'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

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.

Thematic (Sector/Industry)

<div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/144/315/original/2020-07-05_13-49-05.png?1593924588" class="editor-image img-responsive" data-smartkarma-image-id="144315"></figure><div class="content-caption">Source • Japan Analytics</div>
<p><strong>PROFITS TIMELINE</strong> - As the pace of quarterly results begins to pick up, the downward drift of trailing and forecast profits continue. Forecast Net Income is now below the trough of the previous cycle, and the trailing number should follow soon. Supported by the Bank of Japan, aggregate market capitalisation is above that of the early 2019 profit peak. As a result, earnings multiples are at the upper end of the five-year range, although there is evidence of some resistance at these levels.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/144/329/original/2020-07-05_15-13-29.png?1593929621" class="editor-image img-responsive" data-smartkarma-image-id="144329"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/144/331/original/2020-07-05_15-17-50.png?1593929930" class="editor-image img-responsive" data-smartkarma-image-id="144331"></figure><div class="content-caption">Source • Japan Analytics</div>
<p><strong>RESULTS &amp; REVISION SCORES</strong> - Our Scoring methodology tells the same 'story'. We are one to two quarters away from the bottom of this earnings cycle - a bottom that is likely to match that of 2009. Whether a 10% decline in market value from pre-COVID-19 levels is sufficient 'recognition' of the temporary, and in some cases, permanent, impairment of the earnings generation capability and momentum remains to be seen. We suspect the coming 'next wave' of downward revisions, as shown by Friday's one positive to nine negative ratio, will limit any upside over the summer months. </p>
<p style="text-align: center;"><strong>DAILY STATS</strong></p>
</div><hr><div><p style="text-align: center;"><strong>19 Quarterly Results</strong></p></div><div>
<ul>
<li>
<strong>Results Score:</strong> 7 Positive / 2 Neutral / 10 Negative</li>
<li>
<strong>Average Results Score Change</strong>:-2.0</li>
<li>
<strong>Average % Change in Revenue: </strong>-7.8% Quarter YoY* / +3.1% Rolling TTM YoY</li>
<li>
<strong>Average Operating Profit Margin Change:</strong> -0.4ppt</li>
</ul>
<div class="content-remarks"><p>* Excluding Kasumigaseki Capital</p></div>
</div><hr><div><p style="text-align: center;"><br><strong>7 Annual • 3 Interim Forecasts/Revisions</strong></p></div><div><ul>
<li>
<strong>Annual Forecast/Revision Score:</strong> 1 Positive / 0 Neutral / 6 Negative</li>
<li>
<strong>Interim Forecast/Revision Score Change:</strong> 0 Positive / 0 Neutral / 3 Negative</li>
<li>
<strong>Average Forecast/Revision Score Change:</strong> -15.3</li>
</ul></div>


Source • Japan Analytics
PROFITS TIMELINE - As the pace of quarterly results begins to pick up, the downward drift of trailing and forecast profits continue. Forecast Net Income is now below the trough of the previous cycle, and the trailing number should follow soon. Supported by the Bank of Japan, aggregate market capitalisation is above that of the early 2019 profit peak. As a result, earnings multiples are at the upper end of the five-year range, although there is evidence of some resistance at these levels.
Source • Japan Analytics
RESULTS &amp; REVISION SCORES - Our Scoring methodology tells the same 'story'. We are one to two quarters away from the bottom of this earnings cycle - a bottom that is likely to match that of 2009. Whether a 10% decline in market value from pre-COVID-19 levels is sufficient 'recognition' of the temporary, and in some cases, permanent, impairment of the earnings generation capability and momentum remains to be seen. We suspect the coming 'next wave' of downward revisions, as shown by Friday's one positive to nine negative ratio, will limit any upside over the summer months. 
DAILY STATS
19 Quarterly Results


Results Score: 7 Positive / 2 Neutral / 10 Negative

Average Results Score Change:-2.0

Average % Change in Revenue: -7.8% Quarter YoY* / +3.1% Rolling TTM YoY

Average Operating Profit Margin Change: -0.4ppt

* Excluding Kasumigaseki Capital
 7 Annual • 3 Interim Forecasts/Revisions

Annual Forecast/Revision Score: 1 Positive / 0 Neutral / 6 Negative

Interim Forecast/Revision Score Change: 0 Positive / 0 Neutral / 3 Negative

Average Forecast/Revision Score Change: -15.3


🇯🇵 JAPAN • Results & Revisions 3rd July • The Next Wave

Japan

HASEGAWA CO., LTD. wholesales and retails Buddhist altars and accessories. The Company's sales network is located primarily in North Kyushu and the Tokyo metropolitan area.  Hasegawa also operates home centers, bowling alleys, and gravestone business.

TAY TWO CO., LTD. operates a used book store chain in the Chugoku, Kansai, and Kanto areas of Japan.  The Company sells mainly used books and video game software, videos, and CDs.  The Company also has a video rental business.

ENCHO CO., LTD. operates a home center chain based in Shizuoka Prefecture.  The Company sells construction materials, lumber, gardening supplies, power tools, metal materials for construction, interior materials, electrical equipment, lamps, automobile parts, and leisure goods based in Shizuoka.  The Company also operates new housing construction and renovation businesses.

TRUST CO., LTD. exports and sells used cars to individual buyers through internet website.  The Company exports used cars mainly to Africa, Central South America, and Oceania.

HOUSE OF ROSE Co., Ltd. wholesales and retails natural cosmetics and miscellaneous goods at department stores and specialty stores.  The Company also imports cosmetics from foreign countries.

International Conglomerate of Distribution for Automobile Holdings Co., Ltd. operates automibile dealerships.  The Company sales new cars, new import cars, and used cars. ICDA Holdings also operates automobile recycling business.

KANSEKI CO., LTD., a Tochigi-based company, operates home improvement centers in the North Kanto area.  The Company also merchandises housewares, motor vehicle supplies, and outdoor sports equipment, and related-supplies.

SEKICHU CO., LTD. operates home center stores in Gunma, Tochigi, and Saitama prefectures.  The Company mainly sells lumber, hardware, paint, gardening goods, and exterior products.  Sekichu also operates eyeglasses stores and sports/ leisure goods and automobile accessories stores.

APPLE INTERNATIONAL CO., LTD. exports used cars and related auto-parts to South-Eastern countries.  The Company is a franchisee of Apple Group, which buys and sells used cars.

Pacific Net Co., Ltd. operates personal computers and its peripheral equipment recycle business.  The Company also provides personal computer rental and data erasing services.

Esprit Holdings Limited, through its subsidiaries, designs, licenses, sources, wholesales, and retails high quality life-style products under the ESPRIT brand name in Europe, Asia Pacific and North America.  The Company also sells Red Earth cosmetics, skin, and body care products and operates Salon Esprit in Asia Pacific.

Beauty Community PCL engages in cosmetic and beauty products retail business including make-up, Skin care and accessories.

Sunfar Computer Co., Ltd. sells personal computers, computer peripheral equipment, computer related supplies, and computer software.

Sunfonda Group Holdings Limited is an automobile dealer. The Company offers luxury and ultra-luxury automobiles in northwestern China.

Bossini International Holdings Limited, through its subsidiaries, retails and distributes garment.

Sanlian Commercial Co., Ltd. operates in retail businesses. The Company sells cleaning products, household electrical appliances, groceries, stationery, and other merchandise.

IT City Public Company Limited is a retailer of computers, computer peripherals and accessories, and office equipment.  The Company also provides computer repair and maintenance services.

King Fook Holdings Limited, through its subsidiaries, retails jewelry and trades bullions. The Company also provides securities and commodities broking services as well as wholesales diamond.

Cybernaut International Holdings Company Limited manufactures and distributes industrial machinery products. The Company produces molten steel flow control equipment, industrial accessories, and other products. Cybernaut International Holdings also offers equipment regular replacement services.

Grand Baoxin Auto Group Limited operates as a automobile sales and service company. The Company focuses on selling mid-and-high end branded cars. Grand Baoxin Auto Group also offers used car sale, after-sales maintenance, and other services.

Bike 0 & Company LTD. is a used motorcycle dealer. The Company mainly advertises its business in magazines, websites, radio, and TV commercials to lure potential customers. Bike also provides maintenance services at satellite retail stores, participates in motorcycle auctions, and sells used parts.

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Bike O & Co Ltd (3377 JP)

🇯🇵 JAPAN • Results & Revisions 3rd July • The Next Wave

PROFITS TIMELINE - As the pace of quarterly results begins to pick up, the downward drift of trailing and forecast profits continue. Forecast Net...

Campbell Gunn

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