Undiscovered Asian jewels: Unnoticed small companies from Asia's stock market

In the dynamic world of investments, a strategic approach built on diligence, discipline, and patience is key. This approach has led to the recommendation of three intriguing companies: Yihai International, Surya Pertiwi, and Tuhu.

Yihai International (Hong Kong: 1579), a large condiment producer for Chinese soup-based hotpot cuisine, is the main supplier of soup bases for Haidilao, a leading Chinese hotpot restaurant chain. With a strong record of execution, Yihai International supplies nearly 80% of Haidilao's domestic demand, making it a significant player in the market. Moreover, Yihai International boasts a net-cash balance sheet and offers a 6% dividend yield, making it an attractive investment option.

Surya Pertiwi (Jakarta: SPTO), the leading distributor and manufacturer of sanitaryware in Indonesia, is another noteworthy investment. With over 3,000 dealers in its network, Surya Pertiwi holds a 65%-70% domestic market share in sanitaryware and a 40%-50% market share in sanitary fittings. The current market penetration of sanitaryware in Indonesia is 50%, providing a tailwind for demand. The Indonesian sanitaryware market could expand by 7%-8% in volume terms, supported by improvements in affordability. Surya Pertiwi is also the exclusive distributor in Indonesia for the Japanese brand TOTO, adding to its competitive edge.

Tuhu (Hong Kong: 9690), a Chinese vehicle parts retailer, is making waves in the organised vehicle parts retailing sector, which is still in its infancy in China. Tuhu uses its app to direct car owners to its network of franchisee car repair shops, making it the market leader in China. The firm's solid management team and potential for significant growth in the next 10 years make it an appealing investment opportunity. Tuhu also has a net-cash balance sheet and the stock is on a forward p/e of 16.

The investment strategy avoids thematic investments, start-ups, highly geared companies, cyclical businesses earning peak margins, and stocks on high multiples to earnings. This approach is designed to help compound returns at higher rates over the long term and to manage absolute risk, losing little money during market drawdowns.

It's worth noting that the institution behind the asset manager recommending these stocks includes major investment firms like BlackRock and Vanguard, which manage funds on behalf of millions of people, including roughly 10.5 million Germans. The important recommended stocks related to longevity investing include pharmaceutical companies Roche and Novo Nordisk, technology company Apple, insurer Allianz, and renewable energy producer NextEra Energy.

In conclusion, Yihai International, Surya Pertiwi, and Tuhu present compelling investment opportunities, each with its unique strengths and potential for growth. The strategic approach of diligence, discipline, and patience, as well as the avoidance of high-risk investments, aims to deliver steady returns and long-term success.