A Market Leader in a Real-World Industry

Charging & Fearless is the only newsletter that delivers under-the-radar, global stock picks before they make front-page news. We traverse borders to uncover the explosive potential of international companies beyond the scope of Wall Street analysts. Enjoy the 5-minute pitch on this week’s stock below...

Daikin Industries

Daikin is a Japanese conglomerate with a specialization in air conditioning, refrigeration, fluorochemicals, and oil hydraulics. It is the largest manufacturer of air conditioning units in the world.

Primed to Grow

This week’s pick was spurred by the company Wattsco, a specialist in HVAC (heating, ventilation, and air conditioning) that has been a runaway market winner for nigh on 40 years. Daikin Industries is a Japanese equivalent that enjoys a global market-leading position. It’s not sexy, but it’s intensely profitable for investors and when we look at long-term trends, it becomes even more enticing. The International Energy Agency has forecast that the demand for air conditioners is going to triple by 2050 as emerging countries become wealthier. This is a boon for the world leader Daikin.

Management has outlined long-term returns on capital goals which should buoy investors. It also shows signs of the turnaround in corporate governance that is becoming commonplace amongst Japanese businesses. It is no wonder Wall Street’s elite are looking at the land of the rising sun much more favourably in 2023. 

In Their Own Words

What Could Go Wrong?

Daikin is reliant on new builds to spur much of its growth, so question marks over the industry’s short-term future are front of mind. The slowdown in the Chinese real estate market is a concern, as the region makes up roughly 15% of revenues. As is the state of the commercial real estate market. Office buildings are seeing a notable markdown on their valuations this year, meaning there is little motivation to commence new projects. 

Final Word

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