Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>2Q Earnings Neutral; Mainly FX driven. The company sidestepped the worse of what we are seeing in broader printer market (See XEROX; Canon)</li>
<li>The outlook remains Negative. Macro conditions set to be worse in H2 vs H1. Core Home &amp; Office Printing Business key IJP unit sales struggling with severe margin pressures.</li>
<li>Ongoing share buyback mildly supportive but unlikely to be a game changer with falling earnings.  Target-based 0.8x PBR implying ¥1700 TP.  </li>
</ul>


2Q Earnings Neutral; Mainly FX driven. The company sidestepped the worse of what we are seeing in broader printer market (See XEROX; Canon)
The outlook remains Negative. Macro conditions set to be worse in H2 vs H1. Core Home &amp; Office Printing Business key IJP unit sales struggling with severe margin pressures.
Ongoing share buyback mildly supportive but unlikely to be a game changer with falling earnings.  Target-based 0.8x PBR implying ¥1700 TP.  


Seiko Epson(6724 JP)| Neutral 2Q Earnings; Negative Outlook – Remain Bearish

<ul>
<li>Seiko Epson has been one of the better performing tech stocks during 2022</li>
<li>We believe that the stock benefited from COVID-related stay-at-home demand for printers</li>
<li>We now turn Bearish as the Covid boost should dissipate, while the PC market has taken a turn for the worse</li>
</ul>


Seiko Epson has been one of the better performing tech stocks during 2022
We believe that the stock benefited from COVID-related stay-at-home demand for printers
We now turn Bearish as the Covid boost should dissipate, while the PC market has taken a turn for the worse


Seiko Epson (6724) | Home Printing Running Out of Ink

Thematic (Sector/Industry)

<ul>
<li>Yen weakness and stronger macro data propels Japanese stocks to two month high</li>
<li>Two themes to keep an eye on: Nuclear restarts and share buybacks</li>
<li>The IMF believes that Japan needs to embrace digitalisation to spur productivity and growth</li>
</ul>


Yen weakness and stronger macro data propels Japanese stocks to two month high
Two themes to keep an eye on: Nuclear restarts and share buybacks
The IMF believes that Japan needs to embrace digitalisation to spur productivity and growth


Japan Weekly: Nikkei Hits a Two Month High

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/seiko-epson-corp" target="_blank" data-smartkarma-citation="entities:16793:1" rel="noopener">Seiko Epson (6724 JP)</a> announces the first special div for the 2023 Nikkei 225 dividend futures.</li>
<li>And it also announces a VERY big buyback. The headlines say 9.5%. The reality is more like 4.0-4.4%, but that is still going to be 15-20% of Real World Float. </li>
<li>Given mildly positive backdrop, a net cash position, low multiples, and lack of major Real World Float active investor, this could go up.</li>
</ul>



Seiko Epson (6724 JP) announces the first special div for the 2023 Nikkei 225 dividend futures.
And it also announces a VERY big buyback. The headlines say 9.5%. The reality is more like 4.0-4.4%, but that is still going to be 15-20% of Real World Float. 
Given mildly positive backdrop, a net cash position, low multiples, and lack of major Real World Float active investor, this could go up.


Epson (6724) - A Big Buyback Amid Benign Backdrop

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<p>In last week's <em>Int'l Compass</em> (Sept. 2), we highlighted emerging markets (EEM-US, Shanghai Comp) and Japan (TOPIX, TOPIX Small) as areas of bullish interest, with short-term bullish inflections suggesting the tide was turning in favor of these markets. This remains the focus in today's report, and especially on Japan; bullish price inflections and breakouts have started to proliferate, which suggests this could be the start of a broad-based rally for Japan in the weeks and months ahead.</p>

In last week's Int'l Compass (Sept. 2), we highlighted emerging markets (EEM-US, Shanghai Comp) and Japan (TOPIX, TOPIX Small) as areas of bullish interest, with short-term bullish inflections suggesting the tide was turning in favor of these markets. This remains the focus in today's report, and especially on Japan; bullish price inflections and breakouts have started to proliferate, which suggests this could be the start of a broad-based rally for Japan in the weeks and months ahead.

Buy Japan On This Breakout ; TOPIX Breaking Out To 21-Year Highs; Actionable Theme: Growth Sectors

Japan

Seiko Epson Corporation manufactures communications equipment, electronic devices, and precision products.  The Company's products include printers, scanners, Liquid Crystal Projectors, semiconductors, quartz devices, and watches.

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Seiko Epson (6724 JP)