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>Chiyoda results were slightly weak driven by a poor gross margin in the fourth quarter but revenue guidance was punchy at ¥500bn vs. consensus at ¥354bn. </li>
<li>We had flagged previously that Chiyoda would be moving to the favourable portion of the construction s-curve shortly and that appears to be coming through. </li>
<li>That drove OP guidance of ¥20bn which is far above consensus at ¥14bn and could eventually help Chiyoda reduce potential dilution.</li>
</ul>


Chiyoda results were slightly weak driven by a poor gross margin in the fourth quarter but revenue guidance was punchy at ¥500bn vs. consensus at ¥354bn. 
We had flagged previously that Chiyoda would be moving to the favourable portion of the construction s-curve shortly and that appears to be coming through. 
That drove OP guidance of ¥20bn which is far above consensus at ¥14bn and could eventually help Chiyoda reduce potential dilution.


Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>JPX-Nikkei 400 is composed of common stocks listed in the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.</li>
<li>A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year.</li>
<li>Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-February 2022.</li>
</ul>


JPX-Nikkei 400 is composed of common stocks listed in the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year.
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-February 2022.


JPX-Nikkei 400 Rebalance 2022: Leaderboard End-Feb 2022

<ul>
<li>Chiyoda’s 3Q numbers weren’t especially surprising nor impactful as the company continues its recovery. </li>
<li>We have been detailing for some time how current valuations look depressed and upside risk was present from the capital structure. </li>
<li>Now we believe that revenue trends are improving to the extent that they may put a floor under the stock.</li>
</ul>


Chiyoda’s 3Q numbers weren’t especially surprising nor impactful as the company continues its recovery. 
We have been detailing for some time how current valuations look depressed and upside risk was present from the capital structure. 
Now we believe that revenue trends are improving to the extent that they may put a floor under the stock.


Chiyoda – Momentum Turn Could Be Around the Corner

Chiyoda 2Q results confirmed an improving gross margin trend and continued cost control at the SG&amp;A level. With gas and copper prices at high levels the order environment should remain extremely strong and strong operating performance could open up Chiyoda’s options to reduce the dilution potential of its preferred shares.

Chiyoda 2Q results confirmed an improving gross margin trend and continued cost control at the SG&amp;A level. With gas and copper prices at high levels the order environment should remain extremely strong and strong operating performance could open up Chiyoda’s options to reduce the dilution potential of its preferred shares.

Chiyoda – LNG Prices, Preferred Shares, Put Options, Call Options and Reflexivity

We have covered Chiyoda’s SPERA hydrogen technology since 2017 and have been fascinated by the technology’s potential to make existing oil and gas infrastructure usable in a hydrogen transition. Now in partnership with ENEOS and the Queensland University of Technology, Chiyoda appears to have made significant further strides in reducing costs and investment burdens in the hydrogen supply chain.

We have covered Chiyoda’s SPERA hydrogen technology since 2017 and have been fascinated by the technology’s potential to make existing oil and gas infrastructure usable in a hydrogen transition. Now in partnership with ENEOS and the Queensland University of Technology, Chiyoda appears to have made significant further strides in reducing costs and investment burdens in the hydrogen supply chain.

Chiyoda – This Just Removed a Big Hydrogen Bottleneck

Japan

CHIYODA CORPORATION constructs, inspects, and maintains industrial plants around the world.  Those plants include oil refinery, petrochemical, food, and pharmaceutical plants.  The Company also provides comprehensive engineering services for such as energy saving, factory automation (FA), and environmental preservation for water treatment and soil purification.

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Chiyoda Corp (6366 JP)

Chiyoda – Just Getting Started

Chiyoda guidance was extremely strong and well above consensus but could still prove conservative while valuations remain depressed even ignoring...

Mio Kato

JPX-Nikkei 400 Rebalance 2022: Leaderboard End-Feb 2022

A look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-February 2022.

Janaghan Jeyakumar, CFA

Chiyoda – Momentum Turn Could Be Around the Corner

Chiyoda's current valuations look depressed and upside risk is present from the capital structure. Now revenue trends are improving to the extent...

Mio Kato

Chiyoda – LNG Prices, Preferred Shares, Put Options, Call Options and Reflexivity

With a strong order environment and strong operating performance a rising share price could open up Chiyoda’s options to reduce the dilution...

Mio Kato

Chiyoda – This Just Removed a Big Hydrogen Bottleneck

In partnership with ENEOS and the Queensland University of Technology, Chiyoda appears to have made significant further strides in reducing costs...

Mio Kato

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