Brief Summary
The video introduces Hoshizaki, a Japanese company and a global leader in commercial refrigeration and ice equipment. It highlights the company's financial resilience, global presence, and potential for growth, making it an attractive investment opportunity. The presenter discusses the company's strengths, including its niche market, innovation, and shift towards higher-value markets, while also acknowledging potential risks like global supply chain issues and challenges in merger integrations.
- Hoshizaki is a global leader in commercial refrigeration and ice equipment.
- The company has a strong financial position with minimal debt and a history of innovation.
- It is undervalued by 13% and has potential for growth through strategic acquisitions and expansion into new markets.
Introduction to Hoshizaki
The presenter introduces Hoshizaki, a Japanese company specializing in commercial refrigeration and ice equipment, available in the US as an OTC (Over-The-Counter) stock. Hoshizaki is a global leader in its sector, providing essential equipment for commercial kitchens, hotel chains, restaurants, bars, and supermarkets worldwide. Founded in 1947, the company has a presence in over 100 countries and serves as a backbone for the hospitality sector.
Financial Overview and Market Position
Hoshizaki is financially resilient, with a revenue of $3-4 billion last year and has experienced a post-pandemic boom, improving operational efficiencies through automation. The company has streamlined operations, increasing profits by 9% and maintaining its position as a market leader. It has very little debt, with a debt-to-equity ratio of only 1.4%. The presenter suggests the company is undervalued by 13% based on discounted cash flow and relative value analysis. The OTC stock, listed as HIF, is currently trading at $33 a share, with a potential upside to around $46.
Reasons for Investment
The presenter pitches Hoshizaki as an investment due to its status as a Japanese global company with very little debt and a clear business niche. While smaller than giants like Toshiba or Toyota, Hoshizaki has a significant global footprint and earns revenue in dollars. The company manufactures essential commercial equipment like ice machines, refrigerators, freezers, and dishwashers, serving as a "pick and shovel" for the hospitality industry.
Innovation and Moat
Hoshizaki's global diversification reduces its reliance on any single region. The company has a history of innovation, including creating the first fully automatic ice machine in the 1960s. Hoshizaki emphasizes original products and technology, aiming to be number one in its field. The company's vertical integration, from manufacturing to R&D and innovation, provides a durable competitive advantage compared to companies that rely on copying or outsourcing.
Strategic Shifts and Acquisitions
Hoshizaki is shifting towards higher-value markets and services, moving beyond traditional restaurant markets in Japan, where the population is aging. The company's focus on international expansion is seen as a positive sign for investors, potentially leading to growth and margin expansion. The acquisition of Burma, an Italian company, in 2022 has pushed Hoshizaki into emerging markets. Successful integration of Burma could be a significant growth driver, although cultural differences between European and Japanese companies pose a risk.
Sustainability and Energy Efficiency
Hoshizaki focuses on sustainable refrigeration and energy efficiency, using natural refrigerants and energy-saving machines. This aligns with global regulations on climate change and greenhouse gases, providing a tailwind for the company as regulations become stricter. The presenter acknowledges potential risks such as global supply chain issues and trade tariffs.
Conclusion and Call to Action
The presenter concludes by asking viewers for their thoughts on Hoshizaki as a potentially undervalued company. He suggests a deeper dive into the company's balance sheets and invites viewers to share their opinions or experiences with the company. He highlights that investing in Hoshizaki is like investing in the "picks and shovels" of the restaurant and hospitality industry, providing essential services to major chains. The presenter expresses curiosity about whether viewers have considered investing in kitchen equipment and refrigeration companies.
