Asian Dividend Gems: Precision Tsugami China

• Precision Tsugami China specializes in the production of precision machine tools. Precision Tsugami China is part of the broader Tsugami Corporation, a Japanese company founded in 1923.

• The company's dividend yield increased from 4.3% in FY2021 to 8.9% in FY2022 and 10.1% in FY2023.

• We found Precision Tsugami China (1651 HK) using Smartkarma's Smart Score Screener system.

Conclusion First

We have a positive view of Precision Tsugami China. Precision Tsugami China specializes in the production of precision machine tools. China is actively trying to upgrade and transform the country from being labour intensive to technology intensive. As a result, despite the economic weakness in China, there is likely to be an ongoing long-term demand for high-end CNC machine tools in the transformation and upgrading of the Chinese manufacturing industry.

The company's dividend yield increased from 4.3% in FY2021 to 8.9% in FY2022 and 10.1% in FY2023. The company has attractive valuations. It is trading at EV/EBITDA of 2.9x, P/E of 6.1x, and P/B of 1.1x in 2024. Its EV/EBITDA and P/E multiples in 2024 are trading at 32% and 20% discount to the average valuation multiples from 2019 to 2023.