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Over the quarter, after months of public back and forth between Fujitec and its largest shareholder, Oasis, Fujitec held its much anticipated EGM. The foundations of Oasis’ criticisms, and reason for calling the EGM, was that the then president, Uchiyama, who despite owning less than 10% of the shares, treated Fujitec like his personal company. Uchiyama’s disregard for shareholders was highlighted at the AGM last June, when Uchiyama stepped down before his, presumably low, support could be revealed, only to be appointed shortly after as a non-elected Chairman. This infuriated the shareholder base, led to public letters questioning the outside Director’s conduct (including ours) and ultimately the calling of the EGM.

Of the eight directors put forward by Fujitec to the EGM; one stepped down before, five were rejected by shareholders and another stepped down after (he only received 50.2% support), leaving just one candidate on the Board. Meanwhile, four of Oasis’ six candidates were approved. At the EGM the one remaining Fujitec-appointed outside director stated that he pushed back against Uchiyama’s appointment as Chairman and following the EGM put his name to a statement by the outside director announcing several governance improvements. It’s safe to say that he has sided with the newly elected outside directors.

Fujitec’s board is now composed of five shareholder supportive outside directors against the three incumbent inside directors. Since the EGM, Uchiyama has already been ousted from his Chairman role and an investigation launched into potential intimidation of Oasis’ director candidates at the EGM. We have been appalled at the behaviour of management over the past year and we would not be surprised if further changes are made.

The EGM outcome is a fantastic example of shareholder democracy working, and while it happens too rarely in Japan, it serves as a wakeup call to Japanese management that they are accountable to shareholders. The share price has reacted well to the outcome, gaining 6% at the time of writing. We look forward to seeing what the empowered board will announce to realise Fujitec full potential.

In November, activist investor Oasis Management called an Extraordinary General Meeting (EGM) at Fujitec. Since we established a position in 2018, we have engaged with Fujitec on an assortment of topics ranging from operational improvements to enhancing corporate governance, launching a public website in May 2021. Fujitec has taken excellent steps in improving its corporate value, and we have achieved a +88% return over the life of our investment. However, we are in full support of Oasis’ campaign to revitalise Fujitec’s Board, who, since Oasis raised accusations of inappropriate transactions from the founding Uchiyama family earlier this year, have acted with disregard for shareholders.

Oasis’ EGM notice seeks to replace all six incumbent independent directors, while retaining three executives who currently reside on the Board. The objective is to bring new elevator industry experience, reform the governance structure and, ultimately, unlock trapped value. We expect that, given the disgruntled shareholder base, there is a healthy chance that within the next three months Fujitec will have a significantly different board, and one that will finally rid the Company of Uchiyama’s overbearing shadow and focus the Company on creating shareholder value.

On the last day of the month, activist investor Oasis Management called an Extraordinary General Meeting (EGM) at Fujitec. Since we established a position in 2018, we have engaged with Fujitec on various topics, from operational improvements to enhancing corporate governance. Fujitec has taken excellent steps in improving its corporate value, and we have consequently achieved a +89% return over the life of our investment. However, we are in full support of Oasis’ campaign to revitalise Fujitec’s Board, who, since Oasis raised accusations of inappropriate transactions from the founding Uchiyama family earlier this year, have acted with blatant disregard for shareholders.

Oasis’ EGM notice seeks to replace all of the incumbent independent directors with six new independent directors while retaining the three executives who currently reside on the Board. The objective is to bring new elevator industry experience, reform the governance structure and ultimately unlock trapped value. We expect that, given the disgruntled shareholder base, there is a healthy chance that within the next three months Fujitec will have a significantly different board, and one that will finally rid the Company of Uchiyama’s overbearing shadow and focus the Company on creating shareholder value.

The only detractor over the month was Fujitec, whose -5.1% share price return reduced performance by 22bps. Over the month Fujitec’s peer, Kone, reported bleak results. Sales for Asia fell -25%, the largest YoY fall of any quarter since 2009, and management painted a less than rosy picture for the remainder of the year. With China accounting for c.20% of Fujitec’s operating profit after minorities, the negative read across weighed on the share price.

In the near term however, we expect the market to focus less on earnings and more on whether former President and Fujitec’s founder’s son, Mr Uchiyama can be ousted from the Company. Fujitec’s largest shareholder, Oasis, has led a high-profile public campaign to oust him after highlighting decades of abusive related-party transactions. On what we think was an effort to conceal a low approval rating, one hour before the June 2022 AGM Fujitec withdrew the motion to nominate Mr Uchiyama as President, before reappointing him as Chairman after the AGM. We publicly spoke out against that decision and have been engaging with the Company in private.

If Mr Uchiyama is successfully removed, the chances of Fujitec being taken private increase quite substantially. We estimate a privatisation event could occur at least +40% higher than the current share price, which explains why Fujitec’s share price has held up relatively well in 2022, increasing by +15%, while peers (Kone, Schindler and Otis) have fallen on average by -12%. Fujitec is a top-ten holding but we have refrained from adding to our position as we don’t think the share price fully reflects the risk of a prolonged slowdown in Chinese construction.  Still, with Fujitec accounting for 5.2% of AJOT’s NAV, we are well positioned for a privatisation event should it occur and, in the meantime, will look to continue to work with management to maximise corporate value as a listed company.

At the end of June we released a public statement questioning whether Fujitec’s current outside directors were acting in the best interests of shareholders. Subsequent to the public release of our presentation in May 2020, we have conducted all our dialogue privately, making excellent progress on several issues. However, Fujitec’s response to legitimate concerns raised by Oasis Management in May regarding related-party transactions between Fujitec and former President Mr Uchiyama fell a long way short of what we expect from a listed company.

Despite the Board’s efforts to exonerate Mr Uchiyama of any wrongdoing, we remain entirely unconvinced that the numerous related-party transactions undertaken by Mr Uchiyama and his family do not pose a problem for corporate governance. In recognition of that, we voted against Mr Uchiyama’s reappointment at Fujitec’s 2022 AGM along with three other outside directors.

However, in what we think was an effort to conceal a low approval rating for Mr Uchiyama’s reappointment, the motion to reappoint him as President was withdrawn one hour before the AGM. Then, shortly after the AGM, Mr Uchiyama was reappointed as Chairman without the approval of shareholders.

We are astounded by the clear disregard for shareholder rights and Fujitec’s blatant effort to circumnavigate the AGM voting process. We are not alone – two other shareholders holding almost 16% of the shares released a public statement following the AGM debacle and we know from private conversations that many shareholders share the same views.

The Board has lost the support of its shareholders and the current situation cannot continue. As we discussed in our public statement, we are proactively evaluating our next steps to protect shareholder value. What form that might take is still being decided but we won’t sit idly by while shareholder rights are being ignored.

At the end of June, we released a public statement questioning whether Fujitec’s current outside directors were acting in the best interests of shareholders. Since the launch of our original public campaign in May 2020, we have conducted all of our dialogue privately, making excellent progress on several issues. However, Fujitec’s response to legitimate concerns raised by Oasis Management, a Hong Kong based activist, in May regarding related-party transactions between Fujitec and former President Mr Uchiyama fell a long way short of what we expect from a listed company.

Despite the Board’s efforts to exonerate Mr Uchiyama of any wrongdoing, we remain entirely unconvinced that the numerous related-party transactions undertaken by Mr Uchiyama and his family do not pose a problem for corporate governance. In recognition of that, we voted against Mr Uchiyama’s reappointment at Fujitec’s 2022 AGM along with three other outside directors.

Disappointingly, in what we think was an effort to conceal a low approval rating for Mr Uchiyama’s reappointment, the motion to reappoint him as President was withdrawn one hour before the AGM. Then, shortly after the AGM, Mr Uchiyama was reappointed as Chairman without the approval of shareholders.

We are astounded by the clear disregard for shareholder rights and Fujitec’s blatant effort to circumnavigate the AGM voting process. We are not alone – two other shareholders holding almost 16% of the shares released a public statement following the AGM debacle and we know from private conversations that many shareholders share the same views.

The Board has lost the support of its shareholders and the current situation cannot continue. As we stated in our public statement, we are proactively evaluating our next steps to protect shareholder value. What form that might take is still being decided but we won’t sit by passively while shareholder rights are being ignored. We believe there is upside to Fujitec’s current share price and the steps we take will be aimed at realising that upside.

Fujitec, a top ten global elevator & escalator manufacturer, was the second-largest detractor, reducing returns by 36bps as its share price fell by -10.5%. Having been a strong contributor earlier in the year, the share price has given up nearly all its gains, now up only +5.4% for the year. While Fujitec’s share price has outperformed peers, it still trades at a discount, 11.5x EV/EBIT vs 18.0x.

During the month Oasis, a Hong Kong based activist investor, launched a campaign calling for shareholders to vote against the reappointment of President Takakazu Uchiyama, son of Fujitec’s founder. Oasis highlighted several related-party transactions dating back to 1989, and as recently as 2021, alleging that Uchiyama has enriched himself at the expense of shareholders. Fujitec responded by appointing a law firm to lead an investigation into the transactions. As a leading shareholder, we discussed the allegations and Fujitec’s response at length with the law firm that led the investigation, two outside directors and Fujitec executives, including President Uchiyama.

While we share Oasis’ concerns about the related-party transactions, Fujitec’s response was more troubling. Instead of admitting wrongdoing and strengthening corporate governance, Fujitec has embarked on a campaign of denial and obscuration. Fujitec’s response omitted important details, the law firm Fujitec appointed to lead the investigation was not independent and the Board, amazingly and despite being 50% independent, unequivocally found that not one of the related-party transactions posed a problem for corporate governance. We are deeply disappointed and have made our grievances known to the Company, including suggestions on how to move forward. Regardless of the outcome, we hope that the collective voice of shareholders speaking out against the mistreatment of company assets is a reminder to executives that they are accountable to shareholders, even if they belong to the founding family.

Fujitec was the largest detractor over the month taking 88bps from performance as its share price fell -10.7%. Fujitec’s share price had been strong over 2022, benefitting from an ambitious mid-term which outlined, for the first time, a capital policy, and prominent activist investor Oasis declaring a 7% stake. However, concerns over rising material costs and China slowdown weighed on the share price, as it has for Fujitec’s global peers who have fallen by an average -20% over 2022. Over the month Fujitec’s weight in the portfolio fell to a more modest 5.5% from 8.9% and on a 11.6x EV/EBIT does not look expensive considering the business quality.

Fujitec was the largest contributor over the quarter, adding 165bps to performance as its share price increased +27%. Fujitec has been a large weight in AJOT since launch and one where we have dedicated significant engagement resources. Over our holding period thus far, we have sent six letters and met with the company almost 30 times. In May 2020 we released a 73-slide public presentation highlighting Fujitec’s underperformance and undervaluation.

Fujitec has reacted positively to our engagement by announcing several improvements, including abolishing its anti-takeover measure, appointing a majority independent board, cost-cutting initiatives, launching new products to expand sales and improving IR disclosure. However, Fujitec took a step backwards when in December it announced a confusing and unambitious mid-term plan. We sent a presentation and draft press release to the company in January, showcasing its flaws, putting forward solutions and, importantly, threatening to take our specific grievances public. To our delight, management responded to all eight of our recommendations and released a supplementary mid-term plan at the start of March.

The most important response was on capital allocation, a glaring issue that had not been addressed since our original campaign. Not only did management commit to a higher ROE target of 12% (from 10%), but they mapped out a clear capital allocation framework for the next three years, seeing up to 16% of Fujitec’s market cap distributed via dividends and buybacks, taking measures to reduce working capital and utilising debt to fund growth CAPEX and potential M&A.

While there is room for further improvements, Fujitec’s management has wholeheartedly listened to our, and other shareholders’, feedback. We applaud Fujitec for that and the humility it took to re-publish its mid-term plan. It bodes well for our future engagement, and we have developed an even closer relationship.

Following the launch of our public campaign in May 2020, Fujitec has returned +110% vs the MSCI Japan Small +26% and peers +10%. Fujitec’s EV/EBIT valuation has rerated to 14x vs 7x when we first invested, and we expect the actions taken by management over the past years will lead to a long-term improvement in profitability and growth potential. We believe our success with Fujitec, while maintaining a strong relationship, showcases the power of engagement and is an endorsement of our approach. While the valuation discount to peers has become less compelling, we still believe there is further upside and will continue to engage with the company.

Fujitec – the Japanese elevator & escalator company – was a meaningful contributor in March, with the shares up +16%.

Across AVI funds we have been invested in Fujitec since July 2018 and one where we have dedicated significant engagement resources. Over our holding period, we have sent six letters and met with the Company almost 30 times, and in May 2020 we released a 73-slide public presentation highlighting Fujitec’s underperformance and undervaluation.

Fujitec has reacted positively to our engagement by announcing several improvements, including abolishing its anti-takeover measure, appointing a majority independent board, cost-cutting initiatives, launching new products to expand sales and improving IR disclosure. However, Fujitec took a step backwards when in December it announced a confusing and unambitious mid-term plan. We sent a presentation and draft press release to the Company in January, showcasing the plan’s flaws, putting forward solutions and, importantly, threatening to take our grievances public. To our delight, management responded to all eight of our recommendations and released a supplementary mid-term plan at the start of March.

The most important response was on capital allocation, a glaring issue that had not been addressed since our original campaign. Not only did management commit to a higher ROE target of 12% (from 10%), but they mapped out a clear capital allocation framework for the next three years which will see up to 16% of Fujitec’s market cap distributed via dividends and buybacks, and measures taken to reduce working capital and utilise debt to fund growth CAPEX and potential M&A.

While there is room for further improvements, Fujitec management has wholeheartedly listened to our, and other shareholders’ feedback. We applaud Fujitec for that and the humility it took to re-publish its mid-term plan. It bodes well for our future engagement, and we have developed an even closer relationship.

Fujitec has been a hugely successful investment and showcases the power of shareholder engagement. Since the launch of our public campaign in May 2020, Fujitec has returned +110% vs the MSCI Japan Small +26% and peers +10%. Fujitec’s EV/EBIT valuation has rerated to 14x vs under 10x when the Fund first invested, and the actions taken by management over the past years will lead to a long-term improvement in profitability and growth potential. While the valuation discount to peers has become less compelling, we still believe there is further upside and will continue to engage with the Company.

Fujitec was the only notable contributor, with a +7% share price increase adding 54bps to performance. We attribute the strength to a rebound in what has been a lacklustre period for the share price and in response to Fujitec’s mid-term plan released in December. From an operational perspective, Fujitec is implementing several of our suggestions. Models are being standardised, manufacturing outsourced, and lower-priced products launched to grow into new market segments. This culminated in management targeting three-year profit growth of +58%, putting Fujitec on a three-year forward EV/EBIT multiple of 6.7x.

However, the plan lacked details and did not outline an improvement in capital efficiency, targeting an unambitious ROE of 10.7%. We continue to engage with management to rectify the undervaluation and address our outstanding issues. Encouragingly, we are not alone and at the time of writing, two other shareholders have written public letters in 2022 criticising Fujitec’s mid-term plan. We know other shareholders who privately agree with our views, and we hope our combined voices will be a powerful force for continued improvements.

Fujitec was the second largest detractor, with a share price decline of -7.6% reducing returns by 26bps. The weakness follows a strong share price performance over the summer which was eroded following the fallout from Evergrande and concerns over a wider slowdown in Chinese property development. Given Fujitec’s near 40% exposure to China property, we have been modestly reducing our position although it still ended the month at a healthy 6.2% of NAV. Fujitec’s management recognise the short-term headwinds but remain sanguine on China’s long-term opportunity which, coupled with self-help measures, should see Fujitec continue its earnings growth trajectory which saw it post a +27% YoY profit growth last quarter.

Fujitec was the second-largest contributor, with its share price gaining +12% over the month. August saw it report strong earnings growth, with operating profits growing +163%. Compared to the same quarter pre-COVID, operating profits are now +94% higher. Furthermore, efforts to improve the company’s margin structure appear to be working – gross margins were 25%, above the long-term average of 21%. Despite strong fundamentals, Fujitec continues to trade on a 12x EV/EBIT multiple compared to peers on an average of 25x. We believe there may be more upside to be had, notwithstanding the +130% share price gains over the past two years.

stacked in our favour.

Long-time contributor Fujitec was the 2^nd largest contributor with a share price return of +12% adding 90bps. It reported knock-out earnings, with year on year operating profit growth of +163% with profits now +94% vs the same quarter pre-COVID. Fujitec’s efforts to narrow its margin gap to peers are starting to bear fruit. Gross profit margins over the past twelve months came in at the highest in Fujitec’s history, just shy of 25% and comfortably above the 21% long-term average. Over two years, Fujitec’s share price has increased by +130%, yet still trades on only a 12x EV/EBIT multiple compared to global peers on 25x.We believe there is more upside to come.

Fujitec was the largest contributor over the month, with its share price increasing by 5%. During the month, Fujitec commissioned a research report in English. While unlikely to explain the share price move, it is nonetheless an encouraging step by management. Fujitec suffers from a lack of sell-side coverage, so the report should help to raise Fujitec’s profile amongst investors. Secom Joshinetsu was the second-largest contributor, with a share price return of +7%, on what we expect is a greater appreciation for the Company’s defensive characteristics.

Following the release of our public presentation in May and a strong share price (which has since appreciated by 49%), Fujitec has been our largest investment. We have been engaging with management regularly with 13 meetings over the past year, and numerous informal calls. Management have made great strides in improving their business, with an overhaul of their communications, operations, and governance, in line with our suggestions.  Despite the improvements Fujitec’s share price has plateaued over the past months (unjustifiably in our view), reducing the portfolio weight to 7.1% and ceding the top spot to newcomer DTS, with a 7.3% weight. We expand on DTS in more detail below, but we believe it presents a highly compelling opportunity with a combination of strong growth, low valuation, and a management team open to shareholder dialogue.

Over the month Fujitec was the leading detractor from performance. Being the largest position in the portfolio (8.7% of NAV) its -6.0%
share price return had an outsized impact on portfolio returns. Fujitec announced results at the start of the month. The lacklustre
performance, while not unexpected, was due to a timing issue with its overseas subsidiaries whose results are consolidated in Fujitec’s
accounts with a three-month lag. We expect profits for the second half of the year to be strong.

Although announced after the end of the month, it would be remiss not to mention Fujitec’s new strategic plan, a response – we believe
– to the public presentation that we released in May. The key positive to emerge from the plan was the intention to discontinue the antitakeover
measure (poison pill) that protects Fujitec from hostile takeover approaches, and which is a fundamental reason why Fujitec
suffers a valuation discount. Whilst we would have liked to see an explicit capital policy, we were pleased to see that the company will
install a compensation & nomination committee – a clear sign of improving attitudes towards stronger corporate governance. On the
operational front, management confirmed that they would take efforts to streamline their manufacturing processes and focus on the
after service business. These were in line with many of the key points that we outlined in our presentation. As this news is digested, we
expect Fujitec’s share price to continue its upward trajectory towards a valuation more in line with its peers.

It is interesting to note the strong performance from both Teikoku Sen-I and Fujitec, who were the 2nd and 3rd largest contributors to performance over the quarter. We engaged publicly with both companies earlier in the year, submitting two shareholder proposals at Teikoku’s AGM and releasing a public presentation on Fujitec. While we prefer to engage in private, our public campaigns show management of our other portfolio companies that if they are not willing to listen and implement changes in line with our suggestions, we have the ability, willingness and knowhow to take our recommendations public. Importantly, especially in Japan, we are careful that our public campaigns are not seen as overly hostile, and that we approach it from a long-term perspective. At both Teikoku and Fujitec we have retained a close and cordial relationship with management, with whom we are in regular contact.

We continue to hold private dialogue with Fujitec and have been encouraged by their improved communications with shareholders and their announcement that they will combine their escalator and elevator business in China to improve efficiencies. We think that our public campaign has sparked investors’ interest in Fujitec, and over the month it was our largest contributor adding +140bps to performance. Since the publication of our presentation addressing Fujitec’s undervaluation and underperformance, its shares have outperformed the TOPIX by +25%.

Taking Fujitec to the Next Level – Latest AVI Public Campaign

We have been shareholders of Fujitec since July 2018 and, across all AVI funds, now hold over 3% of its shares. Founded in 1948, Fujitec manufactures, installs, and maintains elevators and escalators (“E&E”). While it has a global presence, 90% of profits derive from Asia where it is well established. Over half of profits relate to after-sales services.

At the beginning of May we launched a detailed public campaign⁴ highlighting a multitude of issues at Fujitec, while choosing not to submit shareholder proposals this year. While shareholder proposals are an effective way to draw attention to a company and enact change, we believe the chances of success are greater having first presented analysis around a whole suite of issues. Management teams are more receptive to suggestions that focus not solely on balance sheet improvements, but also on increasing the value of the core business through operational measures.

Moreover, many issues cannot be addressed through shareholder proposals alone, as Japanese Company Law and articles of incorporation limit shareholder proposals to only a few key issues such as dividends, director appointments, and buybacks. Measures that address the efficiency of operations such as closure of plants, increased R&D spend, or improved employee remuneration, are reserved for the judgement of management.

Given the risks inherent in transporting people at high speeds, regulations require the regular maintenance of elevators. This usually means that the manufacturer who installed the elevator, and knows it in detail, is awarded a lucrative multi-decade service contract. This is the cash cow of the business, and while E&E companies might appear to be capital intensive and cyclical, they are quite the opposite and we believe the high multiples at which Fujitec’s global peers consequently trade (over 20x EV/EBIT) are justified.

Fujitec on the other hand, trades on an EV/EBIT multiple of less than 10x. It is smaller than its global peers, with no sell-side analyst coverage, poor governance, and a misplaced strategy. To address Fujitec’s undervaluation, we recommended to the Board that they undergo a comprehensive strategic review, commit to divesting strategic holdings in other listed companies, set out a transparent capital policy, and adopt a three-committee style board structure.

Our research for the presentation took around two months, and during that time we spoke to twelve experts within the field including ex-Fujitec employees, peers, customers, and suppliers. We built up a detailed picture of where we thought Fujitec’s failings were and, on the operational front, identified five areas that, if improved, could have a huge impact on margins and growth.

The presentation was well received by other shareholders who have grown frustrated by years of undervaluation and weak management. We sense there is sympathy from inside the Company to our recommendations and that some believe change is needed. We recognise, however, that Rome was not built in a day, and that transforming the culture of a company from outside is exceptionally difficult. We are respectful of this process and while eager for change, have given Fujitec the chance to respond to our recommendations before we take any further public actions. Most importantly, our relationship with management has so far been cordial, we were invited to attend the AGM, have held numerous calls with management, and have a meeting arranged with one of the independent directors.

Just after we released our presentation, Oasis, a well-known Hong Kong-based activist, submitted shareholder proposals to Fujitec seeking the cancellation of Fujitec’s treasury shares. The proposal received an encouraging 33% support ratio, following which Oasis called for a leadership change and stated that they are considering calling an EGM. They raise valid points, and two vocal shareholders is better than one.

Fujitec has been the best performing stock in the portfolio over the quarter, appreciating by +43% in GBP vs the MSCI Japan Small Index’s +13%. It has also been the largest contributor to returns since AJOT launched.

In this vein, at the start of May we launched a new campaign calling for Fujitec to adopt fundamental reforms after years of poor performance. A detailed presentation has been published on a dedicated website www.takingfujitectothenextlevel.com, which analyses in detail three interconnected areas that require fundamental reform: a flawed strategy, undisciplined capital policy, and weak governance. We encourage you to visit the website.

Fujitec is a global elevator manufacturer, selling to customers in Japan, China, Southeast Asia, North America and Europe. With a 5.5% weight in the portfolio, it is our fourth largest position and since launch has been the third biggest contributor. The strong performance (+29% on our average buy-in price) has been driven by a slight increase in Fujitec’s valuation but owes more to improved operating performance, with profit growth for the first half of the year of +50% and forecast full year growth of +15%.

The most appealing aspect of Fujitec’s business is the maintenance contracts that it receives after the installation of an elevator. These last for decades, producing steady, recurring profit. This is not lost on the market with Fujitec’s global peers trading on EV/EBIT multiples of 20x, and the emerging bidding war for thyssenkrupp’s elevator business – with some of the world’s largest private equity managers vying for a stake –  highlighting the attraction of the business model.

However, Fujitec, exposed to the same industry dynamics, trades on an EV/EBIT multiple of just 8x. We attribute Fujitec’s lower valuation to several factors. 1) Poor balance sheet efficiency. One third of Fujitec’s balance sheet is allocated to low yielding cash and investment securities, which accounts for 46% of Fujitec’s market cap. These contribute little to profits and are valued at a heavy discount by the market. 2) Poison pill. Fujitec first introduced a poison pill in 2007 to fend off a proposed buyout. By restricting potential buyers, it removes the possibility of a takeover, thus leading to a valuation discount. 3) Weaker margins. Fujitec suffers from lower operating margins than peers, 7% vs 12%, driven by lesser scale and an overly diversified exposure to non-core geographies. 4) Lack of sell-side coverage. No sell-side analysts cover Fujitec while Kone and Schindler are covered by 30 and 21 analysts, respectively.

We are working with management and the Board to address these problems, and they have so far been receptive to our suggestions. Considering not only the valuation but also margin upside, we believe the share price could double over the medium-term. Fujitec represents one of the most compelling investments in AJOT’s portfolio.