Mitani Corporation (TYO: 8066): $1.2 bn Japanese Conglomerate at 2.6× EV/EBIT with 30+ Years of Profitability

There are plenty of deep-value investments in Japan that aren’t microcaps and are quietly executing extremely well. Mitani Corporation (TYO: 8066) is one of them. The company is doing everything right: growing profits, buying back stock, and raising dividends. It has been profitable every single year since at least 1985 (as far back as Koyfin data goes). Despite growing profits nearly fivefold since 2008 and being consistently shareholder-friendly, the market still gives Mitani little credit. That may sound unfair given the stock is up roughly 9x since 2012, but it remains far too cheap.

I originally found Mitani while reviewing the holdings of the Militia Long/Short Equity ETF (U.S.-listed, ticker: ORR). While I own ORR outright, I also own several of its individual holdings, including Mitani.

Valuation Snapshot:

Mitani isn’t just a low-return widget manufacturer barely earning its cost of capital. Despite carrying a massive net cash position, return on equity was still 11.44% in FY25. Management calculates ROIC at 26%, largely because idle cash is excluded from their calculation. Profits have risen consistently for more than 20 years and are up nearly fivefold since 2008.

The Business

Mitani Corporation is a diversified conglomerate with businesses spanning cement trading, IT systems, offshore wind power, spices, and more. The company operates across three main segments:

The Corporate Supply segment is the profit engine, generating the highest absolute operating income with strong margins. Its largest component is the Cement & Ready-mix Concrete business, which has seen profits increase despite declining volumes, driven by improved pricing. According to the company, Mitani is the “#1 cement seller in Japan.” The business acts as a middleman between manufacturers such as Taiheiyo Cement and end customers, providing logistics and related services.

The Corporate Supply segment also includes the building maintenance business through its Nihon Bisoh subsidiary, which holds a dominant share of Japan’s gondola rental market (80%+) as well as sales and maintenance of permanent gondolas, which can be uniquely designed for each building. These are specialized suspended platforms used for high-rise window cleaning, painting, and repairs. The company has more than 3,500 units deployed nationwide, including on landmark buildings such as Roppongi Hills and Tokyo Skytree.

The shift into wind power, spices, IT, and building maintenance represents a strategic move away from lower-margin commodity trading (such as coal and cement) toward higher-margin niche businesses. While revenues have declined since 2008, profits have increased nearly fivefold. Management has made a series of acquisitions with a clear focus on profitability and disciplined capital allocation. Even with a massive net cash position, returns on equity remain surprisingly strong and would be much higher if idle cash was invested. At least rising interest rates in Japan should give cash rich companies like Mitani a boost.

Capital Returns & Recent Performance

The company’s historical metrics are excellent. Management has consistently grown profitability while buying back shares and raising the dividend. While I would prefer more aggressive buybacks, the stock is fairly illiquid, with average daily trading volume of roughly $139,000. Even so, this hasn’t stopped Mitani from steadily increasing its dividend.

FY25’s dividend was ¥66 per share while the forecast for FY26 is ¥77. That’s a 16% increase in a single year and brings the current yield to 3.5%. I suspect dividend hikes will be the main form of capital returns going forward as insiders already own a substantial portion of the company (see appendix) and further repurchases may bump up against float requirements to remain listed.

Profits are forecast to dip 2.7% in FY26, but this looks conservative as the company already thoroughly beat their first half projections but kept full year forecasts unchanged.

Conclusion:

There’s more depth to Mitani’s business, but it doesn’t need over-analysis. The stock is clearly cheap, and management appears to be executing well. Despite a market cap north of $1 billion, Mitani attracts very little investor attention. Yahoo Finance Japan shows only a couple of posts per month on average, and there are just a handful of mentions in English on X.

I own a basket sized position in Mitani.

Disclosure: I own shares in Mitani Corporation (8066). The security could be sold at any point in time without prior notice. This is a small position as part of a broader basket of cheap Japanese companies so I haven’t dug too deep into this name. If I missed anything important, feel free to share in the comments. None of this is investment advice. Everything in this post is my own opinion and I could be wrong. Do your own due diligence.

Appendix:

Ownership:

The company is ~55% controlled by founding family interests through affiliated entities (Mitani Sekisan, Mitani Land Home, family foundations). President & Representative Director is Satoshi Mitani is the 3rd generation; his son Soichiro is now Managing Executive Officer (4th generation succession). The son is only 33 years old and has been the head of finance for 5 years now. Capital returns have increased under his tenure. Hopefully this trend continues.

Given the concentration of ownership, Activism is impossible here, but also not necessary as management is doing an excellent job.