Omar Malik of Hosking Partners presented his in-depth investment thesis on Hikari Tsushin (Japan: 9435) at Asian Investing Summit 2026.
Thesis summary:
Hikari Tsushin is a Japanese holding company comprising three arms (a core distribution business, a listed equity portfolio, and opportunistic M&A), an outlier within corporate Japan. Founded by Yasumitsu Shigeta, who rebuilt the firm after a 99% drawdown in 2000, the group pivoted in 2010 toward in-house recurring-revenue products and a Berkshire-inspired capital-allocation framework. Over 15 years, Hikari has compounded operating profit above 20%, book value and dividends at 17% each, maintained ROE above 16%, and reduced share count by 18%.
The core business distributes essential services (electricity and gas, telecom lines, office water, and smartphone and home-appliance insurance) through roughly 1,000 agency partners housing 20,000 salespeople who sit on agency P&Ls rather than Hikari’s. Reach extends to 1.3 million corporate customers, or 20-30% of all Japanese corporates, and 4 million individuals; group churn runs under 2%. A low fixed-cost base allows Hikari to undercut incumbents and consolidate distressed peers, while a 200% five-year return hurdle on recurring revenue divided by CAC imposes discipline across channels. Outcomes include 30% share in office water, 80% in mobile device insurance, and the #2 position in independent electricity.
A culture of frugality, meritocracy, decentralized capital allocation, and mandatory after-tax share ownership underpins these advantages. President Wada, who joined out of university, has purchased roughly $100 million of stock personally. Between 2017 and recent years, management borrowed about $6 billion of long-dated Japanese debt near zero rates and deployed it into 500-600 undervalued Japanese equities plus an $800 million Berkshire Class A position (Hikari is the 10th-largest Class A holder). Portfolio cost of ~830 billion yen sits on a $4 billion gain, with an eight-year IRR of 18% versus 11% for TOPIX.
The shares recently traded at roughly 1.5x book, the low end of the range since 2022 despite 17% book CAGR, implying a core EV near 900 billion yen, or 8x reported operating profit and 5x on owner earnings. Management guides to 10% recurring operating-profit CAGR plus another 5% from M&A. On conservative assumptions of 10% core growth, a steady-state 10x terminal multiple, and a 50% portfolio uplift over five years, Omar estimates roughly 100,000 yen per share, implying 150% upside or a ~20% CAGR.
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Asian Investing Summit 2026 was held from April 14-21, 2026. The content of this website is not an offer to sell or the solicitation of an offer to buy any security. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth on this website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.
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