Equity Long-Short Analyst

Pyari Menon

Thematic (Sector/Industry)

In this report, we have crawled through over ten years of technical publications to analyze the Fuel Cell space. The top five companies we screen from a technology perspective are <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a>, <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>, <a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" data-smartkarma-citation="entities:155:1" rel="noopener">Hyundai Motor Co (005380 KS)</a>, <a href="https://www.smartkarma.com/entities/general-motors-co" target="_blank" data-smartkarma-citation="entities:18811:1" rel="noopener">General Motors Co (GM US)</a>, and <a href="https://www.smartkarma.com/entities/bloom-energy-corp" target="_blank" data-smartkarma-citation="entities:34062:1" rel="noopener">Bloom Energy Corp (BE US)</a> Technologically automakers (Japanese in particular) dominate the fuel cell sector. Among pure plays, <a href="https://www.smartkarma.com/entities/bloom-energy-corp" target="_blank" data-smartkarma-citation="entities:34062:1" rel="noopener">Bloom Energy Corp (BE US)</a> and <a href="https://www.smartkarma.com/entities/ballard-power-systems-inc" target="_blank" data-smartkarma-citation="entities:25813:1" rel="noopener">Ballard Power Systems (BLDP CN)</a> are best positioned and perhaps the only ones who come somewhat close to the auto OEMs from a technology perspective. Some lesser-known private players that have gained traction in technological terms over the last five years are Dioxide Materials, 24M Technologies, and Bayotech.Currently, batteries have a decisive advantage over fuel cells, and as a business proposition, fuel cells have so far mostly failed to live up to their technological promise. However, fuel cells using hydrogen generated from renewables offer a much lower environmental impact across their lifecycle. This sustains investor interest in the hope that system price declines, economies of scale, lower cost of renewable energy generation, and maturation as a business could make FC competitive longer term.

In this report, we have crawled through over ten years of technical publications to analyze the Fuel Cell space. The top five companies we screen from a technology perspective are Toyota Motor (7203 JP), Honda Motor (7267 JP), Hyundai Motor Co (005380 KS), General Motors Co (GM US), and Bloom Energy Corp (BE US) Technologically automakers (Japanese in particular) dominate the fuel cell sector. Among pure plays, Bloom Energy Corp (BE US) and Ballard Power Systems (BLDP CN) are best positioned and perhaps the only ones who come somewhat close to the auto OEMs from a technology perspective. Some lesser-known private players that have gained traction in technological terms over the last five years are Dioxide Materials, 24M Technologies, and Bayotech.Currently, batteries have a decisive advantage over fuel cells, and as a business proposition, fuel cells have so far mostly failed to live up to their technological promise. However, fuel cells using hydrogen generated from renewables offer a much lower environmental impact across their lifecycle. This sustains investor interest in the hope that system price declines, economies of scale, lower cost of renewable energy generation, and maturation as a business could make FC competitive longer term.

Stock Ideas From Data Mining Technical Publications: A Look into Fuel Cells

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

Nissan posted better than expected results for the second consecutive quarter but once again it was the Finance business doing the heavy lifting and as we suspected cost cuts from 1Q did not fully carry over into 2Q. While Nissan is beating consensus we have concerns about the quality of earnings.

Nissan posted better than expected results for the second consecutive quarter but once again it was the Finance business doing the heavy lifting and as we suspected cost cuts from 1Q did not fully carry over into 2Q. While Nissan is beating consensus we have concerns about the quality of earnings.

Nissan– Dragged Along by the Finance Business

Nissan reported 1QFY22 results on Wednesday generating revenue of ¥2,008bn (-21.1% QoQ, +71% YoY) and OP of ¥75.7bn (for an OPM of 3.8% compared to OPM of -13.5% and -0.9% respectively in 1QFY21 and 4QFY21). The improvement of Nissan’s profitability compared to its previous quarter was mainly due decreases in SG&amp;A expenses which were 12.8% of revenue compared to 15.1% and 21.9% respectively in 1QFY21 and 4QFY21. The reported revenue was 6.5% higher than consensus estimates while OP beat by ¥130bn, thanks in large part to the finance business.<table class="table table-striped"><tbody>
<tr>
<td style="width: 42.76%;">In ¥bn</td>
<td style="width: 19.7%;">Revenue </td>
<td style="width: 17.84%;">OP</td>
<td style="width: 19.7%;">OPM</td>
</tr>
<tr>
<td style="width: 42.76%;">Actual Results - 1QFY22</td>
<td style="width: 19.7%;">2,008</td>
<td style="width: 17.84%;">              76</td>
<td style="width: 19.7%;">3.8%</td>
</tr>
<tr>
<td style="width: 42.76%;">Consensus - 1QFY22</td>
<td style="width: 19.7%;">1,886</td>
<td style="width: 17.84%;">-            55</td>
<td style="width: 19.7%;">-2.9%</td>
</tr>
<tr>
<td style="width: 42.76%;">Surprise</td>
<td style="width: 19.7%;">6.5%</td>
<td style="width: 17.84%;">NM</td>
<td style="width: 19.7%;">6.7% points</td>
</tr>
<tr>
<td style="width: 42.76%;"> </td>
<td style="width: 19.7%;"> </td>
<td style="width: 17.84%;"> </td>
<td style="width: 19.7%;"> </td>
</tr>
<tr>
<td style="width: 42.76%;">Guidance - FY22</td>
<td style="width: 19.7%;">9,750</td>
<td style="width: 17.84%;">150</td>
<td style="width: 19.7%;">1.5%</td>
</tr>
<tr>
<td style="width: 42.76%;">Consensus - FY22</td>
<td style="width: 19.7%;">          9,114</td>
<td style="width: 17.84%;">            4.6</td>
<td style="width: 19.7%;">0.1%</td>
</tr>
<tr>
<td style="width: 42.76%;">Difference</td>
<td style="width: 19.7%;">7.0%</td>
<td style="width: 17.84%;">3183%</td>
<td style="width: 19.7%;">1.5% points</td>
</tr>
</tbody></table><div style="text-align: left;" class="content-caption">Source: Company disclosures, CapIQ</div>

Nissan reported 1QFY22 results on Wednesday generating revenue of ¥2,008bn (-21.1% QoQ, +71% YoY) and OP of ¥75.7bn (for an OPM of 3.8% compared to OPM of -13.5% and -0.9% respectively in 1QFY21 and 4QFY21). The improvement of Nissan’s profitability compared to its previous quarter was mainly due decreases in SG&amp;A expenses which were 12.8% of revenue compared to 15.1% and 21.9% respectively in 1QFY21 and 4QFY21. The reported revenue was 6.5% higher than consensus estimates while OP beat by ¥130bn, thanks in large part to the finance business.

In ¥bn
Revenue 
OP
OPM


Actual Results - 1QFY22
2,008
              76
3.8%


Consensus - 1QFY22
1,886
-            55
-2.9%


Surprise
6.5%
NM
6.7% points


 
 
 
 


Guidance - FY22
9,750
150
1.5%


Consensus - FY22
          9,114
            4.6
0.1%


Difference
7.0%
3183%
1.5% points

Source: Company disclosures, CapIQ

Nissan Motor – Dependant on Its Finance Business

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Renesas Electronics / Equity Capital Markets

Renesas, along with INCJ, aims to raise around US$3.4bn via selling a mix of primary and secondary shares.The current deal would be of somewhat similar size as two of the past deals that we have covered for Renesas:<ul>
<li dir="ltr" aria-level="1">US$2.8bn bn in 2017 <a href="https://www.smartkarma.com/insights/renesas-electronics-placement-additional-thoughts-on-valuation-flotation-and-ownership" target="_blank" rel="noopener">Renesas Electronics Placement: Additional Thoughts on Valuation, Flotation, and Ownership</a></li>
<li dir="ltr" aria-level="1">US$2.4bn in 2018 <a href="https://www.smartkarma.com/insights/renesas-placement-tighter-effective-discount-and-placement-overhangs-but-statistic-supports-a-bid" target="_blank" rel="noopener">Renesas Placement: Tighter Effective Discount and Placement Overhangs but Statistic Supports a Bid</a></li>
</ul>In this insight, we'll run the deal through our ECM framework and talk about deal dynamics.

Renesas, along with INCJ, aims to raise around US$3.4bn via selling a mix of primary and secondary shares.The current deal would be of somewhat similar size as two of the past deals that we have covered for Renesas:
US$2.8bn bn in 2017 Renesas Electronics Placement: Additional Thoughts on Valuation, Flotation, and Ownership
US$2.4bn in 2018 Renesas Placement: Tighter Effective Discount and Placement Overhangs but Statistic Supports a Bid
In this insight, we'll run the deal through our ECM framework and talk about deal dynamics.

Renesas Placement - Very Well Flagged, past Deals Have Done Well but Large Size Warrants Correction

Nissan reported relatively weak 4Q results and disappointing guidance for FY03/22 after including an unusual “business risks” buffer in its OP guidance. The market reacted in slightly kneejerk fashion sending the stock down 10% on Wednesday but we consider this excessive given clear signs of excessive conservatism.

Nissan reported relatively weak 4Q results and disappointing guidance for FY03/22 after including an unusual “business risks” buffer in its OP guidance. The market reacted in slightly kneejerk fashion sending the stock down 10% on Wednesday but we consider this excessive given clear signs of excessive conservatism.

Japan

NISSAN MOTOR CO., LTD. manufactures and distributes automobiles and related parts. It also provides financing services. Nissan delivers a comprehensive range of products under various brands. The Company manufactures in Japan, the United States, Mexico, the United Kingdom and many other countries.

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Nissan Motor (7201 JP)

Stock Ideas From Data Mining Technical Publications: A Look into Fuel Cells

Fuel cells have a place in the green energy market but with poor economics, they have a problem finding where that is. Japanese automakers...

Pyari Menon

Nissan– Dragged Along by the Finance Business

Nissan posted better than expected results for the second consecutive quarter but once again it was the Finance business doing the heavy lifting...

Mio Kato

Nissan Motor – Dependant on Its Finance Business

Nissan reported strong results boosted by its finance business and a significant curtailment in SG&A expense putting it on track to hit our ¥250bn...

Mio Kato

Renesas Placement - Very Well Flagged, past Deals Have Done Well but Large Size Warrants Correction

Renesas, along with INCJ, aims to raise around US$3.4bn via selling a mix of primary and secondary shares. The current deal would be of somewhat...

Sumeet Singh

Nissan – Oversold

Nissan appears oversold after the stock fell 10% due to weak guidance by the company, however, this appears to be simple conservatism following a...

Mio Kato

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