Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

The S&amp;P DJI Global Indices team <a href="https://www.spglobal.com/spdji/en/documents/indexnews/announcements/20201211-1277389/1277389_tes15aircaivspindnkn4.pdf?force_download=true" target="_blank" rel="noopener">confirmed</a> Friday night that <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a> would join the S&amp;P500 and the S&amp;P100 at the close of trading on 18 December, with <a href="https://www.smartkarma.com/entities/apartment-invt-mgmt-co-a" target="_blank" data-smartkarma-citation="entities:2193:1" rel="noopener">Apartment Invt &amp; Mgmt Co A (AIV US)</a> coming out of S&amp;P500 and its 14 December spin-out Apartment Income REIT replacing <a href="https://www.smartkarma.com/entities/dunkin-brands-group-inc" target="_blank" data-smartkarma-citation="entities:15866:1" rel="noopener">Dunkin' Brands Group (DNKN US)</a> in the S&amp;P Midcap 400, and <a href="https://www.smartkarma.com/entities/occidental-petroleum-corp" target="_blank" data-smartkarma-citation="entities:17075:1" rel="noopener">Occidental Petroleum (OXY US)</a> coming out of the S&amp;P100 but staying in the S&amp;P500. When the S&amp;P announced on the 16th of November that Tesla would be joining the S&amp;P500 in December, it said the pro-forma inclusion weight would be ~1.01% (without measuring what would come out). S&amp;P also said that it would update the pro-forma inclusion weight and trading value impact when the Deletion was announced, but they did not. My calc suggests it is 1.47% as of Friday's close. And the two-way trading value based on the S&amp;P's original US$51bn number is, as of today, ~US$152bn.Which is a lot.The arithmetic, and an explanation of why it matters, follow.

The S&amp;P DJI Global Indices team confirmed Friday night that Tesla Motors (TSLA US) would join the S&amp;P500 and the S&amp;P100 at the close of trading on 18 December, with Apartment Invt &amp; Mgmt Co A (AIV US) coming out of S&amp;P500 and its 14 December spin-out Apartment Income REIT replacing Dunkin' Brands Group (DNKN US) in the S&amp;P Midcap 400, and Occidental Petroleum (OXY US) coming out of the S&amp;P100 but staying in the S&amp;P500. When the S&amp;P announced on the 16th of November that Tesla would be joining the S&amp;P500 in December, it said the pro-forma inclusion weight would be ~1.01% (without measuring what would come out). S&amp;P also said that it would update the pro-forma inclusion weight and trading value impact when the Deletion was announced, but they did not. My calc suggests it is 1.47% as of Friday's close. And the two-way trading value based on the S&amp;P's original US$51bn number is, as of today, ~US$152bn.Which is a lot.The arithmetic, and an explanation of why it matters, follow.

Tesla Into S&P - Rebal Details, and Implications for Vol and Active Portfolio Reconstruction

Equity Analyst, LightStream Research

Aqila Ali

Equity Analyst

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

<a href="https://www.smartkarma.com/entities/mazda-motor-corp" target="_blank" data-smartkarma-citation="entities:20528:1" rel="noopener">Mazda Motor (7261 JP)</a> is cheap. This is perhaps not surprising given the company’s deteriorating margins in the past, but as we have argued, investments were necessary to improve the company’s long-term prospects. Despite the headwinds from the pandemic, green shoots from this strategy are appearing and we believe the depressed valuations offer multi-bagger potential.

Mazda Motor (7261 JP) is cheap. This is perhaps not surprising given the company’s deteriorating margins in the past, but as we have argued, investments were necessary to improve the company’s long-term prospects. Despite the headwinds from the pandemic, green shoots from this strategy are appearing and we believe the depressed valuations offer multi-bagger potential.

2021 High Conviction - Mazda Accelerating Out of COVID Corner

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Mazda reported 2Q results that were slightly better than expected as revenue of ¥739bn (consensus ¥725bn) and OP of -¥7.6bn (consensus -¥8.4bn) both beat slightly. The results were on the less impressive end of overall auto sector results, but volume trends are improving and details on the company’s forward strategy were encouraging.

Mazda reported 2Q results that were slightly better than expected as revenue of ¥739bn (consensus ¥725bn) and OP of -¥7.6bn (consensus -¥8.4bn) both beat slightly. The results were on the less impressive end of overall auto sector results, but volume trends are improving and details on the company’s forward strategy were encouraging.

Subaru posted strong 2Q results before lunch today and raised guidance above consensus at the revenue line and to the same level as consensus at the OP line. Nevertheless, we believe the OP projection is conservative and consensus is, as usual, late in picking up on how strong the recovery in earnings for the auto sector is likely to be.

Subaru posted strong 2Q results before lunch today and raised guidance above consensus at the revenue line and to the same level as consensus at the OP line. Nevertheless, we believe the OP projection is conservative and consensus is, as usual, late in picking up on how strong the recovery in earnings for the auto sector is likely to be.

Subaru – Pointing the Way for Auto Sector Recovery

On October 8th Mazda launched its new MX-30 crossover in Japan. The vehicle was not especially remarkable, being a gasoline mild-hybrid derived from the CX-3/CX-30 platform but will be followed by a full EV version and more interestingly an electric version with a rotary/Wankel engine used as a range extender. This could have some implications for the PHEV costs relative to BEVs.

On October 8th Mazda launched its new MX-30 crossover in Japan. The vehicle was not especially remarkable, being a gasoline mild-hybrid derived from the CX-3/CX-30 platform but will be followed by a full EV version and more interestingly an electric version with a rotary/Wankel engine used as a range extender. This could have some implications for the PHEV costs relative to BEVs.

Mazda – The Return of the Wankel Engine and Its Significance for the EV Transition

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)

Tesla Into S&P - Rebal Details, and Implications for Vol and Active Portfolio Reconstruction

The TSLA S&P500 inclusion involves $150bn of direct flows and perhaps another $200-300bn indirect flows. It really is a MAMMOTH trade. And index...

Travis Lundy

2021 High Conviction - Mazda Accelerating Out of COVID Corner

Our 2021 High Conviction Idea: Mazda is cheap. Despite the headwinds from the pandemic, we believe the depressed valuations offer multi-bagger...

Aqila Ali

Mazda – Closer and Closer to Toyota

We believe Mazda has the potential to emulate Subaru's 2012-2015 performance by executing on its strategy to raise brand value and localise...

Mio Kato

Subaru – Pointing the Way for Auto Sector Recovery

We expect a strong 2H recovery in earnings for the auto sector and Subaru, as an early reporter, appears to be confirming this view.

Mio Kato

Mazda – The Return of the Wankel Engine and Its Significance for the EV Transition

Mazda as the only automaker not to give up on the Wankel engine may have a unique advantage to offer when transitioning to PHEVs and beyond.

Mio Kato

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