Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

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

Strong demand for cleaning equipment and other semiconductor production equipment (SPE) from foundry and logic makers provided the main impetus for a 31% year-on-year increase in consolidated sales and a 3.7x increase in operating profit in the six months to September.Supported by  efficiency gains, the company beat 1H sales and profit guidance and raised guidance for 2H of FY Mar-22.New SPE orders were up 89% and the order backlog reached a record high. This points to further growth in sales and profits next fiscal year, bringing the projected P/E ratio down to 9.4x. We continue to recommend Screen as a lagging alternative to Tokyo Electron. 30% potential upside.

Strong demand for cleaning equipment and other semiconductor production equipment (SPE) from foundry and logic makers provided the main impetus for a 31% year-on-year increase in consolidated sales and a 3.7x increase in operating profit in the six months to September.Supported by  efficiency gains, the company beat 1H sales and profit guidance and raised guidance for 2H of FY Mar-22.New SPE orders were up 89% and the order backlog reached a record high. This points to further growth in sales and profits next fiscal year, bringing the projected P/E ratio down to 9.4x. We continue to recommend Screen as a lagging alternative to Tokyo Electron. 30% potential upside.

Screen Holdings (7735 JP): Beat 1H and Raised 2H Guidance

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

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.

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

Sales and profits hit record highs in the three months to June, but were inflated by a change in the timing of revenue recognition. On the other hand, strong underlying demand for semiconductor production equipment led to a large upward revision to FY Mar-22 guidance. Management is now forecasting a 32% increase in sales, a 58% increase in operating profit and a 52% increase in net profit in the year to next March. This is consistent with SEMI's forecast of 34% growth in semiconductor production equipment (SPE) sales in calendar 2021.The new, higher guidance for 1H of FY Mar-22 also implies lower profits in 2Q. This, according to management, is due to the fact that most of the one-off gains attributable to the accounting change were recorded in 1Q. Room for another upward revision to guidance appears to be limited.For 2022, SEMI is forecasting a 5% increase in SPE demand to exactly $100 billion. The round number indicates that some additional growth may be needed to overcome the worldwide shortage of semiconductors, but that supply and demand are likely to come back into balance sometime next year.Tokyo Electron's sales and profits are likely to peak at the same time, in our estimation, while support for share prices from central bank QE fades away. Reduce holdings.

Sales and profits hit record highs in the three months to June, but were inflated by a change in the timing of revenue recognition. On the other hand, strong underlying demand for semiconductor production equipment led to a large upward revision to FY Mar-22 guidance. Management is now forecasting a 32% increase in sales, a 58% increase in operating profit and a 52% increase in net profit in the year to next March. This is consistent with SEMI's forecast of 34% growth in semiconductor production equipment (SPE) sales in calendar 2021.The new, higher guidance for 1H of FY Mar-22 also implies lower profits in 2Q. This, according to management, is due to the fact that most of the one-off gains attributable to the accounting change were recorded in 1Q. Room for another upward revision to guidance appears to be limited.For 2022, SEMI is forecasting a 5% increase in SPE demand to exactly $100 billion. The round number indicates that some additional growth may be needed to overcome the worldwide shortage of semiconductors, but that supply and demand are likely to come back into balance sometime next year.Tokyo Electron's sales and profits are likely to peak at the same time, in our estimation, while support for share prices from central bank QE fades away. Reduce holdings.

Tokyo Electron (8035 JP): As Good as It Gets

Semiconductors, Memory and SSDs Specialist, Objective Analysis

Jim Handy

Semiconductors, Memory and SSDs Specialist

Objective Analysis

Objective Analysis offers third-party independent market research and data for the semiconductor industry and investors in the semiconductor industry.

Semiconductors, Memory and SSDs

Thematic (Sector/Industry)

The semiconductor market reached record revenues in June.  Much of this has been driven by a mild shortage in semiconductor memories, DRAM and NAND flash, but the larger shortage of older technologies has also had a hand in this.

The semiconductor market reached record revenues in June.  Much of this has been driven by a mild shortage in semiconductor memories, DRAM and NAND flash, but the larger shortage of older technologies has also had a hand in this.

June Semiconductor Revenues Reach New Record

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE: SOHO China, Invesco Office, Iress, WH Group, PCCW

Japan

Tokyo Electron Limited manufactures and sells industrial electronics products, such as semiconductor manufacturing machines, computer system, and electronic components.  The Company products are sold in US, Taiwan, and others as well as in Japan.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Tokyo Electron Ltd Unsp Adr (TOELY US)

Screen Holdings (7735 JP): Beat 1H and Raised 2H Guidance

Screen beat 1H guidance and raised 2H guidance. Record SPE orders driven by foundry, logic and other IC capex points to further growth in FY Mar...

Scott Foster

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

Japan (TOPIX, TOPIX Small) was a big focus for us last week, and it remains the focus in today's report; this could be the start of a broad-based...

Vermilion Research

Tokyo Electron (8035 JP): As Good as It Gets

Earnings momentum has peaked. Semiconductor equipment sales and profits should peak next year. Reduce holdings as the semiconductor shortage is...

Scott Foster

June Semiconductor Revenues Reach New Record

Semiconductor revenues are breaking historic records. Can this trend continue? Trend analysis indicates that it should end. We will be watching...

Jim Handy

Last Week in Event SPACE: SOHO China, Invesco Office, Iress, WH Group, PCCW

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)