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

<ul>
<li>In keeping with its penchant for developing every type of technology imaginable, Toyota has been working on not just fuel cells but also hydrogen engines.</li>
<li>Now it is partnering with Mazda, Subaru, Yamaha and KHI to further expand on this concept and add synthetic carbon neutral fuels to the mix.</li>
<li>These efforts could potentially provide alternative zero carbon transition paths and are worth understanding.</li>
</ul>


In keeping with its penchant for developing every type of technology imaginable, Toyota has been working on not just fuel cells but also hydrogen engines.
Now it is partnering with Mazda, Subaru, Yamaha and KHI to further expand on this concept and add synthetic carbon neutral fuels to the mix.
These efforts could potentially provide alternative zero carbon transition paths and are worth understanding.


Toyota – Revving Up the Hydrogen Engine

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Capital Markets

<ul>
<li>The ¥500bn Offering of Honda shares is now priced (¥1,664.5/share) making it ¥497.46bn. Bookbuilding for retail - 80% of the book - is now. The price today closed at ¥1,665/share. </li>
<li>The Offering has follow-on "non-discretionary" demand which is non-negligible. It is worth understanding the amounts and timing.</li>
<li>The lockups and non-discretionary demand, along with Honda's relative cheapness as a large cap OEM and likely upcoming offerings on competitors means it has support.</li>
</ul>


The ¥500bn Offering of Honda shares is now priced (¥1,664.5/share) making it ¥497.46bn. Bookbuilding for retail - 80% of the book - is now. The price today closed at ¥1,665/share. 
The Offering has follow-on "non-discretionary" demand which is non-negligible. It is worth understanding the amounts and timing.
The lockups and non-discretionary demand, along with Honda's relative cheapness as a large cap OEM and likely upcoming offerings on competitors means it has support.


Big Honda (7267) Offering - Flow Timing Matters

<ul>
<li>At the beginning of this month, we got a scoop from Reuters about a US$3bn selldown of <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> by P&amp;C insurers and others. </li>
<li>We knew this was coming at some point. The FSA had pushed the insurers to unwind cross-holdings, and it is otherwise of the zeitgeist. </li>
<li>It came out as heavily retail-oriented, and the supply/demand details are otherwise interesting. To boot, there is an EPS boost to come.</li>
</ul>


At the beginning of this month, we got a scoop from Reuters about a US$3bn selldown of Honda Motor (7267 JP) by P&amp;C insurers and others. 
We knew this was coming at some point. The FSA had pushed the insurers to unwind cross-holdings, and it is otherwise of the zeitgeist. 
It came out as heavily retail-oriented, and the supply/demand details are otherwise interesting. To boot, there is an EPS boost to come.


The Honda (7267) Offering - Much Easier Than It Looks

<ul>
<li>Just pre-close on 2 July, Reuters carried an article suggesting a ¥500bn secondary offering in <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> as insurers sold. The stock fell 4% in minutes. </li>
<li>Honda semi-confirmed but it took two days to get to the details, now out. The stock climbed in the meantime. </li>
<li>At launch, this deal is two-thirds covered by buyback + passive demand but the supply is heavily-weighted to retail. Cheaper than it looks, lots of moving parts. Read the details!</li>
</ul>


Just pre-close on 2 July, Reuters carried an article suggesting a ¥500bn secondary offering in Honda Motor (7267 JP) as insurers sold. The stock fell 4% in minutes. 
Honda semi-confirmed but it took two days to get to the details, now out. The stock climbed in the meantime. 
At launch, this deal is two-thirds covered by buyback + passive demand but the supply is heavily-weighted to retail. Cheaper than it looks, lots of moving parts. Read the details!


Big ¥500bn Honda (7267) Offering Is Small

Event-Driven

<ul>
<li>Today just before the close, Reuters came out with an article saying Japan's four major insurers and some financial institutions would offer ¥500bn of shares in a secondary offering.</li>
<li>That implies about 275-280mm shares (insurers hold ~195mm). In May, Honda announced a ¥300bn buyback with earnings, with nothing done so far. </li>
<li>The supply/demand dynamics here are key. There are a lot of moving parts over time. Honda is cheaper than it looks but there are moving parts there too.</li>
</ul>


Today just before the close, Reuters came out with an article saying Japan's four major insurers and some financial institutions would offer ¥500bn of shares in a secondary offering.
That implies about 275-280mm shares (insurers hold ~195mm). In May, Honda announced a ¥300bn buyback with earnings, with nothing done so far. 
The supply/demand dynamics here are key. There are a lot of moving parts over time. Honda is cheaper than it looks but there are moving parts there too.


BIG ¥500bn Honda (7267) Offering Coming?

Japan

MITSUBISHI MOTORS CORPORATION develops and manufactures passenger cars and its related parts.  The Company has production facilities in Japan, the US, and Thailand.  Mitsubishi Motors Corp provides vehicle-related financing and leasing service through its subsidiary.

Yamaha Motor Co., Ltd. manufactures motorcycles.  The Company also produces motor vehicle engines for Toyota Motor Corp. and Ford Motor Co.  Yamaha Motor's specialty products include motor boats, snowmobiles, golf carts, and electric power generators.  Yamaha Motor sells products in Japan, North America, Europe, Asia, and South America.

Isuzu Motors Limited manufactures and markets trucks and automobile parts. The Company's products include pickup trucks, light/heavy duty trucks, medium and large-sized buses, recreational vehicles, and sport utility vehicles.

NISSAN SHATAI CO., LTD. develops, designs, and assembles automobiles including sedans, Recreational Vehicles(RV), station wagons, and buses for Nissan Motor. The Company also manufactures parts for motor vehicles.

NGK SPARK PLUG Co., Ltd. manufactures and markets spark plugs for automobiles, motorcycles, agricultural machinery, ships, and aircrafts.  The Company also makes ceramic products for semiconductor and telecommunication equipment. NGK Spark Plug markets its products under the NGK and NTK brand names and has subsidiaries in the US, Canada, France, Germany, and South Korea.

KOITO MANUFACTURING CO., LTD. produces lighting equipments for automobiles such as head and tail lights, rear combination lamps, and fog lamps.  The Company has  its production facilities in Japan, the US, the UK, Czech, China, Thailand, Taiwan, and India.  Koito Manufacturing also manufactures electronics parts for aircrafts including lighting equipments and oil pressure gauges.

Stanley Electric Co., Ltd. manufactures lighting equipment including head lights, HID (High Intensity Discharge) assist lamps, and rear combination lamps for automobiles.  The Company also produces LCD (Liquid Cristal Display) and LED (Light Emitted Diode) lamps for communication equipment, office automation equipment, and information displays.

NIFCO INC. manufactures synthetic resinous fasteners and plastic components for automobiles and home electronic appliances.  The Company has its subsidiaries in Korea, Hong Kong, Australia, Malaysia, Singapore, and the US.

NOK CORPORATION manufactures oil seals and industrial rubber products for automobiles.  The Company also produces electronic equipment used for cellular phones and PCs.  NOK has production facilities in Taiwan and Thailand.

The Yokohama Rubber Company Limited produces rubber products including automobile tires, tubes, and conveyor belt for industrial use.  The Company also produces golf clubs and passenger aircraft parts such as restroom units and tanks for drinking water.

Harley-Davidson, Inc. designs, manufactures, and sells motorcycles.  The Company's products include heavyweight touring, custom, and performance motorcycles, as well as a line of motorcycle parts, accessories, and general merchandise.  Harley-Davidson also provides motorcycle floor planning and parts and accessories financing to its North American and European dealers.

FAW Jiefang Group Co., Ltd, through joint ventures, manufactures and markets cars and auto parts.  The Company produces automobiles, transmission systems, and engines.  FAW Car also provides auto repair and customizing services.

BAIC BluePark New Energy Technology Co.,Ltd. operates as a passenger car manufacturer. The Company engages in research, development, and marketing of new energy vehicles and power battery system. BAIC BluePark New Energy Technology conducts businesses in China.

BAIC BluePark New Energy Techn (600733 CH)

Guangzhou Automobile Group Company, Ltd. manufactures, sells, and services automobiles. The Company is also involved in automobile parts and components, and auto finance and related services for both overseas and domestic markets.

Chongqing Changan Automobile Company Limited develops, manufactures, and markets mini cars, mini sedans, full size sedans, and engines.

Chongqing Changan Automobile Company (200625 CH)

Thor Industries, Inc. produces and sells a wide range of recreation vehicles.  The Company markets its products through independent dealers located throughout the United States and Canada.  Thor's products are sold under the Airstream Classic, Dutchmen, Skamper, Infinity, Four Winds, Citation, Signature, and other names.

Anhui Jianghuai Automobile Co., Ltd. manufactures and markets bus and truck chassis, gear boxes, other auto parts, and business automobiles.

Yadea Group is a leading electric two wheeler brand in China. The company produces electric bikes and scooters.

Tofas Turk Otomobil Fabrikasi AS manufactures cars and automobile parts under license from Fiat.  The Group also imports Alfa Romeo and Fiat cars for domestic market and provides financing services.

BAIC Motor Corporation Limited designs, researches, develops, manufactures and sells a variety of passenger vehicles in China.

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)

Toyota – Revving Up the Hydrogen Engine

Toyota has been working on not just fuel cells but also hydrogen engines and is now partnering with Mazda, Subaru, Yamaha and KHI to potentially...

Mio Kato

Big Honda (7267) Offering - Flow Timing Matters

The Honda Offering is BIG at ¥500bn but over time, the net overhang is substantially reduced by behavioural expectations, passive buying, a...

Travis Lundy

The Honda (7267) Offering - Much Easier Than It Looks

Honda's mega-offering is not mega. It is two-thirds covered by non-active investor demand over the next two months. 80+% if the stock falls post...

Travis Lundy

Big ¥500bn Honda (7267) Offering Is Small

The big ¥500bn Honda offering is announced. Details and context the buyback and passive demand cover two-thirds of the offering but this is going...

Travis Lundy

BIG ¥500bn Honda (7267) Offering Coming?

A Reuters article today suggested Japanese non-life insurers and other financial holders would combine to launch a ¥500bn secondary offering on...

Travis Lundy

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