Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

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

<ul>
<li>Advantest has dropped back 11.5% from its recent high but is still up 43% year-to-date and up 2.3X from a year ago. Consolidation is likely to continue.</li>
<li>Demand for High Bandwidth Memory (HBM) for use with AI processors could lift sales, profits and profit margins to new highs within the next two years.</li>
<li>That could bring the projected P/E ratio down from 75.5x FY Mar-24 EPS guidance to 31x FY Mar-26 EPS in a favorable but not unreasonably optimistic scenario. </li>
</ul>


Advantest has dropped back 11.5% from its recent high but is still up 43% year-to-date and up 2.3X from a year ago. Consolidation is likely to continue.
Demand for High Bandwidth Memory (HBM) for use with AI processors could lift sales, profits and profit margins to new highs within the next two years.
That could bring the projected P/E ratio down from 75.5x FY Mar-24 EPS guidance to 31x FY Mar-26 EPS in a favorable but not unreasonably optimistic scenario. 


Advantest (6857 JP): AI Speculation Discounted

Japan Specialist

Mark Chadwick

<ul>
<li>Advantest reported strong Q3 results, driven by robust demand for memory testers</li>
<li>The company raised its full-year guidance for revenue and operating profit to inline with analyst estimates</li>
<li>Advantest’s stock price remains overvalued on AI-hype. We remain bearish with a potential downside of 25%.</li>
</ul>


Advantest reported strong Q3 results, driven by robust demand for memory testers
The company raised its full-year guidance for revenue and operating profit to inline with analyst estimates
Advantest’s stock price remains overvalued on AI-hype. We remain bearish with a potential downside of 25%.


Advantest (6587) | Testing the Limits of AI

Equity Long-Short, Semiconductors, Fabricated Knowledge

Douglas O'Laughlin

Equity Long-Short, Semiconductors

Fabricated Knowledge

Learn more about the world's most important manufactured product. Meaningful insight, timely analysis, and an occasional investment idea.

Thematic (Sector/Industry)

<ul><li>Japan is the darling of the moment. To those who haven’t kept track of the story, a series of <a href="https://www.jpx.co.jp/english/equities/improvements/follow-up/b5b4pj000004yqcc-att/dreu250000000uqc.pdf" target="_blank" rel="noopener">market reforms in January</a> encourages companies with a price-to-book ratio below one to create a plan to achieve capital efficiency.</li><li>Given that half of the companies at the time were trading below 1x P/B, this is a big deal.</li><li>And this has driven a massive wave of buybacks and changes, leading to the Nikkei finally breaking a 30-year high.</li></ul>

Japan is the darling of the moment. To those who haven’t kept track of the story, a series of market reforms in January encourages companies with a price-to-book ratio below one to create a plan to achieve capital efficiency.Given that half of the companies at the time were trading below 1x P/B, this is a big deal.And this has driven a massive wave of buybacks and changes, leading to the Nikkei finally breaking a 30-year high.

Japanese Semiconductor Stocks and AI "Winners" that Ain't So

Ortus Advisors

Andrew Jackson

Independent Insight Provider

<ul>
<li>More tech weakness in the US but most names off their lows, with Japan futures pointing to a recovery</li>
<li>Big margin calls yesterday at Japanese retail brokers may see continued forced selling in the most crowded names.</li>
<li>A quick glance at names with upside catalysts/strong fundamental drivers which should have room to run on an overall market recovery.</li>
</ul>


More tech weakness in the US but most names off their lows, with Japan futures pointing to a recovery
Big margin calls yesterday at Japanese retail brokers may see continued forced selling in the most crowded names.
A quick glance at names with upside catalysts/strong fundamental drivers which should have room to run on an overall market recovery.


Japan Morning Connection: 7453 JP, 4307 JP, 6857 JP

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>Japan's markets have again failed to break to new highs creating a potential for a double-top pattern.</li>
<li>Trump's policies which target lower interest rates and a weaker dollar will put pressure on Japan's markets as can be seen from the high correlation between the JPY and TPX.</li>
<li>Sectors such as trading companies, autos and semiconductors could see the most pressure under a Trump presidency.</li>
</ul>


Japan's markets have again failed to break to new highs creating a potential for a double-top pattern.
Trump's policies which target lower interest rates and a weaker dollar will put pressure on Japan's markets as can be seen from the high correlation between the JPY and TPX.
Sectors such as trading companies, autos and semiconductors could see the most pressure under a Trump presidency.


Trump Trades and the JAPAN Market Are Like Oil and Vinegar

Japan

ADVANTEST CORPORATION produces semiconductor testing devices and electronic measuring instruments.  The Company's products include large-scale integration (LSI) test systems, memory test systems, dynamic test handlers, network analyzers, electronic meters, optical testing devices, and signal sources.

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Advantest Corp (6857 JP)

Advantest (6857 JP): AI Speculation Discounted

Cyclical recovery accelerated by demand for High Bandwidth Memory testers should take sales and profits to new highs, but this has been largely...

Scott Foster

Advantest (6587) | Testing the Limits of AI

Advantest's Q3 results were strong due to high demand for memory testers. The company raised its full-year guidance. The stock price is overvalued...

Mark Chadwick

Japanese Semiconductor Stocks and AI "Winners" that Ain't So

Another BSPDN name and some ABF ideas. Not every AI semiconductor stock is actually winning. This edition just so happens to be Japan focused

Fabricated Knowledge

Japan Morning Connection: 7453 JP, 4307 JP, 6857 JP

US tech stocks showing weakness but on the rebound. Japanese market may see forced selling due to margin calls. Discussion of stocks with...

Andrew Jackson

Trump Trades and the JAPAN Market Are Like Oil and Vinegar

Japan markets have now entered Bear Markets (-20% from peak level) and the JPY continues to strengthen effecting an unwind of carry trades...

David Mudd

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Advantest (6857 JP): AI Speculation Discounted

Cyclical recovery accelerated by demand for High Bandwidth Memory testers should take sales and profits to new highs, but this has been largely...

Scott Foster

Advantest (6587) | Testing the Limits of AI

​Advantest's Q3 results were strong due to high demand for memory testers. The company raised its full-year guidance. The stock price is overvalued...

Mark Chadwick

Japanese Semiconductor Stocks and AI "Winners" that Ain't So

Another BSPDN name and some ABF ideas. Not every AI semiconductor stock is actually winning. This edition just so happens to be Japan focused

Fabricated Knowledge

Japan Morning Connection: 7453 JP, 4307 JP, 6857 JP

​US tech stocks showing weakness but on the rebound. Japanese market may see forced selling due to margin calls. Discussion of stocks with...

Andrew Jackson

Trump Trades and the JAPAN Market Are Like Oil and Vinegar

Japan markets have now entered Bear Markets (-20% from peak level) and the JPY continues to strengthen effecting an unwind of carry trades...

David Mudd

Advantest's Q3 results were strong due to high demand for memory testers. The company raised its full-year guidance. The stock price is overvalued...

US tech stocks showing weakness but on the rebound. Japanese market may see forced selling due to margin calls. Discussion of stocks with...