Noritsu Koki Co., Ltd.
Noritsu Koki Co., Ltd. engages in the manufacture and sale of environment solution, kitchen, and photo processing equipment. It operates through the following segments: Monodzukuri, Health Care, Drug Discovery, Senior Life, Agricultural Food, and Others. The Monodzukuri segment handles research, development, production, and sale of pens and cosmetic parts. The Health Care segment provides radiology services, survey data, and genetic testing. The Drug Discovery segment provides research, development and sale of biopharmaceuticals. The Senior Life segment handles publication and mail order services for seniors. The Agricultural Food segment produces and sells fresh vegetables. The Others segment handles investigation and investment of new growth areas. It also offers mail order for dental materials and development and sale of drug treatment database for insurance companies. The company was founded by Kanichi Nishimoto in June 1951 and is headquartered in Tokyo, Japan.
COMMENTARY
Market review
Global equity markets advanced again in May, with the artificial intelligence and power-infrastructure theme continuing to dominate leadership. US equities pushed to fresh highs alongside Korean equities, and European semiconductor names traded at or near record levels. The rally remained narrow as small-caps lagged the mega-cap winners, sustaining the dispersion that has weighed on diversified quality strategies through the year.
Technology and power-infrastructure exposures captured the bulk of capital flows, widening the gap between large-cap winners and the broader market. Growth styles linked to the AI complex continued to draw momentum from more diversified factors.
The macroeconomic picture was less supportive. US April CPI printed at 3.8%, a three-year high, with inflation pass-through becoming more visible in corporate margin guidance. Expectations for rate cuts in 2026 collapsed as Kevin Warsh was confirmed as Federal Reserve Chair, succeeding Jerome Powell. The Fed held rates at 3.75% for a third consecutive meeting, and the European Central Bank also held. In the Middle East, the ongoing Iran conflict kept Brent crude rangebound, while a Trump-Xi summit in Beijing produced an agreement to keep the Strait of Hormuz open. The Australian dollar finished broadly flat, making translation an immaterial factor for returns.
Resilient inflation, a more hawkish path on rates and concentrated leadership leave the market on a narrower foundation heading into the second half.
Portfolio Commentary
The Fund rose 3.3% in May, marginally ahead of its benchmark, as results from a handful of holdings absorbed weakness across several US positions. Performance was driven by company-specific news rather than macro positioning, with two contributors reporting first-quarter numbers that materially exceeded expectations.
Max Stock, Israel’s dominant extreme-value retailer, extended its strong run on 19 May after reporting revenue up 18.3%, comparable-store sales up 16.9% and adjusted EBITDA up 57.4%, with gross margin expanding 330 basis points. Management pointed to favourable Passover timing and a higher average price per item, alongside supply-chain and direct-import efficiencies that have lifted margins. The result marked a clear acceleration from 2025 and validated the merchandising and margin-expansion thesis.
Nextpower, the solar-tracker and integrated power platform formerly known as Nextracker, swung from April’s largest detractor to the second-largest contributor after its 12 May result. The company reported record FY2026 revenue of USD 3.56 billion and a record backlog above USD 5.25 billion, secured an investment-grade credit rating, raised its FY2027 outlook, and agreed to acquire a power-conversion portfolio. Confirmation that the non-tracker businesses are scaling resolved much of the strategic uncertainty that had weighed on the shares.
Pexip, the Norwegian video-infrastructure specialist, rose sharply after its 5 May report, gaining around 14% on the day. Annual recurring revenue grew 17%, and quarterly revenue rose 30%, while in-quarter EBITDA almost doubled to a 46% margin. New business in the secure-and-custom segment, led by defence and sovereign-IT wins, continued to underpin the investment case.
APi Group, the US fire and life-safety services provider, declined despite a strong quarter that delivered a 15.3% revenue uplift, organic growth above 10%, expanding margins and raised guidance. The weakness reflected the financing of an aggressive expansion programme, with roughly USD 1 billion of debt-funded acquisitions alongside a USD 500 million senior notes offering. Insider selling and profit-taking after a strong run added to the pressure. We read this as a valuation reset, not a deterioration in the business.
Tootsie Roll, the US confectioner, gave back ground after a soft first-quarter print. Net sales edged up modestly but earnings were flat as margins absorbed elevated cocoa costs, Spanish operation losses and heavier trade-promotion spend. Cocoa has eased from its 2025 extremes but remains elevated, with relief expected late in 2026 and into 2027. We view this as a cyclical input-cost headwind, not a franchise issue.
Portfolio activity was light, with no new positions initiated. Ollie’s Bargain Outlet was exited as same-store-sales growth proved merely adequate, trimming consumer-discretionary exposure. Positioning was otherwise stable, consistent with our preference for letting quality businesses compound through short-term dislocations.
The portfolio remains concentrated in high-quality smaller companies with durable competitive positions and diversified end-market exposures. We continue to favour businesses whose operational progress drives returns through macro noise rather than depending on it.