Introduce two distinctive companies in management: Ship Healthcare HD (3360), Centena (2317) >
When looking at a company's future prospects,management philosophyis undoubtedly important. Even Fast Retailing (9983) and Nitori (9843), which have become representative Japanese companies, grew significantly precisely because they had distinctive leaders.
In this article, two companies with distinctive management philosophies are highlighted. Both are investing in growth sectors, and their medium- to long-term expansion is promising.
Ship Health Care Holdings (3360)
With the mission “creating environments to protect lives,” they are involved in constructing medical facilities, supplying medical materials, operating paid nursing homes, and dispensing pharmacies, among other activities.
Established in 1992 as a medical, health, and welfare consulting company, it has sincerepeatedly used M&A to expand its business. The consolidated group consists of about 50 companies.
Despite frequent M&A, the company operates with essentially no debt and maintains a sound financial position. The potential loss from goodwill is limited to within a single-year net profit.
In short,the company is a skilled practitioner of M&A in the medical field. Its ability to successfully utilize M&A, with a success rate said to be around 30%, deserves recognition. Even Nihon Denkai (6594), famous as a growth company, expanded by repeatedly focusing on motors through M&A.
A distinctive feature is that the company adopts a slogan aligned with its management policy. For example, phrases such as!!Three-stage rocket for three-way benefits!!“!!Autonomy and self-reliance!! Do-re-mi-fa-so-la-ti-do“Accordion management, cheerfully!” are slogans filled with energy, even if their meaning is not entirely clear.
[Reference]Company history
Currently targeting stable growth with a net sales growth rate of 5.6% annuallyIt appears the P/E ratio is around 20, not particularly cheap by historical standards, but it is viewed as an interesting company in a steadily growing medical sector.
Systena (2317)
A company that develops systems. Recently, it has been especially active indevelopment related to autonomous driving.
Looking at its history, the company originally developed online games and the like. However, in recent years it has largely withdrawn from game development and focused on B2B system development.
Why did this happen? It can be read from its management policy. The policy includes statements such as the following.
“We will shrink and exit growth-slow businesses and rapidly shift management resources to higher-growth areas.”
Chairman’s Message
In other words,this company has moved toward more profitable fields by leveraging its system development capabilities. As a result, its focus shifted from game development to B2B areas such as autonomous driving.
Being able to adapt in the fast-paced system field is a major strength. IT, on the whole, is undoubtedly a growth area, so continuing to seek growth sectors there can lead togrowth that exceeds the industry average.
Moreover, what I particularly liked is the following language from the annual report.
“We predict the current financial bubble will burst sooner or later, and the crucial point is not to dance in the bubble or chase high prices; rather, during the chaotic period after the bubble bursts, there are great opportunities for a big leap. We are pursuing cost control and data-driven management grounded in reality.”
FY2019 Annual Securities Report
This mindset is shared by managers of companies that enjoy long-term growth.Nitori’s chairman Izumo and Nihon Denkai’s chairman Nagamori also excel at “contrarian” thinking. Both make bold investments when market conditions deteriorate.
Systena, too, would likely see temporary stagnation in earnings and stock price if the economy worsens. However, following the above mindset, such times are precisely when there are big opportunities. If this approach remains intact, the company can be expected to perform well over the long term.
Currently, the P/E is around 35, which is overpriced. There is no need to chase at the high price, butthe moment when the market suddenly turns and everyone becomes pessimistic is a buying opportunity. At that time, I would like to be able to buy prudently.
