UKC Holdings is engaged in the sales and distribution of semiconductor and electrical components. It´s a typical Japanese net-net low margin business. Entered at ¥1630 or a NCAV ratio of about 0.51. The company pays dividends and have some IR info in English.
| Current assets | ¥ 134 895 000 |
| Total liabilities | ¥ 85 111 000 |
| Net current assets | ¥ 49 784 000 |
| Market cap | ¥ 25 500 000 |
| Ratio | 51% |
Bargain Hunter 
Very good timing with this one so far, congrats!
I tried to verify the numbers and according to this site the ratio was only around 0.8 at a ¥1630 price:
https://www.kaijinet.com/jpExpress/Default.aspx?f=company&cf=financial_statement&cc=3156
On the englisch IR page there are no numbers for FY2017 (31/03/2017) yet.
Keep it up!
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Ah, yes.. I calculated the ratios per the calendar year end. The report you refer to was not available to me at the time. It was a quantitative bet and the ratios are still within rage, although upside is now lower.
If I gathered correctly, the FY17 figures were delayed due to uncertainty relating to book value of some prepayments. It’s good the FY17 are now released and the company still has net current assets.
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Any worries about this?
“During the process of preparing for the announcement
of financial statements of the fiscal year ended March 2017 on May 10, 2017, the Company became aware of the need for a close inspection of the evaluation of assets such as advance payment for UKC (H.K.), one of the Company’s consolidated subsidiary companies, and there were concerns about a portion of the recoverability of approximately 4 billion yen as the total advance payment of March 2017, and concerns about the recoverability of approximately 2-4 billion yen of accounts receivable for assets other than the advance payment, so the Company disclosed on May 10, 2017 that outside experts were selected and stipulated for a close inspection. ”
Click to access investigation_report.pdf
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Yes, it is a concern. The market cap is trading close to NCAV so I’ll likely drop the share soon. As for the actual issue it’s good they initiated an independent review and published the results (in English!). However, when there is a problem with the books there tend to be more surprises.
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I just found this site and love to read anything I can about other net net investors. I’m not sure exactly what your strategy is but mine is simply to but the ten cheapest price to NNWC. The only acceptations being no china, no pharma and no exploration companies. Also no one printing shares to raise capital. With all this in mind I was wonder if you have taken a look at STRI or Nautilus Marine Services PLC. Both have NNWC over 4x their prices and seem like prime candidates for mean reversion.
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My strategy is similar to yours, but I’m more qualitative. I use a NNWC screen to find candidates and then I usually select what I consider the best from a bad bunch. Some picks are pure quantitative bets, like UKC and other Japanese net-nets. I am not at all certain my own opinions add any value, I’ve seen plenty of papers indicating that a mechanical system is better. Anyway, I do look for business that are ongoing. So no exploration companies or failed pharma. I also avoid retail companies with high inventory and generally companies that issue shares. I am more open to China. My standard holding period is 3 years.
The shares you mention are interesting. NMC PLC is listed on AIM which is expensive and difficult for me to trade on, so no AIM holdings for the time being. I guess STRI would fit nicely in a collection with MSN and QCCO… 🙂
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