Analysis of Rasa Corp (3023:TYO)

Rasa Corporation is a Japanese company that has been active since 1939. It imports, exports, and sells minerals and steelmaking materials, including zircon sands and ferronickel, which are used to make fire-resistant materials, molds, and touch panels. It also sells and rents small construction equipment, imports and sells high-pressure pumps, produces and sells plastics and chemicals, and rents real estate. It has 248 employees.

Like many Japanese companies, Rasa is completely ignored by the market. It is trading at 7.45 times recurring earnings, 0.75 times tangible book value, 0.34 times sales and 3.3 times free cash flow. In other words, Rasa, no one cares... absolutely! The same goes for the dividend, the yield is a very generous 3.36%, even though the distribution ratio is only 25%! Crazy stuff... In such conditions, Rasa still has some slack under the accelerator to increase its distributions or to invest in its own development. It also increased its dividend by 60% between 2016 and 2017. Rasa certainly does not increase its distributions every year, so it is not really a classic payer of increasing dividends. Nevertheless, over eight years, it has still increased the income it offers to shareholders at an annual rate of almost 10%.

Just like the dividend, earnings, cash reserves and assets are growing over the long term, which proves the strength of this company's business model. It is clearly managing to create value for its owners and this is reflected in its share price which has more than doubled in the last five years.

Liquidity reserves are good, with a current ratio of 1.81 and a reduced liquidity ratio of 1.43. However, there is a slight decline in the first ratio compared to the previous year (1.84). Nothing too bad, however.

The gross margin is on the other hand up, at 17.8%, as is the return on assets, at 4.86%. The debt ratio is down, at 18.5%. Finally, note that the number of shares in circulation has not changed for several years.

So apart from a very small downside concerning the general liquidity ratio, but that's to say something, all the lights are green for Rasa. The company's long history speaks in its favor. Like other Japanese companies that I have presented, Rasa has experienced nuclear fire and it is still there, like a weed...

I believe that Rasa's share price can easily double in the next few years and that the dividend will do at least as well (that alone is already an achievement if we consider the already very generous yield currently offered by the company).

So I just bought this title.