologies SA (“HIT”), Niles Co., Ltd. (“Niles”), Columbia Music Entertainment, Inc. (“CME”), Phoenix Resort K.K. (“Phoenix Seagaia Resort”) and Shaklee Global Group, Inc. (“Shaklee”), were contributed to the Company in connection with the initial offering and listing of its ordinary shares on Euronext Brussels in March 2005. The investment in U-shin Ltd. (“Ushin”) was made during the fiscal year ended March 31, 2007. The investment of $7 million in SigmaXYZ was made in fiscal 2009. The Company seeks to enhance the value of these businesses through strategic acquisitions and operating improvements through its industrial partnership approach.
RHJ International has been previously written up twice on VIC, but its valuation has gotten even more compelling, as I attempt to demonstrate below.
For reference, see
http://www.valueinvestorclub.com/Value2/Idea/ViewThread.aspx?id=3426&page=0&msgpage=3751
and
http://www.valueinvestorclub.com/Value2/Idea/ViewThread.aspx?id=2207&page=0&msgpage=3751
The previous write-ups provide a good description of the company – my focus is on the current valuation.
VALUATION
Four of the company’s holdings are publicly traded in Japan (in MM, except per share amounts):
|
Share
|
Share
|
Shares
|
Market
|
RHJI
|
RHJI
|
|
Price (Yen)
|
Price ($)
|
O/S
|
Cap
|
Owns %
|
Value
|
|
Ticker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asahi Tec
|
5606 JP
|
31
|
$ 0.342
|
476.7
|
$ 163.0
|
60.2%
|
$98.1
|
|
Columbia Music
|
6791 JP
|
28
|
$ 0.309
|
270.0
|
$ 83.4
|
25.5%
|
$21.3
|
|
Shaklee
|
8205 JP
|
346
|
$ 3.817
|
24.7
|
$ 94.3
|
40.7%
|
$38.4
|
|
U-Shin
|
6985 JP
|
282
|
$ 3.111
|
32.0
|
$ 99.4
|
20.0%
|
$19.9
|
|
|
Total $177.6
The remaining separately identified Japanese holdings (Phoenix Resort, Honsel and Niles) have a cost basis of $794 million as of September 30, 2008.
RHJ had other unidentified investments with a fair market value on September 30, 2008 of $113 million. We can assume a minimum current value of $65 million for these securities, equal to the current market value of the company’s 3.2% stake in publicly traded Commercial International Bank (Egypt).
Adjusting for the November 2008 investment of $50 million in Asahi Tech, cash as of September 30, 2008 was $625 million.
This indicates a total value for RHJIF.PK of
|
$MM
|
Low
|
High
|
|
Publicly traded Japanese companies
|
$178
|
$178
|
|
Separately identified private Japanese companies
|
0
|
794
|
|
Other not separately identified securities
|
65
|
125
|
|
Cash
|
625
|
625
|
|
Total value
|
868
|
1,722
|
|
Value per RHJIF.PK share
|
$ 10.15
|
$ 20.13
|
|
Number of RHJ shares outstanding (MM)
|
85.55
|
85.55
|
The current market price per share of $4.92 compares very favorably even with the extremely conservative low end of the valuation range.
Catalyst
We may need to wait until the current fear of all things "private equity" disappears, but large discount to value should ultimately be reduced.