Japanese Turnaround Situations, Short-Ideas, Azabu Research

Michael Allen

Japanese Turnaround Situations, Short-Ideas

Azabu Research

Azabu Research is a publishing and consulting firm focused on distressed equities in the Japanese market. We specialize in turnaround strategies, corporate combinations, divestitures, and restructuring.

Publisher of the Tokyo Turnaround Letter, which conducts the most thorough research possible of publicly available information, including forensic tests for fraudulent overstatement of assets and understatement of liabilities, as well as rigorous market and industry analysis to assess the underlying strengths of the company’s products or services, the appropriateness of the company’s turnaround strategy, and the skill of its current management team. The average length of a report exceeds 25 pages of text and tables, excluding any disclosures or executive summaries.

We have more than 30 years of experience in applying this process to distressed equities in Japan. Additionally, subscribers have free access to detailed, yet easily navigated earnings models for the target company as well as the top five comparable companies, and unlimited access to the analyst for follow-up questions.

Azabu Research also conducts be-spoke research on a project basis, and provides consulting services to companies looking to restructure, divest, make acquisitions, go public, or improve investor sentiment toward their stock.

Independent Research and Consulting Firm

Equity Bottom-Up

<ul>
<li>2025 will start with more attractive turnaround opportunities than we have seen in a long time. </li>
<li>An uptick in TOBs, MBOs and merger discussions makes it suddenly no longer safe to short low-PBR companies indiscriminately.</li>
<li>Investors are noticing. More than two-dozen large- and medium-cap stocks with deep discounts to the benchmark began to bounce off well-defined support levels in late December.</li>
</ul>


2025 will start with more attractive turnaround opportunities than we have seen in a long time. 
An uptick in TOBs, MBOs and merger discussions makes it suddenly no longer safe to short low-PBR companies indiscriminately.
Investors are noticing. More than two-dozen large- and medium-cap stocks with deep discounts to the benchmark began to bounce off well-defined support levels in late December.


Unloved Japan Round Up Jan. 3: Set Up for A Banner Year?

<ul>
<li>Below is a sample of the unloved Japanese stocks we focus on at Azabu Research, with key valuation metrics and latest news.</li>
<li>The average PBR in this week’s list is 0.5x and the average P/E is 5.9x.</li>
<li>Most of the stocks in this week’s round up are related to either the auto supply chain or the electric power grid.</li>
</ul>


Below is a sample of the unloved Japanese stocks we focus on at Azabu Research, with key valuation metrics and latest news.
The average PBR in this week’s list is 0.5x and the average P/E is 5.9x.
Most of the stocks in this week’s round up are related to either the auto supply chain or the electric power grid.


<ul>
<li>Mazda’s domestic unit volume was up 24% in September, compared to an industrywide total of only 1.1%.</li>
<li>Meanwhile, Q2 consensus EBIT estimates have come down by 32% since the release of Q1 results.</li>
<li>But the yield is over 6%, and the Payout ratio is only 17% even on the new estimates.</li>
</ul>


Mazda’s domestic unit volume was up 24% in September, compared to an industrywide total of only 1.1%.
Meanwhile, Q2 consensus EBIT estimates have come down by 32% since the release of Q1 results.
But the yield is over 6%, and the Payout ratio is only 17% even on the new estimates.


Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>Up to 9 stocks could be deleted from global passive portfolios in November. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.</li>
<li>There has been a buildup of shorts on nearly all these stocks though the extent of the pre-positioning varies.</li>
<li>The increase in shorts is smaller than the estimated passive selling, though there is a fair amount of variability across the names.</li>
</ul>


Up to 9 stocks could be deleted from global passive portfolios in November. The deletion will lead to liquidity events where trackers will need to sell multiple days of ADV.
There has been a buildup of shorts on nearly all these stocks though the extent of the pre-positioning varies.
The increase in shorts is smaller than the estimated passive selling, though there is a fair amount of variability across the names.


Japan: Potential Passive Selling in November

Derivatives and Quantitative Strategist

Gaudenz Schneider

Equity Derivatives

<ul>
<li>The global auto industry faces significant tariff exposure. Option implied volatility offers a forward-looking assessment of risk.</li>
<li>Chinese car makers started to increase in implied volatility more than the other markets at the beginning of February. They now show the highest risk.</li>
<li>Recent implied volatility trends, asymmetric pricing (skew), and the term structure all seem to indicate that the Indian auto sector is the least exposed to international trade relations.</li>
</ul>


The global auto industry faces significant tariff exposure. Option implied volatility offers a forward-looking assessment of risk.
Chinese car makers started to increase in implied volatility more than the other markets at the beginning of February. They now show the highest risk.
Recent implied volatility trends, asymmetric pricing (skew), and the term structure all seem to indicate that the Indian auto sector is the least exposed to international trade relations.


EQD | Volatile Roads: Unveiling Risk in the Asian Auto Industry Through the Options Market

Japan

Mazda Motor Corporation manufactures and sells automobiles, trucks, auto parts, and its accessories.  The Company operates its business worldwide.

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Mazda Motor (7261 JP)

Unloved Japan Round Up Jan. 3: Set Up for A Banner Year?

An uptick in TOBs, MBOs, and mergers creating the best environment for deep value turnarounds in a long time. Dozens of discounted stocks started...

Michael Allen

Unloved Japan Round-Up

Some Autos, Steel, and Electric Power companies in Japan now offering yields that compete with U.S. Treasuries. The end of the hurricane season...

Michael Allen

Unloved Japan Roundup: Bracing for Q3

Mazda’s domestic volume up 24% in September, compared to industrywide average of 1.1%. Q2 estimates down by 32% in 3 months, but yield over 6%,...

Michael Allen

Japan: Potential Passive Selling in November

There are a bunch of stocks in Japan that could be sold by passive global investors in November. Shorts have increased on nearly all stocks and the...

Brian Freitas

EQD | Volatile Roads: Unveiling Risk in the Asian Auto Industry Through the Options Market

Global auto industry faces tariff risk. The option market assigns the highest risk to Chinese car makers. The Indian auto sector appears least...

Gaudenz Schneider

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Unloved Japan Round Up Jan. 3: Set Up for A Banner Year?

An uptick in TOBs, MBOs, and mergers​ creating the best environment for deep value turnarounds in a long time. Dozens of discounted stocks started...

Michael Allen

Unloved Japan Round-Up

Some Autos, Steel, and Electric Power companies in Japan now offering yields that compete with U.S. Treasuries. The end of the hurricane season...

Michael Allen

Unloved Japan Roundup: Bracing for Q3

Mazda’s domestic volume up 24% in September, compared to industrywide average of 1.1%. Q2 estimates down by 32% in 3 months, but yield over 6%,...

Michael Allen

Japan: Potential Passive Selling in November

There are a bunch of stocks in Japan that could be sold by passive global investors in November. Shorts have increased on nearly all stocks and the...

Brian Freitas

EQD | Volatile Roads: Unveiling Risk in the Asian Auto Industry Through the Options Market

​Global auto industry faces tariff risk. The option market assigns the highest risk to Chinese car makers. The Indian auto sector appears least...

Gaudenz Schneider

An uptick in TOBs, MBOs, and mergers creating the best environment for deep value turnarounds in a long time. Dozens of discounted stocks started...

Global auto industry faces tariff risk. The option market assigns the highest risk to Chinese car makers. The Indian auto sector appears least...