#317: Our Favorite Japanese Stocks

0:01Emmet:I'm not giving up. I am selling the building. The final season of FX is the bear. The restaurant is flooded. Everything's either going to be okay. Or not. We are outgunned and we are outmanned, but we have each other. FX is the bear. The final season. All episodes now streaming on Disney plus. The talent agency crossed with a merchandise empire, crossed with an events business, but it's for a whole new generation of digital entertainers. And the reason an investor might be interested, despite what I just said, is that its revenue with one, two, three, four, five, seven years is growing like crazy.

0:53Emmet:It's compounded annual growth rate and revenue. This is annual compounded, it's 62%. And yet the stock price is hitting near historical lows.

1:12Emmet:Welcome to Stock Club, the podcast where we find and discuss stocks that anyone can buy, many of which we believe will go on to grow your wealth. Hello, Mike, how are you this week? I'm good. Should I say konnichiwa? this episode will be going out when you are in japan we are pre-recording it um so we said we would have a look at the japanese market because we were running out of ideas and you were going to be in japan so maybe next week we'll be talking about stocks from the algarve or stocks from costado store or wherever i end up going we needed to do one that's somewhat evergreen and i think no better subject than japan what what i mean by evergreen folks is that like we're obviously recording this before i go to japan i don't recreate my home studio everywhere i go and um it needs to have somewhat of a shelf life which often when you're commentating on the market's latest story is like three minutes especially if mr musk is involved but i give you a laugh so my friend peter slagers uh of compounding quality wrote an email today in our time not your time about uh about morgan housell and coincidentally uh i've had both peter and morgan on the show as you know mike and he reminded me that morgan said japan doesn't only have the longest living humans it also has the longest living businesses and so these ultra durable businesses are also known as shinisa and there's approximately 140 businesses in japan that are where I claim to be over 500 years old and a handful of them claim to be over a thousand years old so if we can't find and build an evergreen podcast from a list of businesses that are ostensibly thousand years old well we can do nothing but let me tell you something this is the bit that gave me the laugh so these 500 odd uh sorry these businesses that have survive for 500 years to 140 or so companies basically do it with just two rules they hold tons of cash and they avoid debt which is something Peter Lynch always said and then and this is a bit I just got a chuckle there's a list of the world's oldest businesses in various different categories first one is the oldest hotel in the world is in Japan 705 years old by the way I'm not going to read out the names because I don't want to go there.

3:43Emmet:I'm not going to unveil my Japanese ignorance, pronunciation ignorance. Oldest Hotel, country, Japan, year founded, 705. Oldest machinery company in the world, Japan, year founded, 760. Oldest religious goods company, japan founded 1885 uh all this confectionery company japan uh founded in the year 1000 oldest tea company japan oldest metalware company japan all the sake company hardly surprising japan oldest pharmacy in the world japan oldest pub in the world sean's bar ireland i was like i was like i got one for this yeah found it in the year 900 i'm like we just can't shake our stereotypes are you joking me like we have viewed like the oldest metalworks companies they were probably making samurai swords meanwhile now in fairness don't talk down in john's bar takes a long lot lot of stuff now to keep a bar going for over a thousand years so fair play to cash and no debt seemingly well it's interesting you're talking about cash and no debt because have you been to sean's bar sorry i'm totally i'm gonna say have you been to japan have you been to sean's bar i'll have been to japan before i've been to sean's bar which is kind of quite the stretch have you been to sean's bar no no me neither and it's an athlone is it yeah i think it it's not like it was a thousand years ago i think it's just a normal pub but it's been functioning as a pub right in that location yeah over a thousand years is the well i always thought it was the um what's the one there just near guinness brewery the brazen the brazen the turkset brazen of the turks is it turks no it's the brazen right yeah yeah they they have an argument with sean's barn about it oh have they in my head it's sean's bar anyways yeah anyway so there you have it so we we have a show today folks that's going to talk about japanese companies and truly there are some magnificent specimens so um shall i go or shall you go mike have you what have you to say on the matter well i just think it's an interesting time as well to talk about japanese businesses in general because you're talking about those legacy companies that operate in a very strict way that hold loads of cash and all this stuff it's not actually very shareholder friendly And there's been a lot of initiatives in Japan to turn that around.

6:16So the new prime minister, Sane Takechi, she's brought in a bunch of pro-growth policies that have really like kind of put a turbo rocket into Japanese stocks over the last year. So there's already, this was in before she came in, but this kind of corporate governance overhaul to essentially become investor friendly. so yeah keeping loads of cash on your books a few buybacks with that a few dividends do you know help help a brother out here um and then like to catch you as well she's bringing in a lot of stuff like infrastructure spending investment incentives uh and then there's an expectation of higher wages as well so it is becoming a bit less of a sleepy economy and more growth focused because remember if we talk about the last decade in the US stock market between what 2000 and 2010, the Japanese, the Nikkei 225, the Japanese equivalent of the S &P 500 had something like a lost 35 years or something.

7:19I don't think it, no, it's longer maybe. It didn't reach a new all-time high that was set during the Japanese asset bubble in the late 80s up until about 2023 or 2024 something crazy like that so there's been a complete and like this is probably goes a lot to explaining why so many companies are very risk averse because of that absolute just crazy if we're talking about you know maybe current market levels that this just took it to a whole new level when it comes to japanese as well but it wasn't just stocks it was housing prices it was everything across the board uh it's actually quite interesting if you look at the most expensive property deals ever they're all from japan and they're all in that time period which is a tangent to now but it explains why there are that lingering effects of kind of risk-averse nature in businesses and why the stock was so stuck while the stock market was so slow for so long so they are trying to turn that around and kind of push growth um so so that's why it is always worth looking at other economies and as japan has always traditionally been the second biggest stock market in the world behind the US, even despite that slow growth.

8:28So yeah, I think it is a very fertile ground for stock pickers and it's definitely worth the look. So that's why we're there today.

8:34Emmet:For sure. So what I did, Mike, was I decided to apply a few filters to the entire Japanese market to try and identify some businesses that might fit within the envelope of businesses that we, through experience and years of practice, have identified as more likely to succeed so what i did was i i just put a lid on the maximum size so for a moment i'm just going to talk us dollars in fact there's only one filter that's that's uh related to to money but uh so i put a lid on a market cap of uh 20 billion dollars so i only looked at companies floated in japan less than 20 billion in size with a three-year compounded annual growth rate or kager or CAGR depending on where you are of 25 percent so vast last three years but revenue for the last year has grown at 35 percent and what I'm getting at there is that revenue growth is accelerating so we've a three-year CAGR of 25 percent but last year is up 35 percent I put in a filter for return on equity of 20 percent or more and a return on invested capital which you and I have debated over the years on and off mic about which is should we go at roic or return equity but i put on a minimum return on invested capital of 10 so that's quite uh um very straight to form it is very strict and nonetheless it pumped out 22 companies and i did not dive into all of them but i did dive into the category leaders if you like in some of those in some of those forms and and actually the biggest one and you know the way my japanese stuff can be very different to irish and american and british stuff like just the the whole vibe of a japanese product and company but like as in culture in general you know we don't really appreciate that this is a much much older culture than we than we have here in western states you know in europe in the us or wherever else you are it's going back thousands and thousands of years the future me which is the me as you listen to this podcast is we'll be in that culture hopefully i'll be way further up the curve be surprising if i wasn't being as i'm in the country but you're absolutely right my wife was there on many occasions with her work once upon a time and she was so enthused about us going so that is why i'm in japan folks it's also known as a summer holiday but the largest business that fitted inside all of those parameters um indulge me i have to read how they describe themselves because I read I went oh that's so Japanese uh Sanrio have you heard of Sanrio Mike you know what it rings a bell but I really tell you anything about it but I probably because I went and did similar filters at some point oh very good well I I have a handful of companies I'm gonna rattle through and I found myself giggling at some of the descriptions because I just didn't I don't know I hope it's not culturally insensitive to just say they sounded very japanese to me but sanrio um together with its subsidiaries plans designs and sells social communication gifts greeting cards and books in japan and internationally the company wait here this also operates restaurants and produces promotes and distributes movies in addition it engages in the production and sale of videos and dvds planning and presentation of musicals and live performances copyright licensing activities and planning and operating theme parks sanrio was incorporated in 1949 and is headquartered in tokyo one of the cities where i will be going to now um i got a kick at it firstly you gotta suspect they just have not updated their company profile like who does videos anymore nobody yeah it sounds a bit like if you were describing what disney does on a very kind of basic level yes very much so but one of the points kind of related to you talking about the new prime minister our president as a president of our prime minister prime minister i think there's a specific uh title but is she effectively prime minister yeah exactly so she's trying to create this environment where businesses prioritize growth and and are seen as innovative um but part of that challenges that that is recognized and the value is unlocked and one of the metrics that we have looked at over the years is ev enterprise value divided by ebitda earnings before interest tax depreciation mortization and without diving into the metric it basically gives a historic trend line of is this business uh cheaper or more expensive relative to its historical pricing So the revenue of Sanrio has grown like cray-cray.

13:40Emmet:Like its competent annual growth rate is 37 % a year. Just to put that into perspective, in March 21, its 12-month revenue is around$41 billion. And now the last 12 months, it's$183 billion. So the growth has been during MIFA. so it is up up up up up in its proper shape curve that you'd like to see but this ev divided by ibira the rough and ready way of seeing if companies a little cheaper historically is down down down so um it's by by no means is this company my favorite uh from the few that i filtered on but it was the biggest the largest by market cap um and i thought it was the first one that I would at least talk about here and now.

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15:11Emmet:and then you can go the next one um has the next one i'm gonna talk about has the one i next speak about i don't know if you're going to go next is uh has the best three-year revenue compounded annual growth rate it's called rain solutions is that your one oh no i'll come back to that um and then the one after that i'm going to talk about oh very very interesting one it has the best return on equity and it has it's called any color have you seen that one no all right okay i'm gonna enjoy that one because it's just batch it if you pardon the language it's uh and then the final of four i'm going to talk about is called buy sell technologies which is my favorite okay okay sounds good well let me jump in yours no no no we're safe we're safe let me jump in okay we're safe okay go for it so i am talking about actually i did a lot of research into this business for nexus um oh and so the company is called smaregi s-m-a-r-e-g-i uh it's trying to become the square of japan at least before square started messing around with all this crypto nonsense um so it is it's right to interrupt was it published to nexus yes oh it was okay interesting yeah so this is a little sneak peek as well so a sas provider of like uh pos systems for merchants small and medium-sized retailers, shops, restaurants, salons.

16:40The standard, we've seen a bunch of these businesses, a subscription system that covers transactions, inventory management, all that jazz. And then it's also got some HR and e-commerce products as well. But what made me really interested in this business and the crux of the investment thesis, it was quite surprising to me at least, which is that Japan is way behind the rest of the world when it comes to cashless payments. And there's a few reasons for this. So you've got an aging population. It's the oldest country in the world by population. So 28 % of the country is 65 or over, which is a huge factor behind this.

17:19And then there's an awful lot of these small soul traders as well. So like, I don't know, you're walking down the road and it's Emmett's yakitori stand and it's a tiny little kiosk and you're just there frying meat on sticks or Mike's umbrella hut right next door to you. And it's just some old fella who repairs umbrellas. That's the kind of businesses that make up an awful lot of Japanese commerce. So they typically would have a lot of old proprietors. They've done things a certain way for decades. And they just don't want to change too much. Why would they complicate things? And essentially, they didn't either have to either.

17:54They didn't have to shift to cashless payments because the population itself didn't really want it to. So it was a really interesting point because you look at its neighbors, you look at Korea and China, and they're the most advanced in the world when it comes to cashless payments. I mean, China's turned their payments app into like the number one social media over there as well. And meanwhile, Japan is miles behind. So in 2018, it proposed, the government proposed this thing called the cashless vision, which aimed to increase cashless payments to 40 % of all transactions by 2025, which it has already done, and then ultimately to 80%, which is a huge jump if you think about it.

18:34That's doubling the amount of payments that go through, we'll say cashless, in the space of how many years. So it's already achieved the medium-term goal, but 80 % is obviously way, way off yet, which means that there's a real secular trend here kind of staring us in the face. if they're going to reach the same level of Korea and China, they have to do a huge amount of infrastructure shifts and kind of behavioral shifts in this country. You know, it wants to emulate Korea and China, and it's currently at the level of Cape Verde and the Dominican Republic and Azerbaijan when it comes to cash payments.

19:10So it is a big, as you say, the BHAG, the big, hairy, audacious goal from the Japanese government to bring cashless payments up to this level. and one of the companies that is really kind of capitalizing is obviously is smeregi because it is that digital pos system we're so used to in ireland or wherever else that's become so common place that still has an awful lot more room to run there so we kind of know what works we we've used it ourselves but it's not half as way as popular as it is here as it is in japan sorry um so there's a real momentum behind the business uh which is helped by a few catalysts covet is obviously one.

19:47COVID in general turned a lot of people away from cash. Tokyo Olympics was another. Merchants had to adopt a huge influx of foreign tourists. And then lastly, this is a funny one, but I couldn't get over the scale of this event, which was very much kind of government mandated in a sense because they made it a cashless event. So the Osaka Kansai Expo saw 25 million visitors and it was run as a completely cash-free event. So those three factors kind of combined to really get the wave behind Smaregi because it's still a small company. It's worth below a billion dollars in the market cap, but it has huge ambitions.

20:25So it basically set out, and this is what I love to see in like an investor relations page is these long, medium and long-term goals of like the B hack. We have this North Star. This is what we're going to do. And it dubbed it Vision 2031. And it just highlights all its ultimate targets. It wants to become the marketing leader in payment processing in Japan. It wants 30 billion yen in annual current revenue by 2031, which has tripled its current rate. And it's making great strides to get there. So its network covers over 50 ,000 merchants now, scaling fast. It's nearly doubled that figure since the start of 2022.

21:06It's processed over 12 trillion yen in its history. And it's got really high customer satisfaction. Its current churn rate is less than 0.5%. And a lot of this goes, well, there's a couple of factors at play which lead to this high retention. So one of the big factors, of course, is that it's gone, I mentioned this at the start, it's gone beyond just a POS system. So obviously a POS is kind of the operating system of any retailer. But if you can do more than just that, if you can kind of get your tendrils into every aspect of the business, it makes it harder and harder for a merchant to churn.

21:44So it's upselling and cross-selling stuff like its HR system, which is smirky time card, which basically is just how employees check in and check out, does payroll, shift management, vacation day, stuff like that. it's not a huge contributor to the business, but it makes it much more important in the world of that merchant because now you're relying on this one business for two functions. And then there's Smuragy EC, which is Smuragy e-commerce. So a recently acquired NetShop supporters, and it's a very young division yet. It's only just gotten off the ground, but it's kind of going to be the Shopify for these merchants now when they want to get online.

22:23So now you're going omni-channel as well. And that just really gets the hooks in further and further. So you've got B2B services and B2C services then coming in, like order handling, inventory, shipping, CRM, even like wholesale processes and cart design, stuff like that. So there's an awful lot of stuff at play here. I really just can't get over how far behind Japan is when it comes to cash payments in general. That one was really just like, whoa, that's kind of a shocking stat.

22:51Emmet:It is actually shocking. And yet they can get 25 million people to go to an expo. Yeah, exactly. I remember reading about this expo and it was about designing the future society for everybody's lives. So I managed to get 25 million people into, I think it was Yookishima Bay or something like that. and um they uh it got away the reason it came into my attention was that i have this architectural email that i get by architecture i love uh uh architecture i won't go off on that one but anyway there was this a um a grand ring built uh which was a two kilometer wooden structure built all the way around by a famous japanese architect and it was certified by the guinness book of records is the longest wooden architectural structure ever built and when you think about this is what i mean about japan there's a whole lot of stuff going on over there that would surprise us they got 25 million people plus off to this expo they built a world-breaking wooden structure and everyone's looking at their phone going i don't want to pay pay with the phone it's like are you having to pay that's crazy yeah honestly but you know it also raised question about apple pay but let's not go there but i certainly love that pitch and i love that business and because i love the opportunity yeah well you just recognize a behavioral trend that's happening in front of you you know like it's a small little business grand ambitions lots of recurring revenue high margin revenue base low churn it's mission critical pretty predictable cash generation like not not a whole lot of downside when you think about how important it is to its customers uh Plenty, loads of cash, cash equivalents on the books, no debt.

24:44So yeah, look, it's not the sexiest thing in the world. It's a business we've kind of all seen. But to see it within the context of Japan, I think there is a big runway ahead of it for it there, if it can capitalize on the opportunity. Lovely pitch.

25:02Emmet:And it's called again, what's it called again? Smaregi, S-M-A-R-E-G-I. Sounds like a character from Lord of the Rings. yeah or both of them golem's cousin samaragi anyway um nice one mike thank you for that well i will i push on with a few of mine hey it's emmet you know me from this podcast today i want to tell you about something i'm genuinely very excited about which is investicon and it's coming to dublin on the 27th of august this year it's a very exclusive one day live event and i want you there. We're bringing together some of the most successful stock investors of our generation and each of them will hand you their top three stock picks on the day.

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26:25Emmet:There's Jason Safran, who's the Chief Investment Officer at a leading university in America who manages a real institutional portfolio with a long-term lens. We've Eric Bleeker, owner of 24-7 Wall Street, who's forgotten more about AI and growth stocks than most people will ever know. And of course, Peter Slagers, founder of Compound and Quality. And if you're not already following Peter's work, you're missing out. You'll spend the day surrounded by people who think the way you think, long-term conviction-led investors who actually care about the companies they own. That kind of room is very rare.

27:01Emmet:The venue is the Market Bar, which is one of Dublin's most iconic spaces. It's historic, atmospheric, and yes, there will be tapas and drink flowing throughout the day. Spots are going fast. Head to investicon.ie to grab yours. Early bird tickets are available right now at a serious discount, but they won't last. So that's Investicon, 27th of August in Dublin. I'll see you there. Well, I'm going to go one, the next one I'm going to describe within the envelope of those filters I opened with had the highest three year revenue compounded growth rate. It was something like 80%, 85 % compounding per year.

27:42Emmet:So it was preposterous and it certainly deserved a second look. And a company called VRAIN, V-R-A-I-N, which is I presume how they pronounce it. and hardly surprising considering the very many stock club podcasts that we've broadcast in the last two years it's engaged in providing you guessed it folks ai solutions for the manufacturing industry so it provides ai visual inspection and ai vibration inspection and ai abnormal sound inspection all the things that you would need in a plant aka a factory with a production line with a conveyor belt with stuff going along it it has ai systems to i suppose optimize the production and optimize safety and optimize uh what do they call when something is subprime and not good enough to go off the conveyor belt you know what i mean spoilage is that the word so they have ai systems so it is a business that is positioned for continuing substantial growth as we all know because that's the ai uptake and its its products are appearing or at least certainly appear to address this critical need across all manufacturing world of manufacturing in various sectors and the fact that it has a really tight strategic focus um on expanding its couple of products and entering into new adjacent markets will probably drive revenue and growth so it very much is you know if japan if if horizon my growth investing service was focused on japan i think it would make the cut and it's had great financial performance uh consistent revenue growth it's profitable and indeed as a consequence of everything i've just said it's clearly demonstrated its ability to execute a business plan and deliver value but But on the flip side, it is in a field where all types of new competitors are emerging.

29:44Emmet:And it's a very expensive business to run. It has a reliance on a limited number of customers, which Michael Porter, business guru, would say is a no-no. The bargaining power of customers, when you own a handful of them, they can ruin it. um whenever forevermore when i say that i'll think of progyni or progeny how do we pronounce it well you pronounce it progyni but i'm pretty sure you're wrong that's always the other way around oh no progyni anyway they did the um reproductive health care company that had amazon amazon as a customer and they pulled and of course the share price went went south and you know when you have a handful of customers you just don't want to be in that position um and then it as much as we talk about going into new adjacent markets is an opportunity it is also diversification aki diversification it can generally it can be a huge threat to a business that they don't do it right or increase costs and so basically reigns the next one i say was the one that i was pitching with the best revenue growth with a market cap under 20 billion and it still has a very impressive return in equity over 20 percent return the best capital over 10 i don't have the exact number but it sat inside a very nice short list of 20 odd companies that i think deserve a closer look whatever your thing it could be anything canva helps you make that thing a thing canva is a simple online tool thing it's a way to design with our magic ai tool things you can social media your thing generate images or videos of your thing make decks for presentations to show your thing whatever needs to be done for your thing canva can make it an even better and bigger thing canva the thing that makes anything a thing not so bad what do we got next you got two more next i think so yeah i'll go to i'll go with one more and then one more after that which makes two so um i got so um uh yes the one inside with the best return on equity which so many master investors say look forget about everything the only number i want to see is return on equity the business that presents itself is called any color all in caps all the one word why else would you write it any other way and it's genuinely a fascinating and unusual company and arguably one of the most original business models in Japanese media.

32:20Emmet:So it operates a platform called Nijisanji, N-I-J-I-S-A-N-J-I, but it's all in caps. And it basically it's a vtuber a virtual liver project so along with international vtuber ventures and mixed media projects so everyone's like okay what what's it do now so a vtuber is a content creator who uses animated 2d or 3d avatars rather than showing their real face and they stream live live on YouTube and other platforms and any color manages the talent and owns the IP and monetizes their IP across all these various channels so that's bizarre yeah bizarre that's what I meant and so it the way I kind of brought it back to understanding it in my Western world brain is that it's a talent agency crossed with a merchandise empire uh crossed with an events business so but it's for a whole new generation of digital entertainers and um the reason an investor might be interested um despite what i just said is that its revenue with one two three four five seven years is growing like crazy it's compounded annual growth rate and revenue this is annual compounded is 62 and yet the stock price is hitting near historical lows now does that mean i think it's a buy no because i have really it took a lot for me to try and explain it i did a good job what's the too hard pile a lot of investors use it it's too hard to understand you know it's for someone else too hard yeah throw it over there but it's even it's probably not hard to understand but But it is very difficult for someone who's, let's say, born and bred over here to actually accept that this business has a runway or to get a feeling.

34:34Or born before 2010, maybe as well with the streaming thing. Yeah. Reminds me a bit of, do you remember, this was peak, peak spec. There was a company that went public called FaZe Holdings, no? Yeah. Yeah. And it was just, it was, I didn't really have any. it was it was a bunch of e-gamers and streamers and that was the business model was basically that they just they had a collective um umbrella which they streamed under called phase remember to move over because any color has arrived phase mike and phase emmett and all that stuff mad stuff

35:11Emmet:as much as oh totally as much as like guffaw um i have go for the business like come on look at the success it's absolutely preposterous so certainly yeah hats off to them any color if you're going to talk about a business that has embraced hyper growth this is the one it is truly so unusual to see revenue explode to this level that it's growing more or less 62 percent year on year that's kind of earliest earliest day startup numbers you know so anyway that's any color folks pure japanese one to look at if you understand what i'm saying better than me okay now i'm gonna go with let me i have two more i lied i'll do the next one really quick right okay mike i'm gonna do the next one super quick um it's buy sell technologies um which is japan's leading tech enabled second-hand goods platform and it's incorporated in 2001 it's hq'd in Tokyo and what it does is it purchases and sells art and antiques and kimonos precious metals bags jewelry watches even collectible booze and cameras and short-term baby and children's items um through its sites and stores and sales events and b2b auctions so it basically um feels very much like um it's japan's answer to uh tread up our real real a lot of our customers will know the real real company ticker real um which um do what uh do what what buy and sell or buy sell is doing over in japan uh but it's doing it buy sell is doing with far better unit economics um and has this kind of demographic tailwind that's uniquely Japanese so it has an expanding market opportunity it has a really good model um great brand awareness um and its innovation uh it does have a whole bunch of proprietary technology um and I suppose a unique service offering that that I think gives it fairly good barriers to entry but um that said there is some intense competition market saturation is a risk and of course it would be highly sensitive to economic downturns but again if you look at the business it scored extremely well in in my filter of companies in japan that look positioned to grow okay yeah i i don't love those kind of marketplaces we've we've seen suffer um where we started yeah the the us listed one suffer yeah it'll be Etsy invented and all these businesses.

38:02Emmet:It's funny. You don't really see them. I mean, I would have pinned Etsy's name on a flag maybe six years ago and said that business has it figured and it's the new alternative to a pocket of the internet that heretofore was unconquered, but yet it conquered it, but the market opportunity just wasn't big enough to keep it going. So I hear you. Well, I'm not saying it's the Etsy. It's more like it's the second end marketplace. Yeah. but if i had to choose one from my list um last but not least pardon me absolutely last by by no means least i bet you you you encountered this one it's called one career did you see that one no right it's a career data platform um and it supports the digital transformation of all things to do with recruitment and hr operations it sounds familiar uh from various businesses we've discussed over the years, but it allows job seekers to access all the info needed to make employment decisions in one place.

39:05Emmet:And that information was up until this point required across multiple channels. And it accumulates career data for job seekers and companies with the info they need to make hires, basically. But the revenue history is absolutely one of the cleanest compounding curves you'll find amongst Japanese small caps and it has grown its revenue so steadily and beautifully since 2019 at a rate of 41 percent and its return on equity is currently 31 percent so as much as that revenue curve has gone up up up so too has ROE return on equity gone up up up the first year where return equity was clearly reported was in 2022 is 21 it went to 26 it stayed at 26 and in the last 12 months up to 31 and what it has is all the hallmarks of a a really great business that's just going to keep that momentum going it's a founder-led business it's built on a proprietary data asset that gets better with use aka the network effect it's attacking a really large and structurally important market which is Japanese graduates and I guess early career mid-career hires and has this SaaS layer built on top of media business to to really go deep into companies it feels like a hybrid of maybe LinkedIn with Glassdoor or with Paycom maybe, but its revenue consistency, revenue growth consistently is really, really impressive in a market that generally is quite entrenched in doing things the way they have always been done.

40:56Emmet:But it does have two giant competitors, which are, I think, unknown this side of the world. One is called Raikunabi and the other is called mynavi and um they're backed by recruit holdings and medialdo respectively and these are giant organizations in japan um so they will possibly move in and close that content gap that that um uh that one career has kind of exploited for its growth so like everything there's always competitor lurking and if you found an opportunity you're either going to be taken out or bought out and um i guess what i'd say is that this is a really this is a lovely small cap company i think while it has a competitor sure everything does um and it looks like it has a really compelling story when you look through its slides which unusually are in english an awful lot of the slides i had to stick into an ai machine and go come here what does this say so um so that's it that's one career and it's the final of my stocks but i think all of the names i've mentioned and the name you mentioned come from some quality research and shortlisting yeah for sure and just on one career as well i think japanese work practices in general are very much in need of modernization there's a lot of practices still that are quite traditional in Japan sleeping under your desk sleeping under your desk the salary men that you know are too drunk to go home and sleeping on the streets and stuff you can't you can't leave the pub if the boss doesn't want to leave all that stuff and modernizing that I think is a very necessary um necessary initiative which which one career seems to be doing so look at the two Irish lads guffawing at that terrible stuff what are they doing in japan per people you can see while your boss is there i'm not leaving a pub while anyone's there you can but you can see the business need for it which which is good but yeah for sure but that's great right um that's all and i suppose enjoy your holiday as it's going on right now in this episode thanks i'm having a great time yeah well i'll be learning loads of japanese i'll see i'll see you now buying your shirt and tie from the vending machine because you're out all night oh yeah exactly yeah that was it thank you very much for joining me and thank you everyone for listening in this episode is brought to you by google chrome you think you know a browser but gemini and chrome that's new it can help you with practically anything on the web like restoring a vintage motorcycle from a 50 page restoration block or finally break down that long article you've had open for weeks gemini and chrome is here for it.

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