Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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.

Equity Bottom-Up

<p>We have for over a year discussed China’s transition from a pure BEV strategy for its emissions reduction goals, to a more balanced approach incentivising not just BEVs but also hybrids and FCEVs. Naturally this has the biggest impact on Toyota and this change in the status quo is under-appreciated by the market.</p>

We have for over a year discussed China’s transition from a pure BEV strategy for its emissions reduction goals, to a more balanced approach incentivising not just BEVs but also hybrids and FCEVs. Naturally this has the biggest impact on Toyota and this change in the status quo is under-appreciated by the market.

Toyota – Hybrid Technology Transfer to GAC and China Going Hybrid Mean Share Gains for Toyota

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Thematic (Sector/Industry)

<div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/163/118/original/2020-10-03_15-34-01.png?1601706874" class="editor-image img-responsive" data-smartkarma-image-id="163118"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div>
<p><strong>WARMING UP</strong> - Earnings momentum is finally on the 'up'. Our Interim Forecast/Revision Score data series which runs from March to September finished 2020 on a two-month high, while both the Annual series are above their September low points. The divergence between domestic non-manufacturing and globally-orientated manufacturing companies continues to widen exemplified by <a href="https://www.smartkarma.com/entities/honda-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:154:1" rel="noopener">Honda Motor (7267 JP)</a>'s announcement of their decision to pull out of Formula 1 from the end of the 2021 season. Although trailing earnings have also stabilised, operating and net income forecasts and their 'gap to trailing' continue to increase. The forward multiple is 32.5 times. </p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/163/261/original/2020-10-04_07-12-52.png?1601763187" class="editor-image img-responsive" data-smartkarma-image-id="163261"></figure><p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p>
</div><div><p>Our best and worst pair is home centre <a href="https://www.smartkarma.com/entities/shimachu-co-ltd" target="_blank" data-smartkarma-citation="entities:5235:1" rel="noopener">Shimachu (8184 JP)</a> for whom a rumoured bid from peer DCM has emerged and diaper machinery maker and small-cap value investor favourite and Unicharm proxy<a href="https://www.smartkarma.com/entities/zuiko-corp" target="_blank" data-smartkarma-citation="entities:5568:1" rel="noopener"> Zuiko (6279 JP)</a>. </p></div><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/163/135/original/2020-10-03_17-07-27.png?1601712488" class="editor-image img-responsive" data-smartkarma-image-id="163135"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/163/136/original/2020-10-03_17-08-41.png?1601712545" class="editor-image img-responsive" data-smartkarma-image-id="163136"></figure><hr><div><p style="text-align: center;"><strong>DAILY STATS</strong></p></div><hr><div><p style="text-align: center;"><strong>18 Quarterly Results</strong></p></div><div><ul style="list-style-type: disc;">
<li><p><strong>Results Score:</strong> 56% Positive / 11% Neutral / 33% Negative</p></li>
<li><p><strong>Average Results Score Change:</strong> 0.0 points</p></li>
<li><p><strong>Average % Change in Revenue:</strong> -9.6% Quarter YoY / -5.2% Rolling TTM YoY </p></li>
<li><p><strong>Average Operating Profit Margin Change:</strong> -2.6ppt</p></li>
<li><p><strong>Percentage Making Quarterly Losses:</strong> 33%</p></li>
</ul></div><hr><div><p style="text-align: center;"><strong>9 Annual • 6 Interim Forecasts/Revisions</strong></p></div><div><ul style="list-style-type: disc;">
<li><p><strong>Annual Forecast/Revision Score:</strong> 33% Positive /22% Neutral / 44% Negative</p></li>
<li><p><strong>Interim Forecast/Revision Score Change:</strong> 50% Positive / 17% Neutral / 33% Negative</p></li>
<li><p><strong>Average Forecast/Revision Score Change:</strong> -2.1 points</p></li>
</ul></div>


Source for all charts &amp; tables: Japan Analytics
WARMING UP - Earnings momentum is finally on the 'up'. Our Interim Forecast/Revision Score data series which runs from March to September finished 2020 on a two-month high, while both the Annual series are above their September low points. The divergence between domestic non-manufacturing and globally-orientated manufacturing companies continues to widen exemplified by Honda Motor (7267 JP)'s announcement of their decision to pull out of Formula 1 from the end of the 2021 season. Although trailing earnings have also stabilised, operating and net income forecasts and their 'gap to trailing' continue to increase. The forward multiple is 32.5 times. 
• BEST &amp; WORST •
Our best and worst pair is home centre Shimachu (8184 JP) for whom a rumoured bid from peer DCM has emerged and diaper machinery maker and small-cap value investor favourite and Unicharm proxy Zuiko (6279 JP). DAILY STATS18 Quarterly Results
Results Score: 56% Positive / 11% Neutral / 33% Negative
Average Results Score Change: 0.0 points
Average % Change in Revenue: -9.6% Quarter YoY / -5.2% Rolling TTM YoY 
Average Operating Profit Margin Change: -2.6ppt
Percentage Making Quarterly Losses: 33%
9 Annual • 6 Interim Forecasts/Revisions
Annual Forecast/Revision Score: 33% Positive /22% Neutral / 44% Negative
Interim Forecast/Revision Score Change: 50% Positive / 17% Neutral / 33% Negative
Average Forecast/Revision Score Change: -2.1 points


🇯🇵 JAPAN • Results & Revisions 10/​​​​​02 DCM (Under)Bids for Shimachu, Zuiko>Unicharm, Ktk>Canon

<div><p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p></div><p>Our 'best' and 'worst' pairing from yesterday's announcements is micro-cap home centre <a href="https://www.smartkarma.com/entities/encho-co-ltd" target="_blank" data-smartkarma-citation="entities:2666:1" rel="noopener">Encho (8208 JP)</a> and utility <a href="https://www.smartkarma.com/entities/kansai-electric-power-co-inc" target="_blank" data-smartkarma-citation="entities:18907:1" rel="noopener">Kansai Electric Power (9503 JP)</a>. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/161/042/original/2020-09-24_05-33-51.png?1600893369" class="editor-image img-responsive" data-smartkarma-image-id="161042"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/161/043/original/2020-09-24_05-35-52.png?1600893382" class="editor-image img-responsive" data-smartkarma-image-id="161043"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div><hr><p style="text-align: center;"><strong>DAILY STATS</strong></p><hr><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/161/044/original/2020-09-24_05-38-13.png?1600893505" class="editor-image img-responsive" data-smartkarma-image-id="161044"></figure><p><strong><a href="https://www.smartkarma.com/entities/mitsuba-corp" target="_blank" data-smartkarma-citation="entities:1323:1" rel="noopener">Mitsuba (7280 JP)</a></strong>- The <a href="https://www.smartkarma.com/entities/honda-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:154:1" rel="noopener">Honda</a> supplier Mitsuba was the lone result announced yesterday which was predictably grim. The shares have yet to reach Oversold territory and are below 2008/9 levels in terms of our Relative Price Score. However, with an Enterprise Value of ¥146 billion and a market cap of just ¥17.5 billion, lead banker <a href="https://www.smartkarma.com/entities/concordia-financial-group-ltd" target="_blank" data-smartkarma-citation="entities:22704:1" rel="noopener">Concordia (7186 JP)</a> should be seeking a new 'home' for this business. Honda's stake in Mitsuba is 3.65%, and Nissan's pension fund owns 3.82%.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/161/045/original/2020-09-24_05-40-52.png?1600893673" class="editor-image img-responsive" data-smartkarma-image-id="161045"></figure><hr><p style="text-align: center;"><strong>11 Annual • 5 Interim Forecasts/Revisions</strong></p><ul style="list-style-type: disc;">
<li><p><strong>Annual Forecast/Revision Score:</strong> 36% Positive / 0% Neutral / 64% Negative</p></li>
<li><p><strong>Interim Forecast/Revision Score Change:</strong> 60% Positive / 0% Neutral / 40% Negative</p></li>
<li><p><strong>Average Forecast/Revision Score Change</strong>: -3.6 points</p></li>
</ul><div class="content-caption"><p> </p></div>

• BEST &amp; WORST •Our 'best' and 'worst' pairing from yesterday's announcements is micro-cap home centre Encho (8208 JP) and utility Kansai Electric Power (9503 JP). Source for all charts &amp; tables: Japan AnalyticsDAILY STATSMitsuba (7280 JP)- The Honda supplier Mitsuba was the lone result announced yesterday which was predictably grim. The shares have yet to reach Oversold territory and are below 2008/9 levels in terms of our Relative Price Score. However, with an Enterprise Value of ¥146 billion and a market cap of just ¥17.5 billion, lead banker Concordia (7186 JP) should be seeking a new 'home' for this business. Honda's stake in Mitsuba is 3.65%, and Nissan's pension fund owns 3.82%.11 Annual • 5 Interim Forecasts/Revisions
Annual Forecast/Revision Score: 36% Positive / 0% Neutral / 64% Negative
Interim Forecast/Revision Score Change: 60% Positive / 0% Neutral / 40% Negative
Average Forecast/Revision Score Change: -3.6 points
 

🇯🇵 JAPAN • Results & Revisions 09/​​​​​​​​​​​23 - Grim Mitsuba, Even Encho, KEPCO Loses Steam

Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

ASA Capital Management

ASA Capital Management is a boutique Research and Investment Advisory firm focusing on primary research in India. ASA provides bespoke research services to Institutional Clients with a focus on due diligence backed with primary research, Field Trips & Channel Checks.

<div>
<p>This insight is a sequel to our monthly auto tracker insights. It covers the performance of the auto sector in India for the month of August, 2020. We look at four main aspects - the four wheeler vehicle segment, the two wheeler vehicle segment, vehicle registration data and alternative data search trends. We also now report OEM volumes covering <a href="https://www.smartkarma.com/entities/maruti-suzuki-india-ltd" target="_blank" data-smartkarma-citation="entities:733:1" rel="noopener">Maruti Suzuki India (MSIL IN)</a> , <a href="https://www.smartkarma.com/entities/tvs-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:16123:1" rel="noopener">TVS Motor (TVSL IN)</a> ,<a href="https://www.smartkarma.com/entities/eicher-motors-ltd" target="_blank" data-smartkarma-citation="entities:18316:1" rel="noopener">Eicher Motors (EIM IN)</a> and <a href="https://www.smartkarma.com/entities/hero-motocorp-ltd" target="_blank" data-smartkarma-citation="entities:2391:1" rel="noopener">Hero Motocorp (HMCL IN)</a> . </p>
</div>
<div>
<p>August data shows the slight turn in consumers' behaviour towards the segment. With government initiatives now focussed on rejuvenating public transport, consumers are now backing away from private vehicle purchases. There has been an incredible growth in the two-wheeler segment and we also see an optimistic return to normalcy in rural India.</p>
<div class="content-highlight">
<p>This is a Joint insight with <a href="https://www.smartkarma.com/profiles/nitin-mangal" target="_blank" data-smartkarma-citation="accounts:1988" rel="noopener">Nitin Mangal</a> </p>
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</div>


This insight is a sequel to our monthly auto tracker insights. It covers the performance of the auto sector in India for the month of August, 2020. We look at four main aspects - the four wheeler vehicle segment, the two wheeler vehicle segment, vehicle registration data and alternative data search trends. We also now report OEM volumes covering Maruti Suzuki India (MSIL IN) , TVS Motor (TVSL IN) ,Eicher Motors (EIM IN) and Hero Motocorp (HMCL IN) . 


August data shows the slight turn in consumers' behaviour towards the segment. With government initiatives now focussed on rejuvenating public transport, consumers are now backing away from private vehicle purchases. There has been an incredible growth in the two-wheeler segment and we also see an optimistic return to normalcy in rural India.

This is a Joint insight with Nitin Mangal 



India Autos | Auto Tracker for August - YoY Volume Recovery

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/157/299/original/2020-09-06_14-17-48.png?1599369500" class="editor-image img-responsive" data-smartkarma-image-id="157299"></figure>
<div class="content-caption">Source for all charts: Japan Analytics</div>
<p><strong>(It's a) </strong><a href="https://www.smartkarma.com/entities/tea-life-co-ltd" target="_blank" data-smartkarma-citation="entities:6199:1" rel="noopener"><strong>Tea Life  (3172 JP)</strong></a> - Micro-cap Tea Life combines two of the hottest market themes - online retailing and health food and has seen its shares rise 62% over the last month. Fourth-quarter operating margins fell year-on-year, and the initial forecasts for the current year are cautious. The market-implied growth rate of zero is too low; however, the company has yet to see any significant incremental returns for the debt-funded 160% increase in Net Operating Assets over the last four years. </p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/157/301/original/2020-09-06_14-22-10.png?1599369747" class="editor-image img-responsive" data-smartkarma-image-id="157301"></figure>
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<div>
<p style="text-align: center;"><strong>DAILY STATS</strong></p>
</div>
<hr>
<div>
<p><strong>PERCENTAGES </strong>-<strong> 65%</strong> of quarterly results,<strong> 71%</strong> of annual forecasts/revisions and<strong> 57%</strong> of interim forecasts have negative Scores. <strong>43%</strong> of companies reporting lost money for the quarter.</p>
</div>
<hr>
<div>
<p style="text-align: center;"><strong>23 Quarterly Results</strong></p>
</div>
<div>
<ul style="list-style-type: disc;">
<li>
<strong>Results Score:</strong> 30% Positive / 4% Neutral / 65% Negative</li>
<li>
<strong>Average Results Score Change:</strong> -2.7 points</li>
<li>
<strong>Average % Change in Revenue:</strong> -15.7% Quarter YoY / -6.8% Rolling TTM YoY </li>
<li>
<strong>Average Operating Profit Margin Change:</strong> -1.9 ppt <strong><em>(ex tella)</em></strong>
</li>
<li>
<strong>Percentage Making Quarterly Losse</strong>s: 43%</li>
</ul>
</div>
<hr>
<div>
<p style="text-align: center;"><strong>17 Annual • 7 Interim Forecasts/Revisions</strong></p>
</div>
<div>
<ul style="list-style-type: disc;">
<li>
<strong>Annual Forecast/Revision Score:</strong> 29% Positive / 0% Neutral / 71% Negative</li>
<li>
<strong>Interim Forecast/Revision Score Change:</strong> 43% Positive / 0% Neutral / 57% Negative</li>
<li>
<strong>Average Forecast/Revision Score Change: </strong>-6.3 points</li>
</ul>
</div>


Source for all charts: Japan Analytics
(It's a) Tea Life  (3172 JP) - Micro-cap Tea Life combines two of the hottest market themes - online retailing and health food and has seen its shares rise 62% over the last month. Fourth-quarter operating margins fell year-on-year, and the initial forecasts for the current year are cautious. The market-implied growth rate of zero is too low; however, the company has yet to see any significant incremental returns for the debt-funded 160% increase in Net Operating Assets over the last four years. 



DAILY STATS



PERCENTAGES - 65% of quarterly results, 71% of annual forecasts/revisions and 57% of interim forecasts have negative Scores. 43% of companies reporting lost money for the quarter.



23 Quarterly Results




Results Score: 30% Positive / 4% Neutral / 65% Negative

Average Results Score Change: -2.7 points

Average % Change in Revenue: -15.7% Quarter YoY / -6.8% Rolling TTM YoY 

Average Operating Profit Margin Change: -1.9 ppt (ex tella)


Percentage Making Quarterly Losses: 43%




17 Annual • 7 Interim Forecasts/Revisions




Annual Forecast/Revision Score: 29% Positive / 0% Neutral / 71% Negative

Interim Forecast/Revision Score Change: 43% Positive / 0% Neutral / 57% Negative

Average Forecast/Revision Score Change: -6.3 points



🇯🇵 JAPAN • Results & Revisions 09/​​04 - (It's A) Tea Life, Kanamoto(& Nagawa), HI-LEX, SoftServ

Japan

Honda Motor Co., Ltd. develops, manufactures, and distributes motorcycles, automobiles, and power products such as generators and farm machinery. The Company also operates a financial credit business. Honda Motor has manufacturing facilities in the US, Canada, the UK, France, Italy, Spain, Brazil, Mexico, India, and Thailand.

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Honda Motor (7267 JP)

🇯🇵 JAPAN • Results & Revisions 10/02 DCM (Under)Bids for Shimachu, Zuiko>Unicharm, Ktk>Canon

• BEST & WORST • The release of earnings announcements, forecasts and revisions was unaffected, and our best and worst pair is medical wear...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 09/23 - Grim Mitsuba, Even Encho, KEPCO Loses Steam

• BEST & WORST • Our 'best' and 'worst' pairing from yesterday's announcements is food and drink retailer Life (8194 JP) and parking lot...

Campbell Gunn

India Autos | Auto Tracker for August - YoY Volume Recovery

This insight is a sequel to our monthly auto tracker insights. It covers the performance of the auto sector in India for the month of August,...

Pranav Bhavsar

🇯🇵 JAPAN • Results & Revisions 09/04 - (It's A) Tea Life, Kanamoto(& Nagawa), HI-LEX, SoftServ

(It's a) Tea Life (3172 JP) - Micro-cap Tea Life combines two of the hottest market themes - online retailing and health food and has seen its...

Campbell Gunn

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Toyota – Hybrid Technology Transfer to GAC and China Going Hybrid Mean Share Gains for Toyota

China's shift to a more hybrid-friendly stance is a leading indicator of where global NEV efforts are likely to go. This is underappreciated by the...

Mio Kato

🇯🇵 JAPAN • Results & Revisions 10/​​​​​02 DCM (Under)Bids for Shimachu, Zuiko>Unicharm, Ktk>Canon

• BEST & WORST • The release of earnings announcements, forecasts and revisions was unaffected, and our best and worst pair is medical wear...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 09/​​​​​​​​​​​23 - Grim Mitsuba, Even Encho, KEPCO Loses Steam

• BEST & WORST • Our 'best' and 'worst' pairing from yesterday's announcements is food and drink retailer Life (8194 JP) and parking lot...

Campbell Gunn

India Autos | Auto Tracker for August - YoY Volume Recovery

This insight is a sequel to our monthly auto tracker insights. It covers the performance of the auto sector in India for the month of August,...

Pranav Bhavsar

🇯🇵 JAPAN • Results & Revisions 09/​​04 - (It's A) Tea Life, Kanamoto(& Nagawa), HI-LEX, SoftServ

(It's a) Tea Life (3172 JP) - Micro-cap Tea Life combines two of the hottest market themes - online retailing and health food and has seen its...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 10/02 DCM (Under)Bids for Shimachu, Zuiko>Unicharm, Ktk>Canon

🇯🇵 JAPAN • Results & Revisions 09/23 - Grim Mitsuba, Even Encho, KEPCO Loses Steam

🇯🇵 JAPAN • Results & Revisions 09/04 - (It's A) Tea Life, Kanamoto(& Nagawa), HI-LEX, SoftServ