In light of the Lunar New Year, five Asian companies that meet Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B) co-managers Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio)’s four-criteria investing approach are Open House Group Co. Ltd. (TSE:3288, Financial), KCI Ltd. (XKRX:036670, Financial), HITO-Communications Holdings Inc. (TSE:4433, Financial), SuHeung Co. Ltd. (XKRX:008490, Financial) and Sinopharm Group Co. Ltd. (HKSE:01099, Financial) according to the Buffett-Munger Screener, a Premium feature of GuruFocus.
Several Asian countries, including China, South Korea, Vietnam and Singapore, celebrate Lunar New Year, which marks the beginning of the new lunisolar calendar year. Key traditions include exchanging red envelopes, doing housekeeping, gathering with family for dinner and attending dragon festivals.
As such, investors may find opportunities in Asian companies that meet Buffett and Munger’s investing strategy. Buffett said in regard to the companies he likes to invest in, he looks for companies that have understandable businesses, favorable growth prospects, shareholder-oriented management and attractive valuations. Key criteria include high business predictability, positive profit margin growth and low valuations.
GuruFocus’ Buffett-Munger Screener listed several Asian stocks with a predictability rank of five stars and increasing profit margins over the past five years. The stocks are also fairly valued or undervalued based on GuruFocus’ GF Value measure.
Open House Group
Shares of Open House Group (TSE:3288, Financial) traded around 4,880 yen ($37.59), showing the stock is modestly undervalued based on its price-to-GF Value ratio of 0.80 as of Friday.
The Japanese real estate brokerage company has a GF Score of 95 out of 100, driven by a rank of 10 out of 10 for profitability and growth, a GF Value rank of 8 out of 10, a momentum rank of 7 out of 10 and a financial strength rank of 4 out of 10.
Open House Group’s profitability ranks 10 out of 10 on several positive investing signs, which include a five-star business predictability rank, a return on equity that outperforms more than 90% of global competitors and a gross profit margin that has increased by approximately 1.2% per year on average over the past five years.
KCI
Shares of KCI Ltd. (XKRX:036770) traded around 8,720 won ($7.07), showing the stock is significantly undervalued based on its price-to-GF Value ratio of 0.63 as of Friday.
The Korean household chemical company has a GF Score of 98 out of 100, driven by a rank of 10 out of 10 for profitability and growth, a financial strength rank of 9 out of 10, a GF Value rank of 8 out of 10 and a momentum rank of 6 out of 10.
KCI’s profitability ranks 10 out of 10 on several positive investing signs, which include a five-star business predictability rank and an operating margin that has increased by approximately 2.7% per year on average over the past five years and is outperforming more than 85% of global competitors.
HITO-Communications Holdings
Shares of HITO-Communications Holdings (TSE:4433, Financial) traded around 1,602 yen, showing the stock is fairly valued based on its price-to-GF Value ratio of 1.05 as of Friday.
The Japanese business outsourcing company has a GF Score of 95 out of 100 based on a rank of 10 out of 10 for profitability and growth, a financial strength rank of 8 out of 10, a GF Value rank of 6 out of 10 and a momentum rank of 5 out of 10.
HITO-Communications' profitability ranks 10 out of 10 on several positive investing signs, which include a five-star business predictability rank, a high Piotroski F-score of 8 out of 9 and an operating margin that has increased by approximately 5% per year on average over the past five years.
SuHeung
Shares of SuHeung (XKRX:008490, Financial) traded around 32,900 won, showing the stock is significantly undervalued based on its price-to-GF Value ratio of 0.58 as of Friday.
The Korean pharmaceutical company has a GF Score of 91 out of 100 based on a growth rank of 10 out of 10, a profitability rank of 9 out of 10, a GF Value rank of 8 out of 10, a momentum rank of 5 out of 10 and a GF Value rank of 4 out of 10.
SuHeung’s profitability ranks 9 out of 10 on several positive investing signs, which include a five-star business predictability rank and an operating margin that has increased by approximately 1.9% per year on average over the past five years.
Sinopharm
Shares of Sinopharm (HKSE:01099, Financial) traded around 19.32 Hong Kong dollars ($2.47), showing the stock is modestly undervalued based on its price-to-GF Value ratio of 0.78 as of Friday.
The Chinese drug distribution company has a GF Score of 94 out of 100 based on a rank of 9 out of 10 for profitability and momentum, a growth rank of 10 out of 10, a GF Value rank of 6 out of 10 and a financial strength rank of 5 out of 10.
Sinopharm’s profitability ranks 9 out of 10 on several positive investing signs, which include a five-star business predictability rank and an operating margin that has increased by approximately 1.4% per year on average over the past five years.
