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Disclaimer: I am long shares of Oricon (TSE-4800) at the time of publishing this post.

The single best Japanese company I’ve ever found is Oricon (TSE-4800).

This was a once-in-a-lifetime find for me, and sadly the company is performing an MBO to buy out the shares at 1332 yen per share.

I am releasing my research to the public because I am hoping shareholders do not tender or we get the acquirer to raise their bid because, although a 60-70% gain is nice, the company has the potential to easily be a 1-7x bagger.

My full deep dive is here: Stock With Hidden License to Tax Everything

After reading my own deep dive, I realize that I was too wordy and didn’t get to the meat of my investment thesis until halfway through. My goal in this post is to get to my core investment thesis asap!

Table of Contents:

1. Brief Company Overview

2. Segment Overview

   1. Customer Satisfaction Survey

   2. Customer Referral

3. Business Economics

   1. Customer Satisfaction Survey

   2. Customer Referral

4. Upside Potential

5. Commentary on MBO

What is Oricon?

Oricon used to be known for its music rankings. Due to their recognition as the top music-ranking list in Japan, they ventured into music sales and ringtone sales. Their business model crumbled once Apple released the iPhone because Apple does not allow anyone else to sell music on their iPhone besides iTunes/Apple Music. The business model further died off given music streaming.

Oricon has made a full transition into the following 4 segments:

• Customer Satisfaction (CS) Survey Business

• News Distribution and PV business

• Data Service Business

• Advertising Business

The Customer satisfaction survey business is Oricon’s core business, where they conduct customer satisfaction surveys and publish the results into ranking lists. The top 3 winners of any ranking list can pay Oricon to use their Oricon trademark logo. I will go in depth later in this post.

For the News Distribution and PV business, Oricon produces over 3,500 entertainment-related news articles, paid PR feature articles, and videos per month.

This content is distributed to its own channels:

• YouTube - 2.34 mm subscribers

• Twitter/X - 1.6 mm followers

• Facebook - 164k followers

• Instagram - 43.7k followers

• Line - 3.69 mm friends/followers

The content is also distributed to third-party news distributors, such as Yahoo News and other major websites and apps.

Next is the Data Service Business, where Oricon simply collects sales data for music, videos, and books. Revenue is received from broadcasting stations and e-commerce sites for accessing or using Oricon’s database and ranking data.

Lastly, there is Advertising, which was a recent cheap acquisition in Oct 2024, which gives Oricon the ability to upsell companies in its network advertising services.

Key Highlights:

• Good (B) management and excellent (A) business economics at an attractive price (A-)

• Oricon is an asset-light business with 30%+ normalized operating margins. The business is growing, and margins can further improve with operating leverage.

• As of Aug 8th, 2025; Oricon trades at:

  • 816 yen per share or 10.5bn MCap.

  • Lots of cash and very little debt. Net Cash of 3.4 bn yen (180 mm debt, 3.6 bn in cash)

  • EV = 7.0 bn yen. If including 713 mm yen of investment securities, then EV = 6.4 bn yen.

• Valuation Metrics:

  • 4.9x FY2025 (Mar 2026) EV/EBIT excl. LT investments

  • 4.4x FY2025 (Mar 2026) EV/EBIT incl. LT investments

  • 10.9x FY2025 P/E

  • 1.95x Current P/B

  • 1.75x Current P/S

  • 4.4% dividend yield or ¥36 per share

  • 18% FY2025 ROE

• Stock is undervalued, as the market is underestimating the company’s ability to grow

• The market does not understand that the stock has a positive flywheel in motion that can lead to multiple expansion at levels similar to Kakaku.com (2371). Kakaku.com’s range of valuation metrics over the last 10 years:

  • LTM EV/EBIT: 11.4x-21.8x

  • LTM P/E: 20.4x-49.4x

  • LTM P/B: 7.1x - 16.6x

  • LTM P/S: 4.9x-10.1x

• If Oricon can become the de facto customer satisfaction ranking list in Japan, the company could generate a 60-200% return in 1-3 years, with an even larger upside, a 2-7x multi-bagger in the best-case scenario. All this upside with very little risk in current valuation, a 4.4% dividend yield, and management’s track record of opportunistically buying back shares.

• This is a GARRP investment: Growth at a really reasonable price

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• Furyu - 6238: +25%

• SK Japan - 7608: +100%

• Round1 - 4680: +100%

• Haier - 690D: +75%

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Let me first touch upon the superior business economics of their core business, the customer satisfaction survey business.

Communication Business Segment

1. Customer Satisfaction Surveys

2. News Distribution/Page Views (PV)

Oricon’s largest segment is the communication business segment, with the customer satisfaction survey and news distribution/PV segments being the company’s core businesses. The segment accounts for 80% of revenues. So let’s dive into the customer satisfaction survey segment first:

Customer Satisfaction (CS) Survey Business:

CS Segment Overview:

The customer satisfaction survey business is Oricon’s cash cow and the most important segment Oricon operates in.

Within the CS segment there are 4 revenue segments:

• Trademark usage

• Customer Referral

• Data Distribution

• Other (Consulting)

Oricon conducts online customer satisfaction surveys of users of various services. Customer satisfaction is ranked in an independent, fair, and neutral manner. (See the appendix at the bottom to learn more about the Oricon customer satisfaction survey process).³

Oricon currently has 193 rankings, as of July and August 2025, spanning 13 categories:

From the surveys, Oricon gives awards to the top 3 winners of each ranking list.

Oricon 2025 Award Recipients

Trademark Usage:

Companies that want to utilize their ranking in ads need to sign a contract and pay a fee to license Oricon’s unique trademark logo. The contract allows the company to use the trademark for 1 year.

Just to clarify, Oricon is getting paid to distribute a JPEG!

1st to 3rd place Oricon Trademark Logos Below:

Examples of how trademark logos are showcased:

Infographic of Customer Satisfaction Survey Business Model:

Live footage of me stumbling upon an Oricon trademark logo when I was looking into Oricon’s comps. Kakaku (2371) has a website called “Job Box,” which is an HR website for people looking for jobs. When I was looking into Job Box, an Oricon trademark logo showed up, mentioning how Job Box is No. 1 in job information services. Talk about coincidence!

In the customer satisfaction survey segment, trademark revenues make up over 70% of revenues.

Digital Promotion (Customer Referral) Segment

Oricon’s rankings are published on its ranking website, where the public can see the companies considered in the survey, the survey questions asked, and the survey results.

In order for a company to directly link their company website to Oricon’s ranking list, they must enter into a customer referral contract, paying Oricon based on the number of customer referrals directed to their company page; hence, the higher the traffic to Oricon’s ranking page, the better.

My interpretation of this is that the companies who sign up are paying a variable fee for this service, so it is different than the trademark segment in that there likely is little to no upfront fee.

The interesting part of this segment is that if there are 10 companies in the survey, linking one’s website is not limited to just the top 3 award winners. All companies can pay to refer customers to their website.

Keep this at the back of your mind. The business economics of this part are insane, and I will come back to it later in this pitch. For the time being, remember the following 4 things:

• To have a clickable link, companies have to enter into a customer referral contract where they pay per click

• The higher the traffic on Oricon’s page, the more Oricon makes from customer referrals

• The more ranking lists and the more trademark logos get used in ads from winning customers, the more exposure Oricon gets, and hence, the more traffic gets driven to Oricon’s ranking list website.

• All companies on the ranking list can sign a customer referral contract

Data Distribution:

This segment is simply the sale of survey data and additional insights.

Other (Consulting):

Oricon offers consulting services where companies can hire Oricon to conduct research on their own company and its stakeholders to extrapolate insights that can help improve customer satisfaction.

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Business Economics and Revenue Growth Analysis:

Customer Satisfaction (CS) Survey Business:

In the customer satisfaction survey segment, trademark revenues make up over 70% of revenues.

Trademark Business Economics:

The core of my investment thesis rests on Oricon’s ability to turn the trademark usage into the consumer gold standard for customer satisfaction rankings.

Oricon’s trademark is, in ways, a positive self-reinforcing flywheel. Large companies like Sony Insurance will use Oricon’s rankings in their advertisements.

Those familiar with Oricon music rankings will recognize Oricon. Those curious about Oricon’s credibility in rankings outside of music may think to themselves,

”Well, if Sony is using their trademark in their advertisement, surely they must be legitimate.”

By association, this pairing of large brands with Oricon’s trademark logo reinforces trust in the eyes of the consumer.

In the social media age, we live in a world driven by impressions. When Sony puts out an ad, how many impressions do you think that generates?

Sony’s ad that generates thousands, if not millions, of views has Oricon’s trademark logo on it.

An individual unaware of Oricon’s non-music-related rankings may perform due diligence on Oricon’s trademark logo and realize it’s Oricon from the Oricon music rankings. This may bring up nostalgic childhood memories and reinforce trust in the Oricon trademark.

This is simply 1 trademark logo on 1 ad from 1 company. Oricon has 193 rankings, with the top 3 being privy to the trademark logo. Creating potential ad opportunities from 379 companies. Depending on the company’s reach and ad spend, the number of impressions may vary, but the key takeaway here is that companies are paying Oricon to spread Oricon’s trademark logo—Oricon is receiving free marketing and organic exposure.

This free exposure leads to curious consumers heading over to the Oricon ranking website. Oricon charges companies a customer referral fee based on the number of clicks to link their company’s website on the ranking list directly. If they don’t pay the customer referral fee, customers will have to Google search the company, which runs the risk of poor SEO rankings and other competitors having a higher ranking due to sponsored ads.

This next part is very important to understand. Reread it a few times if you have to:

So you are telling me I have to pay Oricon to use their trademark. A customer sees my ad and is curious about the award I won. The customer goes to the Oricon ranking site to see the ranking list. While the customer is on the ranking list, if the customer wants to click a convenient link to see my company website, I have to pay Oricon as well? Did I just pay to direct traffic to the link that I paid for as well?

I hope you get the humour in this and how great the business economics are for this to happen. The more “Sony Car Insurance” spends on ads, the more money Oricon generates from their customer referral arrangement.

Referring to Oricon’s ranking lists can be habit-forming. There will come a point where customers who have previously relied on the rankings will visit the rankings on their own. This would be the next stage of growth and credibility I hope Oricon can attain.

In an interview, if an interviewer asks you about your former team at your previous firm, the optimal answer is to only give compliments, such as “hardworking,” “productive,” and “collaborative.” The interviewer will subconsciously associate all those nice qualities with you as well.

What do you think happens to the consumer’s subconscious when the No. 1 car insurance, real estate brokerage, job search, or telecommunication company uses Oricon’s trademark logo in its advertising? Gradually consumers will subconsciously associate Oricon with great companies.

If the assumption is that Oricon is still developing its reputation, then by logical deduction, the price they charge for the usage of their trademark should be some discount to the increased conversion that can be had if an ad doesn’t have the trademark.

For example, an ad without the trademark has a click-through rate of 2%, but with the trademark it increases to 5%. A life insurance company would line up to pay Oricon money for such a substantial improvement in KPI.

So not only can Oricon raise prices in relation to the effectiveness of their trademark, but they can also almost perfectly price discriminate against companies whose customers have higher LTV (lifetime value). This is similar to how AdSense works on YouTube videos. Channels that make financial videos make way more money per 1000 views than prank videos because insurance/financial companies are willing to pay more to target more affluent viewers. If an individual is looking at video content on TFSA/RRSP/IRA/government tax-advantaged investment accounts, they likely have money to invest.

There could come a time in the distant future when the association can become so strong that the actual credibility of the actual survey might not even matter; there will come a point where slapping an Oricon trademark will lead to increased conversion vs. not having it. Foodies can blindly trust that they will have an excellent dining experience at a Tabelog Gold award-winning restaurant.

Reputation and credibility take a long time to build. Once Oricon becomes highly trusted for its rankings, not only will its trademark encourage consumers to use its product or service, but there will also be no need for another incumbent.

The reputation established through longevity will be Oricon’s competitive moat. No competitor can simply create a customer satisfaction survey with a trademark and attain the results that Oricon has had. Why would customers switch to a ranking list they are unfamiliar with? Why would companies pay to use a trademark from some unestablished company?

My read on the pulse of the situation is that Oricon is still establishing itself as the de facto gold standard in ranking services. For the customer satisfaction survey to perform the way it is currently performing, Oricon must have at least a good reputation in the mind of the consumer, and the trademark has to be working for the trademark contract rates to increase to 39%.

What we hope to happen is for Oricon to generate the same level of credibility it had with music rankings across other service rankings and maybe even expand to product rankings.

They have competition from certain companies, i.e., JD Power (auto, insurance, finance), but Oricon can expand into rankings for all products and services where there is currently no clear winner. i.e., avoid restaurant rankings because Tabelog dominates that ranking list.

Oricon has the potential to become the de facto gold standard for all things rankings, where stamping an Oricon trademark increases the credibility of the firm and hence converts an otherwise suspecting consumer into a customer.

Ranking Lists Business Economics:

As we can see, there was a decline in ranking lists in 2023. Oricon must spend upfront capital to gather data from survey respondents to conduct these customer satisfaction surveys. Sometimes the data will result in a monetizable ranking list and sometimes not.

In the following screenshot, it can be seen that Oricon has revived the 24-hour Gym ranking list. Having written a deep dive on Fast Fitness Japan (7092), “Anytime Fitness” was the pioneer of the 24-hour gym chain in Japan; hence, there were very few competitors. After Anytime Fitness proved their business could work, many competitors entered the space, making the competitive landscape more saturated. Given there are more options now, it makes sense for Oricon to revive the 24-hour gym ranking list. Anytime Fitness won in every metric in 2024, but in 2025 AF took 3rd.

Which is to say, even if a ranking list is removed, the work is not completely lost in that it can be revived.

In terms of business economics, the most monetizable ranking lists are where there are high levels of competition, and despite the top 3 being ahead, the underdogs can take market share if the top 3 are not careful. This is where having an Oricon trademark would be very monetizable because the top 3 will want as many advantages in differentiating themselves from their competitors if the service seems similar to the uninformed. i.e., car insurance, real estate brokerage, and cram schools.

What drives each segment are:

• Trademark Use KPIs/Op Stats:

  • # of ranking lists

  • trademark usage contract rates, %

  • ARPU—average revenue per contract (user) [not reported, estimated]

• Digital Promotion (customer referral rates) KPIs/Op Stats:

  • Oricon ranking website traffic (not reported, similarweb?)

  • “Customer referral contract rate” = # of companies signed up for customer referrals/# of companies included in all surveys (not reported)

  • Click-through rate: When a customer visits a ranking list, how likely are they to click a link? (not reported)

  • Clicks: Customers pay a variable fee dependent on the number of customers Oricon refers to their companies’ websites. (I am not sure if there is an upfront fee or not.)

• Data Distribution KPIs/Op Stats:

  • # of ranking lists

  • Note: Newer ranking lists would have less historical data and hence would be potentially less attractive to a buyer, which is to say future sales could improve.

• Other (speculated to be consulting) KPIs:

  • # of clients who are contestants

Driving Trademark Revenue:

*Trademark Revenue = “Avg Implied # of awards that qualify for trademark contracts” x Trademark Usage Contract Rates, % x Avg Revenue Per Contract

**Avg Implied # of awards that qualify for trademark contracts = Avg Ranking Lists x 3 ← 3 being 1st, 2nd, and 3rd place

For the trademark revenue segment, I believe Oricon will continue to increase the number of ranking lists.

But simply increasing rankings lists doesn’t guarantee increased revenues or earnings; what is most important is trademark usage contract rates. 39.1% of winners have contracts. I believe there is still a lot of room to grow here.

The slight dilemma I have here is the No. 1 winner will have the most incentive to sign a contract, but I’m not sure how much incentive 2nd or 3rd place has. Who wants to put on their marketing material that they are 2nd or 3rd? Wouldn’t that advertising simply make a consumer think, I wonder who No. 1 is then?

I guess the wonderful thing about the consumer thinking about who is number 1 from seeing an Oricon trademark logo for 2nd or 3rd is that the consumer will want to visit the Oricon ranking website to satisfy their curiosity.

The counter to the above argument would be in highly saturated services where there is limited availability. If I were looking for a cram school, but the top cram school was fully booked, then I’d look for the 2nd place winner for availability. This could apply to daycares and gyms. Say the No. 1 gym is 15 minutes away and is constantly packed during peak times, but the No. 2 gym is 10 minutes away and not as packed.

I did a thought experiment in my head. I believe the following to be attainable:

• 95% of 1st place winners sign trademark usage contracts

• 50% of 2nd place winners sign trademark usage contracts

• 33% of 3rd place winners sign trademark usage contracts

• Blended trademark usage rate = 59.4%

And then, based on price, 1st place winners would pay the most, and 3rd place winners would pay the least. Currently, we have no data on this.

Another element that makes revenue forecasting a little more difficult is the pricing of the trademark. I believe the trademark fee should be different for different industries and services. A 24-hour gym chain with 1000+ locations in Japan would be willing to pay far more for the No. 1 trademark than a hair salon chain with 50 locations in Japan.

The value of the trademark should be tied to the increase in the following metrics:

• Click-through rate of an online ad

• Increased conversions or organic search from seeing a billboard, marketing material, flyer (harder to gauge)

• Can the trademark be the deciding factor that tips the scale in a company’s favour?

• What is the value of the product or service being sold?

• LTV of the customer

• What would be the difference in sales with and without a trademark?

Now that we have established that the trademark fee is dependent on its ability to increase sales performance, then as Oricon’s credibility improves over time, so too will they be able to charge more.

The positive flywheel here is increased credibility, which leads to increased conversions from users of Oricon’s trademark, which leads to Oricon being able to charge more, which leads to more companies signing up for trademark usage contracts.

The current method of driving trademark sales is the best method I can think of given known data.

Hidden Growth Opportunities in Trademark:

• Further ranking lists based on age, region, gender

  • Lower trademark usage pricing for region-specific awards. i.e., if you are No. 1 in the Kanto/Tohoku/Kansai/etc. regions

• AI to create customized ranking lists tailored to each user

• Create ranking lists for products, in addition to services

• Expansion overseas

  • Adopt business model in overseas markets

  • Can maybe start off with Japanese offerings that international audiences would value—create a rival to MyAnimeList or MyDramaList, etc.

Trademark revenues have CAGRed at 13.4% since FY2016. From all the above growth opportunities, I believe trademark revenues still have a long runway for revenue growth and operating leverage. The current revenue level is due to a shift in ranking lists; once ranking lists resume course, and the positive flywheel compounds over a few more cycles, I believe trademark usage contract rates will increase, and so too will the ARPU.

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Digital Promotion (Customer Referral) Segment

Oricon’s rankings are published on its ranking website, where the public can see the companies considered in the survey, the survey questions asked, and the survey results.

In order for a company to directly link their company website to Oricon’s ranking list, they must enter into a customer referral contract, paying Oricon based on the number of customer referrals directed to their company page; hence, the higher the traffic to Oricon’s ranking page, the better.

My interpretation of this is that the companies who sign up are paying a variable fee for this service, so it is different than the trademark segment in that there likely is little to no upfront fee.

The interesting part of this segment is that if there are 10 companies in the survey, linking one’s website is not limited to just the top 3 award winners. All companies can pay to refer customers to their website.

I believe this opens up a large revenue potential for Oricon. Once Oricon rankings become the gold standard for customer satisfaction surveys and organic traffic increases to such a level that it would be suboptimal to not have your link attached to your ranking on the ranking list.

Here is a ranking list where the top 3 winners did not opt for customer referrals, but the two last-place finishers opted in. I have seen other interesting combinations.

Here is the opposite scenario for English schools, where everyone except the 3rd place finisher opted in for customer referrals. By the 3rd place finisher not opting in, they may be losing customers to their other competitors.

If you are a consumer, it’s much easier to click a link than to search in Google for the other companies. There could be a scenario where by not signing up for customer referrals, you are losing customers to the other companies on the list.

I believe customer referral income to be most abundant in ranking lists where companies operate in saturated markets.

Oricon can then bundle trademark usage, customer referrals, data distribution, and consulting in any package to increase ARPU.

Hidden Growth Opportunities:

• I believe if Oricon could create tailored ranking lists using AI, then more companies would be incentivized to sign up for customer referrals, because a company on the bottom of the general ranking list might appear on the top of a list for a unique customer.

As we can see from the above, customer referral revenue CAGRed 12.3% since FY2016. Based on all the growth opportunities I listed above, I believe customer referral revenue has not reached its potential.

According to Similarweb, Oricon’s ranking website only has 1 mm visitors a month. I believe there is room for visits to substantially increase over time.

Data Distribution:

This segment should increase as ranking lists and companies covered grow. I don’t have high hopes for this segment, but I do believe they will continue to gradually grow.

Other (Consulting):

I am not sure how effective consulting will be as a service, so I’ll reserve comment until more historical figures present themselves.

What’s the upside?

I believe the number 1 case study for Oricon is Kakaku (2371).

Kakaku owns:

• Kakaku.com: the No. 1 shopbot website in Japan

• Tabelog: the No. 1 restaurant ranking guide/table reservation website in Japan. Replaced Michelin and grew in popularity due to being more representative of what Japanese people think are the best restaurants in Japan, as the ratings are based on real customer reviews.

• Job Box: a job search site that has the most job postings (not the No. 1 job search site) in Japan.

• other referral services

I believe the Tabelog business to have the highest degree of competitive moat. For most countries, achieving 3 Michelin stars is the highest accolade a restaurant/chef could attain. Michelin was seen as the gold standard for restaurant rankings globally. For Tabelog to dethrone Michelin in Japan is no easy task.

How was this possible? TLDR I could talk multiple paragraphs about this, but essentially Michelin was not accurately reflecting how people in Japan would view a restaurant. Tabelog adjusted their rating system to allow users with more credible eating experiences to sway the ratings. So a person who loves Unagi and has shown on the Tabelog app to have made table reservations at over 50 Unagi restaurants would have way more “influence” on Unagi restaurants than someone who has gone to 2.

Every year Tabelog releases its ranking of Tabelog Gold, Silver, and Bronze winners, which is an accolade similar to Michelin 3-star ratings.

The point I am trying to make is being seen as a “credible” source for referrals, where one’s rankings are seen as accurate and trustworthy, once established, typically results in 1 company, at most 2, dominating public perception.

This can be seen with Oricon music rankings and Billboard fighting for the No. 1/No. 2 spot.

For further discussion on the extrapolations of Kakaku as it relates to Oricon, see the appendix¹

Back to valuation, if Oricon becomes the gold standard for rankings beyond where there is overlap, car insurance with J.D. Power, Oricon’s multiple should rerate to something in the vicinity of Kakaku 2371.

Once Oricon reaches Tabelog-level credibility, accuracy, and trust, they can charge more for using its trademark, and margins would further expand. It becomes a license to print money and a tax on any service it covers.

Tabelog is clearly a tax on the restaurant industry in Japan. If you want to offer online table reservations, you go with Tabelog, and you can’t say no to their fees because they control so much of the online traffic for organic restaurant discovery; it would be a suboptimal decision to not be on Tabelog for most restaurants. The only exception is if you are a highly established restaurant that is constantly booked up weeks or months in advance; then Tabelog’s service is not required.

The business economics for utilizing a ranking trademark are phenomenal; the difficulty is in getting there.

It is so easy to miss the mark on exactly what Oricon could be worth in the best-case scenario. It is truly difficult to ascertain, given the upside is so great if exceptional execution and luck are on their side.

Here are some Kakaku valuation metrics over the last 10 years:

LTM EV/EBIT: 11.4x-21.8x

LTM P/E: 20.4x-49.4x

LTM P/B: 7.1x - 16.6x

LTM P/S: 4.9x-10.1x

If we assume the lower end of each of the above metrics:

If we assume no revenue growth or margin expansion from 2026, highly unlikely, here is the return profile:

Sales: 6000

EBIT: 1450

Net Income: 960

BV: 5,657

LTM EV/EBIT: 11.4x *1450 = 16.5 bn yen; add net cash of 3.8 bn; Mcap = 20.3 bn yen

LTM P/E: 20.4x *960 = 19.6 bn yen

LTM P/B: 7.1x*5657 = 40.2 bn yen

LTM P/S: 4.9x*6000= 29.4 bn yen

Based on the company’s current Mcap of 9.9 bn yen, the company could generate a 100-300% return.

Update as of June 2026:

Substack post reviewing their latest earnings

The above is alternative data provided only in the business description section for the customer satisfaction survey business. Every month on the 1st or 2nd, the company will release how many ranking lists and people have been surveyed. If you forget to record it, then it’s gone.

As of May 2026, the company completely stopped reporting both figures. The last update was in April 2026.

Here are some brief details of the MBO:

I believe the Koike family knows what they are holding onto. I believe the Koike family is carrying forward their economic interest because they know the long-term potential of Oricon. Mgmt’s offer would seem fair to a short-term-oriented investor or an investor that doesn’t understand what they are holding.

At 16x PE, an investor that has an outlook for the company of 1 year would be satisfied with this offer.

But we forget about the 4.4 bn in net cash, including investment securities, on the balance sheet that will certainly be used for debt paydown once the MBO is completed. So the true figure to pay attention to is that Oricon is getting swallowed for 7.7x EV/EBIT.

Although I myself am happy with a 60-70% return in under 1 year, it is bittersweet that it looks like I very much cannot participate in the upside potential of Oricon.

“Little Pond” is (likely a bad translation) a fund made for the benefit of the Koike family. In total, the Koike family owns 41.73% of shares outstanding (net of treasury shares).

Here are additional points from their press release:

So only Little Pond is the surviving shareholder. The shares owned by Hidenori, Naoko, and Yumi are part of the tender.

Given the company plans to acquire up to 8.2 mm shares, the tenderable shares from the Koike family make up 9.1% of target shares or almost 20% of the minimum threshold of shares needed for the MBO to go through.

On the surface, if you didn’t know how to do fundamental analysis or were looking at Oricon for the first time, you would think this is a fair offer. But if we truly factor in the long-term potential Oricon has with its positive flywheel and there being no competitors and the TAM they could service, Oricon is still quite undervalued.

My read on the situation is that they are purposely not releasing May figures because it could potentially indicate that the increase in ranking lists is picking up traction. If the narrative flips to Oricon being a high-growth company, Marunouchi Capital would have to pay more to acquire shares.

This coupled with the conservative FY forecast. I believe given the substantial increase in ranking lists to 214 ranking lists, Oricon should outperform in the next 6-12 months. I think what a buyer would fear is that shareholders start understanding that the narrative has improved and that Oricon will continue to grow ranking lists and achieve a higher contract rate, so they will no longer be able to acquire shares at 1332 yen per share anymore.

What management is doing is acquiring Oricon’s valuation in 1 year and keeping all the upside from 1 year + all to themselves and the private equity fund.

We are likely at the point where the business is about to take off. Surprisingly, mgmt makes up an excuse that they have a lot of capital-intensive investments they want to make, which would work better in a private company structure. I personally don’t buy it.

The company share price, before the stock rallied, was around 800-900 yen per share. I genuinely don’t care if they wanted to be aggressive with capital allocation because I know what Oricon is capable of growing into, which is a Kakaku generalist ranking list company.

How much could their share drop? Oricon is already cheap and has a lot of cash. Mgmt’s justification only applies to short-term holders that care about price volatility but penalizes long-term holders that truly see the value of the company over the next 3 years.

I believe management, by approving this transaction, is not working in the best interest of shareholders but more so for themselves. The fact that they suddenly stopped releasing the May ranking list and survey data indicates that they want to acquire the company before there is factual evidence the company is experiencing its next leg of growth. If the management were not allowed to carry forward their economic interest, I suspect the share price they would negotiate for would be significantly higher.

Given the offer isn’t egregiously bad, it will be hard to fight this in court. I think the only way to remove the MBO is for shareholders who cumulatively own more than 4,308,075 shares to not tender their shares (33.6% of shares outstanding needed to block the deal). I know Hikari Tsushin owns shares (UH Partner 2 & 3, 9% roughly, if my guess is right), so potentially they and other shareholders can join forces.

If anything, even if Oricon gets swallowed, I hope this stock reveal has shown you part of my process and how I read between the lines to find a truly exceptional business.

The next time I reveal that I have a high-conviction stock, make sure to not miss out on potentially truly exceptional gains.

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This exact thing has happened to me with Shinoken Group, Fast Fitness Japan, and now Oricon. I guess you could say I’m lucky and unlucky at the same time.

I guess a truly S-tier stock is one where you are lucky enough that the stock rallies and somehow doesn’t get acquired…

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Disclaimer: I am long shares of Noritsu Koki (TSE-7744) at the time of publishing this post.

Table of Contents:

1. Company Overview

2. Key Highlights

3. Quick Valuation

4. Key Highlights

5. Segmented Analysis

   1. Pioneer DJ/AlphaTheta

   2. JLabs

   3. Teibow

   4. MIM

   5. Senqcia (Recent Acquisition)

6. Opportunities

7. Risks

8. Conclusion

Company Overview:

Noritsu Koki was initially famous for the photo “mini-lab,” an automated process for developing film into photos. At its peak, the company had over 50% of the global market share. With the digitalization of cameras in the early 2000s, the business went into perpetual decline.

In 2005, Kanichi Nishimoto, the founder, passed away.

From 2005 to 2010, the company was struggling and in a transitionary phase.

In 2008, Hirotsugu Nishimoto, former secretary and son-in-law of Kanichi Nishimoto, took over as president and turned the company into an investment holding company.

From 2010 onward, Hirotsugu executed a series of acquisitions across unrelated sectors, spanning healthcare (drug discovery, medical info, dentistry), digital (AI, fintech, crowdsourcing), senior care, insurance, agriculture, food, and manufacturing, while frequently holding stakes in more than 10 businesses simultaneously.

The most successful exit for the company to date was the IPO of JMDC Group (Japan Medical Data Center, Doctor Net, and Unike Software Research) in 2019 and the subsequent sale of a portion of their stake in JMDC Group (33% of shares outstanding) to Omron for 111.8 billion yen in February 2022. Post-sale, the company retained 8.8 mm shares valued at 33.5 bn yen. In FY2025, the company retained just under 3 mm shares valued at 11.9 bn yen).

The acquisition price for JMDC Group was as follows:

• JMDC1 acquired for 2.4 bn yen in 2013

• Doctor Net2 acquired for 3.2 bn yen in 2010

• Unike Software Research3 acquired for 3.3 bn yen in 2016

• Totalling 8.9 bn yen for JMDC Group

Each of the above companies were acquired at different times. JMDC Group was formed out of the above 3 companies prior to IPO of JMDC Group.

The following is a breakdown of the transaction:

Given an acquisition price of 8.9 bn yen for the initial 33% they did sell, NK had an approx. 18x bagger.

Hirotsugu was successful in identifying businesses with good future prospects, buying them, improving them, and selling them at higher values. IPOing JMDC Group (TSE-4483) shares at 2950 yen per share and then holding out to sell their stake at 4x the IPO price (6000 yen/share, 2 for 1 stock split in 2020 implies an IPO price per share of 1475 yen per share).

If you can extract 1 valuable life lesson from this post, it’s the importance of who you pick as your son-in-law!

Hirotsugu’s success in acquisitions gave the company ample cash to continue acquiring companies and grow as an investment holding company.

The former DNA of Noritsu Koki was to be the dominant leader in film and photo processing.

The new Noritsu Koki DNA is acquiring dominant businesses that occupy the No. 1 market share in their market or are the “Only 1” in their market. This is what the company calls their “No. 1/Only 1” investment philosophy. Bad grammar, but essentially companies with dominant market share.

After Hirotsugu stepped down in 2018, the person in charge of executing this corporate DNA is CEO Ryukichi Iwakiri (currently 48 years old, 1978). Quite impressive for Ryukichi to become CEO at 40 years old.

Since then, Ryukichi has made, in my opinion, a spectacular acquisition in AlphaTheta (Pioneer DJ), which has a 90% market share of professional DJ equipment globally and a 60-70% market share of all DJ hardware equipment. I will touch on the superior economics this business exhibits later.

The excess cash on the balance sheet is due in part to successful exits and cash flow generated by its business units.

The future game plan of Noritsu Koki (NK) is simple. Continue to acquire companies that dominate their market. Find areas where the company can add value or can inject capital. Once the company deems the value of any particular company has been maximized or the value can be maximized with a strategic buyer, NK is willing to sell.

The No.1 or the only company in a market typically exhibits some competitive advantage or moat. So this is similar to Buffett’s investing in companies with a moat, but the caveat is that NK does not hold forever. As a bit of a tangent, NK establishing this precedent won’t allow for spectacular deals that Buffett receives from families that want the family/management to not get turned over.

Key Highlights:

• My investment rating for Noritsu Koki is “__”: Business economics (__), Management (__), and Value (__). (Available to Paid Subs)

• Noritsu Koki owns an S-tier business in Pioneer DJ/AlphaTheta, which has a 60-70% market share in all DJ equipment and 90%+ market share in professional DJ equipment. Based on my estimates, several tailwinds point to Pioneer DJ possibly achieving 75% hardware market share over the next 12-24 months, which would have positive knock-on effects on the company’s DJ software market share. If this plays out how I foresee it playing out, revenues will continue to grow and further operating leverage will be realized.

• NK’s acquisition of Senqcia gives NK positive exposure to the AI boom and data center build out in Japan. Acquiring Senqcia secures key structural, flooring, and seismic product segments, opening up a path for Noritsu Koki to reinvest those cash flows into M&A targeting other stages of the physical construction process.

• It is in the company’s DNA to run companies that are No. 1 in their field. Typically, if the company has the most market share, it exhibits some sort of competitive advantage or superior business economics. NK intends to continue this investment philosophy in the area of manufacturing.

• The current CEO, Iwakiri, has showcased an ability to grow the company organically and through acquisition. Iwakiri is responsible for the acquisition of Pioneer DJ/AlphaTheta so we have Iwakiri to thank for getting the company to this stage. He is only 48 years old and has many years ahead of him.

• As of Q1 FY2026, Noritsu Koki has allocated all excess cash. Cash and investments evenly cover debt. NK has a cash cow in Pioneer DJ. The key challenge going forward is how to create shareholder value when allocating cash flow generated from operations.

Quick Valuation:

*Price of 1997 yen /share on May 21, 2026.

Noritsu Koki has a market cap of 213 bn yen and 15 bn yen of net debt. Enterprise value is 228 bn yen excl. investment securities and 211 bn yen incl. investment securities.

NK has 16.5 bn yen in investment securities. (Only reported in the securities report, hence assumed unchanged, as there was no sale of investment securities in CFS). There is also a 2.7 bn “equity” investment listed in the FY2025 securities report, but I have excluded it, as it is likely illiquid.

NK forecasts paying out a total annual dividend of 75 yen per share (paid semi-annually) or a dividend yield of 3.8%.

The company currently has a stock repurchase program of up to 3 bn yen, or 1.6 mm shares, from Feb 24, 2026 to June 30, 2026. As of the May 7, 2026, “Notice regarding repurchase of treasury stock,” they have repurchased 2.6 bn yen or 1.2 mm shares worth of stock, thus far.

….

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This special situation is immediately actionable, and the window to take advantage is ending very soon, up until June 3, to be exact.

This is a low-downside, decent-upside trading setup. The opportunity‘s downside is roughly 0% and upside is +5% for 1/2 days of trading.

I have released this idea to paid subs and given them a 1-day advantage over free subs. Tomorrow morning I will release this to free subs as well, after the trading day is over, but by that time another trading day will have elapsed, and the train might have left the station.

*I didn’t have much time to look at this trade given a recent personal matter that needed my attention. Please forgive how rushed this special situation pitch is. The decision was, do I not offer this opportunity to make money for my subs because I don’t have time, or offer this opportunity to my subs to look into themselves even though it is very rough around the edges?

Well, I thought you guys would appreciate making money. The setup is very straightforward; I found a few elements about this trade that I liked and acted quickly. Upside is quick and downside is protected, so I acted. I breakdown my analysis below:

Read more

We are up +30-50% depending on your purchase price.

What’s great to know is that this company is not done rallying.

It is only getting started, as I assessed it as a potential 2-7x bagger at the price I originally pitched it at.

In this post, I will be going over the company’s recent earnings in a private video.

You can follow along with the video to see me break down each filing, or you can listen to this like a podcast. Enjoy!

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This post and all its contents herein are the exclusive property of Continuous Compounding. This post is intended solely for informational purposes and is not to be distributed, reproduced, or transmitted, in whole or in part, for commercial purposes or sale without prior written consent from Continuous Compounding. Any unauthorized use, dissemination, or sale of this research is strictly prohibited and may be subject to legal action.

Disclaimer: I do not have a position in Buffalo Co. (TSE-3352) at the time of publishing this post.

Buffalo Co. (TSE-3352)

“Quick Stock Review” will be a series of stocks I’ve reviewed in a live stream or done off-stream that could become interesting in the future. This is not a stock pitch, but purely a review of the stock and what opportunities and hurdles the stock has.

Buffalo Co. single stock live stream (recap at 2:13:30):

I figure if a stock has shown up in my stock screen, it may have shown up in yours.

Over time, I’d have such a large archive of quick stock reviews. Most cheap stocks that show up, you can just search my Substack and find a quick summary.

Brief Company Overview:

Buffalo Co. should not be confused with Buffalo Inc. (TSE-6676) that sells electronics.

Buffalo Co. is a franchisee company, meaning they franchise businesses.

Buffalo currently owns 15 Autobacs stores. The Autobacs brand is owned by Autobacs Seven Co. (TSE-9832).

Buffalo also operates 6 “Yakiniku Like” and 5 “Pisola” stores.

Yakiniku Like is a high-turnover affordable Japanese meat-grilling restaurant where customers gets their own grill. Service is fast, and the dining experience is semi-no-frills in that sauces, water, and an ordering tablet are available at the table for customers to self-serve. The cost savings from reduced labour costs are passed over to customers.

I personally have gone to Yakiniku Like twice in 2019 and really enjoyed the experience. Food is delicious and super great value for the money.

Pisola is a family-oriented chain casual Italian restaurant. Pisola offers pizza, pasta, cured meats, cheese, and risotto. What is surprising is Pisola offers all-you-can-eat and drink options.

Unlike Yakiniku Like, Pisola seems to be a medium-priced (3000-5000 yen per person). Japan has the second-best pizza restaurant, so this is not that calibre of Italian food. What should be noted is that Pisola makes pizza in a wood-fire oven.

Pisola Short

Google reviews for Pisola range between 3.5-3.8. After reading the reviews, I saw quite a few 3-star reviews that said the food is delicious, but because they were nitpicking certain minor things, the review got a lower rating. I personally felt quite a few ratings were overly harsh, than what I am personally used to. When I went to Japan in 2019, a 4.1-star rating or above would be certain for a good/great experience. For me, anything about 4.3, you really couldn’t go wrong.

*I did a sanity check on X, asking local Japanese about Google ratings and apparently 3.5-3.8 is a good rating. Japanese consumers tend to be more strict in their ratings.

In Japan, the food guide of choice is Tabelog. Based on the following ratings, Pisola rates quite high, indicating great food and a good experience.

Pisola Tabelog Ratings:

Pisola Misato City: 3.45

Pisola Narita City: 3.37

Pisola Yokosuka City: 3.16

Pisola Kumagaya City: 3.30

Pisola Toda City: 3.35

The Numbers:

EBIT margins: 4-5%

Revenue growth last 10 years: 33% in total

Valuation (Japanese yen):

• MCap: 4.0 bn yen (at 1713 yen per share)

• Debt: 0.8 bn yen

• Cash: 3.3 bn yen

• Investment securities: 0 bn

• EV: 1.5 bn

• EV/EBIT: 2.7x

• P/B: 0.6x

• P/E: 10.8x

• Div yield: 3.8% (65 yen per share)

Why you would consider investing:

• Cheap

• Improving margins, but still a low-margin business

• Lots of dry powder to perform more openings in more Autobacs or restaurant franchises

  • Autobacs: The company guides to opening 5 Autobacs stores from now until 2029.

  • Restaurant store openings:

    • Yakiniku Like business has just turned profitable, but the business does not seem to perform well despite revenue growth. Operating leverage for Yakiniku Like has been poor, which signals the business is very sensitive to meat prices and unable to pass on the costs to customers.
      
      Pisola stores were initially open in FY2024. The results in 2021 to 2023 are simply Yakiniku Like results.

      

      As we can see from the above, revenues grew almost 3x, but margins were still negative. Showing no signs of operating leverage.

      
      The existence of a Yakiniku Like is great for consumers, not so much for the business owner.
      
      Given Yakiniku Like is a value chain, raising prices won’t be easy as customers are likely very elastic to price increases. This is likely why increases in meat prices, would negatively impact Yakiniku Like.
      
      I am of the opinion that Buffalo will not be opening any more Yakiniku Like stores in the future.

    • Pisola is a different story. 2 of their stores have already turned profitable. Due to opening their 4th and 5th stores last FY2025, it will take some time for the stores to ramp up.

      The company guides to opening 12 more restaurants from FY2024, bringing the total up to 19 restaurants.
      
      Based on the medium management plan, Buffalo can open 8 more stores by 2029 as they are sitting on 11 restaurants currently.

Why you wouldn’t consider investing:

• Low-margin business

• At the mercy of finding good franchise businesses to allocate capital

  • Common opinion is that its great to be the franchisor, less so to be the franchisee. I wish they franchised some Anytime Fitness (Fast Fitness Japan -delisted) locations haha (long-time subscribers will understand this reference).

• No buybacks

• Their potential growth engine in F&B is a risky industry with high failure rates

Factor exposure:

• Autobacs

  • ICE vehicles

  • Domestic new ICE vehicle sales

  • Domestic used ICE vehicle sales

  • Average age of ICE vehicles owned in Japan

  • Average KMs/Miles driven in a single year by ICE vehicles (impact frequency of services like oil change)

• Food & Beverage

  • Disposable income

  • Household disposable income

  • COGS price for ingredients (beef for yakiniku like, cheese/tomato prices for Pisola)

  • Tourism

  • Demand for franchise chain restaurants, demand for italian pizza/pasta

EV vehicle owners are not the primary target customer of Autobacs in that most EV owners don’t seek to modify their vehicle as much as ICE vehicle owners.

EV vehicles are quite complete out the factory assembly line, the main thing Autobacs can offer are EV specific tires and rim replacements.

With the business model of Autobacs it has way more value add for ICE vehicles with the JDM car culture in Japan. Internal combustion engine (ICE) vehicles are highly customizable, allowing for a wide range of both performance enhancements (turbocharger, supercharger and suspension upgrades) and stylistic modifications such as wraps, bodykits, and wings (maybe performance).

I primarily see stylistic modifications for EVs and hybrids, rather than performance.

Rating: B+/A-

Based on preliminary analysis, Buffalo seems promising. It trades cheaply at only 2.7x EV/EBIT, low P/B 0.6x, and offers a 3.8% div yield. We have good downside protection while we wait for the business to inflect.

When will the business inflect?

Paid subs will be offered additional commentary on when I believe the business will inflect and offer an asymmetric trading setup in the section below…

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***There is no guarantee that I will release discounts or what discount rate I choose to use in the future.

The analysis continues below…

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This post and all its contents herein are the exclusive property of Continuous Compounding. This post is intended solely for informational purposes and is not to be distributed, reproduced, or transmitted, in whole or in part, for commercial purposes or sale without prior written consent from Continuous Compounding. Any unauthorized use, dissemination, or sale of this research is strictly prohibited and may be subject to legal action.

Disclaimer: I do not have a position in Niitaka (TSE-4465) at the time of publishing this post.

Niitaka (TSE-4465)

“Quick Stock Review” will be a series of stocks I’ve reviewed in a live stream or done off-stream that could become interesting in the future. This is not a stock pitch, but purely a review of the stock and what opportunities and hurdles the stock has.

Niitaka single stock live stream (recap at 2:10:21):

I figure if a stock has shown up in my stock screen, it may have shown up in yours.

Over time, I’d have such a large archive of quick stock reviews. Most cheap stocks that show up, you can just search my Substack and find a quick summary.

Niitaka specializes in cleaning chemicals catered primarily to restaurants, hotels, food factories, schools, and supermarkets.

The company has recently expanded into the healthcare industry by acquiring a company (Biobank) that sells a lactic acid bacteria-fermented health supplement that aids in digestive health.

Niitaka’s strength is that it is relatively more vertically integrated than its competitors, so it can create custom cleaning solutions for unique use cases for its customers.

One example is the company’s “Chemifine” quick rinse product. Typically at the end of the workday, restaurants will do a comprehensive clean of all of the kitchen’s surfaces, from the countertops and appliance surfaces to the floor. This is to prevent cross-contamination and ensure floors are safe and not slippery for the next day. Chemifine is a product that doesn’t require scrubbing and doesn’t bubble as much, allowing for faster cleaning times. The primary value prop is that restaurants can save on labour costs with this product due to reduced cleaning times.

Hypothetical example: 6 kitchen staff stay behind to clean the kitchen. With Chemifine you save 10 minutes of cleaning time per person. 60 minutes of labour cost are saved with Chemifine. Would you rather pay a few cents or bucks more for Chemifine or pay more for labour?

EBIT margins: 5-7%

Revenue growth last 10 years: 65% in total

Valuation:

• MCap: 14 bn yen (at 2325 yen per share)

• Debt: 1.7 bn yen

• Cash: 7.3 bn

• Investment securities: 0.5 bn

• EV*: 8.2 bn excl. investment securities

• EV**: 7.7 bn incl. investment securities

• EV*/EBIT: 4.1x

• P/B: 0.9x

• P/E: 9.2x

• Div %: 3.3% (76 yen per share)

Why you would consider investing:

• Cheap

• Improving margins due to

  • healthcare products having higher margins than the company’s core business

  • recent drop in the cost of raw materials

  • revenue growth as a result of company gaining market share - operating leverage

• Gradually capturing more market share in chemical segment

• Lots of dry powder to perform more acquisitions in healthcare or related chemical products

• Expansion of cleaning solutions for other industries beyond food, i.e., dental clinics.

• Food Trends: Trend of eating self-heating hotpot for take-out orders in China - Niitaka sells solid fuels that heat up food over a set period of time while emitting fewer odours.

• End customers in restaurant, hotel, and food industries are likely to do well due to tourism boom in Japan

Why you wouldn’t consider investing:

• Sensitive to price fluctuations of chemical raw material costs

  • Cannot completely pass on costs to customers

• Circle of competence reasons

• No buybacks

• CEO owns very little stock, which is interesting

Factor exposure:

• Chemical raw material prices: petroleum, natural oils, and fats

• Restaurant, hotel, supermarket, and food factory sales

• Tourism in Japan

• Cleanliness and hygiene standards of restaurants, schools, etc.

• COVID would be good for this company given their disinfecting cleaning supplies

Rating: B+/A-

Based on preliminary analysis, Niitaka seems promising. What is most interesting are the levers for growth Niitaka has at its disposal... (content for paid subs)

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**Prices will only go up. This is what my pricing strategy will likely look like, so the earlier you lock in your pricing, the more you save. We are quickly approaching the end of “0-50” pricing. If it overshoots 50 at the end of this promo, I will honour the pricing for those who lock it in.

***There is no guarantee that I will release discounts or what discount rate I choose to use in the future.

The analysis continues below…

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This post and all its contents herein are the exclusive property of Continuous Compounding. This post is intended solely for informational purposes and is not to be distributed, reproduced, or transmitted, in whole or in part, for commercial purposes or sale without prior written consent from Continuous Compounding. Any unauthorized use, dissemination, or sale of this research is strictly prohibited and may be subject to legal action.

Disclaimer: I do not have a position in Townnews-Sha co. (2481) at the time of publishing this post.

Buffett used to love investing in newspaper companies.

The reasoning being each town would primarily have 1 local newspaper that controlled all the attention (views), and ad spend from local businesses would funnel to it.

This business has been heavily disrupted by the internet as people consume their news from various sources. It has been further disrupted by most people’s standards for quality journalism and reputable sources being low.

Townnews-Sha Co. (TSE-2481)

“Quick Stock Review” will be a series of stocks I’ve reviewed in a live stream or done off-stream that could become interesting in the future. This is not a stock pitch, but purely a review of the stock and what opportunities and hurdles the stock has.

Townnews single stock live stream (recap at 2:05:30):

I figure if a stock has shown up in my stock screen, it may have shown up in yours.

Over time, I’d have such a large archive of quick stock reviews. Most cheap stocks that show up, you can just search my Substack and find a quick summary.

Town News specializes in providing local news to 36 districts across Kanagawa Prefecture, Machida City, Hachioji City, and Tama City in Tokyo (as of the end of June 2025).

The company plans to expand to 2 additional districts in the near term.

EBIT margins: 10-15%

Revenue growth last 10 years: 11% in total

Valuation:

• MCap: 3.7 bn yen (at 675 yen per share)

• No debt

• Cash: 2.2 bn

• Investment securities and real estate: 1.75 bn

• EV*: 1.5bn excl. investment securities

• EV**: 0 incl. investment securities

• EV*/EBIT: 3.0x

• P/B: 0.71x

• P/E: 10.4x

• Div %: 3.0%

Why you would consider investing:

• Cheap

• Revenues have been growing due to digital transformation (non-print news)

• Capital light, printing and distribution outsourced

• If revenues can expand via non-print digital local news, operating leverage likely to improve margins

  This Substack is reader-supported. To support my work, consider becoming a free or paid subscriber.

Why you wouldn’t consider investing:

• Family owns 55% of the company; despite Hikari Tsushin owning 7%, it's unlikely to be acquired

• Declining industry

• Dividends have gone up gradually, but no buybacks

• Very low float

• I don’t see revenues dramatically increasing unless they are able to expand local news to other prefectures

• No good way to allocate capital. Where are funds reinvested?

Potential lottery ticket:

Are able to expand digital local news to other prefectures, as they offer 36 different editions in 36 districts across Kanagawa Prefecture and in Machida City, Hachioji City, and Tama City in Tokyo (as of the end of June 2025).

Would have to hire local journalists and reporters to curate local news content.

Factor exposure:

• Aging population increase good (seniors likely target audience)

• Family formation increase good (parents who want to see their kids’ results in local competitions)

• AI efficiently gains if can be well utilized (efficient content creation)

• Print media industry decline

• Ad spending budgets depend on the economy

Rating: B-/B

The rating could improve if the price drops to where the dividend yield reaches 4-5%, the company performs buybacks, or the digital transformation uncovers some hidden catalyst that can allow them to meaningfully grow revenue.

Other Quick Stock Reviews:

Niitaka (TSE-4465)

Buffalo Co. (TSE-3352)

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This is simply a quick update on Furyu.

2 years ago, I wrote a deep dive on Furyu (6238).

What drew me initially to Furyu was it being the market leader with a 90% market share in the photosticker market.

Furyu has been stagnant for quite some time, but recently it is showing signs of being able to transition out of photosticker dependency.

The following are the major changes in each segment:…

50% off annual paid sub: - link

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*Offer expires March 22, 2026

**Prices will only go up. This is what my pricing strategy will likely look like, so the earlier you lock in your pricing, the more you save. We are quickly approaching the end of “0-50” pricing. If it overshoots 50 at the end of this promo, I will honour the pricing for those who lock it in.

***There is no guarantee that I will release discounts or what discount rate I choose to use in the future.

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This post and all its contents herein are the exclusive property of Continuous Compounding. This post is intended solely for informational purposes and is not to be distributed, reproduced, or transmitted, in whole or in part, for commercial purposes or sale without prior written consent from Continuous Compounding. Any unauthorized use, dissemination, or sale of this research is strictly prohibited and may be subject to legal action.

Disclaimer: I am long shares of Keiwa (4251) at the time of publishing this post.

Hey Continuous Compounders,

A recent development in the consumer tech industry has made Keiwa (4251) an immediately actionable idea.

This was a hidden catalyst that I did not expect but has made Keiwa a strong buy.

The market has still not responded to this recent development.

Based on such news, Keiwa becomes an A+, potentially S-tier stock, given it is cheap (5.2x EV/EBIT, 9.7x P/E), trading at 1.1x P/B, has healthy margins (mid-teens), and, timing-wise, becomes an immediately actionable idea given a surprise catalyst could lead to quick value realization in the next 6 months.

This post is for paid subscribers only.

I missed doing a Valentine’s Day promotion (expires by Mar 22nd), so here it is:

50% off annual paid sub: - link

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*Offer expires March 22, 2026

**Prices will only go up. This is what my pricing strategy will likely look like, so the earlier you lock in your pricing, the more you save. We are quickly approaching the end of “0-50” pricing. If it overshoot 50 at the end of this promo, I will honour the pricing for those who lock it in.

***There is no guarantee that I will release discounts or what discount rate I choose to use in the future.

Read more

This post and all its contents herein are the exclusive property of Continuous Compounding. This post is intended solely for informational purposes and is not to be distributed, reproduced, or transmitted, in whole or in part, for commercial purposes or sale without prior written consent from Continuous Compounding. Any unauthorized use, dissemination, or sale of this research is strictly prohibited and may be subject to legal action.

Disclaimer: I am long shares of Keiwa (4251) at the time of publishing this post.

Hey Continuous Compounders,

In 2026, I will be releasing on average 1 quick stock pitch every month that will be stocks I’ve conducted initial research on that potentially warrant further research.

How can you engage?

At the end of each stock pitch, I want you to vote if you would be interested in seeing this “quick stock pitch” be turned into a deep dive.

The stock of interest this month is Keiwa (4251)

Table of Contents:

1. What is Keiwa?

2. Key Highlights

3. Business Economics of Keiwa

4. Competitive Advantages

5. Opportunities

6. Risks

7. Alternative data sources for alpha

8. Conclusion

What is Keiwa?

Keiwa was founded in 1948 as a paper processing company that supplied waterproof paper to the textile industry. Throughout the years, Keiwa has developed technologies (lamination, coating, and film production) and specialized know-how from manufacturing packaging materials and protective sheets.

In the 90s, with Japan’s tech boom, Keiwa applied its expertise to creating optical films for displays.

Keiwa’s core business is making optical films that direct and diffuse backlighting from LEDs found in LCD panels in laptops, tablets, smartphones, monitors, and automotive displays. The optical products business accounts for over 80% of revenues.

What makes Keiwa unique is that they have been able to carve out substantial market share in small- to medium-sized displays for laptops and tablets.

Keiwa’s market share:

• Edge-lit LED small- and medium-sized market (laptops/tablets/smartphones): 40-60% market share

• mini-LED medium-sized market (laptops/tablets): 80-90% market share

*source: Shared Research1

**See footnote for overview of Edge-lit, Mini-LED, and OLED technology2

For those who have been paying attention to the smartphone market, OLED display technology has taken over due to its superior contrast and deeper blacks.

OLED creates colour via an organic compound, which degrades over time and has a risk of “burn-in.” Due to the OLED lifespan closely matching the smartphone lifecycle, where consumers typically replace their phones in 2-4 years, the burn-in risk and gradual colour degradation of OLEDs are not applicable for smartphone users. Smartphone-related sales for Keiwa are only approx. 1-1.5% of total optical sales.

The number 1 thing to watch out for, and which would pose substantial risk to Keiwa as a company, is OLED technology getting to a comparable reliability and cost of mini-LEDs.

There is currently “Tandem OLED” technology, which stacks OLED pixels so each pixel works half as hard, leading to an extended shelf life. Imagine 1 light bulb working at 100% brightness to fill up a room vs 2 light bulbs working at 50% to fill up a room. For Tandem OLED to be comparable in cost to mini-LED, single-layer OLED needs to reach roughly 60% of the cost of mini-LED, which won’t be happening anytime soon.

The biggest hurdle preventing OLEDs from achieving a cost lower than mini-LEDs or edge-lit is due to yield. You cannot physically replace an OLED pixel, whereas you can for edge-lit or mini-LED.

In the production of OLEDs, if 1 pixel fails, you cannot swap out the pixel; you can only laser it to turn it off, leading to a lower-grade panel. For applications where high-grade panels (no pixel failures) are necessary, yield rates are lower. The higher cost of OLED panels captures this inherent failure rate, leading to a higher cost versus LED LCD panels. For Tandem OLED panels, you have 2 layers of OLED. If a single-layer OLED panel has a 90% success rate, a tandem OLED panel only has an 81% success rate.

Given 80% of Keiwa’s revenues are optical product-related revenues, betting on Keiwa is betting on edge-lit and mini-LED LCD technology continuing to maintain or grow market share in laptops, tablets, monitors, and other applications where mini-LEDs have an inherent advantage over OLED.

The trend for mini-LEDs is positive; mini-LEDs have yet to peak as a technology, and their market share is still growing. If you look at Sony, LG, or Samsung’s current TV catalogue, it is a mix of edge-lit (low-end), full array (medium), mini-LED (high-end), and OLED (high-end) displays. OLED is not a clear winner in the TV category.

Here are the pros and cons of Mini-LED vs OLED:

• Pros:

  • Lower cost (higher manufacturing yield, savings are passed onto consumer)

  • Significantly higher brightness

  • Better viewing experience in sunny and well-lit environments

  • Longer useful life (10-20 years)

  • Bright scenes look better than OLED

• Cons:

  • Less blooming due to more dimming zones, but blooming still exists in dark scenes

  • In a dark room, OLED’s superior contrast ratio outshines mini-LED. In a bright room, OLED’s lack of brightness makes colour accuracy and the viewing experience worse than mini-LED.

  • OLED has superior viewing angles. If you are off centre, mini-LED colours don’t look as good as OLED.

I believe the perception of OLEDs being the outright superior display technology has to do with personal bias, as most of our smartphones use OLED displays. I believe the choice of mini-LED or OLED depends on the use case, price, expected lifespan of the product, and viewing environment.

I believe the specific applications where mini-LED LCDs have inherent advantages over OLED are being overlooked by the market.

Keiwa’s Functional Products Segment Overview:

Functional products refer to materials that the company has added certain attributes to, such as moisture resistance, heat resistance, corrosion inhibition, and durability.

Functional products include:

• high-performance films for EVs

• backsheets for solar cells

• medical process films

• processing paper for urethane foam

• industrial packaging materials - moisture proofing and corrosion-inhibiting to prevent rust of steel products

• protective sheets for infrastructure/construction applications

• agricultural films for greenhouse farming

Why should you be interested?

• Cheap:

  • EV/EBIT = 5.2x

    • Enterprise Value = 18.3 bn yen

    • Mcap = 25.6 bn yen

    • Net Cash = 7.3 bn yen, Debt = 2.3 bn

  • P/E = 9.7x

  • P/B = 1.1x

  • Price: 1326 yen per share as of Jan 26th, 2026

• Healthy Margins: hinting at good business economics in the product segments they operate:

• Low Downside: Low P/B of 1.1x. Management announced their goal is to increase P/B above 1.0x and has already attained that goal. Historically, the company has traded far above 1.0x PB due to revenue growth expectations in its infrastructure segment “The Plaster Tape to Rescue the Earth,” which protects and extends the life of roofs. After discovering their product couldn’t live up to their expectations, Keiwa swiftly ended operations and put the product back into the R&D phase. I actually see this as management owning up to failures early and cutting losses early, which is a good sign of honest management.
  

  At current levels, Keiwa provides low downside with high potential upside if management is able to create a new film technology for upcoming screen technology, expand its market share in automotive applications, and make R&D breakthroughs in their former infrastructure segment.

• Improved corporate governance:

  • management has raised its dividend to 35 yen per share (2.6% div yield) and has set its dividend payout ratio at 30%

  • The company approved the decision to perform share buybacks of 4.15% of shares outstanding (800,000 shares), with an upper limit value of 1.2 bn yen by the end of 2025. As of June 2025, the company acquired 958 mm yen worth of shares.

• Keiwa has secured top market share in its focus areas, which has allowed it to enjoy higher margins relative to its competitors

• Growth opportunities: …

  Become a paid subscriber to receive my latest stock pitches and unlock all paid content. In addition, get exclusive access to my paid susbcriber chat where you get updates on my latest stock pitches.

• A recent hidden catalyst has surfaced that makes this an immediately actionable idea. Click link for the follow up Keiwa write up explaining the hidden catalyst.

Read more

Portions of this post may have been prepared with the assistance of artificial intelligence (“AI”) tools. AI may have been used to draft, edit, organize, or generate content. AI-generated materials may contain inaccuracies or omissions, and no warranty is provided regarding their completeness, reliability, or suitability for any purpose.

This post and all its contents herein are the exclusive property of Continuous Compounding. This post is intended solely for informational purposes and is not to be distributed, reproduced, or transmitted, in whole or in part, for commercial purposes or sale without prior written consent from Continuous Compounding. Any unauthorized use, dissemination, or sale of this research is strictly prohibited and may be subject to legal action.

Disclaimer: I am long shares of Round1 (4680), Glory (6457) at the time of publishing this post.

Happy New Years Continuous Compounders,

I had a great year investing in 2025.

I generated a +37% return in 2025, unfortunately lower than my +48% in 2024 (2024 recap)…

Well, let’s try to beat this in 2026!

What would you like to see from Continuous Compounding?

Happy New Year!

We have big plans this year for CC, but before we move ahead, I want to hear from you!

The following survey will help me understand my readership and create the most value for subscribers.

Continuous Compounding 2026 New Year’s Resolution Survey

To thank everyone for participating:

⁃ 2 lucky winners from the first 50 participants will be chosen at random to receive a $25 Amazon Gift Card
⁃ 2 lucky winners from the next 100 participants will be chosen at random to receive a $25 Amazon Gift Card
⁃ 2 lucky winners will be picked from the 150th participant and beyond to receive a $25 Amazon Gift Card

Additionally, 10 participants will receive a one-month paid subscription to CC. Good luck, and thank you for participating!

*Max spend of $150 on gift cards, if enough readers complete the survey.

Table of Contents:

1. Quick Recap

2. 3 Main Contributors to My Investment Success This Year

3. What is in store for Continuous Compounding in 2026

S&P500: +17.88% (Price return: 16.39%, Dividend return: 1.49%)
Nikkei225: +28.6% (Price return: 25.0%, Dividend return: 3.60%)
Topix: +26.0% (Price return: 23.7%, Dividend Return: 2.3%)

So you could say I beat my direct benchmarks of Nikkei225/Topix by ~9/~11%.

I believe the main market to beat is the S&P 500, given the US has generated the best long-run historical performance. In my 2024 recap, I mentioned how investing in an S&P 500 ETF is the GTO investing strategy for equity exposure. The primary reason I would deviate (exploit) from investing in the S&P 500 is if I believe I can beat the S&P 500; otherwise, the easiest thing to do is just buy an S&P 500 ETF. I beat my GTO benchmark by ~20%.

This is simply an investing journal entry and an annual recap of my investment learnings for 2025.

For those who are familiar with Francois Rochon, he is the inspiration for writing this post.

So you might be wondering, was my outperformance luck or was it skill?

My goal is not to persuade you any which way. I am simply celebrating having another great year investing.

Reflecting back on 2025, I believe there were…

3 main reasons for how I generated +37% last year:

1) Be concentrated on your best ideas

2) Focus on winners and avoid losers

3) Get lucky again by timing the market

1) Concentration

I went through in a theoretical sense why I get concentrated when I have extremely high conviction in the 2024 recap.

This year when the Japanese market tanked in April, I was yet again given the opportunities of a lifetime, similar to that of August 2024.

The exact same patterns played out.

Having garnered a deep understanding of the stocks I’ve performed a deep dive on, I was confident that the prices being offered in the April crash offered low downside and high upside.

From the following tweet, you can see I have performed quite well.

My top-performing stocks that contributed heavily to this year’s return are:

Gold Award: Round1 (4680): up to +100% return, as I took profit up from 1200 to 1600 yen before liquidating my entire position around the 1500-1600 level.

It was the 3rd down day of the April crash, and I allocated roughly 20-25% of my portfolio to Round1 and timed the stock purchase perfectly to its absolute lowest point.

I allocated 50% of my entire portfolio at one point in this position. Once Round1 rebounded, I took profit in favour of diversification towards my “cheap basket.”

In these once-in-a-lifetime situations, speed is key. You have to act fast and make decisions on stocks you have already performed analysis on.

Only after exhausting your list of stocks you know well do you take a big-picture approach and allocate funds to baskets.

To use a sports-betting analogy, those who have performed a deep dive on a stock should know the true line for a stock. When a market is in a sell-off and market participants are scrambling to sell, now is not a time to perform research on new ideas; it is time to assess valuations from the stocks you have already performed research on.

Inversely, if you do not know the approximate true line of a stock, you likely don’t understand it well enough. One should strive to get to this level of understanding when the market pays you to understand a stock.

Think about it this way. After I exhausted my list of stocks I knew well, I allocated funds into stocks I deemed as too cheap based on my stock screener.

When I take 15-30 minutes on each of these new starter positions for my “cheap basket,” I have no clue what the actual true line is. I am guessing directionally this stock has a high likelihood of going up.

Wouldn’t you want to add more to positions where you know the odds vs. those that you don’t?

Silver Award: Glory (6457): +70%. Mostly unrealized return.

Glory came from my research into the pachinko industry in Japan. This was a stock I believed the market was irrationally selling off given their US market and international expansion opportunity. The growth pathway was clear, and the conditions of the market sell-off in relation to tariffs were overblown as they affect Glory.

Glory is responsible for the self-service kiosks at McDonald’s in North America. If it’s good for arguably one of the most successful fast food chains in the world, think about the expansion opportunity for fast food chains that have not adopted Glory’s tech.

Bronze Award: SK Japan (7608): up to +105% return, as I took profit from 900 yen per share up to the recent all-time highs of the 1400-1500 level.

My error with SK Japan, even though it is my most successful stock pitch so far on this Substack, is that I put too much weight on the historical track record of shareholders in this stock.

The SK Japan shareholder base is a bunch of short-term holders, hence the high price volatility. I knew the lower bound where stock was too cheap and the upper bound where traders would take profit. SK Japan was quite range-bound too, unable to break out like Round1 (4680), so my position in SK Japan was not as large as Round1 or Glory.

What I didn’t expect was for the shareholder base to take on what looks like a new narrative for the stock and for it to reach new all-time highs.

2) Focus on Winners and Avoid Losers

This is a strategy from a reflection of my biggest losses I’ve had before. I find that my hit rate is quite high. Could be because we are in a bull market, so it’s easy to be right over 50%. If I were to roughly guess, my hit rate is around 70-85%.

My rule of thumb is when a stock drops 10% and I know nothing about it besides spending 30 minutes to a few hours on the name, I assume I don’t know enough about the stock and exit.

If it is a stock I have some level of conviction on, and it drops 20%, then I will humbly admit defeat and move on.

Here are 2 scenarios where a concentrated position could lead to underperformance at the portfolio level:

1. When a concentrated position is range-bound and stays stagnant while the market moves up

2. When a concentrated position goes down

I embrace the concept of momentum in a theoretical sense in investing.

The inspiration for this post is Francois Rochon, who believes in watering your flowers and cutting your weeds.

By taking profits early on winning positions and adding on to your losing positions, you are effectively cutting your flowers and watering your weeds.

Since taking this approach, my focus is always on how to maximize my winnings.

It also strips you of your ego of wanting to be right.

I don’t need to be right on every stock; I just need to be more right on average.

Imagine you had a high hit rate (60-90%), but you got overly sticky on a position that wasn’t working out or the market just wasn’t agreeing with you. Adding onto your losing positions and making them a more concentrated % of your portfolio enhances the chances that a few losers will nullify the advantage of having a theoretical high hit rate.

When a winning position of mine does well, I don’t mind adding on and increasing the position.

If I know my stocks have the potential to flip in a short time period, it takes 10 bad ideas that drop 10% to catch up.

Also, when you invest in cheap Japanese stocks with low downside, you get:

• earnings surprises

• buyout surprises

• share buyback and dividend increase surprises

that has the potential to increase the stock price +50% out of nowhere. i.e. Buffalo (6676)

I was asked to review Buffalo in my live stream by a viewer and bought a starter position, and out of nowhere it increased 50% in a month.

2025 was a year where I had very few losses, each being quite small.

Another thing I don’t do is add onto my losing positions. Sometimes I cut my losses to reduce the exposure. So if I have more than a starter position in a name and it goes down, I will reduce the sizing of the stock in my portfolio.

This year my biggest loss, Genda, was actually one of my smallest positions, and because I reduced its sizing as it dropped, the impact on my performance was negligible.

Actually the reason my portfolio didn’t go up more in the second half of 2025 is that I concentrated on a stock that I believe has really high upside and low downside. The stock hasn’t moved much, but I believe once the investing public truly understands what is going on with this company, the stock will completely rerate and rerate quickly.

I am actually at odds with myself sometimes on concentration.

On 1 hand, I am allocating a large % of my portfolio into my highest conviction stock, but if it trades mostly range-bound, should I add on as the stock breaks out of this range?

I am inspired by Stanley Druckenmiller, and in an interview he discussed avoiding certain positions when the chart looked terrible.

In his own words, and I’m paraphrasing, when the chart has no info, he can’t “cheat.” Which implies looking at charts is his way of cheating.

I found this kind of fascinating, and this might be something I incorporate into my own strategy.

I have often had stocks I felt strongly about that don’t move much, but suddenly some news will be released and the stock gaps up. The prime example of this is Fast Fitness Japan (7092) The stock became range-bound for several months and went on a tear recently given improved KPIs at their domestic locations and reaching even further heights with the recent takeover.

I have heard of the idea of inflection investing and think it’s something definitely worth looking into further.

If I didn’t allocate as heavily into my latest high conviction idea, my return this year might be above 40%+.

The downside of concentration is that when your concentrated position lags, your portfolio return gets heavily impacted, and you can lag your index.

Is there a way to ride the rising tide of the index, and when you get a special signal that signals a stock is inflecting, for us to increase sizing?

For anyone who has any insight on inflection investing, please DM me. I would very much like to learn from you.

3) Get Lucky By Timing The Market

With the tariff concerns from Trump, I already diversified a bit into gold and held a larger cash position in my portfolio.

When the tariff news was announced in April, I exploitatively sold some positions early and bought them all back on the rebound.

The fortunate timing allowed me to suffer a smaller drawdown relative to the market and higher positive performance relative to the market.

What’s in store for Continuous Compounding in 2026:

• More high conviction deep-dive stock pitches

• More quick pitches

• A dedicated group chat for paid Continuous Compounders

• More live streaming and video content on YouTube

• More exclusive video content for paid subs

• Working on an investment strategy that has the potential to quite handedly outperform the Tokyo Stock Exchange over the long run. Debating if I want to keep this for myself or release it.

As always, I appreciate each and everyone one of you for supporting Continuous Compounding.

If you got this far, please consider completing the following survey so I can optimize my content for you.

Continuous Compounding 2026 New Year’s Resolution Survey

Let’s set new records in 2026!

Best wishes,

Continuous Compounding - Alan

Want to read more from Continuous Compounding?

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Continuous Compounding’s most relevant content all in one place.

Subscribe for free to receive new posts and support my work.

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Reader Exclusive Promo:

Koyfin is my go-to tool for quickly rejecting or diving deeper into potential opportunities. With its intuitive platform, I can:

• Instantly access business descriptions.

• Analyze valuation multiples and historical profitability.

• Review analyst estimates to gauge future prospects.

It’s a huge time-saver for forming a clear, initial opinion on any company. Ready to streamline your research process? Sign up to Koyfin here to save an additional 20% and take your due diligence to the next level!

Portions of this post may have been prepared with the assistance of artificial intelligence (“AI”) tools. AI may have been used to draft, edit, organize, or generate content. AI-generated materials may contain inaccuracies or omissions, and no warranty is provided regarding their completeness, reliability, or suitability for any purpose.

This post and all its contents herein are the exclusive property of Continuous Compounding. This post is intended solely for informational purposes and is not to be distributed, reproduced, or transmitted, in whole or in part, for commercial purposes or sale without prior written consent from Continuous Compounding. Any unauthorized use, dissemination, or sale of this research is strictly prohibited and may be subject to legal action.

Disclaimer: I am long shares of Round1 (4680) at the time of publishing this post.

The setup for Round1 is looking promising again, so I wanted to quickly touch upon it even though I’m on a break.

Round1 (4680) is one of those “here for a fun time and not for a long time” kind of stocks.

If you are a new reader of mine, here are posts I’ve made on Round1:

Round1 (4680) Quick Pitch

Round1 (4680) In-Depth Analysis

The shareholders are manic depressives who get either very excited about the long-term potential or very pessimistic.

I have owned this stock 4/5 times and profited immensely each time.

Round1, imo, is not a buy-and-hold stock, unless you get in at very cheap prices. The way to play it, imo, is to take advantage of its price volatility.

I recently bought the bottom in April and made close to a 90-100% return when it rallied to roughly 1500-1600 lvls.

I believe the fair value for Round1 is….

Christmas Promo!

I’m feeling festive, so here are my Christmas offers ending Dec 25th, 2026:

50% off Annual Subscription

33% off Monthly Subscription

*Do not use 33% off link if you want to sign up for annual subscription. 33% link only applies a 33% discount on Annual subscription.

Read more

I wanted to share a brief update. I’ll be away for the next three weeks to take care of some personal matters, so the Substack will be on pause until Dec 25th (I will shorten or extend the pause for as long as I am not working on creating new content). A couple of important notes:

• Paid subscribers won’t lose anything—your subscription will be extended by the full length of the pause.

• Free subscribers won’t be able to upgrade to paid during this time, which means access to paid posts will be temporarily locked even if someone wants to pay for a subscription.

BLACK FRIDAY PROMO!

Before the pause begins on Dec 2nd, here’s an opportunity for those who want to take advantage of my Black Friday pricing:

Annual Subscription Black Friday Promo: Save 50% Off! https://continuouscompounding.substack.com/BF50

Monthly Subscription Black Friday Promo: Save 33% Off!

https://continuouscompounding.substack.com/BF33

*Make sure to click on the appropriate link, as the prices are different for each.

Update #2:

When I’m back, I might be unveiling a new, exclusive offering for a limited number of readers, as I believe I have come across a potentially market-beating (S&P500 and TSE) investment strategy. It’s still early, but I’m excited about where my research is heading.

If you haven’t had a chance to read my 2 recent stock pitches, you are seriously missing out:

Deep Dive: Stock With Hidden License to Tax Everything—The highest conviction stock I own in my own personal portfolio and, in my opinion, the best stock pitch I’ve ever released on my Substack.

The Ramen Underdog—growth potential undervalued

As always, thank you for reading and supporting Continuous Compounding.

-Alan

Want to read more from Continuous Compounding?

Continuous Compounding Directory/Menu ←click link

Continuous Compounding’s most relevant content all in one place.

Subscribe for free to receive new posts and support my work.

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Reddit

Reader Exclusive Promo:

Koyfin is my go-to tool for quickly rejecting or diving deeper into potential opportunities. With its intuitive platform, I can:

• Instantly access business descriptions.

• Analyze valuation multiples and historical profitability.

• Review analyst estimates to gauge future prospects.

It’s a huge time-saver for forming a clear, initial opinion on any company. Ready to streamline your research process? Sign up to Koyfin here to save an additional 20% and take your due diligence to the next level!

Table of Contents:

1. Company Overview

2. Quick Valuation Overview

3. Outlook

4. Segment Overview

5. Segment Business Economics and Growth Analysis

6. Growth Opportunities

7. Risks

8. Conclusion

Important Update:

I’ve always been a “fifth-draft writer.” I can perform analysis quickly in my own head, but turning thoughts into clean, readable writing has never been easy. I’ve always admired people who can produce a strong draft on their first try.

Now that AI tools have become so good, it makes sense to use them. Until my last post, I had only used AI to help with spellcheck or grammar via Quillbot.

You’ve probably heard the saying that AI will not replace you, but someone who uses AI will. I want to become comfortable with these tools so I can produce more content.

So here is my honest disclosure: from this point forward I will be using AI to assist in drafting my stock pitches. Every piece will still be reviewed, edited, and sanity checked by me, but AI will help accelerate the process.

I have added the following to my legal disclaimer in case you didn’t notice:

Portions of this post were prepared with the assistance of artificial intelligence (“AI”) tools. AI may have been used to draft, edit, organize, or generate content. AI-generated materials may contain inaccuracies or omissions, and no warranty is provided regarding their completeness, reliability, or suitability for any purpose.

What that will mostly look like is me feeding ChatGPT my notes and first drafts and having it rewrite what I wrote.

Overtime, maybe I can feed it some of my previous Substack posts so it can write like the 5th draft version of me… which is still kinda wordy in my opinion.

My investment track record on Substack has been nothing short of stellar!

SK Japan (7608): +110%

Glory (457): +60%

Fast Fitness Japan (7092): +50%

AGF Management Ltd. (AGF.B) +60%

Furyu (6238): 0%, flat

Round1 (4680) : +100% (sold at the recent peak), closed

Gan (GAN): +80%, closed

Haier Smart Home (690D): +95% (incl. dividends), closed

Century Casino (CNTY): -50%, closed

Most recent high conviction stock pitch (paid subs only): +8% so far

I’ll let you guys draw conclusions. Of course past performance does not indicate future performance. CNTY was my very first stock pitch and it was before I learned the costly lesson about the dangers of underestimating debt on the balance sheet. I turned on paid subscription when I released my Haier Smart Home 690D stock pitch. Since my 690D stock pitch, I haven’t had a loser (Furyu is currently +0.3%, essentially flat).

Here are some customer testimonials and twitter posts:

What makes my Substack unique:

• Unique and underfollowed names: What you will find in any of my stock pitches is that they are likely completely unique. Very few people on FinTwit would have discussed the above names. This is due to:

  • Companies with only Japanese filings. Some investors only look at JP names with English filings. I go through the pain of translating everything via Google Translate/ChatGPT.

  • I enjoy not looking at over crowded names

  • I enjoy performing research on companies I like

  • Other Substacks focus on what’s popular, I focus on what can make me money

• Level of analysis: The amount of work I put into each name is often unparalleled by Substack standards. I literally hand hold you through my investment thesis and how I arrived at my valuation and conviction.

  • You can check out my deep dive on Fast Fitness Japan

    

    

• Balance of Cheap/Quality: Cheap is not enough. I look for a genuine growth engine. Sometimes that growth is hidden and only becomes clear once you have done enough research, or the market is simply underestimating it, as was the case with SK Japan. I attribute much of my hit rate to underpaying for growth and to the market eventually recognizing the narrative I identified earlier, or finally pricing the growth appropriately.

• I put my money where my mouth is, so if you’ve noticed, in almost every stock pitch I’ve ever released, I disclose I am currently long the position.

So for my next stock pitch, I present to you…

I’m feeling festive so here are my Christmas offers ending Dec 25th, 2026:

50% off Annual Subscription

33% off Monthly Subscription

*Do not use 33% off link if you want to sign up for annual subscription. 33% link only applies a 33% discount on Annual subscription.

*Not investment advice. Do your own due diligence. For entertainment purposes only. Past performance does not indicate future performance.

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This post and all its contents herein are the exclusive property of Continuous Compounding. This post is intended solely for informational purposes and is not to be distributed, reproduced, or transmitted, in whole or in part, for commercial purposes or sale without prior written consent from Continuous Compounding. Any unauthorized use, dissemination, or sale of this research is strictly prohibited and may be subject to legal action.

Disclaimer: I hold no positions in any of the stocks published in this post.

Hey Continuous Compounders,

I will be going on vacation, so I will be pausing my Substack for a month. This means if you are a paid sub, you will not be charged after this post is published.

As I am leaving tomorrow, I hope you can forgive me for giving a simpler summary of this month’s Top 5 stocks.

I will aim to find my next high conviction stock pitch out in November of next month.

The top 5 stocks for this month that I have found on stream are:

Read more

This post and all its contents herein are the exclusive property of Continuous Compounding. This post is intended solely for informational purposes and is not to be distributed, reproduced, or transmitted, in whole or in part, for commercial purposes or sale without prior written consent from Continuous Compounding. Any unauthorized use, dissemination, or sale of this research is strictly prohibited and may be subject to legal action.

Disclaimer: I am long shares of Buffalo (6676) and Hammock (173A) at the time of publishing this post.

Dear Continuous Compounders,

In this post I recap the top 5 stock ideas I uncovered in my live streams up until the release of this post.

In addition, I was experimenting with ChatGPT 5 so it did help with research and writing in this post. Apologies ahead of time if some parts sound AI like.

For those who missed my last 2 emails, I have 2 major announcements:

• A full deep-dive on my newest high-conviction stock, the last post was a quick pitch, now you have the full comprehensive analysis

  • Readers of the quick pitch who invested are already up +5-7% depending on cost basis!!!

• New pricing post August 15th, 2025 (Extended until Aug 30th!!!):

  • Monthly plan: $30/month or $360 over 12 months

  • Annual plan: $180/annual or $15 per month

To incentivize long-term subscribers and disincentivize short-term subscribers, the new pricing post Aug 15th will be $30/month ($360 paid over 12 months). For those who see long-term value in my stock pitches, the new annual plan is only $180, a mere 20% increase from the former annual plan and a 50% discount compared to the month-to-month plan over 12 months.

Former plan:

• Monthly plan: $15/month or $180 over 12 months

• Annual plan: $150/annual or $12.50 per month

If you would like to lock in the previous $15/month plan or $150/year annual plan (save 2 months with the annual plan). Here is the link to take advantage of that offer:

https://continuouscompounding.substack.com/50PERCENTOFF

Act now, or the offer will end on August 15th, 2025!

THIS PROMO WILL BE EXTENDED UNTIL AUG, 30TH, 2025!!!

*The reason the non-discounted annual plan states 300 USD and not 180 USD is because the special offer setting from Substack does not allow me to apply different discounts for monthly and annual. So after August 15th, I’ll manually adjust it back down to $180.

**Current paid subscribers, you will be unaffected by this price change for the time being. If you are, please do let me know and slide into my DMs on here or Twitter/X. I’ve adjusted prices in 2024, and I’ve had 0 issues before.

***My thought process has always been to provide immense value to readers far greater than what I charge. There will be a time when the value I bring to the table is so large relative to what some of my early paid subs are paying that I will have no choice but to raise the prices. I may also change my mind on this and keep you guys grandfathered. I could also send each of you a special link that is still a major discount to the current market rate being charged. I’ll be fair.

Newest Stock Pitch (Paid Sub Exclusive)

I hate it when a stock I’m in the process of writing about rallies, and my paid subs can’t take advantage of a lower cost basis.

To mitigate this problem, before I wrap up my very in-depth stock pitch, I will be releasing this shorter quick pitch on the current high-conviction deep dive I’m writing about.

Update: Paid Subs who read my quick stock pitch and invested are already up 5-7% on the stock this deep dive is based on.

This kind of happened to Glory, where I was able to give you guys a short overview of why you should invest in Glory (2280 yen per share), but by the time the deep dive came out, it had rallied 20-25%. It has rallied another 40% since I released the stock pitch (2770 yen per share), but I want you guys, my paid subs, to make as much money as possible.

If you are a free sub, I mainly release immediately actionable ideas. I put my money where my mouth is, so if you’ve noticed, in almost every stock pitch I’ve ever released, I disclose I am currently long the position.

Here at Continuous Compounding, I focus on quality over quantity.

(Can skip if you don’t care to learn more about me) My first passion in life was actually drawing. When I was a kid, I took sketching lessons. The teacher would put up his personal cartoon sketches and have us copy them. The teacher would walk around and give us pointers as he saw the need to. Sometimes he’d be lazy if no parents were around. My goal was to get as close of a sketch to my teacher’s sketch as possible. I noticed that some kids saw the lessons as a race. At a comfortable pace I could do 4-5 drawings a session. At the end of a session, I remember a kid boasting that he completed 9 drawings. I challenged myself once, and while maintaining my standard of quality, I could only do 6. I remember it like it was yesterday; a kid was having trouble with her sketch. She wasn’t able to draw a certain part of a boat correctly. It was a challenging part of the sketch; I had erased and redrawn many times before finally being satisfied with my output. Other students glossed over the intricate details of that part of the boat in favour of speed. My teacher came over to my booth, went through my past drawings that day to find the sketch in question, and must have noticed I had drawn it properly. He grabbed my sketch and showcased it in front of the other kid, who just couldn’t get it. I felt bad for her because the teacher was purposely trying to compare her to me. A very Chinese thing to do. Besides the potential trauma the teacher bestowed upon another student, this validation gave me confidence that what I was doing was correct; there was no point in racing other kids to output more, because at the end of the day we were drawing to acquire new techniques and skills, not to race. I have been programmed this way ever since. I don’t release stock pitches to meet some arbitrary quota. I deliver less but offer more. I want to impress upon you guys the level of work that allows me to get this level of conviction, which doesn’t happen over a few days or sometimes weeks of research.

Be honest, for the $150 annual fee I’m charging, how many stock pitches do you need to truly work out? If we are being honest, anyone with a decent-sized portfolio, 1 would be all it takes.

High-conviction ideas are rare to come by, so I release less than some larger creators who have a frequent quota, but my hit rate has been phenomenal since I started. My pricing has been tuned to reflect the market price $/stock pitch you’d pay for a newsletter that outputs more. In a sense, with my Substack, you are only paying for actionable undervalued stock pitches not for fair-valued ones.

Are you really telling me it is that easy to find a high-conviction stock pitch? You can find 1 every 2-4 weeks? I can spend anywhere between 100 to 200 hours on an idea if I believe it warrants it. Haier Smart Home 690D was an idea that took me 1.5 months to finish extensive research on. Sometimes I enjoy the process of learning about a new company and developing a full picture of its business economics that time just flies. I also have a bad habit of letting ideas marinate for too long. Developing theories, trying to find evidence that disproves and supports it. It is a time consuming process, but I believe it’s worth it and you as readers get quality work that inspires conviction.

Here is how my recent picks did:

Link to Twitter/X post

*The only loss I made was on Genda, which isn’t a stock pitch I wrote up. Notice how for every stock pitch I wrote myself, they have gone up. I am biased here given those are my stock pitches, but I know the stocks I’ve pitched in and out. I’m confident that I also know them far better than 98% of the investors that are in them, so whenever the stock gets cheap, I can recommend and invest in them with conviction.

Paid subs were notified of Glory (6457) 1 month before free subs. Those who followed my Glory trade in April would have made a +70% return (3876 yen per share as of July 25th, 2025)

My paid sub below has made a +72% gain, as his average price is 2255 yen/share (3876 yen per share as of July 25th, 2025)

Nice problem to have when you regret not buying more:

Don’t miss out on my current high conviction stock:

*Not investment advice. Do your own due diligence. For entertainment purposes only. Past performance does not indicate future performance.

Now back to the reason you are here, here are the Top 5 stocks:

6676 - Buffalo

*Click company name for IR link

*Price as of Aug 19th, 2025

Former Rating: A when I did the live stream; at current prices, probably B

Quick Company Overview:

Buffalo, formerly Melco Holdings Inc. until April 2025, is a Japan-based developer, manufacturer, and distributor of digital home appliances and computer peripherals. Founded in 1975 and headquartered in Tokyo, the company operates through 14 subsidiaries and one affiliated company across Japan, the U.S., Europe, and Asia. Its core products include Wi-Fi routers, wired LAN equipment, NAS storage systems, SSDs, Blu-ray/DVD drives, memory products, USB devices, and PC accessories, along with AV equipment, smartphone/tablet accessories, and network infrastructure solutions. Beyond hardware, Buffalo provides data recovery, storage software, erasing solutions, and direct marketing services, while also managing construction, installation, and maintenance of IT infrastructure.

Following its April 2025 reorganization, Buffalo shifted to a streamlined focus on IT-related businesses, shedding its food segment (Shimadaya Co., Ltd.) via spin-off in late 2024. Despite shrinking consumer demand in Japan, Buffalo is leveraging its brand in PC peripherals and network devices while expanding solutions through its corporate-focused “Value Chain Engineering” strategy. Buffalo is positioning itself as a specialized IT engineering company.

What I like:

• Management is aggressively buying back shares, having bought 5.2 bn yen worth acquired from May 1st to May 13th, 2025 (avg share price approx. 2081 yen/share).

  • The company bought back 1.498 mm shares (avg. cost 3498 yen/share) for 5.2 bn yen in the fiscal year ended March 2025.

• Dividend yield is okay at 80 yen per share, or 2.3%. Formerly the dividend was 120 yen per share. The dividend could have been reduced to opportunistically prioritize buybacks.

• Trades cheaply based on EV valuation multiples

• I reviewed the stock on stream in July at 2248 yen per share, and the stock was trading at 0.76x P/B. Currently the stock trades at 1.08x P/B, so it's less of a bargain now.

  • The former play on Buffalo was that it was cheap and it was trading below 1x P/B, so let’s ride the share buyback narrative. Now that Buffalo is trading at over 1x P/B, the current investment thesis may rest on where we believe a reasonable P/B ratio is.

• Buffalo has really high unit market share in quite a few product lines; I’m not sure how they were able to secure such high market share

What I don’t like:

• Despite Buffalo being a brand, they are selling relatively undifferentiated goods with lots of competition. I am not convinced their products are higher quality or technologically superior. The margins on their PC peripherals have been very thin in the low single digits.

• Airdog (air purifier and fan products) exclusive sales contract ends on Aug 29, 2025. Airdog positively contributed to segment profit in FY2024; hence, now that Buffalo is a secondary distributor, their operating margins from this product will decline drastically. Buffalo must rely on its PC peripherals for segment profit.

Additional questions we want answered:

• How can Buffalo maintain positive margins and raise margins?

• How can Buffalo raise revenues?

• What do we think the equilibrium P/B ratio is where buybacks make less sense?

• How can Buffalo ensure they don’t get their lunch eaten by Chinese or other competitors?

  • What are the advantages working in Buffalo’s favor to allow it to stay competitive?

173A - Hammock

*Price/share: 1550¥/share (Aug 19th, 2025)

Quick Company Overview:

• Hammock Inc. (TSE Growth: 173A) is a Japan-based IT solutions company specializing in enterprise software development and sales. Its operations are divided into three solution lines:

  • Network Solutions, led by the “AssetView” series, which provides IT asset management, security, and data leakage prevention

  • Sales DX Solutions, which integrate business card management, SFA/CRM, and MA tools into comprehensive sales support platforms

  • AI Data Entry Solutions, offering AI-powered OCR (Optical Character Recognition) services such as “WOZE” and “DX OCR” that streamline data entry.

  *Each solution is delivered in both on-premises and cloud formats, with cloud adoption accelerating in recent years.

…to continue reading this post, consider becoming a paid subscriber!

Read more

Dear Continuous Compounders,

For those who missed my last quick stock pitch email, I have 2 major announcements:

• A full deep-dive on my newest high-conviction stock, the last post was a quick pitch, now you have the full comprehensive analysis

• New pricing post August 15th, 2025 (Extended until Aug 30th!!!):

  • Monthly plan: $30/month or $360 over 12 months

  • Annual plan: $180/annual or $15 per month

To incentivize long-term subscribers and disincentivize short-term subscribers, the new pricing post Aug 15th will be $30/month ($360 paid over 12 months). For those who see long-term value in my stock pitches, the new annual plan is only $180, a mere 20% increase from the former annual plan and a 50% discount compared to the month-to-month plan over 12 months.

Former plan:

• Monthly plan: $15/month or $180 over 12 months

• Annual plan: $150/annual or $12.50 per month

If you would like to lock in the previous $15/month plan or $150/year annual plan (save 2 months with the annual plan). Here is the link to take advantage of that offer:

https://continuouscompounding.substack.com/50PERCENTOFF

Act now, or the offer will end on August 15th, 2025!

THIS PROMO WILL BE EXTENDED UNTIL AUG, 30TH, 2025!!!

*The reason the non-discounted annual plan states 300 USD and not 180 USD is because the special offer setting from Substack does not allow me to apply different discounts for monthly and annual. So after August 15th, I’ll manually adjust it back down to $180.

**Current paid subscribers, you will be unaffected by this price change for the time being. If you are, please do let me know and slide into my DMs on here or Twitter/X. I’ve adjusted prices in 2024, and I’ve had 0 issues before.

***My thought process has always been to provide immense value to readers far greater than what I charge. There will be a time when the value I bring to the table is so large relative to what some of my early paid subs are paying that I will have no choice but to raise the prices. I may also change my mind on this and keep you guys grandfathered. I could also send each of you a special link that is still a major discount to the current market rate being charged. I’ll be fair.

Newest Stock Pitch (Paid Sub Exclusive)

I hate it when a stock I’m in the process of writing about rallies, and my paid subs can’t take advantage of a lower cost basis.

To mitigate this problem, before I wrap up my very in-depth stock pitch, I will be releasing this shorter quick pitch on the current high-conviction deep dive I’m writing about.

Update: Paid Subs who read my quick stock pitch and invested are already up 4-5% on the stock this deep dive is based on.

This kind of happened to Glory, where I was able to give you guys a short overview of why you should invest in Glory (2280 yen per share), but by the time the deep dive came out, it had rallied 20-25%. It has rallied another 40% since I released the stock pitch (2770 yen per share), but I want you guys, my paid subs, to make as much money as possible.

If you are a free sub, I mainly release immediately actionable ideas. I put my money where my mouth is, so if you’ve noticed, in almost every stock pitch I’ve ever released, I disclose I am currently long the position.

Here at Continuous Compounding, I focus on quality over quantity.

(Can skip if you don’t care to learn more about me) My first passion in life was actually drawing. When I was a kid, I took sketching lessons. The teacher would put up his personal cartoon sketches and have us copy them. The teacher would walk around and give us pointers as he saw the need to. Sometimes he’d be lazy if no parents were around. My goal was to get as close of a sketch to my teacher’s sketch as possible. I noticed that some kids saw the lessons as a race. At a comfortable pace I could do 4-5 drawings a session. At the end of a session, I remember a kid boasting that he completed 9 drawings. I challenged myself once, and while maintaining my standard of quality, I could only do 6. I remember it like it was yesterday; a kid was having trouble with her sketch. She wasn’t able to draw a certain part of a boat correctly. It was a challenging part of the sketch; I had erased and redrawn many times before finally being satisfied with my output. Other students glossed over the intricate details of that part of the boat in favour of speed. My teacher came over to my booth, went through my past drawings that day to find the sketch in question, and must have noticed I had drawn it properly. He grabbed my sketch and showcased it in front of the other kid, who just couldn’t get it. I felt bad for her because the teacher was purposely trying to compare her to me. A very Chinese thing to do. Besides the potential trauma the teacher bestowed upon another student, this validation gave me confidence that what I was doing was correct; there was no point in racing other kids to output more, because at the end of the day we were drawing to acquire new techniques and skills, not to race. I have been programmed this way ever since. I don’t release stock pitches to meet some arbitrary quota. I deliver less but offer more. I want to impress upon you guys the level of work that allows me to get this level of conviction, which doesn’t happen over a few days or sometimes weeks of research.

Be honest, for the $150 annual fee I’m charging, how many stock pitches do you need to truly work out? If we are being honest, anyone with a decent-sized portfolio, 1 would be all it takes.

High-conviction ideas are rare to come by, so I release less than some larger creators who have a frequent quota, but my hit rate has been phenomenal since I started. My pricing has been tuned to reflect the market price $/stock pitch you’d pay for a newsletter that outputs more. In a sense, with my Substack, you are only paying for actionable undervalued stock pitches not for fair-valued ones.

Are you really telling me it is that easy to find a high-conviction stock pitch? You can find 1 every 2-4 weeks? I can spend anywhere between 100 to 200 hours on an idea if I believe it warrants it. Haier Smart Home 690D was an idea that took me 1.5 months to finish extensive research on. Sometimes I enjoy the process of learning about a new company and developing a full picture of its business economics that time just flies. I also have a bad habit of letting ideas marinate for too long. Developing theories, trying to find evidence that disproves and supports it. It is a time consuming process, but I believe it’s worth it and you as readers get quality work that inspires conviction.

Here is how my recent picks did:

Link to Twitter/X post

*The only loss I made was on Genda, which isn’t a stock pitch I wrote up. Notice how for every stock pitch I wrote myself, they have gone up. I am biased here given those are my stock pitches, but I know the stocks I’ve pitched in and out. I’m confident that I also know them far better than 98% of the investors that are in them, so whenever the stock gets cheap, I can recommend and invest in them with conviction.

Paid subs were notified of Glory (6457) 1 month before free subs. Those who followed my Glory trade in April would have made a +70% return.

My paid sub below has made a +72% gain, as his average price is 2255 yen/share (3876 yen per share as of July 25th, 2025)

Nice problem to have when you regret not buying more:

So for my next high-conviction idea, I present to you…

*Not investment advice. Do your own due diligence. For entertainment purposes only. Past performance does not indicate future performance.

*Legal Disclaimer: This post and all its contents are for informational or educational purposes only. Continuous Compounding assumes no responsibility or liability for any errors, inaccuracies, or omissions in this post, links, attachments, or any actions taken based on its contents. The information sources used are believed to be reliable, but accuracy cannot be guaranteed. Recipients of this research are advised to conduct their own independent analysis and seek professional financial advice before making any investment decisions. The opinions expressed by the publisher in this post are subject to change without notice. From time to time, I may have positions in the securities discussed in this post.

This post and all its contents herein are the exclusive property of Continuous Compounding. This post is intended solely for informational purposes and is not to be distributed, reproduced, or transmitted, in whole or in part, for commercial purposes or sale without prior written consent from Continuous Compounding. Any unauthorized use, dissemination, or sale of this research is strictly prohibited and may be subject to legal action.

Disclaimer: I am long shares of Oricon Inc. (4800) at the time of publishing this post.

Table of Contents:

1. Company Overview

2. Key Highlights

3. Valuation Overview/Quick Investment Thesis

4. Outlook

5. Segment Overview

6. Segment Business Economics and Growth Analysis:

7. Risks

8. Conclusion

Company Overview:

Oricon operates 4 segments:

• Customer Satisfaction (CS) Survey Business

• News Distribution and PV business

• Data Service Business

• Advertising Business

Founded in 1968, Oricon pioneered Japan’s first music ranking charts, becoming the country’s go-to source for music popularity—akin to Billboard in the West.

Official Oricon Website

Its rankings, originally based on nationwide sales data, were featured in print, on TV, and later online, cementing “Oricon” as a household name. In the 1980s–90s, charts covered singles, albums, and DVDs. In the 2000s, Oricon monetized its brand through mobile music sales, transitioning from ringtones to full tracks. With the rise of smartphones, it launched the “Oricon Music Store” and expanded into entertainment news via the “Oricon Style” app and “Oricon News” website.

Today, Oricon produces ~3,500 monthly articles and videos distributed through its own platforms and major portals like Yahoo. While its TV presence remains, most engagement now comes from online and social media. The brand’s deep-rooted recognition in Japan (population ~120M) underpins its credibility not just in music, but increasingly in broader entertainment and service/product rankings.

Oricon’s reputation in music rankings remains intact, but its former glory in music sales is no more. Oricon has successfully transitioned into 2 main operating segments:

• Customer Satisfaction Surveys

• News Distribution/Page Views (PV)

Despite this brand equity, Oricon is modestly valued at a ¥10.5 bn market cap ($72M USD) with ¥3.6B net cash, implying an EV of only ¥7.0B ($48M USD)—raising the questions:

• What is the intrinsic value of one of Japan’s most trusted cultural brands?

• How can Oricon leverage its reputation as a trusted brand to its advantage with its core operating segments?

Key Highlights:

• Good (B) management and excellent (A) business economics at an attractive price (A-)

• Oricon is an asset-light business with 30%+ normalized operating margins. The business is growing, and margins can further improve with operating leverage.

• As of Aug 8th, 2025; Oricon trades at:

  • 816 yen per share or 10.5bn MCap.

  • Lots of cash and very little debt. Net Cash of 3.4 bn yen (180 mm debt, 3.6 bn in cash)

  • EV = 7.0 bn yen. If including 713 mm yen of investment securities, then EV = 6.4 bn yen.

• Valuation Metrics:

  • 4.9x FY2025 (Mar 2026) EV/EBIT excl. LT investments

  • 4.4x FY2025 (Mar 2026) EV/EBIT incl. LT investments

  • 10.9x FY2025 P/E

  • 1.95x Current P/B

  • 1.75x Current P/S

  • 4.4% dividend yield or ¥36 per share

  • 18% FY2025 ROE

• Stock is undervalued, as the market is underestimating the company’s ability to grow

• The market does not understand that the stock has a positive flywheel in motion that can lead to multiple expansion at levels similar to Kakaku.com (2371). Kakaku.com’s range of valuation metrics over the last 10 years:

  • LTM EV/EBIT: 11.4x-21.8x

  • LTM P/E: 20.4x-49.4x

  • LTM P/B: 7.1x - 16.6x

  • LTM P/S: 4.9x-10.1x

• If Oricon can become the de facto customer satisfaction ranking list in Japan, the company could generate a 60-200% return in 1-3 years, with an even larger upside, a 2-7x multi-bagger in the best-case scenario. All this upside with very little risk in current valuation, a 4.4% dividend yield, and management’s track record of opportunistically buying back shares.

• This is a GARRP investment: Growth at a really reasonable price

Quick Valuation:

*Stock price as of Aug 8th, 2025.

**Paid subs received the quick stock pitch before the deep dive a few weeks ago. The price has risen 5% roughly, but the analysis hasn’t fundamentally changed.

Oricon has a 10.5 bn market cap and 3.4 bn yen of net cash. Enterprise value is 7.1 bn yen excluding investment securities and 6.4 bn yen including investment securities.

Oricon has a dividend yield of 4.4%, which is a nice safety net.

In addition, Oricon has been active in repurchasing shares, having spent 1.3 bn yen on repurchases and repurchasing 11.5% of shares issued over the last 10 years. Mgmt’s willingness to buy back shares offers a further safety net and offers shareholders additional returns.

*Multiples based on stock price of ¥816 as of Aug 8th, 2025.

Oricon trades at FY2026 4.9x EV/EBIT and FY2026 10.9x P/E.

Oricon's business is asset-light and highly profitable. 24%+ operating margins (30%+ from FY2021-2023) and 18% ROE. As the customer satisfaction survey and news distribution business started performing, one could see the effects of operating leverage take effect.

The reason margins have dropped recently is due to the company winding down the “Mobile” business, investing in SEO optimization for its news distribution business, and investing in increasing the number of ranking lists.

The customer satisfaction survey business and news distribution/PV business haven’t fully embraced AI. Based on the recent investor presentation, management is making efforts to utilize AI.

Oricon would benefit greatly from AI in the following ways:

• Speed of text-based content creation

  • performing research - finding things in large documents

  • summarizing long text - getting up to speed

  • AI converting human notes and writing it in the style of the writer - entire writing process

• Less employees required: 5 writers = 2 writers + AI

• Performing data cleaning, data analysis, and extracting key insights

• Personalized rankings based on variables or factors customers care about

  • Different customers will value different things. i.e., some customers care more about cost of service, while others care more about quality of service while being completely price inelastic

Since Oricon is in the beginning stages of incorporating AI, Oricon’s margins have room to grow.

What is worth mentioning is that Oricon can utilize their cash in a productive manner if it wishes to. They could be more aggressive in hiring employees to create more ranking lists, extract more data points from current surveys, develop an Oricon ranking app that generates custom ranking lists tailored to each user, and invest in AI.

Summary:

So why do I think Oricon is undervalued?

Oricon trades at FY2026 4.2x EV/EBIT and FY2026 10.3x P/E, with 30%+ normalized operating margins and the following growth opportunities:

• growing ranking lists

• improving credibility in its trademark

• growing follower count in its omnichannels

• utilization of AI

• ability to utilize cash to grow its Customer Satisfaction Survey, News Distribution/PV, and Advertising segments more aggressively

The above, coupled with good corporate governance, is a deadly combo.

What’s the upside?

I believe the number 1 case study for Oricon is Kakaku (2371).

Kakaku owns:

• Kakaku.com: the No. 1 shopbot website in Japan

• Tabelog: the No. 1 restaurant ranking guide/table reservation website in Japan. Replaced Michelin and grew in popularity due to being more representative of what Japanese people think are the best restaurants in Japan, as the ratings are based on real customer reviews.

• Job Box: a job search site that has the most job postings (not the No. 1 job search site) in Japan.

• other referral services

I believe the Tabelog business to have the highest degree of competitive moat. For most countries, achieving 3 Michelin stars is the highest accolade a restaurant/chef could attain. Michelin was seen as the gold standard for restaurant rankings globally. For Tabelog to dethrone Michelin in Japan is no easy task.

How was this possible? TLDR I could talk multiple paragraphs about this, but essentially Michelin was not accurately reflecting how people in Japan would view a restaurant. Tabelog adjusted their rating system to allow users with more credible eating experience to sway the ratings. So a person who loves Unagi and has shown on the Tabelog app to have made table reservations at over 50 Unagi restaurants would have way more “influence” on Unagi restaurants than someone who has gone to 2.

Every year Tabelog releases its ranking of Tabelog Gold, Silver, and Bronze winners, which is an accolade similar to Michelin 3-star ratings.

The point I am trying to make is being seen as a “credible” source for referrals, where one’s rankings are seen as accurate and trustworthy, once established, typically results in 1 company, at most 2, dominating public perception.

This can be seen with Oricon music rankings and Billboard fighting for the No. 1/No. 2 spot.

For further discussion on the extrapolations of Kakaku as it relates to Oricon, see the appendix1

Back to valuation, if Oricon becomes the gold standard for rankings beyond where there is overlap, car insurance with J.D. Power, Oricon’s multiple should rerate to something in the vicinity of Kakaku 2371.

Once Oricon reaches Tabelog-level credibility, accuracy, and trust, they can charge more for using its trademark, and margins would further expand. It becomes a license to print money and a tax on any service it covers.

Tabelog is clearly a tax on the restaurant industry in Japan. If you want to offer online reservations, you go with Tabelog, and you can’t say no to their fees because they control so much of the online traffic for organic restaurant discovery; it would be a suboptimal decision to not be on Tabelog for most restaurants. The only exception is if you are a highly established restaurant that is constantly booked up weeks or months in advance; then Tabelog’s service is not required.

The business economics for utilizing a ranking trademark are phenomenal; the difficulty is in getting there.

It is so easy to miss the mark on exactly what Oricon could be worth in the best-case scenario. It is truly difficult to ascertain, given the upside is so great if exceptional execution and luck are on their side.

Here are some Kakaku valuation metrics over the last 10 years:

LTM EV/EBIT: 11.4x-21.8x

LTM P/E: 20.4x-49.4x

LTM P/B: 7.1x - 16.6x

LTM P/S: 4.9x-10.1x

If we assume the lower end of each of the above metrics:

If we assume no revenue growth or margin expansion from 2026, highly unlikely, here is the return profile:

Sales: 6000
EBIT: 1450
Net Income: 960
BV: 5,657

LTM EV/EBIT: 11.4x *1450 = 16.5 bn yen; add net cash of 3.8 bn; Mcap = 20.3 bn yen

LTM P/E: 20.4x *960 = 19.6 bn yen

LTM P/B: 7.1x*5657 = 40.2 bn yen

LTM P/S: 4.9x*6000= 29.4 bn yen

Based on the company’s current Mcap of 9.9 bn yen, the company could generate a 100-300% return.

Outlook:

Forecast for fiscal year ending March 2026 (FY2025):

Sales: 6000
EBIT: 1450
Net Income: 960
BV: 5,657

Segment-Specific Revenue Forecast (YoY Growth)

• Communication Segment: +8%

• News Distribution / Page Views (PV): +13%

• Customer Satisfaction (CS) Survey: +6%

• Data Services: +3%

• Advertising: (No forecast)

In order for Oricon to reach 6000 yen of revenue at the revenue growth rates mgmt forecasts for each segment, the advertising segment must generate approx. 1000 mm yen of revenue to reach that goal. This seems unlikely to me.

In Q1 FY2025, the advertising segment only generated 90.3 mm yen and earned a segment loss of 5.6 mm yen. If the advertising segment generates 1000 mm yen of revenue, I would hope that it earns positive segment profits. Another angle is, if management feels strongly about the ad segment generating 1000 mm yen of revenue, then likely the current operating profit forecast of 1.45 bn yen is too low.

The goal should be to raise revenues while being profitable, and the advertising segment is currently losing money. It would have been nice to know how much revenue advertising was pulling in last year, but we are not given this data. Hopefully as Oricon’s customers from the customer satisfaction survey convert to ad customers, profit margins will improve.

The operating profit forecast seems attainable based on the profitability of its core segments.

Company and Segment Overview:

1. Mobile Business

2. Communication Business

   1. Customer Satisfaction Survey

   2. News Distribution and PV

3. Data Distribution

4. Advertising

Mobile Business (Former Core Business)

Formerly the largest revenue segment for Oricon. This segment included paid music distribution for mobile devices and the PC, “Oricon Music Store,” and the “Yomrun” e-book site.

Despite Oricon having a start in music rankings and mobile music sales, the disruptive nature of smartphone sales, followed up by streaming services (Spotify), has made music ownership, or illegal ownership, much less compelling.

*The reason why Oricon music sales dropped so much was because Japan was in a phase of transitioning from feature phones to smartphones. For smartphones, there were primarily Apple iPhones and Android phones. Apple has its own iTunes music store, which does not allow any other competing music distribution app on its phone. iPhones were extremely popular in Japan. Hence, all former feature phone customers that transitioned to iPhones would not be able to download music from Oricon anymore.

*Side note principle lesson: Anytime customers are forced to switch devices or platforms in order to continue being customers, then likely revenues will decline.

For Android users, have you noticed there is no longer a dedicated preinstalled music player app on your device?

Music rankings were helpful in informing consumers what CDs to buy or what songs to illegally download, but in the age of streaming, for a low monthly subscription (or $0 if you leech off your cousin’s family plan), you have access to a seemingly endless music library.

One no longer needs to do research on what music is popular; it gets automatically pitched to you via the music algorithm, which is similar to an ad-free radio service/satellite radio.

Oricon failed to replace the loss of ringtone and music sales from feature phones with smartphone music sales.

To make matters worse, Billboard Japan exceeded Oricon music rankings in popularity, as Oricon was slow to incorporate stream data into music rankings. (See appendix for the full back story.)2

From the following table, it can be seen that the company’s “mobile” music-related sales (ringtone and music sales) have declined yoy.

*Mobile segment includes music sales for feature phones and smartphones.

As of Q4 of FY2024, the mobile segment has been sold off.

Communication Business Segment

What is commendable to Oricon is that they have been successful in offsetting the decline in “mobile” sales by transitioning the business into 2 core segments:

1. Customer Satisfaction Surveys

2. News Distribution/Page Views (PV)

Oricon’s largest segment is the communication business segment, with the customer satisfaction survey and news distribution/PV segments being the company’s core businesses. The segment accounts for 80% of revenues. So let’s dive into the customer satisfaction survey segment first:

Customer Satisfaction (CS) Survey Business:

CS Segment Overview:

The customer satisfaction survey business is Oricon’s cash cow and the most important segment Oricon operates.

Within the CS segment there are 4 revenue segments:

• Trademark usage

• Customer Referral

• Data Distribution

• Other (Consulting)

Oricon conducts online customer satisfaction surveys of users of various services. Customer satisfaction is ranked in an independent, fair, and neutral manner. (See the appendix at the bottom to learn more about the Oricon customer satisfaction survey process).3

Oricon currently has 193 rankings, as of July and August 2025, spanning 13 categories:

From the surveys, Oricon gives awards to the top 3 winners of each ranking list.

Oricon 2025 Award Recipients

Trademark Usage:

Companies that want to utilize their ranking in ads need to sign a contract and pay a fee to license Oricon’s unique trademark logo. The contract allows the company to use the trademark for 1 year.

1st to 3rd place Oricon Trademark Logos Below:

Examples of how trademark logos are showcased:

Infographic of Customer Satisfaction Survey Business Model:

Live footage of me stumbling upon an Oricon trademark logo when I was looking into Oricon’s comps. Kakaku (2371) has a website called “Job Box,” which is an HR website for people looking for jobs. When I was looking into Job Box, an Oricon trademark logo showed up, mentioning how Job Box is No. 1 in job information services. Talk about coincidence!

In the customer satisfaction survey segment, trademark revenues make up over 70% of revenues.

Digital Promotion (Customer Referral) Segment

Oricon’s rankings are published on its ranking website, where the public can see the companies considered in the survey, the survey questions asked, and the survey results.

In order for a company to directly link their company website to Oricon’s ranking list, they must enter into a customer referral contract, paying Oricon based on the number of customer referrals directed to their company page; hence, the higher the traffic to Oricon’s ranking page, the better.

My interpretation of this is that the companies who sign up are paying a variable fee for this service, so it is different than the trademark segment in that there likely is little to no upfront fee.

The interesting part of this segment is that if there are 10 companies in the survey, linking one’s website is not limited to just the top 3 award winners. All companies can pay to refer customers to their website.

Keep this at the back of your mind. The business economics of this part are insane, and I will come back to it later in this pitch. For the time being remember the following 3 things:

• To have a clickable link, companies have to enter into a customer referral contract where they pay per click

• The higher the traffic on Oricon’s page, the more Oricon makes from customer referrals

• All companies on the ranking list can sign a customer referral contract

Data Distribution:

This segment is simply the sale of survey data and additional insights.

Other (Consulting):

Oricon offers consulting services where companies can hire Oricon to conduct research on their own company and its stakeholders to extrapolate insights that can help improve customer satisfaction.

News Distribution and PV business

Oricon produces over 3,500 entertainment-related news articles, paid PR feature articles, and videos per month.

This content is distributed to its own channels:

• YouTube - 2.34 mm subscribers

• Twitter/X - 1.6 mm followers

• Facebook - 164k followers

• Instagram - 43.7k followers

• Line - 3.69 mm friends/followers

The content is also distributed to third-party news distributors, such as Yahoo News and other major websites and apps.

Revenue segments include:

• ad revenue based on views on Oricon’s own channels

• corporate-sponsored advertising and PR consulting income

• fees for creating content and distributing to partner media outlets

• web advertising production, management, and promotion

*Oricon does not provide a revenue breakdown of the above revenue segments.

Oricon was ranked #3 in the “Arts and Entertainment” category according to “similarweb” and #2 on July 1st, 2025.

Syosetu.com is an e-novel site where independent authors can submit their works. Suki-kira.com is a popularity website that shows which celebrities are popular based on user votes. Unext.jp is a video streaming site. Hence, in the “Arts and Entertainment” category there are no direct competitors for Oricon in terms of entertainment news.

*The limitation here is that I have not looked into how thoroughly SimilarWeb has scraped the web for comps.

Over the last 3 months, Oricon’s website visits have increased. The company stated in their investor presentation that they spent money on SEO (search engine optimization), so it seems like it is working.

The age demographic is primarily 25-54. The largest 2 groups are 35-44 and 45-54, which, typically in first-world countries, tend to be the age groups with the highest spending power, as it coincides with the period in one’s life with the highest income potential. The age group is consistent with when Oricon music rankings were popular.

Based on the table above, Oricon needs to figure out how to cater their entertainment content to younger audiences. Oricon has time to figure this out, as their largest age demographic are still far from retirement age.

On a side note, this age demographic table reinforces the genius behind Oricon’s shift to customer satisfaction surveys and rankings. Those aged 25-54 are most likely requiring guidance on what car insurance provider, real estate brokerage, or hair salon to go to. In a way, Oricon’s transition from mobile sales dependency to customer satisfaction surveys is in lockstep with its music fans growing up and entering the workplace.

Natalie.mu is a website that offers entertainment news that is catered to younger audiences. Natalie has a website and mobile app. This is potentially a competitor to watch out for.

What is impressive to me is that 75% of Oricon’s traffic is from organic search. Oricon must have done a stellar job with SEO for their viewers to find Oricon from search results. What I would like to see over time is for “direct” traffic to increase, either through:

1. people bookmarking Oricon as a quick access tab

2. Oricon being a default startup tab on their browser

3. Readers type in “oricon,” and the Google URL bar automatically suggests oricon.co.jp to them, and they hit enter.

1 and 2 would lead to recurring visits from active viewers. 3 would rely on the viewers’ active recall and browsing habits. I’d theorize viewers in 1 and 2 would lead to more reliable and consistent habitual reading of Oricon news.

*Likely app usage traffic is not accounted for here.
**There isn’t really a way to track the above, but in theory that is what we want.

Top search words leading viewers to Oricon’s website: Oricon, Sieg Axe (Gundam related), Osaka Expo, Oricon Rankings, Oricon News

*Data is for June 2025. Data retrieved on July 15, 2025, from similarweb

*Data retrieved from Google on July 2025

Data Service Business

Oricon collects sales data and creates rankings for music, videos, and books. In the data service business, revenue is received from broadcasting stations and e-commerce sites for accessing or using Oricon’s database and ranking data.

Advertising Business

In October 2024, the company acquired all issued shares of Shin-Asahi Co., Ltd., an advertising planning and production firm, making it a consolidated subsidiary.

Following the acquisition, a new reporting segment called the "Advertising Business" was established. Reporting under this new segment will begin from the fiscal year ending March 31, 2025. This marks a strategic expansion into the advertising domain, enhancing the company's overall business portfolio.

Shin-Asahi performs the following functions:

• Media business: planning and production of advertising and PR related to TV, radio, newspapers, and magazines

• Promotion business: planning and production of events, seminars, and sales promotions

• Digital business: planning and production of advertising and PR related to SNS, creation and renewal of homepage and landing page.

• Content business: sports, characters, games, art, video, SDGs, learning, and more

• Music business: music production, artist discovery and management, and other music-related activities

This acquisition makes a lot of sense given Oricon has such an expansive customer list from CS award winners, CS customer referrals, companies that have paid for paid articles on Oricon News, and not to mention Oricon’s entertainment industry connections built since its inception.

Now let’s take a look at the business economics of each segment and my view of the revenue growth potential of the company.

Business Economics and Revenue Growth Analysis:

Customer Satisfaction (CS) Survey Business:

In the customer satisfaction survey segment, trademark revenues make up over 70% of revenues.

Trademark Business Economics:

The core of my investment thesis rests on Oricon’s ability to turn the trademark usage into the consumer gold standard for customer satisfaction rankings.

Oricon’s trademark is, in ways, a positive self-reinforcing flywheel. Large companies like Sony Insurance will use Oricon’s rankings in their advertisements.

Those familiar with Oricon music rankings will recognize Oricon. Those curious about Oricon’s credibility in rankings outside of music may think to themselves,

”Well, if Sony is using their trademark in their advertisement, surely they must be legitimate.”

By association, this pairing of large brands with Oricon’s trademark logo reinforces trust in the eyes of the consumer.

In the social media age, we live in a world driven by impressions. When Sony puts out an ad, how many impressions do you think that generates?

Sony’s ad that generates thousands, if not millions, of views has Oricon’s trademark logo on it.

An individual unaware of Oricon’s non-music-related rankings may perform due diligence on Oricon’s trademark logo and realize it’s Oricon from the Oricon music rankings. This may bring up nostalgic childhood memories and reinforce trust in the Oricon trademark.

This is simply 1 trademark logo on 1 ad from 1 company. Oricon has 193 rankings, with the top 3 being privy to the trademark logo. Creating potential ad opportunities from 379 companies. Depending on the company’s reach and ad spend, the number of impressions may vary, but the key takeaway here is that companies are paying Oricon to spread Oricon’s trademark logo—Oricon is getting a lot of free organic exposure.

This free exposure leads to curious consumers heading over to the Oricon ranking website. Oricon charges companies a customer referral fee based on the number of clicks to link their company’s website on the ranking list directly. If they don’t pay the customer referral fee, customers will have to Google search the company, which runs the risk of poor SEO rankings and other competitors having a higher ranking due to sponsored ads.

This next part is very important to understand, reread it a few times if you have to:

So you are telling me I have to pay Oricon to use their trademark. A customer sees my ad and is curious about the award I won. The customer goes to the Oricon ranking site to see the ranking list. While the customer is on the ranking list, if the customer wants to click a convenient link to see my company website, I have to pay Oricon as well? Did I just pay to direct traffic to the link that I paid for as well?

I hope you get the humour in this and how great the business economics are for this to happen. The more “Sony Car Insurance” spends on ads, the more money Oricon generates from their customer referral arrangement.

Referring to Oricon’s ranking lists can be habit-forming. There will come a point where customers who have previously relied on the rankings will visit the rankings on their own. This would be the next stage of growth and credibility I hope Oricon can attain.

In an interview, if an interviewer asks you about your former team at your previous firm, the optimal answer is to only give compliments, such as “hardworking,” “productive,” and “collaborative.” The interviewer will subconsciously associate all those nice qualities with you as well.

What do you think happens to the consumer’s subconscious when the No. 1 car insurance, real estate brokerage, job search, or telecommunication company uses Oricon’s trademark logo in their advertising? Gradually consumers will subconsciously associate Oricon with great companies.

If the assumption is that Oricon is still developing its reputation, then by logical deduction, the price they charge for the usage of their trademark should be some discount to the increased conversion that can be had if an ad doesn’t have the trademark.

For example, an ad without the trademark has a click-through rate of 2%, but with the trademark it increases to 5%. A life insurance company would line up to pay Oricon money for such a substantial improvement in KPI.

So not only can Oricon raise prices in relation to the effectiveness of their trademark, but they can also almost perfectly price discriminate against companies whose customers have higher LTV (lifetime value). This is similar to how AdSense works on YouTube videos. Channels that make financial videos make way more money per 1000 views than prank videos because insurance/financial companies are willing to pay more to target more affluent viewers. If an individual is looking at video content on TFSA/RRSP/IRA/government tax-advantaged investment accounts, they likely have money to invest.

There could come a time in the distant future when the association can become so strong that the actual credibility of the actual survey might not even matter; there will come a point where slapping an Oricon trademark will lead to increased conversion vs. not having it. Foodies can blindly trust that they will have an excellent dining experience at a Tabelog Gold award-winning restaurant.

Reputation and credibility take a long time to build. Once Oricon becomes highly trusted for its rankings, not only will its trademark encourage consumers to use its product or service, but there will also be no need for another incumbent.

The reputation established through longevity will be Oricon’s competitive moat. No competitor can simply create a customer satisfaction survey with a trademark and attain the results that Oricon has had. Why would customers switch to a ranking list they are unfamiliar with? Why would companies pay to use a trademark from some unestablished company?

My read on the pulse of the situation is that Oricon is still establishing itself as the de facto gold standard in ranking services. For the customer satisfaction survey to perform the way it is currently performing, Oricon must have at least a good reputation in the mind of the consumer, and the trademark has to be working for the trademark contract rates to increase to 39%.

What we hope to happen is for Oricon to generate the same level of credibility it had with music rankings across other service rankings and maybe even expand to product rankings.

They have competition from certain companies, i.e., JD Power (auto, insurance, finance), but Oricon can expand into rankings for all products and services where there is currently no clear winner. i.e., avoid restaurant rankings because Tabelog dominates that ranking list.

Oricon has the potential to become the de facto gold standard for all things rankings, where stamping an Oricon trademark increases the credibility of the firm and hence converts an otherwise suspecting consumer into a customer.

Ranking Lists Business Economics:

As we can see, there was a decline in ranking lists in 2023. Oricon must spend upfront capital to gather data from survey respondents to conduct these customer satisfaction surveys. Sometimes the data will result in a monetizable ranking list and sometimes not.

In the following screenshot, it can be seen that Oricon has revived the 24-hour Gym ranking list. Having written a deep dive on Fast Fitness Japan (7092), “Anytime Fitness” was the pioneer of the 24-hour gym chain in Japan; hence, there were very few competitors. After Anytime Fitness proved their business could work, many competitors entered the space, making the competitive landscape more saturated. Given there are more options now, it makes sense for Oricon to revive the 24-hour gym ranking list. Anytime Fitness won in every metric in 2024, but in 2025 AF took 3rd.

Which is to say, even if a ranking list is removed, the work is not completely lost in that it can be revived.

In terms of business economics, the most monetizable ranking lists are where there are high levels of competition, and despite the top 3 being ahead, the underdogs can take market share if the top 3 are not careful. This is where having an Oricon trademark would be very monetizable because the top 3 will want as many advantages in differentiating themselves from their competitors if the service seems similar to the uninformed. i.e., car insurance, real estate brokerage, and cram schools.

What drives each segment are:

• Trademark Use KPIs/Op Stats:

  • # of ranking lists

  • trademark usage contract rates, %

  • ARPU—average revenue per contract (user) [not reported, estimated]

• Digital Promotion (customer referral rates) KPIs/Op Stats:

  • Oricon ranking website traffic (not reported, similarweb?)

  • “Customer referral contract rate” = # of companies signed up for customer referrals/# of companies included in all surveys (not reported)

  • Click-through rate: When a customer visits a ranking list, how likely are they to click a link? (not reported)

  • Clicks: Customers pay a variable fee dependent on the number of customers Oricon refers to their companies’ websites. (I am not sure if there is an upfront fee or not.)

• Data Distribution KPIs/Op Stats:

  • # of ranking lists

  • Note: Newer ranking lists would have less historical data and hence would be potentially less attractive to a buyer, which is to say future sales could improve.

• Other (speculated to be consulting) KPIs:

  • # of clients who are contestants

Driving Trademark Revenue:

*Trademark Revenue = “Avg Implied # of awards that qualify for trademark contracts” x Trademark Usage Contract Rates, % x Avg Revenue Per Contract

**Avg Implied # of awards that qualify for trademark contracts = Avg Ranking Lists x 3 ← 3 being 1st, 2nd, and 3rd place

For the trademark revenue segment, I believe Oricon will continue to increase the number of ranking lists.

But simply increasing rankings lists doesn’t guarantee increased revenues or earnings; what is most important is trademark usage contract rates. 39.1% of winners have contracts. I believe there is still a lot of room to grow here.

The slight dilemma I have here is the No. 1 winner will have the most incentive to sign a contract, but I’m not sure how much incentive 2nd or 3rd place has. Who wants to put on their marketing material that they are 2nd or 3rd? Wouldn’t that advertising simply make a consumer think, I wonder who No. 1 is then?

I guess the wonderful thing about the consumer thinking about who is number 1 from seeing an Oricon trademark logo for 2nd or 3rd is that the consumer will want to visit the Oricon ranking website to satisfy their curiosity.

The counter to the above argument would be in highly saturated services where there is limited availability. If I were looking for a cram school, but the top cram school was fully booked, then I’d look for the 2nd place winner for availability. This could apply to daycares and gyms. Say the No. 1 gym is 15 minutes away and is constantly packed during peak times, but the No. 2 gym is 10 minutes away and not as packed.

I did a thought experiment in my head. I believe the following to be attainable:

• 95% of 1st place winners sign trademark usage contracts

• 50% of 2nd place winners sign trademark usage contracts

• 33% of 3rd place winners sign trademark usage contracts

• Blended trademark usage rate = 59.4%

And then, based on price, 1st place winners would pay the most, and 3rd place winners would pay the least. Currently, we have no data on this.

Another element that makes revenue forecasting a little more difficult is the pricing of the trademark. I believe the trademark fee should be different for different industries and services. A 24-hour gym chain with 1000+ locations in Japan would be willing to pay far more for the No. 1 trademark than a hair salon chain with 50 locations in Japan.

The value of the trademark should be tied to the increase in the following metrics:

• Click-through rate of an online ad

• Increased conversions or organic search from seeing a billboard, marketing material, flyer (harder to gauge)

• Can the trademark be the deciding factor that tips the scale in a company’s favour?

• What is the value of the product or service being sold?

• LTV of the customer

• What would be the difference in sales with and without a trademark?

Now that we have established that the trademark fee is dependent on its ability to increase sales performance, then as Oricon’s credibility improves over time, so too will they be able to charge more.

The positive flywheel here is increased credibility, which leads to increased conversions from users of Oricon’s trademark, which leads to Oricon being able to charge more, which leads to more companies signing up for trademark usage contracts.

The current method of driving trademark sales is the best method I can think of given known data.

Hidden Growth Opportunities in Trademark:

• Further ranking lists based on age, region, gender

  • Lower trademark usage pricing for region-specific awards. i.e., if you are No. 1 in the Kanto/Tohoku/Kansai/etc. regions

• AI to create customized ranking lists tailored to each user

• Create ranking lists for products, in addition to services

• Expansion overseas

  • Adopt business model in overseas markets

  • Can maybe start off with Japanese offerings that international audiences would value—create a rival to MyAnimeList or MyDramaList, etc.

Trademark revenues have CAGRed at 13.4% since FY2016. From all the above growth opportunities, I believe trademark revenues still have a long runway for revenue growth and operating leverage. The current revenue level is due to a shift in ranking lists; once ranking lists resume course, and the positive flywheel compounds over a few more cycles, I believe trademark usage contract rates will increase, and so too will the ARPU.

Digital Promotion (Customer Referral) Segment

Oricon’s rankings are published on its ranking website, where the public can see the companies considered in the survey, the survey questions asked, and the survey results.

In order for a company to directly link their company website to Oricon’s ranking list, they must enter into a customer referral contract, paying Oricon based on the number of customer referrals directed to their company page; hence, the higher the traffic to Oricon’s ranking page, the better.

My interpretation of this is that the companies who sign up are paying a variable fee for this service, so it is different than the trademark segment in that there likely is little to no upfront fee.

The interesting part of this segment is that if there are 10 companies in the survey, linking one’s website is not limited to just the top 3 award winners. All companies can pay to refer customers to their website.

I believe this opens up a large revenue potential for Oricon. Once Oricon rankings become the gold standard for customer satisfaction surveys and organic traffic increases to such a level that it would be suboptimal to not have your link attached to your ranking on the ranking list.

Here is a ranking list where the top 3 winners did not opt for customer referrals, but the two last-place finishers opted in. I have seen other interesting combinations.

Here is the opposite scenario for English schools, where everyone except the 3rd place finisher opted in for customer referrals. By the 3rd place finisher not opting in, they may be losing customers to their other competitors.

If you are a consumer, it’s much easier to click a link than to search in Google for the other companies. There could be a scenario where by not signing up for customer referrals, you are losing customers to the other companies on the list.

I believe customer referral income to be most abundant in ranking lists where companies operate in saturated markets.

Oricon can then bundle trademark usage, customer referrals, data distribution, and consulting in any package to increase ARPU.

Hidden Growth Opportunities:

• I believe if Oricon could create tailored ranking lists using AI, then more companies would be incentivized to sign up for customer referrals, because a company on the bottom of the general ranking list might appear on the top of a list for a unique customer.

As we can see from the above, customer referral revenue CAGRed 12.3% since FY2016. Based on all the growth opportunities I listed above, I believe customer referral revenue has not reached its potential.

According to Similarweb, Oricon’s ranking website only has 1 mm visitors a month. I believe there is room for visits to substantially increase over time.

Data Distribution:

This segment should increase as ranking lists and companies covered grow. I don’t have high hopes for this segment, but I do believe they will continue to gradually grow.

Other (Consulting):

I am not sure how effective consulting will be as a service, so I’ll reserve comment until more historical figures present themselves.

News Distribution and PV business

There are some slight synergies between the News Distribution business and the Customer Satisfaction Survey business:

• Refer trademark and customer referral customers to the News Distribution segment for paid articles (sponsored advertising) and PR consulting

  • i.e. PR article featuring the company’s recent No. 1 win.

    • Can add a PR article as a bundle deal with trademark usage contracts

• Data collected from customer satisfaction surveys can be used in content creation. No other news distributor would have this data, making the content unique

• Being an entertainment news company, the company likely has established industry connections with many companies. When Oricon reaches out with an award, it would be a more natural business discussion than a cold reach-out.

If we could have complete information, ideally we would have the following metrics:

• Sessions (Similarweb calls it visits)

• # of Active Users/Total Users

• Monthly/Annual visits

• Average Pages viewed per visit

• Number of followers/subscribers across platforms

• How many impressions and views do their posts, articles and videos get

Oricon doesn’t publish many KPIs for the segment. The following are the average monthly sessions that I painstakingly had to visually estimate based on the following chart published in the company’s investor presentation:

*The horizontal black lines were added by me so I could better visually estimate. Keep in mind because I visually estimated the above figures, they are prone to human error.

Since the start of when Oricon published session data, Oricon has grown their sessions until the high of FY2023. The sessions have dropped slightly in FY2024.

I personally don’t consume entertainment news. If I do consume it, it is usually pushed upon me by Instagram, YouTube, or Twitter. The Oricon News website/app is a medium that I personally won’t use. My concern for this segment is after their core demographic of 25-50-year-olds ages, will the next generation continue to use their website?

It concerns me that the Oricon app on the Play Store only has 100k+ downloads. The next tier after that is 500k+ downloads, so the Oricon app had 100-500k downloads.

What is more concerning here is that Oricon has stopped offering app support for iOS and Android as of July 31st, 2025. I have the app installed on my Android (S24 Ultra) and can still use it, but it is nowhere to be found on either platform for download. I was not able to find out how many downloads the Apple App Store stated before the app got delisted from the App Store. I tried looking on SimilarWeb and other app-tracking websites but didn’t have much luck without having to go through the process of signing up for a free trial or demo call. If any one of you already uses these services and can search up how many app downloads they had, that would be very much appreciated.

I personally find younger generations use their phones more for news than their computers, so I find it very odd that Oricon has decided to stop app support. Oricon has noted that users can browse Oricon news through the internet browser on their phone. My gut instinct tells me they should keep the app around instead of taking it off, but I could be very wrong.

My thought process is that an individual who downloads a dedicated app just for entertainment news should be a loyal reader. Furthermore, I think there is less friction with tapping an app than opening Chrome and typing “Oricon” in Japanese. The former is a 1-step process, while the latter is a 2-step process.

As we can see below, 84% of devices used are mobile devices, likely primarily smartphones and some tablets.

I believe this move doesn't affect their current age demographic of viewers but may affect them in attracting the next cohort of younger viewers.

The saving grace to this point is that Oricon has

• Oricon News site: 91.1 mm average monthly sessions

• Line: 3.6mm friends/followers

• YouTube: 2.3 mm subs

• Twitter: 1.6 mm followers

• Facebook: 164k followers

• Instagram: 44k followers

Oricon is doing very well on its own website, YouTube, Line, and Twitter. The management thesis for removing their app could be due to a majority of their viewers using SNS over their dedicated app. It could also be that the 100k+ app installers are passive installers of the app and haven’t really touched it in a long time. This is data only Oricon would know.

The growth in this segment comes from their continued growth in subscribers and followers across omnichannels and maintaining and growing their traffic on their Oricon News website.

Oricon’s YouTube channel grows by 200-300k a year:

In terms of channel size, Oricon has a sizable YouTube channel, and I see it as an effective channel to provide video content to younger audiences. Oricon has announced they see short-term video content as a means to grow views. I hope they put more effort into this and utilize this content on their Instagram page as well, as reels are an effective growth strategy on IG.

The company didn’t publish historical Twitter/X followers, but they are currently at 1.6 mm followers. Twitter allows Oricon to offer alternative text-based short-form entertainment news. The convenience to readers is that they don’t have to read an entire article on Oricon News to get updated.

I attempted to download Line on my Android, but the app would get stuck on loading. I have no comments on the Line content strategy.

In summary, Oricon has done a great job to date in growing their news distribution business. The company forecasts the segment will grow 13% in FY2025. I believe their SNS presence will continue to grow given the population of Japan. My concern mainly lies in the ability of the Oricon News website to maintain its traffic levels. If the narrative is that most readers use SNS to access Oricon news updates and get redirected to the Oricon News website through SNS, then I can be at ease.

Hidden Growth Opportunities:

• Anime and other facets of Japanese culture are popular in the West. Oricon can offer translated entertainment news catered to Western audience members.

• Creating rankings lists for foreigners who are interested in visiting Japan

• Collaboration with popular Japanese YouTubers, live streamers, and VTubers. I see primarily entertainment news with traditional idols and celebrities. I think collaborating with YouTubers would allow them to reach a younger audience.

• Bundling services with other revenue segments

Data Service Business

The data service business has been a slow but gradual grower. Oricon has the most expansive data set on music, videos, and books, so I expect it to continue to perform how it has historically performed.

What is impressive is that revenues have only grown 16% since FY2011, but segment profit margins have expanded from 25.4% to 37.6%. This means Oricon has optimized the cost structure of this segment, and it is likely to continue to produce healthy earnings for Oricon into the future.

Advertising Business:

Based on the FY2025 forecast, the Advertising segment needs to generate roughly 1000 mm yen of revenue in FY2025 for the 6000 mm yen revenue target to make sense.

It surprises me that at a 1000 mm yen revenue target, the advertising segment isn’t profitable. It’s possible that management has purposely underpromised in hopes of overdelivering in this segment.

The investment rationale in this segment is simply to direct all customers from Oricon’s communication segment to the advertising arm.

Here is how I see Shin-Asahi complementing each segment:

• Trademark usage: customers who win awards are upsold on customer referrals and advertising. Shin-Asahi can showcase demo products of how they effectively display the trademark logo in flyers, posters, billboards, online ads, and TV commercials (CM).

  • One thing I thought of is that given Oricon’s connection to the entertainment industry, if Sony Car Insurance needs a Japanese idol or actor to star in their CM, then Oricon can use that as a pitching point to utilize its own in-house advertising team.

• Customer referrals: This is a link to the company’s website. Might be something the consulting team could do in making a company’s homepage more appealing to users, but probably not advertising

• Consulting: Consulting team can identify where the customer is lacking in customer satisfaction. Potentially, advertising can help shape public perception of where a company has failed to properly communicate their strengths.

• News Distribution/PV:

  • Bundling of paid PR articles and Shin-Asahi capabilities - upselling

    • If a client is interested in a paid article, they might be interested in Shin-Asahi’s TV ads, SNS ads, and other capabilities

  • Online ads displayed on Oricon’s websites

  • Create CM ads that are also uploaded to Oricon News YouTube channel and other Oricon-owned SNS platforms

  • Shin-Asahi Promotion Business: News distribution can assist in gathering attendees for special events and seminars

• Data Distribution: No synergies here

In summary, effective cross-selling and bundling of advertising services with core communication services will allow Oricon to realize more sales, and hopefully profits, in the advertising segment.

Risks:

• Trademark Use:

  • Loss of credibility from fraud, tampering, accusations

    • Unlikely, as Oricon is a neutral party and is completely impartial, as they don’t represent the consumers or the companies in these rankings. Surveys are conducted by external organizations. They work with academics, experts, and industry stakeholders to design these surveys

  • Competing customer satisfaction ranking lists arise from other data companies. See the appendix for analysis of comparable trademark logo companies4

  • Not as many monetizable ranking lists

  • Not adapting to changing industry dynamics of a ranking list fast enough

    • An oversight Oricon made was not accounting for streaming as a weight in its rankings fast enough. (See appendix 2 to review Oricon’s former mistake in music rankings)

• Customer referrals:

  • lack of internet traffic to ranking lists

    • unlikely due to all the impressions from ads from trademark use, which should result in increased traffic over time

• News Distribution:

  • Decline in internet traffic to Oricon News site

  • Slowdown of subscriber/follower accumulation on all SNS platforms

  • Active users drop across all platforms

  • Drop in ad revenue rates

  • Decline in marketing budgets in the market

  • The price for content and articles declines for news distribution platforms like Yahoo! News.

  • People use AI for entertainment news. Due to AI scraping information off Oricon News, people don’t have to visit Oricon news sites for information anymore. Or if people are too lazy to verify outputs, page views can take a hit as AI can circumvent the need to even visit the source of the information. Fewer visits to Oricon News also mean less traffic towards paid articles.

• Google changes their search algorithm resulting in increased SEO spending on the part of Oricon

• ChatGPT does an algo change and Oricon News is less referenced in AI outputs

The most damaging potential risk here is that reputation takes years to build but can be tarnished overnight. Since most consumers won’t review how the customer satisfaction surveys are conducted, Oricon would need to resist the allure of cutting corners in conducting surveys, as it would easily improve margins. Oricon must maintain a long-term view and ensure they do everything in their power to maintain their independence and credibility in survey results. It’s important to do what’s right even when no one is watching. The segment profit margins of the CS segment are north of 60%, so CS has no financial pressure to cut costs.

Oricon has had 1 controversy where they were accused of manipulating the music rankings, and Oricon sued the journalist for defamation, and the suit was dropped when the journalist’s publishing company apologized and paid charges of 5 mm yen.

Besides this event, Oricon has never been accused of wrongdoing or engaged in wrongdoing; hence, I expect the company to continue to defend its image.

Conclusion:

All in all, there is a lot to like about Oricon. They are asset light. They have great profit margins and will likely continue to benefit from operating leverage as rankings lists, contract rates, customer referrals, news distribution earnings, and data sales continue to increase.

Oricon has a track record of credibility, but they still need some time to be viewed as the de facto customer satisfaction ranking list of Japan. Given the positive flywheel is in motion, as long as they stay consistent on their current path and continue executing and prevent any actions that could hurt their credibility, the positive flywheel will continue to compound on itself.

More ranking lists lead to more awards, leads to more trademark contracts, leads to more impressions on Oricon’s trademark, leads to more credibility, leads to more trademark contracts, leads to more impressions…. you get the point

As of Aug 8th, 2025, Oricon trades at 816 yen per share. 4.9x FY2025 (Mar 2026) EV/EBIT excl. LT investments, 10.9x FY2025 P/E, with a 4.4% dividend yield.

At current valuations, Oricon trades far too cheaply. You get an attractive dividend yield, coupled with a management that has proven they are willing to perform share buybacks.

The alternative dataset to focus on is the monthly update of ranking lists and survey respondents the company releases at the beginning of each month on their customer satisfaction survey business information page. This serves as a gauge of future earnings performance before earnings come out. Q1 reports 187 ranking lists, but at the start of July and August 2025, the company already reported 193 ranking lists. If the company continues to report these high numbers or even higher numbers, Q2 should be a good quarter unless advertising is shown as a complete money pit.

Again, I see this as an S-tier stock, with low downside covered by buybacks, high growth potential, high margins, areas to allocate cash, and multiple expansion from transforming into a Kakaku equivalent for customer satisfaction survey rankings. Oricon’s currently in a transformation stage where its potential is less obvious to those who do not comprehend the positive flywheel that is already set in motion and gaining momentum. Once it becomes obvious, the upside potential could make this a multi-bagger.

As the adage goes, it’s better to be roughly right than accurately wrong. I see this stock going up 60-200% from current levels in the next 1-3 years, with upside exceeding this range in the best-case scenario.

Thanks for reading,

Continuous Compounding - Alan

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Appendix:

3

The following is a translated description of the Customer Satisfaction Survey process as illustrated on the company’s webpage by ChatGPT:

In the Oricon Customer Satisfaction Survey, we conduct an online survey on satisfaction levels, targeting only users who have actually used the service or product. The results are aggregated and published as rankings.

Strengths of the Survey

The Oricon Customer Satisfaction Survey conducts its own research on one of the largest scales in Japan. Taking a neutral stance that belongs to neither the consumer side nor the corporate side, it produces highly accurate customer satisfaction indicators.

Oricon's Independent Survey (Orange)
Based on the theme of “rankings demanded by society,” the survey is independently planned and conducted by Oricon. It is not a commissioned survey from any specific company or individual.

Multifaceted Evaluation (Purple)
Customer satisfaction is categorized into multiple “evaluation items” based on a consumer behavior model. By gathering satisfaction levels for each of these items, it is possible to understand the actual state of service evaluation from multiple perspectives.

Ensuring the quality of respondents (Darker Blue)
To obtain unbiased and neutral responses from respondents, the actual survey is conducted by a highly reliable external organization, with our company name kept confidential.

Coverage of Target Companies (Teal/Lighter Blue)
In order to select services with high customer satisfaction, a wide range of companies are included as targets, regardless of their business size.

The Process to Finalizing the Rankings

We will introduce the process from the survey to the determination of the rankings.

Planning

1. Industry Analysis
Collect and analyze information such as market size and each company’s share in the relevant industry.

2. Player Research
Research the services and products provided by companies in the relevant industry.

3. Company & Expert Interviews
Conduct interviews with companies and experts in the industry to reflect market trends.

Design

4. Evaluation Design
Design multiple “evaluation items” based on the project plan and referencing the company interviews.

5. Survey
Conduct a nationwide online survey. Screen respondents to accurately extract those with actual usage experience, and collect satisfaction scores for each evaluation item.

Aggregation

6. Data Cleaning
Remove invalid responses, outliers, and anomalies. Combine up to three years of data for services that continuously provide satisfaction.

7. Aggregation
Calculate rankings using in-house developed aggregation tools. Assign weightings (importance) to each evaluation item based on correlation with overall satisfaction.

8. Finalizing the Ranking
Convert the Z-score and industry average score into a satisfaction index. Add bonus points for strong recommendations by others, calculate the overall score, and finalize the ranking for companies meeting the required number of responses.

Survey Guidelines Committee

Customer satisfaction surveys are used to analyze the gap in perceptions between companies that provide services or products and the consumers who use them, with the aim of enabling companies to achieve sustainable growth by offering the most suitable services to the appropriate customers.

At Oricon ME Inc. (hereinafter referred to as “our company”), we have been conducting customer satisfaction surveys since 2006 and have published the results as rankings. While these rankings are aggregated under the supervision of third parties, we have also established a “Survey Guidelines Committee” involving external members to discuss and decide on survey methods and rules that take into account the unique characteristics of each industry, as well as the decision-making processes themselves.

Through discussions held by the “Survey Guidelines Committee” and by making its decisions public, we aim to ensure the transparency of our surveys and business practices, while fostering an internal environment where our actions are carried out independently and fairly.

Technical Advisor

The Oricon Customer Satisfaction Survey is conducted under the supervision of experts to ensure the reliability and quality of its rankings.

Professor Hideo Suzuki, Faculty of Science and Technology, Keio University
Keio University, Faculty of Science and Technology / Senior Science and Technology Policy Fellow (part-time), Cabinet Office of Japan

Hideo Suzuki

Career

• 1989 – Graduated from the Department of Administration Engineering, Faculty of Science and Technology, Keio University.

• 1992 – Completed Master’s Program at the William E. Simon Graduate School of Business Administration, University of Rochester.

• 1996 – Completed Doctoral Program in Management Engineering, Graduate School of Science and Engineering, Tokyo Institute of Technology. Earned Ph.D. in Engineering.

• 1996 – Lecturer, Institute of Policy and Planning Sciences, University of Tsukuba.

• June 2002 – Associate Professor, University of Tsukuba.

• April 2008 – Associate Professor, Department of Administration Engineering, Faculty of Science and Technology, Keio University.

• April 2011 – Professor, same department (current position).

• April 2023 – Senior Science and Technology Policy Fellow (part-time), assigned to the Counsellor for Infrastructure and Disaster Prevention, Science, Technology and Innovation Promotion Secretariat, Cabinet Office of Japan.

Research fields: Applied statistical analysis, quality management, marketing.

"Ensuring the Reliability of Rankings"

Oricon’s customer satisfaction surveys and rankings play an important role in providing consumers—who often lack sufficient information about services—with objective, data-driven benchmarks: satisfaction indices and company rankings based on them. This information is intended to help consumers make informed purchasing decisions about services as products.

For companies, the publication of satisfaction scores and rankings, along with an awards system, contributes significantly to revitalizing industries, improving service quality, and strengthening competitiveness.

To ensure that customer satisfaction rankings fulfill their role, we continuously verify and improve survey and measurement methods, evaluation items, and calculation processes from a statistical perspective, striving to maintain reliability.

Suzuki Laboratory
Keio University, Faculty of Science and Technology, Department of Administration Engineering. Graduate School of Science and Technology, Division of Open and Environmental Science

About Suzuki Laboratory
The laboratory engages in a wide range of research based on data analysis, including the development of statistical and machine learning methods, applied research on service quality evaluation and consumer behavior analysis, as well as research on TQM (Total Quality Management), CRM (Customer Relationship Management), and sports management.

Main Research Themes:

1. Statistical Quality Control

2. Marketing Research

3. Customer Data Analysis

4. Research on Management

4

Comparable Trademark Logo Companies:

Nikkei is a B2B customer satisfaction survey provider and sells their data on a research platform to businesses and does not have a consumer-facing trademark logo. Nikkei also does awards, but primarily in the IT and digital service sectors. Nikkei isn’t consumer-facing like Oricon is.

Here are examples of trademark logos that aid in consumer confidence:

Oricon:

J.D. Power:

Good Design Award:

Winners of the “Good Design Award” can pay a fee to use the G-Mark trademark logo.

Examples of how the Good Design Award trademark is displayed by winners of the award:

TP-7 portable audio recorder:

switle Body -caregiver body washing tool:

uF bags and luggage:

Other Marks:

Eco Mark: The Eco Mark is awarded to environmentally friendly products and services by the Japan Environment Association. It certifies that products meet strict environmental standards, appealing to eco-conscious consumers.

JAS Mark: Japanese Agricultural Standard. Administered by the Ministry of Agriculture, Forestry and Fisheries, the JAS Mark certifies the quality and safety of agricultural, forestry, and fishery products, including organic foods. Certified businesses can display the JAS logo.

Omotenashi Mark: Organized by the OMOTENASHI Nippon Executive Committee, this award recognizes products and services embodying Japanese hospitality and quality. Winners can display the OMOTENASHI Selection logo, which highlights excellence in customer experience and cultural authenticity. Used by small businesses, artisans, and service providers (e.g., traditional crafts, restaurants, or tourism services) to appeal to both domestic and international consumers seeking authentic Japanese experiences.

Japanese Stationery Awards:

Those that know me know I love stationery, and Japan does it the best:

Japanese Customer Satisfaction Index (JCSI):

The Japanese Customer Satisfaction Index (JCSI) is a national survey program operated by the Japan Productivity Center, measuring consumer satisfaction across ~30 service industries and 400+ brands. It uses a multi-dimensional causal model evaluating six factors: customer expectations, perceived quality, perceived value, satisfaction, recommendation intention, and loyalty. Results are published publicly and can be licensed by top-ranking companies for marketing and benchmarking purposes.

Based on my research, Oricon has the most recognizable trademark logo for customer satisfaction surveys covering the largest number of services. The only real competitor is JCSI, but they cover 30 service industries and are non-profit. JCSI’s survey is completed with 130k+ respondents vs. Oricon’s current 4 million respondents.

There are also specialized competitors who hyperfocus on a niche category. i.e., design (Good Design Award), restaurants (Tabelog), and automobiles (J.D. Power). Each of these competitors would occupy 1 to a few ranking lists but are unlikely to expand their scope to compete with Oricon.

Dear Continuous Compounders,

Today, I have 2 major announcements:

• A quick pitch on my newest high-conviction stock

• New pricing post August 15th, 2025:

  • Monthly plan: $30/month or $360 over 12 months

  • Annual plan: $180/annual or $15 per month

To incentivize long-term subscribers and disincentivize short-term subscribers, the new pricing post Aug 15th will be $30/month ($360 paid over 12 months). For those who see long-term value in my stock pitches, the new annual plan is only $180, a mere 20% increase from the former annual plan and a 50% discount compared to the month-to-month plan over 12 months.

Former plan:

• Monthly plan: $15/month or $180 over 12 months

• Annual plan: $150/annual or $12.50 per month

If you would like to lock in the previous $15/month plan or $150/year annual plan (save 2 months with the annual plan). Here is the link to take advantage of that offer:

https://continuouscompounding.substack.com/50PERCENTOFF

Act now, or the offer will end on August 15th, 2025!

*The reason the non-discounted annual plan states 300 USD and not 180 USD is because the special offer setting from Substack does not allow me to apply different discounts for monthly and annual. So after August 15th, I’ll manually adjust it back down to $180.

**Current paid subscribers, you will be unaffected by this price change for the time being. If you are, please do let me know and slide into my DMs on here or Twitter/X. I’ve adjusted prices in 2024, and I’ve had 0 issues before.

***My thought process has always been to provide immense value to readers far greater than what I charge. There will be a time when the value I bring to the table is so large relative to what some of my early paid subs are paying that I will have no choice but to raise the prices. I may also change my mind on this and keep you guys grandfathered. I could also send each of you a special link that is still a major discount to the current market rate being charged. I’ll be fair.

Newest Stock Pitch (Paid Sub Exclusive)

I hate it when a stock I’m in the process of writing about rallies, and my paid subs can’t take advantage of a lower cost basis.

To mitigate this problem, before I wrap up my very in-depth stock pitch, I will be releasing this shorter quick pitch on the current high-conviction deep dive I’m writing about.

This kind of happened to Glory, where I was able to give you guys a short overview of why you should invest in Glory (2280 yen per share), but by the time the deep dive came out, it had rallied 20-25%. It has rallied another 40% since I released the stock pitch (2770 yen per share), but I want you guys, my paid subs, to make as much money as possible.

If you are a free sub, I mainly release immediately actionable ideas. I put my money where my mouth is, so if you’ve noticed, in almost every stock pitch I’ve ever released, I disclose I am currently long the position.

Here at Continuous Compounding, I focus on quality over quantity.

(Can skip if you don’t care to learn more about me) My first passion in life was actually drawing. When I was a kid, I took sketching lessons. The teacher would put up his personal cartoon sketches and have us copy them. The teacher would walk around and give us pointers as he saw the need to. Sometimes he’d be lazy if no parents were around. My goal was to get as close of a sketch to my teacher’s sketch as possible. I noticed that some kids saw the lessons as a race. At a comfortable pace I could do 4-5 drawings a session. At the end of a session, I remember a kid boasting that he completed 9 drawings. I challenged myself once, and while maintaining my standard of quality, I could only do 6. I remember it like it was yesterday; a kid was having trouble with her sketch. She wasn’t able to draw a certain part of a boat correctly. It was a challenging part of the sketch; I had erased and redrawn many times before finally being satisfied with my output. Other students glossed over the intricate details of that part of the boat in favour of speed. My teacher came over to my booth, went through my past drawings that day to find the sketch in question, and must have noticed I had drawn it properly. He grabbed my sketch and showcased it in front of the other kid, who just couldn’t get it. I felt bad for her because the teacher was purposely trying to compare her to me. A very Chinese thing to do. Besides the potential trauma the teacher bestowed upon another student, this validation gave me confidence that what I was doing was correct; there was no point in racing other kids to output more, because at the end of the day we were drawing to acquire new techniques and skills, not to race. I have been programmed this way ever since. I don’t release stock pitches to meet some arbitrary quota. I deliver less but offer more. I want to impress upon you guys the level of work that allows me to get this level of conviction, which doesn’t happen over a few days or sometimes weeks of research.

Be honest, for the $150 annual fee I’m charging, how many stock pitches do you need to truly work out? If we are being honest, anyone with a decent-sized portfolio, 1 would be all it takes.

High-conviction ideas are rare to come by, so I release less than some larger creators who have a frequent quota, but my hit rate has been phenomenal since I started. My pricing has been tuned to reflect the market price $/stock pitch you’d pay for a newsletter that outputs more. In a sense, with my Substack, you are only paying for actionable undervalued stock pitches not for fair-valued ones.

Are you really telling me it is that easy to find a high-conviction stock pitch? You can find 1 every 2-4 weeks? I can spend anywhere between 100 to 200 hours on an idea if I believe it warrants it. Haier Smart Home 690D was an idea that took me 1.5 months to finish extensive research on. Sometimes I enjoy the process of learning about a new company and developing a full picture of its business economics that time just flies. I also have a bad habit of letting ideas marinate for too long. Developing theories, trying to find evidence that disproves and supports it. It is a time consuming process, but I believe it’s worth it and you as readers get quality work that inspires conviction.

Here is how my recent picks did:

Link to Twitter/X post

*The only loss I made was on Genda, which isn’t a stock pitch I wrote up. Notice how for every stock pitch I wrote myself, they have gone up. I am biased here given those are my stock pitches, but I know the stocks I’ve pitched in and out. I’m confident that I also know them far better than 98% of the investors that are in them, so whenever the stock gets cheap, I can recommend and invest in them with conviction.

Paid subs were notified of Glory (6457) 1 month before free subs. Those who followed my Glory trade in April would have made a +70% return.

My paid sub below has made a +72% gain, as his average price is 2255 yen/share (3876 yen per share as of July 25th, 2025)

Nice problem to have when you regret not buying more:

So for my next high-conviction idea, I present to you…

Read more

The investing livestream challenge was originally set to launch on July 5th, but due to an unexpected delay—my internet provider wasn’t able to complete installation until July 8th—the official launch has been rescheduled to tomorrow:

📅 July 10th at 3PM PT / 6PM ET.

To make it up to you, I’ll be going all in with a full 8-hour livestream (with breaks as needed) as a show of commitment to the challenge and this community.

I’m excited to have you join me live! Don’t forget to like, subscribe, and jump into the chat to connect with other like-minded investors.

📺 Continuous Compounding YouTube Channel ←CLICK YouTube link

The original challenge rules remain unchanged and can still be found here:

Best,

Alan - Continuous Compounding

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This post and all its contents herein are the exclusive property of Continuous Compounding. This post is intended solely for informational purposes and is not to be distributed, reproduced, or transmitted, in whole or in part, for commercial purposes or sale without prior written consent from Continuous Compounding. Any unauthorized use, dissemination, or sale of this research is strictly prohibited and may be subject to legal action.

Disclaimer: I am long shares of Glory Co., Ltd. (6457) at the time of publishing this post.

Dear Continuous Compounders,

I started my first live stream on June 5th. It has been quite the fun and entertaining experience.

In this post I recap the top 5 stock ideas I uncovered in my live streams up until the release of this post.

YouTube Livestream Recapping the Top 5 Stock Ideas:

Google drive folder containing translated and raw documents: link

*If company has english filings, then they may or may not be included in the above folder

3991 - Wantedly

*Click company name for IR link

Price/share: 1312 ¥ (June 12th, 2025)

MCap: 12.5 bn ¥

Net Cash: 5.7 bn ¥

EV: 6.7 bn ¥

P/B: 2.8x

Div yield: 1.5%

FY2025 EV/EBIT: 4.2x

FY2025 P/E: 12.0x

Quick Company Overview:

• Linkedin of Japan, with far lower market share

• A different approach to job posting. Employers showcase their employer profile, department you are applying to, what team members you will be working with, and images showcasing the company to attract candidates who “vibe” with the company

• Example of employer profile/job posting:

  • Working in Thailand! Looking for a back office staff member who loves VTubers and esports!: https://www.wantedly.com/projects/1810149

  • Global Strategy & Biz Ops: https://www.wantedly.com/projects/2055219

  • Backend engineer: https://www.wantedly.com/projects/1986970?featured=0

What I like:

• High margins. 34% EBIT margins, 22% NI margins, due to capturing economies of scale and reaching a user base that allows for the positive effects of operating leverage to kick in

• Asset-light business model, without much need for capex. Annual D&A and capex are very low. High free cash flow generating business.

• Growth opportunities:

  • Increase members

  • Increase number of employer companies

  • Expansion beyond Japan, i.e. Singapore

  • Adding additional add-ons and features to their existing subscription offering

• A different type of hiring platform that is way more personable than traditional job postings. Appeals to younger generations.

What I don’t like:

• The increase in user base has been slowing, indicating marginal returns from marketing spend

• The increase in companies (employers) has been slowing down as well

• Hoarding cash. How does the company effectively use cash?

• The company should have been aggressive in their marketing spend, but have actually dialled it back down. In an ideal state, Wantedly becomes the LinkedIn of Japan, but if their primary objective is not to capture as much market share as possible, then they may have lost that opportunity.

Additional questions we want answered:

• How is the company investing in its own growth? R&D? Capex?

• Are they effectively using marketing spend, and how are they using it?

• What is the total number of members they could penetrate? What is Japan’s labour pool

• What does the hiring platform market look like? Are there a lot of generalist hiring platforms or a lot of specialized ones?

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3723 - Nihon Falcom Corporation

Price/share: 1123¥/share (June 12th, 2025)

MCap: 11.5 bn ¥

Net Cash: 9.8 bn ¥

EV: 1.7 bn ¥

P/B: 1.15x

Div yield: 0.9%

FY2025 EV/EBIT: 1.4x

FY2025 P/E: 14.4x

Quick Company Overview:

• JRPG company with 2 major gaming IP: YS series, Legend of Heroes

• Loyal fans who comeback to each new IP release

• Games are available on Playstation (PS4/PS5), handheld consoles (Switch), PC, and Mobile

• The company also sells music and merchandise related to its IP

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Nihon Falcom Corp (3723) continued…

What I like:

• Highly profitable: EBIT margins 50%, NI margin 34%,

• Stable and stagnant revenues at 2.5 bn yen. Loyal fan base that enjoys the IP and returns for new releases.

• Have established 2 strong IPs in YS series and The Legend of Heroes.

• Growth opportunities:

  • New IP being established: Tokyo Xanadu (Persona competitor targeting a younger audience)

  • Releasing their title to more game consoles (PS5, Switch) and across platforms (PC, Mobile)

What I don’t like:

• Potentially overreliant on their 2 major IPs in YS series and The legend of Heroes. What if the fan base gets old and doesn’t want to play anymore?

• Potentially, management just wants to keep milking their existing IPs

• Small team of 66 employees. Don’t have excess labour capacity to create another popular IP. Should be more aggressive in hiring and building out capacity to expand or develop new IP.

• Hoarding cash on BS, 9.8 bn yen cash
  

Additional questions we want answered:

• How can they further grow revenues?

• How can they create more IP?

• Could they get bought out, and by whom?

  • Family-owned 60% pre-founder Masayuki Kato passing away in Dec 2024. The company is in the process of dealing with the inheritance situation, so even with a 55% inheritance tax, the family’s post-passing ownership would be exceeding 50%. On the surface, if the heirs want to continue controlling the company, it will be difficult for 3723 to be acquired.

    • If the heirs Kei and Sho Kato don’t want to run the business anymore, they could sell the company.

• Has management ever discussed corporate governance? Dividends, buybacks, and creating other segments.

4380 - M-Mart

Price/share: 1400 ¥/share (June 15, 2025)

MCap: 6.9 bn ¥

Net Cash: 2.2 bn ¥

EV: 4.6 bn ¥

P/B: 3.8x

Div yield: 1.8%

FY2026 EV/EBIT: 7.5x

FY2025 P/E: 17x

Quick Company Overview:

• M-Mart: E-commerce marketplace connecting buyers and sellers of commercial ingredients and food.

• B-net: ecom marketplace for commercial tableware, kitchen equipment, supplies, etc

• Other:

  

• Sellers pay a fixed fee to open up a virtual store. For online transactions, sellers pay a commission rate on sales in certain product categories. Buyers pay nothing to use site.

What I like:

• Highly profitable: EBIT margins 40%, NI margin 27%, operating leverage experienced through decline in SG&A margin

• The company has carved out its own niche and has a first-mover advantage and has created a platform that is the go-to for 230k buyers and 2.1k sellers (sellers pay to create virtual storefronts and pay a commission on completed transactions).

• Growth in sellers was slow up until FY2024, before increasing 28% in FY2025. Did M-Mart reach a critical mass of buyers where now sellers are willing to market themselves on the site?

What I don’t like:

• Growth in buyers has been growing at a decreasing rate.

• Over 50% of the company is owned directly and indirectly by Sumio Murahashi (Founder and CEO). The company will be managed for Sumio or their family’s benefit potentially.

• 2.2 bn yen of cash sitting on BS

Additional questions we want answered:

• The company had 1636 sellers in FY2024 and increased to 2098 by FY2025. How did the number of sellers increase by 462 in 1 year?

• How can the company grow from this stage? Can it grow horizontally?

• How can the company effectively allocate cash?

• Who are the competitors that have created a competing product, and what is preventing them from taking market share from M Mart?

• Would the Murahashi family be willing to sell the company?

5570 - Jenoba

Price/share: ¥716/share (June 16th, 2025)

MCap: 9.2 bn ¥

Net Cash: 2.9 bn ¥

EV: 6.3 bn ¥

P/B: 3.0x

Div yield: 0.8%

FY2025 EV/EBIT: 8.8x

FY2025 P/E: 18.5x

Quick Company Overview:

• Offers high precision location services: GNSS positioning

• By analyzing signals from positioning satellites and correction information data, your position can be determined with high accuracy. Reducing meter level errors to centimeter level errors

• Has many applications:

  • land and marine surveying

  • remote control of unmanned construction machinery

  • automating agricultural machinery

  • labor saving in infrastructure inspection

  • automation and autonomy of industrial equipment

  • Consumer/entertainment applications

What I like:

• Highly profitable: EBIT margins 55%, NI margin 38%

• Existing contract sales are increasing, and new contracts continue to accumulate. 9162 contracts as of Q2 FY2025

• “The data purchase fees for CORSs, the usage fees for the analysis system, and the maintenance fees are all fixed.” (Q2 IP) Since so much of the cost structure is fixed, Jenoba experiences positive operating leverage when sales increase

• Many use cases and applications for Jenoba’s location technology.

  • i-construction (remote construction), smart agriculture, drone, and autonomous driving.

• Business partnership with KDDI to expand application to drone surveying, drone delivery and MAAS.

• The company has a large TAM and can go in many directions; hence the growth multiples.

  

What I don’t like:

• Seems beyond my current circle of competence

• Beyond land survey, there doesn’t seem to be much progress made in the “other” use cases.

Additional questions we want answered:

• How much do they spend on R&D?

• Who are their competitors

• Do they have a moat? IP moat? (They do have a patent)

• Jenoba has been in business for 20 years. What kind of applications did they try to expand into? What has been their speed of execution?

• Can Jenoba live up to its potential?

• Can they be bought out?

• How exactly does the tech work, and how unique is it?