Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>Komatsu's operating profits for FY3/24 of Y607 billion (+24% YoY) surpassed estimates on strong U.S. equipment sales</li>
<li>Komatsu guides for FY3/25 operating profits of ¥557 billion (-8.3% YoY), assuming ¥140/US$</li>
<li>We believe that the market remains too focused on the near-term growth slowdown, while we believe that Komatsu is attractively priced at under 10x EV/EBIT</li>
</ul>


Komatsu's operating profits for FY3/24 of Y607 billion (+24% YoY) surpassed estimates on strong U.S. equipment sales
Komatsu guides for FY3/25 operating profits of ¥557 billion (-8.3% YoY), assuming ¥140/US$
We believe that the market remains too focused on the near-term growth slowdown, while we believe that Komatsu is attractively priced at under 10x EV/EBIT


Komatsu (6301) | 6% TSR and Clean Energy Winner

<ul>
<li>We turned bullish on Komatsu a year ago and the stock has since returned over 50%.</li>
<li>Komatsu is trading at 10x EV/EBIT versus an historical average of 11x, with a target price of ¥5,100/share.</li>
<li>Komatsu represents a cheaper way to play the theme of onshoring and long-term mining demand from electrification.</li>
</ul>


We turned bullish on Komatsu a year ago and the stock has since returned over 50%.
Komatsu is trading at 10x EV/EBIT versus an historical average of 11x, with a target price of ¥5,100/share.
Komatsu represents a cheaper way to play the theme of onshoring and long-term mining demand from electrification.


Komatsu (6301) | A Winning Bet on Onshoring and Electrification

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>At the October rebalance, there are 970 stocks that will have a lower FFW while 114 stocks will have a higher FFW. 493 stocks will undergo a Phased Weight Reduction.</li>
<li>Estimated one-way turnover is 2.54% resulting in a one-way trade of ¥1.815tn. 500 stocks have over 4 days ADV to trade, 100 stocks have over 9 days ADV to trade.</li>
<li>Setting the threshold at +/-US$50m to trade, the stocks with inflows have outperformed the stocks with outflows by 6.5% over the last four months.</li>
</ul>


At the October rebalance, there are 970 stocks that will have a lower FFW while 114 stocks will have a higher FFW. 493 stocks will undergo a Phased Weight Reduction.
Estimated one-way turnover is 2.54% resulting in a one-way trade of ¥1.815tn. 500 stocks have over 4 days ADV to trade, 100 stocks have over 9 days ADV to trade.
Setting the threshold at +/-US$50m to trade, the stocks with inflows have outperformed the stocks with outflows by 6.5% over the last four months.


TOPIX October Rebalance: BIG One With ¥1.8tn a Side to Trade

Ortus Advisors

Andrew Jackson

Independent Insight Provider

Thematic (Sector/Industry)

<ul>
<li>Tech weakness in Japan to continue, following the profit taking lead out of the US with NVDA numbers on Wednesday.</li>
<li>Defence related may get a lift after yesterdays weakness, with Middle East tensions rising, Japan warding off a Chinese spy plane and ex-Defence Minister announcing candidacy for LDP leader.</li>
<li>Typhoon Shanshan is expected in Kyushu. Resulting weakness on related names is usually short-lived and largely retail investor driven, making reverse positioning into the moves the more attractive tactic.</li>
</ul>


Tech weakness in Japan to continue, following the profit taking lead out of the US with NVDA numbers on Wednesday.
Defence related may get a lift after yesterdays weakness, with Middle East tensions rising, Japan warding off a Chinese spy plane and ex-Defence Minister announcing candidacy for LDP leader.
Typhoon Shanshan is expected in Kyushu. Resulting weakness on related names is usually short-lived and largely retail investor driven, making reverse positioning into the moves the more attractive tactic.


Japan Morning Connection: Further Sector Rotation on the Cards as Risk-Off Mood for Tech Continues

<ul>
<li>Gains for Micron on the potential for DDR5 price hikes should help lift <a href="https://www.smartkarma.com/entities/micronics-japan-co-ltd" target="_blank" rel="noopener">6871 Micronics</a> after yesterdays excessive weakness.</li>
<li>More cheer for US home builders after Smith Douglas number beat, adding to the upside story for Sumi Forestry and Selkisui House.</li>
<li>Defence related plays should remain in the spotlight with Kishida replacement candidates Ishiba and Kono both ex-defence ministers.</li>
</ul>


Gains for Micron on the potential for DDR5 price hikes should help lift 6871 Micronics after yesterdays excessive weakness.
More cheer for US home builders after Smith Douglas number beat, adding to the upside story for Sumi Forestry and Selkisui House.
Defence related plays should remain in the spotlight with Kishida replacement candidates Ishiba and Kono both ex-defence ministers.


Japan Morning Connection: Micronics, Mitsubishi Heavy, Kawasaki Heavy

Japan

KOMATSU LTD. manufactures and sells construction and mining machinery, including excavators, bulldozers, and wheel loaders.  The Company, operating on a global scale, also produces forklift trucks and engineering equipment such as press system.

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Komatsu Ltd (6301 JP)

Komatsu (6301) | 6% TSR and Clean Energy Winner

Komatsu stands to benefit from the global shift towards clean energy technologies, which drive demand for critical minerals essential in their...

Mark Chadwick

Komatsu (6301) | A Winning Bet on Onshoring and Electrification

Komatsu stock has surged over 50% in a year but remains undervalued, making it an attractive investment for onshoring and mining demand related to...

Mark Chadwick

TOPIX October Rebalance: BIG One With ¥1.8tn a Side to Trade

Lower FFWs on 970 stocks and higher FFWs on 114 stocks will result in one-way turnover of 2.52% leading to a one-way trade of ¥1.8tn at the close...

Brian Freitas

Japan Morning Connection: Further Sector Rotation on the Cards as Risk-Off Mood for Tech Continues

Tech weakness in Japan likely to persist. Defense stocks may see a boost amid rising tensions. Reverse position into Typhoon-related weakness.

Andrew Jackson

Japan Morning Connection: Micronics, Mitsubishi Heavy, Kawasaki Heavy

Micron's gains from potential DDR5 price hikes could boost Micronics; Defence-related stocks are in focus with Kishida replacement candidates both...

Andrew Jackson

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Komatsu (6301) | 6% TSR and Clean Energy Winner

Komatsu stands to benefit from the global shift towards clean energy technologies, which drive demand for critical minerals essential in their...

Mark Chadwick

Komatsu (6301) | A Winning Bet on Onshoring and Electrification

​Komatsu stock has surged over 50% in a year but remains undervalued, making it an attractive investment for onshoring and mining demand related to...

Mark Chadwick

TOPIX October Rebalance: BIG One With ¥1.8tn a Side to Trade

Lower FFWs on 970 stocks and higher FFWs on 114 stocks will result in one-way turnover of 2.52% leading to a one-way trade of ¥1.8tn at the close...

Brian Freitas

Japan Morning Connection: Further Sector Rotation on the Cards as Risk-Off Mood for Tech Continues

​Tech weakness in Japan likely to persist. Defense stocks may see a boost amid rising tensions. Reverse position into Typhoon-related weakness.

Andrew Jackson

Japan Morning Connection: Micronics, Mitsubishi Heavy, Kawasaki Heavy

​Micron's gains from potential DDR5 price hikes could boost Micronics; Defence-related stocks are in focus with Kishida replacement candidates both...

Andrew Jackson

Komatsu stock has surged over 50% in a year but remains undervalued, making it an attractive investment for onshoring and mining demand related to...

Tech weakness in Japan likely to persist. Defense stocks may see a boost amid rising tensions. Reverse position into Typhoon-related weakness.

Micron's gains from potential DDR5 price hikes could boost Micronics; Defence-related stocks are in focus with Kishida replacement candidates both...