Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>In mid-January, I wrote about <a href="https://www.smartkarma.com/insights/mercari-4385-applying-for-tse-prime-means-topix-inclusion-in-4-5-months" target="_blank" rel="noopener">Mercari's likely TOPIX inclusion 4-5 months later</a>. 4.5mos later, it had been included (<a href="https://www.smartkarma.com/insights/mercari-4385-topix-inclusion-finally-and-it-s-bigger-than-it-looks" target="_blank" data-smartkarma-citation="insights:70912" rel="noopener">Mercari (4385) TOPIX Inclusion, Finally... And It's Bigger Than It Looks</a>) .</li>
<li>The publicly-visible announcement data often does not show TOPIX inclusion parameters. A little sleuthing gets you there. </li>
<li>It's <em>still</em> bigger than it looks, but some large holders have recently been selling.</li>
</ul>


In mid-January, I wrote about Mercari's likely TOPIX inclusion 4-5 months later. 4.5mos later, it had been included (Mercari (4385) TOPIX Inclusion, Finally... And It's Bigger Than It Looks) .
The publicly-visible announcement data often does not show TOPIX inclusion parameters. A little sleuthing gets you there. 
It's still bigger than it looks, but some large holders have recently been selling.


Mercari (4385) - End-July TOPIX Inclusion Update

Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>After a 50% fall in the share price, Lasertec looks cheap on an historical basis and trades at a discount to ASML  </li>
<li>The secular growth outlook for its extreme ultraviolet (EUV) inspection systems is brighter than ever  </li>
<li>Lasertec should be a core holding for Japan growth funds on expectations for continued earnings growth and high returns on equity </li>
</ul>


After a 50% fall in the share price, Lasertec looks cheap on an historical basis and trades at a discount to ASML  
The secular growth outlook for its extreme ultraviolet (EUV) inspection systems is brighter than ever  
Lasertec should be a core holding for Japan growth funds on expectations for continued earnings growth and high returns on equity 


Lasertec (6920) | A Monopoly with a Long Runway

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.

<ul>
<li>Lasertec’s 3Q disappointed as revenue of ¥16.6bn materially undershoot consensus estimates of ¥26.6bn but given quarterly volatility in deliveries and acceptances that is understandable. </li>
<li>What is more concerning is the emerging picture of gross margin decline which the company had previously warned about. </li>
<li>Given inflated valuations these small negatives together with no guidance raise could drive a continued correction.</li>
</ul>


Lasertec’s 3Q disappointed as revenue of ¥16.6bn materially undershoot consensus estimates of ¥26.6bn but given quarterly volatility in deliveries and acceptances that is understandable. 
What is more concerning is the emerging picture of gross margin decline which the company had previously warned about. 
Given inflated valuations these small negatives together with no guidance raise could drive a continued correction.


Lasertec – A Miss At Stratospheric Valuations But That Isn’t Even The Biggest Problem

<ul>
<li>After initially grinding up slowly but underperforming the Nikkei our suggested skew trade gave up ground during the new year sell off.</li>
<li>It did so slowly, however and was outperforming Nikkei when last we checked despite being down slightly. </li>
<li>Thankfully, a lot of the idiosyncratic volatility hurting the skew trade has reversed now and it is positive and outperforming Nikkei consistently.</li>
</ul>


After initially grinding up slowly but underperforming the Nikkei our suggested skew trade gave up ground during the new year sell off.
It did so slowly, however and was outperforming Nikkei when last we checked despite being down slightly. 
Thankfully, a lot of the idiosyncratic volatility hurting the skew trade has reversed now and it is positive and outperforming Nikkei consistently.


TOPIX-Nikkei Skew Trade Starting to Work Nicely

<ul>
<li>Lasertec has been the darling of the SPE sector over the last few years, rising a 122x from mid-2016 to the peak at the start of this year. </li>
<li>With a commanding position for EUV inspection systems and its new ACTIS systems on deck the excitement is understandable. </li>
<li>The valuations though are not, and the share price has now clearly started to break down.</li>
</ul>


Lasertec has been the darling of the SPE sector over the last few years, rising a 122x from mid-2016 to the peak at the start of this year. 
With a commanding position for EUV inspection systems and its new ACTIS systems on deck the excitement is understandable. 
The valuations though are not, and the share price has now clearly started to break down.


Lasertec – Overvaluation Even More Phenomenal Than the Business

Japan

Lasertec Corporation develops, designs, manufactures and markets photomask inspection systems to make semiconductor devices, confocal scanning laser microscopes and liquid crystal display (LCD) inspection systems.

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Lasertec Corp (6920 JP)

Mercari (4385) - End-July TOPIX Inclusion Update

Mercari (4385) will join TOPIX at 28 July close. The data suggests 16/5mm shares to buy, which is only 2x 3mo ADV but would be 18-20% of Real World...

Travis Lundy

Lasertec (6920) | A Monopoly with a Long Runway

After a 50% fall in the share price, Lasertec looks cheap on an historical basis and trades at a discount to ASML. Lasertec should be a core...

Mark Chadwick

Lasertec – A Miss At Stratospheric Valuations But That Isn’t Even The Biggest Problem

Given inflated valuations small negatives such as a miss on volatile revenue, gross margin declines and a lack of a guidance raise could drive a...

Mio Kato

TOPIX-Nikkei Skew Trade Starting to Work Nicely

After initially grinding up slowly but underperforming the Nikkei our suggested skew trade gave up ground during the new year sell off. It is now...

Mio Kato

Lasertec – Overvaluation Even More Phenomenal Than the Business

With a commanding position for EUV inspection systems the excitement around Lasertec is understandable. The valuations though are not, and the...

Mio Kato

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