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>
<a href="https://asia.nikkei.com/Business/Automobiles/Toyota-plans-to-make-record-11m-cars-in-fiscal-year-starting-April" target="_blank" rel="noopener"> The Nikkei is reporting</a> that Toyota has set internal production targets of 11m units for the fiscal year ending March 2023. </li>
<li>That would imply a more than 20% YoY increase in production volumes. </li>
<li>And that in turn is very positive news not just for Toyota but for several other auto-related names.</li>
</ul>



 The Nikkei is reporting that Toyota has set internal production targets of 11m units for the fiscal year ending March 2023. 
That would imply a more than 20% YoY increase in production volumes. 
And that in turn is very positive news not just for Toyota but for several other auto-related names.


Toyota – 11m Unit Production Target Is a Positive Surprise

<ul>
<li>In 2020 and 2021 we had nine conviction calls, four of which returned over 50% within just over a year.</li>
<li>Three more returned close to 40%, one returned 15% and just one was an abject failure returning -39%. </li>
<li>On average, alpha generation was 24.3% and our 2022 names are off to a good start putting up 14.7% in alpha in just over a month and a half.</li>
</ul>


In 2020 and 2021 we had nine conviction calls, four of which returned over 50% within just over a year.
Three more returned close to 40%, one returned 15% and just one was an abject failure returning -39%. 
On average, alpha generation was 24.3% and our 2022 names are off to a good start putting up 14.7% in alpha in just over a month and a half.


A Belated Look Back at Our 2020 and 2021 Conviction Calls and a Look Ahead to 2022

<ul>
<li>We believe commodity inflation and automotive production recovery will be key themes for next year.</li>
<li>While relatively obvious, these themes do not appear adequately priced in to many names.</li>
<li>Dowa Holdings stands out due to accelerating idiosyncratic value on top of thematic tailwinds.</li>
</ul>


We believe commodity inflation and automotive production recovery will be key themes for next year.
While relatively obvious, these themes do not appear adequately priced in to many names.
Dowa Holdings stands out due to accelerating idiosyncratic value on top of thematic tailwinds.


2022 High Conviction – Solar and Auto Production Play Dowa Holdings Drives Towards the Sunrise

<ul>
<li>The Nikkei reports that Sumitomo Metal Mining has developed a method to more effectively recycle Li-Ion battery materials. </li>
<li>Importantly, lithium can be recycled in addition to copper, nickel and cobalt and SMM expects costs to be competitive. </li>
<li>This is positive news but timelines also illustrate the hurdles for a quick transition.</li>
</ul>


The Nikkei reports that Sumitomo Metal Mining has developed a method to more effectively recycle Li-Ion battery materials. 
Importantly, lithium can be recycled in addition to copper, nickel and cobalt and SMM expects costs to be competitive. 
This is positive news but timelines also illustrate the hurdles for a quick transition.


SMM – Important Breakthrough for Li-Ion Battery Recycling

<ul>
<li>Dowa Holdings revised up its guidance from ¥58bn to ¥61bn at the OP level.</li>
<li>Based on historical trends if it can sustain that level of profit generation upside of 60% or more is plausible.</li>
<li>While there is risk of a YoY decline we actually believe that recovering auto production could drive a YoY rise.</li>
</ul>


Dowa Holdings revised up its guidance from ¥58bn to ¥61bn at the OP level.
Based on historical trends if it can sustain that level of profit generation upside of 60% or more is plausible.
While there is risk of a YoY decline we actually believe that recovering auto production could drive a YoY rise.


Dowa Holdings – Firing on All Cylinders

Japan

DOWA HOLDINGS, CO., LTD. mines, refines, smelts, and produces various metalrelated products.  The Company's main products include minerals, precious metals, battery materials, semiconductor and superconductivity materials, magnetic materials, and optical devices.

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Dowa Holdings (5714 JP)

Toyota – 11m Unit Production Target Is a Positive Surprise

Toyota has set internal production targets of 11m units for the FY23 implying a more than 20% YoY increase which is very positive news not just for...

Mio Kato

A Belated Look Back at Our 2020 and 2021 Conviction Calls and a Look Ahead to 2022

We take a look back at our conviction calls from 2020 and 2021 to assess performance and put the strong start to our 2022 names in context.

Mio Kato

2022 High Conviction – Solar and Auto Production Play Dowa Holdings Drives Towards the Sunrise

Dowa Holdings should not only benefit from commodity prices and auto production increases but also expanding solar production and various new...

Mio Kato

SMM – Important Breakthrough for Li-Ion Battery Recycling

SMM has developed a method to more effectively recycle Li-Ion battery materials including lithium cost competitively. This is very positive but...

Mio Kato

Dowa Holdings – Firing on All Cylinders

Based on historical trends if Dowa can sustain its T12 level of profit generation, upside of 60% or more is plausible and we actually believe that...

Mio Kato

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