Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>Advantest's stock has doubled in the past two months, outperforming even Nvidia, indicating a potential peak in momentum</li>
<li>Near term technical indicators suggest the stock could be running out of steam, with few catalysts ahead of July Q1 earnings</li>
<li>The stock is trading at a significant premium to Japanese-listed SPE peers and its historical EV/EBIT multiple of 15x</li>
</ul>


Advantest's stock has doubled in the past two months, outperforming even Nvidia, indicating a potential peak in momentum
Near term technical indicators suggest the stock could be running out of steam, with few catalysts ahead of July Q1 earnings
The stock is trading at a significant premium to Japanese-listed SPE peers and its historical EV/EBIT multiple of 15x


Advantest (6857) | Time to Cash in the Chips?

Thematic (Sector/Industry)

<ul>
<li>OVERSEAS.  NVIDIA Surges after hours on Beat,  Buyback; US Yields Fall after weak PMI; China Braces for Trust Defaults; India lands on the Moon; RUSSIA: Prigozhin off the board</li>
<li>JAPAN.  NKY Futures +0.6% vs Cash; USDJPY 144.8; Japan to allow broader defense exports; Kishida quandry: Spend more amid rising Debt Costs; Japan Govt Budget: 60bn Yen for AI </li>
<li>Japan X.  JFE Steel Adopts "Green Steel" for Low CO2 Emissions in Cargo Ship Construction . This is just the start of a trend we expect to accelerate. </li>
</ul>


OVERSEAS.  NVIDIA Surges after hours on Beat,  Buyback; US Yields Fall after weak PMI; China Braces for Trust Defaults; India lands on the Moon; RUSSIA: Prigozhin off the board
JAPAN.  NKY Futures +0.6% vs Cash; USDJPY 144.8; Japan to allow broader defense exports; Kishida quandry: Spend more amid rising Debt Costs; Japan Govt Budget: 60bn Yen for AI 
Japan X.  JFE Steel Adopts "Green Steel" for Low CO2 Emissions in Cargo Ship Construction . This is just the start of a trend we expect to accelerate. 


Ohayo Japan|NVIDIA Crushes Street #s - Stock Surges; JAPAN X: JFE Adopts "Green Steel"

<ul>
<li>OVERSEAS. US Stocks fall as Dicks Sporting and Macy's raises concerns over US consumer; US Tells China to be more Transparent on Economy; Traders Betting on Blow Out NVIDIA</li>
<li>JAPAN:  NKY Futures -0.3% vs Cash; USDJPY 145.9;  Japan Defense Ministry to ask for (another) Record Budget; 2 trillion yen request for GX spend in FY24. </li>
<li>JAPAN X:  Hitachi Introduces Innovative Executive Compensation Plan Tied to Stock Performance Against Competitors. Interesting structure-lights a fire under senior management. </li>
</ul>


OVERSEAS. US Stocks fall as Dicks Sporting and Macy's raises concerns over US consumer; US Tells China to be more Transparent on Economy; Traders Betting on Blow Out NVIDIA
JAPAN:  NKY Futures -0.3% vs Cash; USDJPY 145.9;  Japan Defense Ministry to ask for (another) Record Budget; 2 trillion yen request for GX spend in FY24. 
JAPAN X:  Hitachi Introduces Innovative Executive Compensation Plan Tied to Stock Performance Against Competitors. Interesting structure-lights a fire under senior management. 


Ohayo Japan|US Stocks Fall on Consumer Fears; JAPAN X: Hitachi Inspires with Mgmt Incentive Scheme

<ul>
<li>
OVERSEAS. US Yields spike to hit 16 year high; Stocks rise SPX closed +0.7% with Tech leading; China woes continue as forecasts cut; NVDIA and TSLA rebound on street optimism</li>
<li>
JAPAN.  NKY Futures +0.7% vs Cash; USDJPY 146.2;  BOJ on pace to buy record amt of bonds under new YCC regime;  Foreigners unloading JGBs; Japan DX market &gt; 2trn yen</li>
<li>
Japan X.  Flying Cars - investments pouring into the space globally. Skydrive, Japan's Flying Car beacon bearer, partners with Suzuki to to push the boundries in the space.  </li>
</ul>



OVERSEAS. US Yields spike to hit 16 year high; Stocks rise SPX closed +0.7% with Tech leading; China woes continue as forecasts cut; NVDIA and TSLA rebound on street optimism

JAPAN.  NKY Futures +0.7% vs Cash; USDJPY 146.2;  BOJ on pace to buy record amt of bonds under new YCC regime;  Foreigners unloading JGBs; Japan DX market &gt; 2trn yen

Japan X.  Flying Cars - investments pouring into the space globally. Skydrive, Japan's Flying Car beacon bearer, partners with Suzuki to to push the boundries in the space.  


Ohayo Japan|Yields Spike and Stocks UP?! Japan X: Flying Cars-Suzuki and SkyDrive's Aerial Ambitions

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.

<ul>
<li>Advantest is highly geared to changes in sales, with average contribution margins of 36% and 51% at the gross and operating profit levels, respectively.</li>
<li>This works on the downside as well as the upside, something that has perhaps not received sufficient attention as optimists imagine a repeat of the recent extraordinary up-cycle.</li>
<li>The share price is down 19% from its July 18 high, but at the top of its 5-year P/E range even vs historical peak EPS.</li>
</ul>


Advantest is highly geared to changes in sales, with average contribution margins of 36% and 51% at the gross and operating profit levels, respectively.
This works on the downside as well as the upside, something that has perhaps not received sufficient attention as optimists imagine a repeat of the recent extraordinary up-cycle.
The share price is down 19% from its July 18 high, but at the top of its 5-year P/E range even vs historical peak EPS.


Advantest (6857 JP): High Gearing on the Downside

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) | Time to Cash in the Chips?

Advantest closed today -10% today (Aug 25, 203) after Nvidia failed to hold on the gains overnight and as US rates spurred a tech sell off. 10%...

Mark Chadwick

Ohayo Japan|NVIDIA Crushes Street #s - Stock Surges; JAPAN X: JFE Adopts "Green Steel"

NVIDIA Surges after earnings beat, buyback; NKY Futures +0.6% vs Cash; USDJPY 144.8; Japan to allow broader defense exports; Kishida quandry: Spend...

Mark Chadwick

Ohayo Japan|US Stocks Fall on Consumer Fears; JAPAN X: Hitachi Inspires with Mgmt Incentive Scheme

US Equities down on Consumer spending concerns; NKY Futures -0.3% vs Cash; USDJPY 145.9; Japan Defense Ministry to ask for (another) Record...

Mark Chadwick

Ohayo Japan|Yields Spike and Stocks UP?! Japan X: Flying Cars-Suzuki and SkyDrive's Aerial Ambitions

Yields Spike and Stocks Up?! Huh? NKY Futures +0.7% vs Cash; USDJPY 146.2; BOJ on pace to buy record amt of bonds under new YCC regime; ...

Mark Chadwick

Advantest (6857 JP): High Gearing on the Downside

1Q results show high gearing on the downside: IC test operating profit down 55%, other segment profits zero. NP down 75%. Further weakness ahead...

Scott Foster

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