Unicharm Corp (8113)

Source: Unicharm Corp website

As Christmas approaches in less than 2 months away, I start thinking of how my year has been and what the next year will hold for me. It also makes me lazy as I always felt that Christmas is a time to rest and enjoy thus I think I will be writing lesser in the months to come. I don't think I'll be missed except maybe for my 1 and only follower on Google+!

Meanwhile, research continues as ACCICB and I continue to search and identify suitable stocks that would be added to our portfolio and this is where I chanced upon Unicharm Corp, a manufacturer of baby care products, feminine care products and pet care products. They own brands such as Moony and Mamy Poko (baby diapers), Sofy (sanitary napkins) and Hartz (pet food, toys and toiletry products). 

The 1 year stock chart looks amazing and their financials show that they have recorded increased net sales for the past consecutive 12 years and record operating income for the past 7 years. The company is still majority owned by the Takahara family and the founder is still a director whereas his son is the current CEO. Their business strategy is to concentrate on sales in Japan and Asia where the growth is with overseas sales now accounting for 57.7% of their consolidated net sales. They are sold in about 80 countries worldwide, ranked third (estimated 9% share) in the global market for non woven fabric and absorbent material products and is the market leader in Asia (estimated 27% share).

Impressive numbers indeed and their closest competitors would be P&G (Whisper, Tampax, Pampers) and Kimberly-Clark (Huggies, Kotex) which are dominant in the Western markets and is an area where we don't see Unicharm going in with big guns to fight for market share. Having said that, Pampers and Huggies are also big in China and that would make an interesting play for all parties involved with the results still in progress.

They are currently in their 9th medium term management plan (April 2014 - December 2016) as part of their overall G2020 plan. Given that personal care products is their main contributor, they are expanding into emerging markets in Africa and Latin America while continuing their growth plans in Asia. They have gained a dominant stronghold in Japan for moderate and light adult incontinence products and this is now driving growth in Unicharm's domestic earnings.

They are leveraging on their existing distribution networks to grow their pet care business and I think that it is a wise move given that pet ownership worldwide is set to rise as economies mature and living standards improve. I like that they have not stopped innovating and improving their products whether its the Sofy Double Fresh Pantyliner, Lifree Shitagi Kankaku Ultra Thin Pants, Moony Airfit diapers or Hartz Ultra Guard Dog Pads.

I've yet to read up on Unicharm competitors such as Kao Corporation, P&G and Kimberly-Clark but it is likely that I would not touch such stocks as they are in multiple business segments across various industries. They are conglomerates in their own right whereas Unicharm is more specialised and focused across a few business segments which have a connection through their non woven technology (baby and adult diapers, sanitary napkins and dog pee pads). Unicharm gets added to my watchlist and I look forward to seeing this in our portfolio! 

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