Japan

So far I don't have any Japan exposure in my portfolio. Their stockmarket has gone nowhere for so many years now, it's tempting to write them off. But if shares there are genuinely undervalued, it's foolish to ignore them - sooner or later value will out.

I'm unlikely to invest in specific shares. There's an ishares ETF - IJPN - which deals with large corporations. So what I'll do is take a quick look at the top few holdings in IJPN to give me an idea of valuation.

Here's the table:

Rank Company Price Country Percentage
1 TOYOTA MOTOR CORP 32.50 Japan 5.60
2 MITSUBISHI UFJ FINANCIAL GRO 4.64 Japan 3.19
3 HONDA MOTOR CO LTD 24.43 Japan 2.52
4 TOKYO ELECTRIC POWER CO INC 28.36 Japan 2.16
5 TAKEDA PHARMACEUTICAL CO LTD 40.78 Japan 2.07
6 NINTENDO CO LTD 291.17 Japan 1.81
7 CANON INC 25.96 Japan 1.73
8 NTT DOCOMO INC 1,572.90 Japan 1.55
9 NIPPON TELEGRAPH & TELEPHONE 43.44 Japan 1.41
10 PANASONIC CORP 11.79 Japan 1.35

Toyota
Based on their last Annual Report (from March 2008):
3.2bn shares outstanding
Market cap ~$100bn
Revenue of $262bn
Operating income of $22.6bn
Net income of $17bn
Shareholder equity of $118.5bn (no intangibles or goodwill in there that I could see)
Net income per share $5.39
Dividend per share of $1.40

So at $32.50 per share they are trading on a historical P/E of about 6, a dividend yield of 4.3%, and a P/TBV of 0.88.

This looks pretty good value to me.

Mitsubishi UFJ Financial Group
Can't be bothered to look at their report, so pulling numbers from Yahoo. Tangible assets about $50bn. Market cap $60bn. So it's trading at a P/TBV of 1.2. Not disastrous, but not great either.

Honda
P/TBV about 0.89, P/E about 7. As per Toyota, looks pretty good.

Conclusion
Obviously more thought required before investing, but things look promising so far. These shares certainly don't look overvalued.