'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

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.

Thematic (Sector/Industry)

<p style="text-align: center;"><strong>• RESULTS &amp; REVISIONS SUMMARY - 3rd FEBRUARY •</strong></p><div><p>Of Wednesday's 100 results announcements, 78% scored positively for earnings momentum despite trailing revenues falling by 5.7% on average and a 2.1 percentage point decline in operating margins. Only 8% of companies were in the red for the quarter.  64% of the 53 annual forecasts/revision announcements scored positively, and the average Forecast/Revision score was +1.2 points.</p></div><div>
<p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p>
<p style="text-align: left;">Wednesday's 'best' large-cap announcements came from <a href="https://www.smartkarma.com/entities/hirose-electric-co-ltd" target="_blank" data-smartkarma-citation="entities:13513:1" rel="noopener">Hirose Electric (6806 JP)</a>, <a href="https://www.smartkarma.com/entities/brother-industries-ltd" target="_blank" data-smartkarma-citation="entities:6114:1" rel="noopener">Brother Industries (6448 JP)</a>, and <a href="https://www.smartkarma.com/entities/sony-corp" target="_blank" data-smartkarma-citation="entities:563:1" rel="noopener">Sony (6758 JP)</a>. The 'worst' were from <a href="https://www.smartkarma.com/entities/eisai-co-ltd" target="_blank" data-smartkarma-citation="entities:21001:1" rel="noopener">Eisai (4523 JP)</a>, <a href="https://www.smartkarma.com/entities/square-enix-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15003:1" rel="noopener">Square Enix (9684 JP)</a>, and <a href="https://www.smartkarma.com/entities/z-holdings-corp" target="_blank" data-smartkarma-citation="entities:19603:1" rel="noopener">Z Holdings (4689 JP)</a>.  We would also note the relatively modest improvement in the trading companies.</p>
</div><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/604/original/2021-02-04_04-53-07.png?1612382019" class="editor-image img-responsive" data-smartkarma-image-id="186604"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/605/original/2021-02-04_04-54-02.png?1612382054" class="editor-image img-responsive" data-smartkarma-image-id="186605"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/606/original/2021-02-04_04-54-35.png?1612382089" class="editor-image img-responsive" data-smartkarma-image-id="186606"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/607/original/2021-02-04_04-55-18.png?1612382134" class="editor-image img-responsive" data-smartkarma-image-id="186607"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/608/original/2021-02-04_04-56-09.png?1612382183" class="editor-image img-responsive" data-smartkarma-image-id="186608"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/609/original/2021-02-04_04-56-48.png?1612382221" class="editor-image img-responsive" data-smartkarma-image-id="186609"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/610/original/2021-02-04_04-57-14.png?1612382245" class="editor-image img-responsive" data-smartkarma-image-id="186610"></figure></section><div style="text-align: center;" class="content-caption">     Source for all charts &amp; tables: Japan Analytics</div>

• RESULTS &amp; REVISIONS SUMMARY - 3rd FEBRUARY •Of Wednesday's 100 results announcements, 78% scored positively for earnings momentum despite trailing revenues falling by 5.7% on average and a 2.1 percentage point decline in operating margins. Only 8% of companies were in the red for the quarter.  64% of the 53 annual forecasts/revision announcements scored positively, and the average Forecast/Revision score was +1.2 points.
• BEST &amp; WORST •
Wednesday's 'best' large-cap announcements came from Hirose Electric (6806 JP), Brother Industries (6448 JP), and Sony (6758 JP). The 'worst' were from Eisai (4523 JP), Square Enix (9684 JP), and Z Holdings (4689 JP).  We would also note the relatively modest improvement in the trading companies.
     Source for all charts &amp; tables: Japan Analytics

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​02/​​​​​​​​​​​​​​​03 Hirose, Eisai..

<div><p style="text-align: center;"><strong>• RESULTS &amp; REVISIONS SUMMARY - 1st FEBRUARY •</strong></p></div><div><p>Of Monday's 76 results announcements, 79% scored positively for earnings momentum despite trailing revenues falling by 5.2% on average and a 2.6 percentage point decline in operating margins. 11% of companies were in the red for the quarter.  65% of the 48 annual forecasts/revision announcements scored positively and the average Forecast/Revision score was +2.6 points.</p></div><p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p><p style="text-align: left;">Monday's best and worst large-cap pairing is <a href="https://www.smartkarma.com/entities/rohm-co-ltd" target="_blank" data-smartkarma-citation="entities:2953:1" rel="noopener">ROHM (6963 JP)</a> and <a href="https://www.smartkarma.com/entities/shionogi-co-ltd" target="_blank" data-smartkarma-citation="entities:19535:1" rel="noopener">Shionogi (4507 JP)</a>. We would also note the declining momentum at <a href="https://www.smartkarma.com/entities/lasertec-corp" target="_blank" data-smartkarma-citation="entities:4126:1" rel="noopener">Lasertec (6920 JP)</a> and <a href="https://www.smartkarma.com/entities/nintendo-co-ltd" target="_blank" data-smartkarma-citation="entities:5415:1" rel="noopener">Nintendo (7974 JP)</a>.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/154/original/2021-02-02_05-32-51.png?1612211584" class="editor-image img-responsive" data-smartkarma-image-id="186154"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/155/original/2021-02-02_05-33-53.png?1612211646" class="editor-image img-responsive" data-smartkarma-image-id="186155"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/156/original/2021-02-02_05-34-39.png?1612211691" class="editor-image img-responsive" data-smartkarma-image-id="186156"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/157/original/2021-02-02_05-35-09.png?1612211734" class="editor-image img-responsive" data-smartkarma-image-id="186157"></figure></section><div class="content-caption">    Source for all charts &amp; tables: Japan Analytics</div>

• RESULTS &amp; REVISIONS SUMMARY - 1st FEBRUARY •Of Monday's 76 results announcements, 79% scored positively for earnings momentum despite trailing revenues falling by 5.2% on average and a 2.6 percentage point decline in operating margins. 11% of companies were in the red for the quarter.  65% of the 48 annual forecasts/revision announcements scored positively and the average Forecast/Revision score was +2.6 points.• BEST &amp; WORST •Monday's best and worst large-cap pairing is ROHM (6963 JP) and Shionogi (4507 JP). We would also note the declining momentum at Lasertec (6920 JP) and Nintendo (7974 JP).    Source for all charts &amp; tables: Japan Analytics

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​02/​​​​​​​​​​​​​01 - Rohm, Shionogi..

<p style="text-align: center;"><strong>• MARKET UPDATE •</strong></p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/185/821/original/2021-01-28_05-31-21.png?1612123987" class="editor-image img-responsive" data-smartkarma-image-id="185821"></figure></section><p><strong>PEAKY</strong> - Thursday's Vale Traded ratio was the highest year-to-date and the third-highest since the COVID-low of 13th March 2020. Down Volume reached 'Panic' levels and was the third-highest in six years. On the previous two 'Panic' days in 2020, this proved to be a buying opportunity. We are less sure this will be this case in 2021.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/185/822/original/2021-02-01_05-17-55.png?1612124290" class="editor-image img-responsive" data-smartkarma-image-id="185822"></figure></section><p><strong>BOJ 'TAPERS'</strong> - The Bank of Japan, naturally intervened by purchasing ETFs but did not, however, raise its recently-reduced buying amount. The central bank also failed to intervene again on Friday, despite the sharp fall in the major indices. As a percentage of Value Traded, Thursday's intervention was the smallest in six years. With long-bond yields rising to a two-year high of 0.5%, perhaps their attention has been diverted elsewhere?</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/185/824/original/2021-01-30_14-31-02.png?1612124614" class="editor-image img-responsive" data-smartkarma-image-id="185824"></figure></section><p><strong>50-DAY MOVING AVERAGE CROSSOVER?</strong> - As a result of Friday's decline, Total Market Value is poised to crossover the 59-Day Moving Average for the first time since 12th October - a further test of this bull market's resolve. As noted last week, 50/200-day moving average 'gaps' of over 60 are rare and normally occur at significant market tops.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/185/827/original/2021-01-30_14-45-46.png?1612124854" class="editor-image img-responsive" data-smartkarma-image-id="185827"></figure></section><p><strong>RESULTS SEASON BEGINS</strong> - Since 15th January, 644 companies have reposted quarterly results. Although, as will be covered in the DETAIL section below, earnings momentum is improving. The aggregate net income forecast is above trailing net income, trailing aggregate operating, and net profit are both still declining.  Trailing and forward earnings multiples are still over 30 times, despite the 3.5% decline from the TOPIX peak on 14th January.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/185/831/original/2021-01-31_17-16-42.png?1612125298" class="editor-image img-responsive" data-smartkarma-image-id="185831"></figure><hr></section><p style="text-align: center;"><strong>• RESULTS SUMMARY - 29th JANUARY •</strong></p><p style="text-align: left;">Of Fridays' 399 results announcements, 71% scored positively for earnings momentum despite trailing revenues falling by 5.3% on average and a 1.7 point decline in operating margins - we are now well past the cycle low point for earnings. Only 11% of companies were in the red for the quarter.  The percentages for forecasts are less optimistic. Only 59% of forecasts and revisions scored positively, although the average score was +2.4 points.  Many large consumer-orientated businesses have yet to see a resumption of pre-COVID levels of activity.</p><p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p><p style="text-align: left;">Our<strong> Best</strong> and <strong>Worst</strong> selection from Friday's announcements is the Diversified Freight Services Peer Group (which includes <a href="https://www.smartkarma.com/entities/yamato-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:2:1" rel="noopener">Yamato Holdings (9064 JP)</a>, <a href="https://www.smartkarma.com/entities/nippon-express-co-ltd" target="_blank" data-smartkarma-citation="entities:18582:1" rel="noopener">Nippon Express (9062 JP)</a>, and <a href="https://www.smartkarma.com/entities/sg-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:26070:1" rel="noopener">SG (9143 JP)</a>) and <a href="https://www.smartkarma.com/entities/daiichi-sankyo-co-ltd" target="_blank" data-smartkarma-citation="entities:3014:1" rel="noopener">Daiichi Sankyo (4568 JP)</a>. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/185/843/original/2021-02-01_06-46-24.png?1612129615" class="editor-image img-responsive" data-smartkarma-image-id="185843"></figure></section><section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/185/846/original/2021-02-01_06-49-21.png?1612129775" class="editor-image img-responsive" data-smartkarma-image-id="185846"></figure></section><p></p></section>

• MARKET UPDATE •PEAKY - Thursday's Vale Traded ratio was the highest year-to-date and the third-highest since the COVID-low of 13th March 2020. Down Volume reached 'Panic' levels and was the third-highest in six years. On the previous two 'Panic' days in 2020, this proved to be a buying opportunity. We are less sure this will be this case in 2021.BOJ 'TAPERS' - The Bank of Japan, naturally intervened by purchasing ETFs but did not, however, raise its recently-reduced buying amount. The central bank also failed to intervene again on Friday, despite the sharp fall in the major indices. As a percentage of Value Traded, Thursday's intervention was the smallest in six years. With long-bond yields rising to a two-year high of 0.5%, perhaps their attention has been diverted elsewhere?50-DAY MOVING AVERAGE CROSSOVER? - As a result of Friday's decline, Total Market Value is poised to crossover the 59-Day Moving Average for the first time since 12th October - a further test of this bull market's resolve. As noted last week, 50/200-day moving average 'gaps' of over 60 are rare and normally occur at significant market tops.RESULTS SEASON BEGINS - Since 15th January, 644 companies have reposted quarterly results. Although, as will be covered in the DETAIL section below, earnings momentum is improving. The aggregate net income forecast is above trailing net income, trailing aggregate operating, and net profit are both still declining.  Trailing and forward earnings multiples are still over 30 times, despite the 3.5% decline from the TOPIX peak on 14th January.• RESULTS SUMMARY - 29th JANUARY •Of Fridays' 399 results announcements, 71% scored positively for earnings momentum despite trailing revenues falling by 5.3% on average and a 1.7 point decline in operating margins - we are now well past the cycle low point for earnings. Only 11% of companies were in the red for the quarter.  The percentages for forecasts are less optimistic. Only 59% of forecasts and revisions scored positively, although the average score was +2.4 points.  Many large consumer-orientated businesses have yet to see a resumption of pre-COVID levels of activity.• BEST &amp; WORST •Our Best and Worst selection from Friday's announcements is the Diversified Freight Services Peer Group (which includes Yamato Holdings (9064 JP), Nippon Express (9062 JP), and SG (9143 JP)) and Daiichi Sankyo (4568 JP). 

🇯🇵 JAPAN • Market + Results & Revisions Update 01/29

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>On Friday 30 October, 2020 just after lunch,  <a href="https://www.smartkarma.com/entities/daiichi-sankyo-co-ltd" target="_blank" data-smartkarma-citation="entities:3014:1" rel="noopener">Daiichi Sankyo (4568 JP)</a> released Q2 earnings (<a href="https://www.daiichisankyo.com/files/investors/library/quarterly_result/2020/pdf/FY2020%20Q2%20Financial%20Results.pdf" target="_blank" rel="noopener">results</a>, <a href="https://www.daiichisankyo.com/files/investors/library/quarterly_result/2020/pdf/FY2020%20Q2%20Presentation%20Material.pdf" target="_blank" rel="noopener">presentation</a>) which showed H1 revenue at ¥480.17bn +0.1%yoy, OP at ¥58.47bn -32.1%yoy, and Net Profit ¥51.59bn -19.9%yoy as SG&amp;A and R&amp;D costs both jumped sharply. </p><p>The company had sharply lowered forecasts for profits this year, even not including the impact of covid-19 beyond that point in late April 2020 when results and the FY2021 forecasts were announced. </p><p>The company has lowered forecasts further for the year, lowering revenues from ¥970bn to ¥960bn, OP from ¥80bn to ¥60bn, and Net Profit from ¥56bn to ¥53bn. Eagle-eyed readers will note that the implied OP and NP for H2 are effectively zero - ¥1.5bn and ¥1.4bn, respectively.</p><p>Consensus was already <em>well</em> below original company guidance so shares bounced 4% mid-day on the news, helped by <strong>news of a large buyback. </strong></p><div class="content-highlight"><p><strong>The <a href="https://www.daiichisankyo.com/media/press_release/detail/index_4087.html" target="_blank" rel="noopener">buyback</a> programme is to buy up to 60 million shares for up to ¥100bn from the start of November 2020 through 23 March 2021. That is 3.1% of shares outstanding. </strong></p></div><p>This is non-negligible given Real World Float is roughly 52% of shares out.</p><p>A buyback also changes the VWAP curve, sometimes significantly.</p><p>As a result, it is worth understanding the impact against float and investor positioning, and it may be worth altering execution strategy during the buyback period.</p>

On Friday 30 October, 2020 just after lunch,  Daiichi Sankyo (4568 JP) released Q2 earnings (results, presentation) which showed H1 revenue at ¥480.17bn +0.1%yoy, OP at ¥58.47bn -32.1%yoy, and Net Profit ¥51.59bn -19.9%yoy as SG&amp;A and R&amp;D costs both jumped sharply. The company had sharply lowered forecasts for profits this year, even not including the impact of covid-19 beyond that point in late April 2020 when results and the FY2021 forecasts were announced. The company has lowered forecasts further for the year, lowering revenues from ¥970bn to ¥960bn, OP from ¥80bn to ¥60bn, and Net Profit from ¥56bn to ¥53bn. Eagle-eyed readers will note that the implied OP and NP for H2 are effectively zero - ¥1.5bn and ¥1.4bn, respectively.Consensus was already well below original company guidance so shares bounced 4% mid-day on the news, helped by news of a large buyback. The buyback programme is to buy up to 60 million shares for up to ¥100bn from the start of November 2020 through 23 March 2021. That is 3.1% of shares outstanding. This is non-negligible given Real World Float is roughly 52% of shares out.A buyback also changes the VWAP curve, sometimes significantly.As a result, it is worth understanding the impact against float and investor positioning, and it may be worth altering execution strategy during the buyback period.

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

<p style="text-align: justify;"><a href="https://www.smartkarma.com/entities/remegen-ltd" target="_blank" data-smartkarma-citation="entities:29191:1" rel="noopener">Remegen Ltd (1788976D CH)</a> has developed a comprehensive pipeline of more than 10 new biological drug candidates for the treatment of refractory diseases, including autoimmune diseases, tumors and eye diseases, that meet a large number of unmet medical needs in China and around the world. Among these drug candidates, two core products are RC18 and RC48. Both are at late clinical stage and would probably be the first two drugs to be commercialized for RemeGen.</p>

Remegen Ltd (1788976D CH) has developed a comprehensive pipeline of more than 10 new biological drug candidates for the treatment of refractory diseases, including autoimmune diseases, tumors and eye diseases, that meet a large number of unmet medical needs in China and around the world. Among these drug candidates, two core products are RC18 and RC48. Both are at late clinical stage and would probably be the first two drugs to be commercialized for RemeGen.

Pre-IPO RemeGen - Insights on Two Core Products RC18 & RC48

Japan

Daiichi Sankyo Co, Ltd is a holding company established through merger of Sankyo and Daiichi pharmaceutical. The Group manufactures pharmaceuticals for human/veterinary use and medical tools and equipment. It also researches and promotes products through related companies throughout the world. The Group also produces food, food additives, livestock feeds, and agrochemicals.

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Daiichi Sankyo (4568 JP)

🇯🇵 JAPAN • Results & Revisions 02/03 Hirose, Eisai..

Of Wednesday's 100 results announcements, 78% scored positively for earnings momentum despite trailing revenues falling by 5.7% on average and a...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 02/01 - Rohm, Shionogi..

Of Monday's 76 results announcements, 79% scored positively for earnings momentum despite trailing revenues falling by 5.2% on average and a 2.6...

Campbell Gunn

🇯🇵 JAPAN • Market + Results & Revisions Update 01/29

Thursday's Vale Traded ratio was the highest year-to-date and the third-highest since the COVID-low of 13th March 2020. Down Volume reached 'Panic'...

Campbell Gunn

Dai-Ichi Sankyo (4568) Buyback Dynamics

Dai-Ichi Sankyo has announced Q2 earnings, a forecast revision, and a ¥100bn buyback to pick up where it left off in 2018. This is twice as big as...

Travis Lundy

Pre-IPO RemeGen - Insights on Two Core Products RC18 & RC48

This article analyzed two core products from RemeGen: RC18 and RC 48. The commercialization of these two products would have direct impact on the...

Xinyao (Criss) Wang

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🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​02/​​​​​​​​​​​​​​​03 Hirose, Eisai..

Of Wednesday's 100 results announcements, 78% scored positively for earnings momentum despite trailing revenues falling by 5.7% on average and a...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​02/​​​​​​​​​​​​​01 - Rohm, Shionogi..

Of Monday's 76 results announcements, 79% scored positively for earnings momentum despite trailing revenues falling by 5.2% on average and a 2.6...

Campbell Gunn

🇯🇵 JAPAN • Market + Results & Revisions Update 01/29

Thursday's Vale Traded ratio was the highest year-to-date and the third-highest since the COVID-low of 13th March 2020. Down Volume reached 'Panic'...

Campbell Gunn

Dai-Ichi Sankyo (4568) Buyback Dynamics

Dai-Ichi Sankyo has announced Q2 earnings, a forecast revision, and a ¥100bn buyback to pick up where it left off in 2018. This is twice as big as...

Travis Lundy

Pre-IPO RemeGen - Insights on Two Core Products RC18 & RC48

This article analyzed two core products from RemeGen: RC18 and RC 48. The commercialization of these two products would have direct impact on the...

Xinyao (Criss) Wang

🇯🇵 JAPAN • Results & Revisions 02/03 Hirose, Eisai..

🇯🇵 JAPAN • Results & Revisions 02/01 - Rohm, Shionogi..