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T. Rowe Price Japan Fund's Top 5 Position Boosts in 4th Quarter

- By James Li

The T. Rowe Price Japan Fund ( Trades , Portfolio ) disclosed this week its top five position boosts for fourth-quarter 2018 were Shimadzu Corp. (TSE:7701), UT Group Co. Ltd. (TSE:2146), Chugai Pharmaceutical Co. Ltd. (TSE:4519), Keyence Corp. (TSE:6861) and Miura Co. Ltd. (TSE:6005).

Managed by Archibald Ciganer, the fund seeks long-term capital appreciation through a growth-style investing approach. Target companies meet criteria like improving market conditions, attractive business niche, attractive industry position, improving earnings and sound balance sheet.


Based on current portfolio data, the fund has high exposure to industrials, consumer cyclical and technology: industrials makes up 24.80% of the portfolio while consumer cyclical represents another 18.50%.


The fund added 154,000 shares of Shimadzu for an average price of 2,714.78 yen ($24.74) per share, boosting the position 79.17%.


Shimadzu operates four business segments: analytical and measuring instruments, medical systems, aircraft equipment and industrial machinery. GuruFocus ranks the company's financial strength 8 out of 10 on several good signs, which include robust interest coverage and a strong Altman Z-score of 5.35. Additionally, Shimadzu's debt-to-EBITDA ratio of 0.48 ranks higher than 81% of global competitors, suggesting a sound balance sheet.


Shimadzu's profitability ranks 7 out of 10: the company's profit margins have increased approximately 17.70% per year over the past five years and are outperforming nearly 80% of global competitors.


The Matthews Japan Fund (Trades, Portfolio), another fund that focuses in Japanese securities, also has a position in Shimadzu.

UT Group

Ciganer's fund added 151,900 shares of UT Group for an average price of 2,830.72 yen per share, boosting the position 53.59%.


UT Group said in a November 2018 earnings release that net sales for the six months ending Sept. 30, reached a record 48,483 million yen (approximately $441.9 million), driven by stronger relations with major corporations through the employment of comprehensive human resource services. Such strong sales growth contributed to a three-year revenue growth rate of 28.70%, a rate that outperforms 88% of global competitors.


GuruFocus ranks the company's profitability 8 out of 10: even though profit margins have declined, UT Group's return on equity and Joel Greenblatt (Trades, Portfolio) return on capital outperform over 90% of global competitors.


Chugai Pharmaceutical

The T. Rowe Price Group Inc.'s (TROW) Japan Fund added 4,000 shares of Chugai Pharmaceutical for an average price of 6,958.46 yen per share.


Chugai, a subsidiary of Roche Holding AG (RO.SW), develops medicine in oncology and various renal, bone and joint diseases. GuruFocus ranks Chugai's financial strength 10 out of 10 on several positive signs, including robust interest coverage of 1,137.88, a solid Altman Z-score of 15.76 and over 1,000 yen in cash for every 1 yen in debt.


Even though the company's profit margins have declined, Chugai's operating margin and return on assets are still outperforming over 80% of global competitors. Such factors contribute to a strong profitability rank of 8.



The fund added 500 shares of Keyence for an average price of 58,721.2 yen per share.


Keyence develops and supplies a wide variety of scientific and technical instruments, including sensors, measuring systems, laser markers, microscopes and machine vision systems. GuruFocus ranks the company's financial strength 10 out of 10 on several positive investing signs, which include no long-term debt, a robust Altman Z-score of 42.36 and a high Piotroski F-score of 7.



The fund added 10,700 shares of Miura for an average price of 2,896.2 yen per share.


Miura engages in the production, sale and maintenance of various boilers for marine and exhaust gas. GuruFocus ranks the company's financial strength 9 out of 10 on several positive signs, which include robust interest coverage, a solid Piotroski F-score of 6 and a strong Altman Z-score of 6.03.


Disclosure: No positions.

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This article first appeared on GuruFocus.