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

Suzuki reported its 4QFY21 results on Thursday which saw revenues increase YoY by 16% and operating profits of ¥56bn (+25% YoY) implying an OPM of 5.6%.The reported results were 6.8%% and 0.6% higher than consensus revenue and OP respectively, but a lack of guidance combined with deteriorating conditions in India and rising cost inflation are likely to keep the stock in check despite some nice signs in its peripheral businesses.<table class="table table-striped"><tbody>
<tr>
<td style="width: 44.28%;">In ¥bn</td>
<td style="width: 15.48%;">Revenue </td>
<td style="width: 22.88%;">OP</td>
<td style="width: 17.36%;">OPM</td>
</tr>
<tr>
<td style="width: 44.28%;">Actual Results - 4QFY21</td>
<td style="width: 15.48%;">1,003</td>
<td style="width: 22.88%;">56</td>
<td style="width: 17.36%;">5.6%</td>
</tr>
<tr>
<td style="width: 44.28%;">Consensus - 4QFY21</td>
<td style="width: 15.48%;">939</td>
<td style="width: 22.88%;">55</td>
<td style="width: 17.36%;">5.9%</td>
</tr>
<tr>
<td style="width: 44.28%;">Surprise</td>
<td style="width: 15.48%;">6.8%</td>
<td style="width: 22.88%;">0.6%</td>
<td style="width: 17.36%;">-0.3%</td>
</tr>
<tr>
<td style="width: 44.28%;"> </td>
<td style="width: 15.48%;"> </td>
<td style="width: 22.88%;"> </td>
<td style="width: 17.36%;"> </td>
</tr>
<tr>
<td style="width: 44.28%;">Actual Results - FY21</td>
<td style="width: 15.48%;">3,178</td>
<td style="width: 22.88%;">194</td>
<td style="width: 17.36%;">6.1%</td>
</tr>
<tr>
<td style="width: 44.28%;">Guidance - FY21</td>
<td style="width: 15.48%;">3,000</td>
<td style="width: 22.88%;">160</td>
<td style="width: 17.36%;">5.3%</td>
</tr>
<tr>
<td style="width: 44.28%;">Surprise</td>
<td style="width: 15.48%;">5.9%</td>
<td style="width: 22.88%;">21.5%</td>
<td style="width: 17.36%;">0.8%</td>
</tr>
</tbody></table><div style="text-align: left;" class="content-caption">Source: Company disclosures, CapIQ</div>

Suzuki reported its 4QFY21 results on Thursday which saw revenues increase YoY by 16% and operating profits of ¥56bn (+25% YoY) implying an OPM of 5.6%.The reported results were 6.8%% and 0.6% higher than consensus revenue and OP respectively, but a lack of guidance combined with deteriorating conditions in India and rising cost inflation are likely to keep the stock in check despite some nice signs in its peripheral businesses.

In ¥bn
Revenue 
OP
OPM


Actual Results - 4QFY21
1,003
56
5.6%


Consensus - 4QFY21
939
55
5.9%


Surprise
6.8%
0.6%
-0.3%


 
 
 
 


Actual Results - FY21
3,178
194
6.1%


Guidance - FY21
3,000
160
5.3%


Surprise
5.9%
21.5%
0.8%

Source: Company disclosures, CapIQ

Equity L/S Analyst | Forensic Accounting | India, Yellowstone Equity

Ankit Agrawal, CFA

Equity L/S Analyst | Forensic Accounting | India

Quantitative Analysis

Since our Original on <a href="https://www.smartkarma.com/insights/asia-buyback-forecasting-which-companies-are-likely-to-raise-cut-buybacks" target="_blank" data-smartkarma-citation="insights:47196" rel="noopener">Asia Buyback Forecasting | Which Companies Are Likely to Raise/Cut Buybacks?</a>, published on Jan 31 2021, this is our first quarterly update. Below we provide updated results from our models based on latest reported fiscal year-end financials. We also discuss companies where there is notable change in our conviction level based on updated data.
At the webinar in March, there was also a request for conducting price movement analysis corresponding to our buyback raise/cut outlook for our back-test results. This analysis is now available. Our results show a decent outperformance/underperformance corresponding to buyback raise/cut prediction, suggesting that users of our models will benefit from guiding their investment decisions based on our buyback raise/cut outlook.

Since our Original on Asia Buyback Forecasting | Which Companies Are Likely to Raise/Cut Buybacks?, published on Jan 31 2021, this is our first quarterly update. Below we provide updated results from our models based on latest reported fiscal year-end financials. We also discuss companies where there is notable change in our conviction level based on updated data.
At the webinar in March, there was also a request for conducting price movement analysis corresponding to our buyback raise/cut outlook for our back-test results. This analysis is now available. Our results show a decent outperformance/underperformance corresponding to buyback raise/cut prediction, suggesting that users of our models will benefit from guiding their investment decisions based on our buyback raise/cut outlook.

Asia Buyback Forecasting | Quarterly Update 1.0

The <a href="https://asia.nikkei.com/Business/Automobiles/Suzuki-chairman-Osamu-Suzuki-to-step-down" target="_blank" rel="noopener">Nikkei announced today</a> that 91-year old Suzuki chairman, Osamu Suzuki would be stepping down in June. Osamu Suzuki was responsible for key strategic decisions such as targeting the mini-vehicle market in Japan and entering India long before competitors recognised its potential, demonstrating remarkable foresight. His departure leaves a vacuum in leadership that will be difficult to fill, but the foundation for the future has been laid in Suzuki’s strengthened relationship with Toyota.

The Nikkei announced today that 91-year old Suzuki chairman, Osamu Suzuki would be stepping down in June. Osamu Suzuki was responsible for key strategic decisions such as targeting the mini-vehicle market in Japan and entering India long before competitors recognised its potential, demonstrating remarkable foresight. His departure leaves a vacuum in leadership that will be difficult to fill, but the foundation for the future has been laid in Suzuki’s strengthened relationship with Toyota.

Suzuki – Osamu Suzuki Stepping Down Could Accelerate Move Into Toyota Group

Suzuki reported 4QFY21 results on Friday which saw revenues increase YoY by 4% and operating profits hit ¥64bn (+43% YoY) implying an OPM of 7.1%. The reported results were 6.8%% and 18.6% higher than consensus revenue and OP respectively.Despite better performance in 3QFY21, the company conservatively stuck with its previous guidance for FY21. Therefore, Suzuki is implying revenue of ¥824bn and OP of ¥21bn implying an OPM of just 2.6% in 4QFY21.<table class="table table-striped"><tbody>
<tr>
<td style="width: 44.28%;">In ¥bn</td>
<td style="width: 15.48%;">Revenue </td>
<td style="width: 22.88%;">OP</td>
<td style="width: 17.36%;">OPM</td>
</tr>
<tr>
<td style="width: 44.28%;">Actual Results - 3QFY21</td>
<td style="width: 15.48%;">905</td>
<td style="width: 22.88%;">64</td>
<td style="width: 17.36%;">5.2%</td>
</tr>
<tr>
<td style="width: 44.28%;">Consensus - 3QFY21</td>
<td style="width: 15.48%;">847</td>
<td style="width: 22.88%;">54</td>
<td style="width: 17.36%;">6.4%</td>
</tr>
<tr>
<td style="width: 44.28%;">Surprise</td>
<td style="width: 15.48%;">6.8%</td>
<td style="width: 22.88%;">18.6%</td>
<td style="width: 17.36%;">-1.2% points</td>
</tr>
<tr>
<td style="width: 44.28%;"> </td>
<td style="width: 15.48%;"> </td>
<td style="width: 22.88%;"> </td>
<td style="width: 17.36%;"> </td>
</tr>
<tr>
<td style="width: 44.28%;">Guidance</td>
<td style="width: 15.48%;">3,000</td>
<td style="width: 22.88%;">160</td>
<td style="width: 17.36%;">5.3%</td>
</tr>
<tr>
<td style="width: 44.28%;">Consensus</td>
<td style="width: 15.48%;">2,980</td>
<td style="width: 22.88%;">173</td>
<td style="width: 17.36%;">5.8%</td>
</tr>
<tr>
<td style="width: 44.28%;">Difference</td>
<td style="width: 15.48%;">0.7%</td>
<td style="width: 22.88%;">-7.7%</td>
<td style="width: 17.36%;">-0.5% points</td>
</tr>
<tr>
<td style="width: 44.28%;"> </td>
<td style="width: 15.48%;"> </td>
<td style="width: 22.88%;"> </td>
<td style="width: 17.36%;"> </td>
</tr>
<tr>
<td style="width: 44.28%;">Implied Guidance- 4QFY21</td>
<td style="width: 15.48%;">824</td>
<td style="width: 22.88%;">21</td>
<td style="width: 17.36%;">2.6%</td>
</tr>
<tr>
<td style="width: 44.28%;">Consensus - 4QFY21</td>
<td style="width: 15.48%;">906</td>
<td style="width: 22.88%;">56</td>
<td style="width: 17.36%;">6.2%</td>
</tr>
<tr>
<td style="width: 44.28%;">Difference</td>
<td style="width: 15.48%;">-9.0%</td>
<td style="width: 22.88%;">-62.1%</td>
<td style="width: 17.36%;">-3.6% points</td>
</tr>
</tbody></table><div style="text-align: left;" class="content-caption">Source: Company disclosures</div>

Suzuki reported 4QFY21 results on Friday which saw revenues increase YoY by 4% and operating profits hit ¥64bn (+43% YoY) implying an OPM of 7.1%. The reported results were 6.8%% and 18.6% higher than consensus revenue and OP respectively.Despite better performance in 3QFY21, the company conservatively stuck with its previous guidance for FY21. Therefore, Suzuki is implying revenue of ¥824bn and OP of ¥21bn implying an OPM of just 2.6% in 4QFY21.

In ¥bn
Revenue 
OP
OPM


Actual Results - 3QFY21
905
64
5.2%


Consensus - 3QFY21
847
54
6.4%


Surprise
6.8%
18.6%
-1.2% points


 
 
 
 


Guidance
3,000
160
5.3%


Consensus
2,980
173
5.8%


Difference
0.7%
-7.7%
-0.5% points


 
 
 
 


Implied Guidance- 4QFY21
824
21
2.6%


Consensus - 4QFY21
906
56
6.2%


Difference
-9.0%
-62.1%
-3.6% points

Source: Company disclosures

Suzuki – 3Q FY21 Momentum Continues and Guidance Overshoot Likely

<a href="https://www.smartkarma.com/entities/hero-motocorp-ltd" target="_blank" data-smartkarma-citation="entities:2391:1" rel="noopener">Hero Motocorp (HMCL IN)</a> announced its Q3FY21 earnings yesterday. It reported highest ever quarterly revenue. Key positive surprises were market share gain in the export market (90bp gain) and 25%+ growth in the spare parts business. Hero Motocorp also did well in the domestic market with 190bp market share gain. This coupled with low base effect helped Hero Motocorp post strong earnings. Revenues grew 40% YoY, EBITDA grew 36% YoY while PAT grew 23% YoY (losses at couple of associates tapered down the PAT growth). EBITDA margins at 14.5% came in within the medium-term guidance of 14-16% range.

Hero Motocorp (HMCL IN) announced its Q3FY21 earnings yesterday. It reported highest ever quarterly revenue. Key positive surprises were market share gain in the export market (90bp gain) and 25%+ growth in the spare parts business. Hero Motocorp also did well in the domestic market with 190bp market share gain. This coupled with low base effect helped Hero Motocorp post strong earnings. Revenues grew 40% YoY, EBITDA grew 36% YoY while PAT grew 23% YoY (losses at couple of associates tapered down the PAT growth). EBITDA margins at 14.5% came in within the medium-term guidance of 14-16% range.

Hero Motocorp Q3FY21 Earnings - Highest Ever Quarterly Revenue

Japan

Suzuki Motor Corporation manufactures automobiles, motorcycles, and their related parts. The Company has production facilities in USA, Japan, Taiwan, India, Pakistan, Indonesia, Thailand, and Hungary.

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Suzuki Motor (7269 JP)

Suzuki – Waiting on India

Suzuki results came in marginally above consensus, but less so on margins as cost inflation pressured profits in India. Despite some nice signs in...

Mio Kato

Asia Buyback Forecasting | Quarterly Update 1.0

This is our first quarterly update since our Original on Buyback Forecasting. We provide updated results based on latest year-end financials.

Ankit Agrawal, CFA

Suzuki – Osamu Suzuki Stepping Down Could Accelerate Move Into Toyota Group

The retirement of Chairman Osamu Suzuki could accelerate moves by Suzuki and Toyota to more closely integrate their operations

Mio Kato

Suzuki – 3Q FY21 Momentum Continues and Guidance Overshoot Likely

Suzuki's performance continues to strengthen against the backdrop of an auto sector gaining momentum. India and Maruti Suzuki drive performance but...

Mio Kato

Hero Motocorp Q3FY21 Earnings - Highest Ever Quarterly Revenue

Robust demand in domestic markets coupled with exponential growth potential across exports, spare parts in conjunction with margin expansion...

Ankit Agrawal, CFA

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