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

<ul>
<li>Aisin’s 3Q revenue of ¥1,004bn (+13.1% QoQ, -4.3% YoY) and OP of ¥54bn (5.4% OPM) reassured investors and the stock closed 4% higher. </li>
<li>Revenue was 1.7% higher than consensus estimates while OP was 4.9% lower but Aisin maintained guidance. </li>
<li>The real story is the production ramp from here however and risk-reward for Aisin remains phenomenally skewed.</li>
</ul>


Aisin’s 3Q revenue of ¥1,004bn (+13.1% QoQ, -4.3% YoY) and OP of ¥54bn (5.4% OPM) reassured investors and the stock closed 4% higher. 
Revenue was 1.7% higher than consensus estimates while OP was 4.9% lower but Aisin maintained guidance. 
The real story is the production ramp from here however and risk-reward for Aisin remains phenomenally skewed.


Aisin – Toyota Production Plan Indicates Further Upside

<p>Aisin announced its 2QFY22 results on Friday (29th October) and the company recorded revenue of ¥887bn (-9.2% QoQ, -1.5% YoY) and OP of ¥25bn (OPM of 2.9% compared to 4.6% and 6.1% respectively in 2QFY21 and 1QFY22). Like with Denso, Aisin maintained guidance despite relatively weak production volumes and margins. Unlike Denso, Aisin’s valuation multiples look depressed.</p>

Aisin announced its 2QFY22 results on Friday (29th October) and the company recorded revenue of ¥887bn (-9.2% QoQ, -1.5% YoY) and OP of ¥25bn (OPM of 2.9% compared to 4.6% and 6.1% respectively in 2QFY21 and 1QFY22). Like with Denso, Aisin maintained guidance despite relatively weak production volumes and margins. Unlike Denso, Aisin’s valuation multiples look depressed.

Aisin – Underlying Improvements Materially Underappreciated

Japanese Turnaround Situations, Short-Ideas, Azabu Research

Michael Allen

Japanese Turnaround Situations, Short-Ideas

Azabu Research

Azabu Research is a publishing and consulting firm focused on distressed equities in the Japanese market. We specialize in turnaround strategies, corporate combinations, divestitures, and restructuring.

Publisher of the Tokyo Turnaround Letter, which conducts the most thorough research possible of publicly available information, including forensic tests for fraudulent overstatement of assets and understatement of liabilities, as well as rigorous market and industry analysis to assess the underlying strengths of the company’s products or services, the appropriateness of the company’s turnaround strategy, and the skill of its current management team. The average length of a report exceeds 25 pages of text and tables, excluding any disclosures or executive summaries.

We have more than 30 years of experience in applying this process to distressed equities in Japan. Additionally, subscribers have free access to detailed, yet easily navigated earnings models for the target company as well as the top five comparable companies, and unlimited access to the analyst for follow-up questions.

Azabu Research also conducts be-spoke research on a project basis, and provides consulting services to companies looking to restructure, divest, make acquisitions, go public, or improve investor sentiment toward their stock.

Independent Research and Consulting Firm

<ul>
<li>Below is a sample of the unloved Japanese stocks we focus on at Azabu Research, with key valuation metrics and latest news.</li>
<li>The average PBR in this week’s list is 0.5x and the average P/E is 5.9x.</li>
<li>Most of the stocks in this week’s round up are related to either the auto supply chain or the electric power grid.</li>
</ul>


Below is a sample of the unloved Japanese stocks we focus on at Azabu Research, with key valuation metrics and latest news.
The average PBR in this week’s list is 0.5x and the average P/E is 5.9x.
Most of the stocks in this week’s round up are related to either the auto supply chain or the electric power grid.


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.

Event-Driven

<ul>
<li>With <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota (7203 JP)</a> having sold some of its stake in <a href="https://www.smartkarma.com/entities/denso-corp" target="_blank" data-smartkarma-citation="entities:18703:1" rel="noopener">Denso</a>, <a href="https://www.smartkarma.com/entities/kddi-corp" target="_blank" data-smartkarma-citation="entities:639:1" rel="noopener">KDDI</a> and <a href="https://www.smartkarma.com/entities/harmonic-drive-systems-inc" target="_blank" data-smartkarma-citation="entities:10238:1" rel="noopener">Harmonic Drive</a> this year, it has firmly set the ball rolling for unwinding some of its cross-shareholding.</li>
<li>Toyota has a shareholding in around 60 listed companies, with its combined disposable stake worth over US$26bn.</li>
<li>In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.</li>
</ul>


With Toyota (7203 JP) having sold some of its stake in Denso, KDDI and Harmonic Drive this year, it has firmly set the ball rolling for unwinding some of its cross-shareholding.
Toyota has a shareholding in around 60 listed companies, with its combined disposable stake worth over US$26bn.
In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.


Toyota Cross-Shareholding - To Say a Whole Lot Is Left Would Be a US$26bn Understatement

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Late May, <a href="https://www.smartkarma.com/entities/aisin-corp" target="_blank" data-smartkarma-citation="entities:11809:1" rel="noopener">Aisin (7259 JP)</a> announced a sell-down of its 34% stake in <a href="https://www.smartkarma.com/entities/exedy-corp" target="_blank" data-smartkarma-citation="entities:6516:1" rel="noopener">Exedy Corp (7278 JP)</a> - a big non-dilutive offering, pricing 11% below undisturbed. Exedy announced a buyback.</li>
<li>Announced on the 27th of May, shares fell sharply the next day, it priced on the 3rd, and offering shares traded on the 10th. Then the price started climbing back.</li>
<li>My <a href="https://www.smartkarma.com/insights/cash-rich-exedy-7278-sees-huge-offering-offset-by-huge-buyback-watch-for-short-term-games" target="_blank" rel="noopener">first</a> and <a href="https://www.smartkarma.com/insights/exedy-7278-huge-offering-resized-watch-the-dynamics-here" target="_blank" rel="noopener">second</a> pieces argued that buyback accretion, index impact, and change in register shape all meant it was a buy. Activist Murakami agreed, now he has 6.5%. </li>
</ul>


Late May, Aisin (7259 JP) announced a sell-down of its 34% stake in Exedy Corp (7278 JP) - a big non-dilutive offering, pricing 11% below undisturbed. Exedy announced a buyback.
Announced on the 27th of May, shares fell sharply the next day, it priced on the 3rd, and offering shares traded on the 10th. Then the price started climbing back.
My first and second pieces argued that buyback accretion, index impact, and change in register shape all meant it was a buy. Activist Murakami agreed, now he has 6.5%. 


[JAPAN ACTIVISM] - Murakami Group Goes Activisting on Exedy (7278) - Room To Run

Japan

Aisin Corporation manufactures and distributes motor vehicle parts. The Company produces drive train, transmissions, clutches, disc brakes, anti-skid brake system, suspensions, oil pumps, power windows, power door locks, and more. Aisin operates sales and production subsidiaries worldwide.

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Aisin (7259 JP)

Aisin – Toyota Production Plan Indicates Further Upside

Even a small OP miss (-4.9%) and maintaining guidance allowed Aisin stock to close 4% higher and the real story is the production ramp from here,...

Mio Kato

Aisin – Underlying Improvements Materially Underappreciated

Like with Denso, Aisin maintained guidance despite relatively weak production volumes and margins. Unlike Denso, Aisin’s valuation multiples look...

Mio Kato

Unloved Japan Round-Up

Some Autos, Steel, and Electric Power companies in Japan now offering yields that compete with U.S. Treasuries. The end of the hurricane season...

Michael Allen

Toyota Cross-Shareholding - To Say a Whole Lot Is Left Would Be a US$26bn Understatement

Toyota, Toyota Industries and Denso are tag teaming to unwind some of their stake in Aisin, in a deal worth over US$1bn. While the timing of the...

Sumeet Singh

[JAPAN ACTIVISM] - Murakami Group Goes Activisting on Exedy (7278) - Room To Run

The Murakami Group has now bought 10.1% of Exedy (7278). Interestingly, NOMURA Aya bought another 1.18% on 14 June to get to 9.59%, then sold 6.79%...

Travis Lundy

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