'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Thematic (Sector/Industry)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/136/350/original/2020-05-28_06-43-04.png?1590615802" class="editor-image img-responsive" data-smartkarma-image-id="136350"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>ALL GOOD</strong> - Japan has had a 'good' COVID-19 relative to many countries. With a little help from the Bank of Japan, Japanese equities are only 11% below the December peak, despite a ten-year low in corporate earnings and the prospect of much worse in that regard in the coming months. Companies have retained staff, and consumer confidence has fallen less than in other developed economies. Production lines were not shut down, resulting in a GFC-like spike in the inventory ratio. The stable Yen will make it harder for exporters to the developing world to clear the stockpiles. Accordingly, the alphabetic 'shape' of Japan's post-COVID recovery will between "V" and "L" and will be more prolonged.</p><p><strong>SLIM TAILS</strong> - We are now in the slim tail of the earnings 'season' with only seven larger caps reporting yesterday of which just two made forecasts for the current year.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/136/353/original/2020-05-28_07-10-35.png?1590617452" class="editor-image img-responsive" data-smartkarma-image-id="136353"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>INTERNAL DEFICIENCIES -</strong> Another 42 companies will announce results today. The largest of these by market cap will be <a href="https://www.smartkarma.com/entities/otsuka-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:12292:1" rel="noopener">Otsuka (4578 JP)</a>, <a href="https://www.smartkarma.com/entities/nissan-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:72:1" rel="noopener">Nissan (7201 JP)</a> (finally), and <a href="https://www.smartkarma.com/entities/toray-industries-inc" target="_blank" data-smartkarma-citation="entities:625:1" rel="noopener">Toray (3402 JP)</a>.  Of the companies with a market capitalisation of over ¥1 trillion, only <a href="https://www.smartkarma.com/entities/olympus-corp" target="_blank" data-smartkarma-citation="entities:356:1" rel="noopener">Olympus (7733 JP)</a>, <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba (6502 JP)</a>, and <a href="https://www.smartkarma.com/entities/hitachi-ltd" target="_blank" data-smartkarma-citation="entities:7797:1" rel="noopener">Hitachi (6501 JP)</a> remain after which this series of Insights will be brought to close. That these three companies required an extra month to prepare their accounts suggests severe deficiencies in the internal reporting structures of these companies.</p>

Source • Japan AnalyticsALL GOOD - Japan has had a 'good' COVID-19 relative to many countries. With a little help from the Bank of Japan, Japanese equities are only 11% below the December peak, despite a ten-year low in corporate earnings and the prospect of much worse in that regard in the coming months. Companies have retained staff, and consumer confidence has fallen less than in other developed economies. Production lines were not shut down, resulting in a GFC-like spike in the inventory ratio. The stable Yen will make it harder for exporters to the developing world to clear the stockpiles. Accordingly, the alphabetic 'shape' of Japan's post-COVID recovery will between "V" and "L" and will be more prolonged.SLIM TAILS - We are now in the slim tail of the earnings 'season' with only seven larger caps reporting yesterday of which just two made forecasts for the current year.Source • Japan AnalyticsINTERNAL DEFICIENCIES - Another 42 companies will announce results today. The largest of these by market cap will be Otsuka (4578 JP), Nissan (7201 JP) (finally), and Toray (3402 JP).  Of the companies with a market capitalisation of over ¥1 trillion, only Olympus (7733 JP), Toshiba (6502 JP), and Hitachi (6501 JP) remain after which this series of Insights will be brought to close. That these three companies required an extra month to prepare their accounts suggests severe deficiencies in the internal reporting structures of these companies.

🇯🇵 JAPAN • Results & Revisions 27th May - Recruit, DNP & Dentsu

Equity Analyst, LightStream Research

Supun Walpola

Equity Analyst

Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a>’s share price has increased by around 53% since the first week of April, following the initial COVID-19 jitters. However, we do not believe that the outlook for the next few quarters justifies this recovery. Recruit’s 4Q FY03/20 financial results could pass as decent, however, things could go south for Recruit from this point. We remain bearish as we expect to hear more bad news from Recruit over the next few quarters.</p>

Recruit Holdings (6098 JP)’s share price has increased by around 53% since the first week of April, following the initial COVID-19 jitters. However, we do not believe that the outlook for the next few quarters justifies this recovery. Recruit’s 4Q FY03/20 financial results could pass as decent, however, things could go south for Recruit from this point. We remain bearish as we expect to hear more bad news from Recruit over the next few quarters.

Recruit Holdings: 4Q Results Could Pass as Decent but Things Could Go South From This Point

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/136/061/original/2020-05-27_06-45-23.png?1590529581" class="editor-image img-responsive" data-smartkarma-image-id="136061"></figure><div class="content-caption">Source • Japan Analytics</div><p>In the<strong> DETAIL</strong> section below, we shall review Tuesday's announcements:-</p><ul>
<li><p>The balance between positive/neutral/negative of the 44 results announcements was 18:5:21.</p></li>
<li>For the 21 revisions/initial forecasts, the split was 5:0:16, and the average Forecast/Revision Score was -12.1. Only 36% of companies reporting full-year results chose to make current year forecasts. </li>
<li>42 companies will announce results today. The largest of these by market cap will be <a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit (6098 JP)</a>, <a href="https://www.smartkarma.com/entities/dai-nippon-printing-co-ltd" target="_blank" data-smartkarma-citation="entities:19388:1" rel="noopener">Dai Nippon Printing (7912 JP)</a>, and <a href="https://www.smartkarma.com/entities/dentsu-inc" target="_blank" data-smartkarma-citation="entities:12434:1" rel="noopener">Dentsu (4324 JP)</a>. </li>
</ul>

Source • Japan AnalyticsIn the DETAIL section below, we shall review Tuesday's announcements:-
The balance between positive/neutral/negative of the 44 results announcements was 18:5:21.
For the 21 revisions/initial forecasts, the split was 5:0:16, and the average Forecast/Revision Score was -12.1. Only 36% of companies reporting full-year results chose to make current year forecasts. 
42 companies will announce results today. The largest of these by market cap will be Recruit (6098 JP), Dai Nippon Printing (7912 JP), and Dentsu (4324 JP). 


🇯🇵 JAPAN • Results & Revisions 26th May - Konica Minolta, Yamaha, DyDo, JAT

<p>We believe it is likely for <a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a> to reach its full-year EBITDA guidance for FY03/20. However, we remain bearish, as we expect Recruit to feel the full impact of COVID-19 from 1Q FY03/21 onwards. Both global and domestic labour markets have weakened since March and the demand for online advertising remains low with the disruption of economic activities.</p>

We believe it is likely for Recruit Holdings (6098 JP) to reach its full-year EBITDA guidance for FY03/20. However, we remain bearish, as we expect Recruit to feel the full impact of COVID-19 from 1Q FY03/21 onwards. Both global and domestic labour markets have weakened since March and the demand for online advertising remains low with the disruption of economic activities.

Recruit Holdings: Likely to Reach Full-Year Guidance but Bad News Could Be on the Way

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/yeahka-limited" target="_blank" data-smartkarma-citation="entities:28436:1" rel="noopener">Yeahka Limited (9923 HK)</a> is a leading payment-based technology platform in China. It is the second-largest non-bank independent QR Code payment service provider in China, with a 14.0% market share as measured by average daily transaction count in 2019, according to Oliver Wyman. Yeahka has launched a Hong Kong IPO to raise net proceeds of $148-197 million.</p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/yeahka-ipo-initiation-cashing-in" target="_blank" rel="noopener">our initiation note</a>, we stated that peeling back the benefit of market growth, Yeahka’s fundamentals offer more positives than negatives. In <a href="https://www.smartkarma.com/insights/yeahka-ipo-way-to-pay" target="_blank" rel="noopener">our PHIP update note</a>, we stated that the 2019 results, continues to reinforce our view and believe Yeahka is worth a look. Overall, we think that a reasonable valuation makes Yeahka tempting at the proposed pricing range.  </p></div></div></div>

Yeahka Limited (9923 HK) is a leading payment-based technology platform in China. It is the second-largest non-bank independent QR Code payment service provider in China, with a 14.0% market share as measured by average daily transaction count in 2019, according to Oliver Wyman. Yeahka has launched a Hong Kong IPO to raise net proceeds of $148-197 million.In our initiation note, we stated that peeling back the benefit of market growth, Yeahka’s fundamentals offer more positives than negatives. In our PHIP update note, we stated that the 2019 results, continues to reinforce our view and believe Yeahka is worth a look. Overall, we think that a reasonable valuation makes Yeahka tempting at the proposed pricing range.  

Japan

Recruit Holdings Co. Ltd. operates information providing services in human resource, housing, bridal, travel, restaurants, beauty, automobiles, and education and more. The company also operate staffing services and advertising business.

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Recruit Holdings (6098 JP)

🇯🇵 JAPAN • Results & Revisions 27th May - Recruit, DNP & Dentsu

ALL GOOD - Japan has had a 'good' COVID-19 relative to many countries. With a little help from the Bank of Japan, Japanese equities are only 11%...

Campbell Gunn

Recruit Holdings: 4Q Results Could Pass as Decent but Things Could Go South From This Point

Recruit Holdings (6098 JP)’s share price has increased by around 53% since the first week of April, following the initial COVID-19 jitters....

Supun Walpola

🇯🇵 JAPAN • Results & Revisions 26th May - Konica Minolta, Yamaha, DyDo, JAT

In the DETAIL section below, we shall review Tuesday's announcements:- The balance between positive/neutral/negative of the 44 results...

Campbell Gunn

Recruit Holdings: Likely to Reach Full-Year Guidance but Bad News Could Be on the Way

We believe it is likely for Recruit Holdings (6098 JP) to reach its full-year EBITDA guidance for FY03/20. However, we remain bearish, as we expect...

Supun Walpola

Yeahka IPO: Valuation Insights

Yeahka Limited (9923 HK) is a leading payment-based technology platform in China. It is the second-largest non-bank independent QR Code payment...

Arun George

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