The recent bout of yen weakness has only helped Japan's mid- and small-cap growth companies. Tokyo-based Yuki Investments still finds many companies that are differentiating themselves, increasing unit sales and creating new markets to grow earnings on a local basis. Unlike last year, Yuki believes the market is fairly valuing stocks and thus sees a shift in focus from over-priced large caps with low/no earnings to undervalued mid- and small-cap growth stocks with improving earnings.
One such company is Investors Cloud Co Ltd (1435), which has developed an innovative apartment management platform to meet increased demand among 30-to-40- year-old company employees seeking to build wealth by owning and managing apartments. Investors Cloud leverages available real estate agent property data and offers a stream-lined transaction flow that does not include intermediaries. The company can thereby cut margins and avoid double taxation, enabling prospective landowners to buy property cheaply.
Membership has been steadily accumulating and the company is now expanding its scale. By not buying property itself, the company reduces inventory risk. It is expanding revenue by focusing on construction contracts with highly differentiated designs. The number of construction projects has increased by about 50% for the fiscal year ending December 2016, and is expected to show similar growth in the current fiscal year. In addition, the company launched a new vertical focused on vacation rental properties and an accompanying customer matching service. Looking ahead, the company plans to introduce a smartphone-based IoT business utilizing existing properties, which it expects will further drive growth.
This is what growth looks like in Japantoday.
