Hikari Tsushin: Japanese Outlier With Two Decades of Strong Compounding

Omar Malik of Hosking Partners presented his in-depth investment thesis on Hikari Tsushin (Japan: 9435) at Asian Investing Summit 2026.

Thesis summary:

Hikari Tsushin is a Japanese holding company comprising three arms — a core distribution business, a listed equity portfolio, and opportunistic M&A — described by Omar of Hosking Partners as an outlier within corporate Japan. Founded by Yasumitsu Shigeta, who rebuilt the firm after a 99% drawdown in 2000, the group pivoted in 2010 toward in-house recurring-revenue products and a Berkshire-inspired capital-allocation framework. Over 15 years, Hikari has compounded operating profit above 20%, book value and dividends at 17% each, maintained ROE above 16%, and reduced share count by 18%.

The core business distributes essential services — electricity and gas, telecom lines, office water, and smartphone and home-appliance insurance — through roughly 1,000 agency partners housing 20,000 salespeople who sit on agency P&Ls rather than Hikari’s. Reach extends to 1.3 million corporate customers, or 20-30% of all Japanese corporates, and 4 million individuals; group churn runs under 2%. A low fixed-cost base allows Hikari to undercut incumbents and consolidate distressed peers, while a 200% five-year return hurdle on recurring revenue divided by CAC imposes discipline across channels. Outcomes include 30% share in office water, 80% in mobile device insurance, and the #2 position in independent electricity.

The culture — frugality, meritocracy, decentralized capital allocation, and mandatory after-tax share ownership — underpins these advantages. President Wada, who joined out of university, has purchased roughly $100 million of stock personally. Between 2017 and recent years, management borrowed about $6 billion of long-dated Japanese debt near zero rates and deployed it into 500-600 undervalued Japanese equities plus an $800 million Berkshire Class A position (Hikari is the 10th-largest Class A holder). Portfolio cost of ~830 billion yen sits on a $4 billion gain, with an eight-year IRR of 18% versus 11% for TOPIX.

The shares recently traded at roughly 1.5x book — the low end of the range since 2022 despite 17% book CAGR — implying a core EV near 900 billion yen, or 8x reported operating profit and 5x on owner earnings. Management guides to 10% recurring operating-profit CAGR plus another 5% from M&A. On conservative assumptions — 10% core growth, a steady-state 10x terminal multiple, and a 50% portfolio uplift over five years — Omar estimates roughly 100,000 yen per share, implying 150% upside or a ~20% CAGR.

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About the instructor:

Omar Malik is a Portfolio Manager at Hosking Partners, a London-based boutique investment management firm specializing in a capital cycle approach to global equities. Prior to joining Hosking Partners, he served as an equity analyst at Wellington Management. Omar began his career on the buy-side at PIMCO, followed by the graduate programme at M&G Investments. An active voice in the value investing community, he spoke at the 22nd Annual Value Investor Conference in Omaha, Nebraska, and has been notably engaged in corporate governance and active ownership initiatives, particularly concerning Japanese equities. Omar holds a Bachelor’s degree in Philosophy and Economics from the London School of Economics (LSE) and is a CFA charterholder. Outside of his professional endeavors, he enjoys exploring new countries and continuously adding to his reading pile.

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