# Hi-Lex (7279.T): Why Does It Trade at 0.38x Book After Selling Assets? > Japanese auto parts maker Hi-Lex (7279) trades at about 0.38x book value after selling cross-holdings and buying Mitsui Kinzoku ACT at a bargain. A Japan value investor says the company has done everything right. We check the one-time gains, thin margins, net cash, the Zennor stake and the founding family's control. By MCAFax · Published October 20, 2026 Section: Markets & Main Street › From Wall Street · Series: Market Calls, Investigated (https://mcafax.com/notebook/series/market-calls-investigated) Canonical: https://mcafax.com/notebook/7279-hi-lex-0-38x-book-after-asset-sales-family-control Source: MCAFax, The Broker's Notebook (https://mcafax.com/notebook). MCAFax is not a lender or a law firm. --- Hi-Lex Corporation (Tokyo Stock Exchange: 7279), a Japanese auto parts maker, closed at 2,255 yen on October 20, 2026, about 0.38x the book value per share in its latest filing. Japan-focused investor Japan Deep Value says the company has "done everything right" on capital and asset sales and the market still ignores it. The catch is that most of this year's profit came from one-time gains, and the core business earns thin margins. *This is journalism and commentary, not investment advice. We hold no position unless stated.* ## Key facts - **Ticker and exchange:** Hi-Lex Corporation, 7279, Tokyo Stock Exchange Standard Market. - **Situation type:** deep value; a stock below book value with asset sales, an acquisition and a founding family stake. - **The call:** long, from Japan Deep Value (@JapanDeepValue1), who has followed Hi-Lex since at least January 2024. - **Valuation:** about 0.38x book (our math: 216.1 billion yen of equity over 36.8 million shares outside Treasury, or about 5,868 yen per share). - **Profit:** nine-month net income of 40.8 billion yen through July 31, 2026, versus 3.4 billion yen a year earlier. - **Main risk:** the jump in profit is mostly one-time, and operating margin was about 1.2%. ## Is 7279.T a good bet right now? The case for Hi-Lex is a market value of roughly 83 billion yen (our estimate at 2,255 yen) against about 216 billion yen of book equity and 73.8 billion yen of cash. The case against is that book value is not cash, and the business that produces it barely earns money. The stock closed at 2,940 yen on October 20, 2025, so it is down about 23% over the past year. ## Why are investors bullish on Hi-Lex? - **A cheap acquisition.** Hi-Lex bought auto parts maker Mitsui Kinzoku ACT, now Hi-Lex ACT, on November 4, 2025. It booked a 28.3 billion yen bargain-purchase gain, meaning it paid less than the net assets it acquired, per its [third-quarter results](https://www.hi-lex.co.jp/wp-content/uploads/2026/09/20260904.pdf). - **Selling cross-holdings.** A September 2026 [notice](https://www.hi-lex.co.jp/wp-content/uploads/2026/09/140120260908532939.pdf) says Hi-Lex has sold three cross-shareholdings this fiscal year for 15,988 million yen, with gains of 15,343 million yen. Its goal is to cut such holdings to 10% or less of net assets. - **Net cash.** At July 31, 2026, cash was 73.8 billion yen against about 23.5 billion yen of borrowings, per the same filing. - **Higher dividend.** Hi-Lex forecasts 80 yen per share for the year, including a 27 yen commemorative payment, versus 46 yen last year. - **An activist-style holder.** Zennor Asset Management LLP raised its stake to 7.40% in a March 2026 filing, at an average cost of 2,159.3 yen, and listed making important proposals among its stated purposes, according to large-shareholding [records](https://ufocatch.com/large-shareholding/holding/E39665/7279). ## Who's making this call and why? Japan Deep Value is an investor account focused on undervalued Japanese stocks. On October 20, 2026 the account [wrote](https://x.com/JapanDeepValue1/status/2112437891993612699): "Hi Lex has done everything right." The same post cites a 23% return on equity and trailing earnings of 1,240 yen per share, or 1.8x earnings, and argues that Tokyo exchange reforms have not fixed valuations. Those trailing figures include this year's one-time gains. In January 2024 the account [noted](https://x.com/JapanDeepValue1/status/1745889403245941193) that the founding family had raised its stake from 25.7% to 27.3%. That matters both ways: a controlling family can take a company private, and it can also block outside pressure. **Track record.** In our tracking, Japan Deep Value is 5-8 (a .385 win rate) on 13 calls scored at 180 days against the S&P 500, with an average edge of about -2.95 percentage points. It is unranked on the career table. See the [scoreboard](https://mcafax.com/notebook/market-calls-scoreboard). ## Who disagrees? We found no public rebuttal of this specific call. The filings supply the bear case. - **The gains don't repeat.** Of 50.9 billion yen in nine-month pretax profit, 42.2 billion yen came from the bargain-purchase gain and securities sales. Without them, pretax profit would have been about 8.7 billion yen. - **Thin margins.** Operating profit was 3,882 million yen on sales of 320,556 million yen, about 1.2%. - **More debt and liabilities.** Short-term borrowings rose to 22.3 billion yen from 7.5 billion yen at the last fiscal year-end, and retirement benefit liabilities tripled to 7.1 billion yen. - **Family control.** With the founding family at 27.3% as of early 2024, outside holders may have limited leverage. ## What are the key facts to verify? - The [third-quarter results](https://www.hi-lex.co.jp/wp-content/uploads/2026/09/20260904.pdf) for equity, share count, cash, debt and the one-time gains. - The [cross-shareholding notice](https://www.hi-lex.co.jp/wp-content/uploads/2026/09/140120260908532939.pdf) for sale totals and the 10% target. - The [large-shareholding records](https://ufocatch.com/large-shareholding/holding/E39665/7279) for Zennor's stake and stated purposes. ## What would prove it right or wrong? **Right:** full-year results due after October 31 show the acquisition lifting operating profit, Hi-Lex returns more cash through buybacks or dividends, or the family or a buyer offers a premium. **Wrong:** operating margins stay near 1%, integration costs eat into book value, or cash goes to new deals instead of shareholders. *This is journalism and commentary, not investment advice. We hold no position unless stated.* ## Questions readers ask **What does Hi-Lex (7279) do?** Hi-Lex Corporation (Tokyo Stock Exchange: 7279) is a Japanese auto parts maker that makes door closure systems, modules and other automotive components. Hi-Lex reported nine-month sales of 320,556 million yen through July 31, 2026. **What is the market call on Hi-Lex (7279)?** Japan Deep Value, an investor account focused on undervalued Japanese stocks, wrote on October 20, 2026 that Hi-Lex has done everything right on capital and asset sales. The account argues the market still assigns Hi-Lex a very low valuation despite those steps. **Why does Hi-Lex (7279) trade at 0.38x book?** Hi-Lex closed at 2,255 yen on October 20, 2026, against book value of about 5,868 yen per share by our math from its third-quarter filing, or about 0.38x. The low multiple reflects an operating margin of about 1.2% and profits that came mostly from one-time gains. **Where did Hi-Lex's 40.8 billion yen profit come from?** Hi-Lex (7279) earned 40.8 billion yen in the nine months to July 31, 2026, mainly from a 28.3 billion yen bargain-purchase gain on buying Mitsui Kinzoku ACT and 13.9 billion yen of securities sale gains. Without those gains, nine-month pretax profit would have been about 8.7 billion yen. **How much has Hi-Lex sold in cross-shareholdings?** Hi-Lex (7279) said in September 2026 that it had sold three cross-shareholdings in the fiscal year ending October 31, 2026, for 15,988 million yen in proceeds. Hi-Lex aims to reduce such holdings to 10% or less of consolidated net assets. **Does Hi-Lex (7279) have net cash?** At July 31, 2026, Hi-Lex held 73.8 billion yen of cash and deposits against about 23.5 billion yen of borrowings, per its third-quarter results. That compares with a market value of roughly 83 billion yen at the October 20, 2026 close, by our estimate. **Who is Zennor Asset Management and why does it matter for Hi-Lex?** Zennor Asset Management LLP reported a 7.40% stake in Hi-Lex (7279) in March 2026, up from 5.16% in July 2025, at an average cost of 2,159.3 yen. Its filing lists making important proposals to the company among its stated purposes. **What is Japan Deep Value's track record?** In our tracking, Japan Deep Value is 5-8 (a .385 win rate) on 13 calls scored at 180 days against the S&P 500, with an average edge of about -2.95 percentage points, and is unranked. The Hi-Lex (7279) call is newly logged and not yet scored. **Who controls Hi-Lex (7279)?** Japan Deep Value noted in January 2024 that Hi-Lex's founding family had raised its stake from 25.7% to 27.3%. A large family stake can support a take-private but can also limit pressure from outside shareholders. **What would prove the Hi-Lex (7279) call right or wrong?** The Hi-Lex call looks right if full-year results show the Mitsui Kinzoku ACT deal lifting operating profit, the company returns more cash, or a buyer offers a premium. It looks wrong if operating margins stay near 1% or cash goes to new deals instead of shareholders.