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.

Event-Driven

<a href="https://www.smartkarma.com/entities/961" target="_blank" data-smartkarma-citation="entities:961:1">Nippon Steel &amp; Sumitomo Metal Corp (5401 JP)</a> announced yesterday that it would be acquiring Swedish engineering specialty steel maker Ovako (for "several tens of billions of yen" according to the Nikkei) by Sep 2018. In addition the NSSMC intends to raise its stake in Japanese bearing specialty steel maker <a href="https://www.smartkarma.com/entities/15900" target="_blank" data-smartkarma-citation="entities:15900:1">Sanyo Special Steel Co Ltd (5481 JP)</a> to 51% (from 15%) by Mar 2019.This is a positive move for Nippon Steel and the Japanese Steel industry in general. Ovako has strong technologies in…

Nippon Steel &amp; Sumitomo Metal Corp (5401 JP) announced yesterday that it would be acquiring Swedish engineering specialty steel maker Ovako (for "several tens of billions of yen" according to the Nikkei) by Sep 2018. In addition the NSSMC intends to raise its stake in Japanese bearing specialty steel maker Sanyo Special Steel Co Ltd (5481 JP) to 51% (from 15%) by Mar 2019.This is a positive move for Nippon Steel and the Japanese Steel industry in general. Ovako has strong technologies in…

Nippon Steel to Raise Stake in Sanyo Specialty to 51+% - Japan Steel Consolidation Kicking Off?

Independent Asian Credit Research, Bondcritic

Warut Promboon

Independent Asian Credit Research

Asian Fixed Income/Frontier Market Research

Bondcritic

Bondcritic, established in 2009, is designed to be an independent credit research voice that helps investors gain insights and unbiased analyses on Asian fixed income market. Our mission is to discover deep-value Asian high-yield and distressed bonds with a bottom-up approach, together with the help of our proprietary ESG (Environmental, Social Development, and Governance) model. At the same time, we focus on bringing investment cases of unrated and unloved issuers to the general public.

Credit

<div class="content-highlight"><h2>Executive summary</h2></div>Moody’s upgraded the senior unsecured bond rating of JSW Steel Limited (JSW) to Ba2 from Ba3 on 6-March. The outlook remains stable.Key rationales of Moody’s upgrade are:<ul>
<li>EBITDA margin not expected to decline (despite raw material prices increase) on rising sales.</li>
<li>Leverage to improve to below 3.0x over the next 12-18 months from Moody’s estimate of 3.3x at 31 March 2018. Such levels are lower than Moody’s threshold for Ba2.</li>
<li>Favorable domestic steel demand supported by government…</li>
</ul>

Executive summaryMoody’s upgraded the senior unsecured bond rating of JSW Steel Limited (JSW) to Ba2 from Ba3 on 6-March. The outlook remains stable.Key rationales of Moody’s upgrade are:
EBITDA margin not expected to decline (despite raw material prices increase) on rising sales.
Leverage to improve to below 3.0x over the next 12-18 months from Moody’s estimate of 3.3x at 31 March 2018. Such levels are lower than Moody’s threshold for Ba2.
Favorable domestic steel demand supported by government…


JSW Steel: Moody's Premature Rating Upgrade

Equity Bottom-Up

Steel stocks across Asia are down:<ul>
<li>Nippon Steel -4.2%</li>
<li>JFE -3.3%</li>
<li>Kobe Steel -3.3%</li>
<li>Nisshin Steel -2.7%</li>
<li>Posco -4.4%</li>
<li>Hyundai Steel -3.0%</li>
<li>China  Steel -1.6%</li>
<li>Baoshan -3.0%</li>
</ul>Except for a couple with US production facilities:<ul>
<li>Yamato Kogyo +2.9%</li>
<li>Bluescope +1.1%</li>
</ul>While Trump's announcement of significant taxes on steel (25%) and aluminium (10%) are a clear negative for exporters, more so from a deteriorating trade/supply demand environment than direct impact, we feel that 15-20% drops from the highs for these stocks is…

Steel stocks across Asia are down:
Nippon Steel -4.2%
JFE -3.3%
Kobe Steel -3.3%
Nisshin Steel -2.7%
Posco -4.4%
Hyundai Steel -3.0%
China  Steel -1.6%
Baoshan -3.0%
Except for a couple with US production facilities:
Yamato Kogyo +2.9%
Bluescope +1.1%
While Trump's announcement of significant taxes on steel (25%) and aluminium (10%) are a clear negative for exporters, more so from a deteriorating trade/supply demand environment than direct impact, we feel that 15-20% drops from the highs for these stocks is…

We initiate our coverage on <a href="https://www.smartkarma.com/entities/18561" target="_blank" data-smartkarma-citation="entities:18561:1">JSW Steel Ltd (JSTL IN)</a> (JSW) with a NEUTRAL recommendation on all JSTLIN complex as we believe the complex is fully-valued against its domestic peers (See Valuation). We see better value in the VEDLN complex ( <a href="https://www.smartkarma.com/entities/22202" target="_blank" data-smartkarma-citation="entities:22202:1">Vedanta Resources PLC (VED LN)</a> ) but also do not recommend selling the JSTLIN complex as we believe its long-term credit outlook is positive on rising EBITDA which could lead to an eventual rating upgrade. Our credit view of JSW is stable, reflecting the company’s rising and recurring EBITDA on rising steel demand in India and JSW’s leading market position. These positives are mitigated by management’s appetite for acquisitions, part if not all of which could be financed by debt.

We initiate our coverage on JSW Steel Ltd (JSTL IN) (JSW) with a NEUTRAL recommendation on all JSTLIN complex as we believe the complex is fully-valued against its domestic peers (See Valuation). We see better value in the VEDLN complex ( Vedanta Resources PLC (VED LN) ) but also do not recommend selling the JSTLIN complex as we believe its long-term credit outlook is positive on rising EBITDA which could lead to an eventual rating upgrade. Our credit view of JSW is stable, reflecting the company’s rising and recurring EBITDA on rising steel demand in India and JSW’s leading market position. These positives are mitigated by management’s appetite for acquisitions, part if not all of which could be financed by debt.

JSW Steel: A Race of EBITDA Against Debt

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

MSCI Emerging Markets Index / Technical Analysis

Highlighted themes and actionable charts: Reiterating BRIC overweight. This country grouping continues to outperform broad EM, and we believe BRIC will be a primary source of outperformance relative to the MSCI EM Index moving forward.  Today’s report includes a wide variety of bottom-up recommendations, spanning most sectors and all market capitalizations within EM.

Highlighted themes and actionable charts: Reiterating BRIC overweight. This country grouping continues to outperform broad EM, and we believe BRIC will be a primary source of outperformance relative to the MSCI EM Index moving forward.  Today’s report includes a wide variety of bottom-up recommendations, spanning most sectors and all market capitalizations within EM.

EM Equity Strategy: Indonesia Perking Up; Overweight BRIC, Tech, and Health Care

India

JSW Steel Limited is an integrated steel producer with manufacturing facilities in Karnataka, Tamil Nadu and the western state of Maharashtra. The Company produces products including hot rolled coils, cold rolled coils, wire rods, galvanized coils and sheets.

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JSW Steel Ltd (JSTL IN)

Nippon Steel to Raise Stake in Sanyo Specialty to 51+% - Japan Steel Consolidation Kicking Off?

Nippon Steel & Sumitomo Metal Corp (5401 JP) announced yesterday that it would be acquiring Swedish engineering specialty steel maker Ovako...

Mio Kato

JSW Steel: Moody's Premature Rating Upgrade

Executive summaryMoody’s upgraded the senior unsecured bond rating of JSW Steel Limited (JSW) to Ba2 from Ba3 on 6-March. The outlook remains...

Bondcritic

JFE: We Would Fade the Trump Tariff

Steel stocks across Asia are down: Nippon Steel -4.2% JFE -3.3% Kobe Steel -3.3% Nisshin Steel -2.7% Posco -4.4% Hyundai Steel -3.0% China Steel...

Mio Kato

JSW Steel: A Race of EBITDA Against Debt

We initiate our coverage on JSW Steel Ltd (JSTL IN) (JSW) with a NEUTRAL recommendation on all JSTLIN complex as we believe the complex is...

Bondcritic

EM Equity Strategy: Indonesia Perking Up; Overweight BRIC, Tech, and Health Care

Highlighted themes and actionable charts: Reiterating BRIC overweight. This country grouping continues to outperform broad EM, and we believe BRIC...

Vermilion Research

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