'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Quantitative Analysis

- MARKET COMPOSITE -<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/082/944/original/2019-03-24_06-29-24.png?1553376576" class="editor-image img-responsive" data-smartkarma-image-id="82944"></figure><div class="content-caption">Source: Japan Analytics</div>FIVE-MONTH HIGH - This bear market rally is now ending. The market composite rose by 15% from the Christmas Day low, peaking on 26th February at ¥659t. The market-value-based percentage above moving averages reached a five-month on Friday. However, the three-month change in that percentage is suggesting that a new bear phase will now commence.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/082/945/original/2019-03-24_06-37-53.png?1553377087" class="editor-image img-responsive" data-smartkarma-image-id="82945"></figure><div class="content-caption">Source: Japan Analytics</div>SELL SIGNAL - The three-month change in the market-value-based percentage above moving averages reached 38 on Friday. Although this indicator is not always reliable as a long-term indicator, it has been helpful over shorter periods and has called the most recent peak in October and December's trough.  We now expect at least a decline in the market composite to below ¥600t and, if economic conditions continue to weaken, a re-test of the December low. <hr>- SECTORS - <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/082/947/original/2019-03-24_07-15-15.png?1553379324" class="editor-image img-responsive" data-smartkarma-image-id="82947"></figure><div style="text-align: left;" class="content-caption">
NB: The 'sparklines' show the three-year trend in the weighted percentage above moving average relative to the Market Composite and the 'STDev' column is a measure of the variability of that relative measure. The table also provides averages for the breaks above and breaks below and the positive and negative crossovers.</div>SECTOR BREAKDOWN - The top six sectors remain mostly domestic and defensive. REITs,Restaurants, Healthcare, Transportation, and Utilities continue from our previous review with Other Commercial Products replacing Information Technology. Equally predictable is the bottom half-dozen - Banks, Non-Bank Finance, Autos, Retail, and Metals remain from two weeks ago, with Energy replacing Construction. With the Yen having broken the ¥110 level against the US dollar on Friday, we would expect the Autos, Machinery, Electrical Equipment, Technology Hardware, and Chemicals sectors to weaken further as indicated by their Negative Crossover percentages. <hr>- COMPANIES -COMPANY MOVING AVERAGE OUTLIERS - As with the Market Composite and Sectors, the Moving Average Outlier indicator uses a weighted sum of each company's share price relative to its 5-day, 20-day, 60-day, 120-day and 240-day moving averages. 'Extreme' values are weighted sums greater than 100% and less than -100%. We would caution that this indicator is best used for timing shorter-term reversals and, in many cases, higher highs and lower lows will be seen. <div class="content-highlight">
In the DETAIL section below, we highlight the current top and bottom twenty-five large capitalisation outliers, as well as those companies that have seen the most significant positive and negative changes in their outlier percentage in the last two weeks and provide short comments on companies of particular note.
Our most extreme positive outlier two weeks ago, <a href="https://www.smartkarma.com/entities/2709" target="_blank" data-smartkarma-citation="entities:2709:1">AnGes (4563 JP)</a> is still the most extreme large cap positive outlier and gained a further 8% over the fortnight. We recommend taking short-term profits.
In the same sector <a href="https://www.smartkarma.com/entities/21001" target="_blank" data-smartkarma-citation="entities:21001:1">Eisai (4523 JP)</a> is the most extreme negative outlier after falling by 16.6% on Friday on the discontinuation of the clinical phase 3 trials of Biogen's Alzheimer's treatment Aducanumab as the primary endpoint is unlikely to be reached. Now at an eight-month Relative Price Score low, a short-term recovery to above ¥8,000 is likely.

</div><div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/082/959/original/2019-03-24_08-46-23.png?1553385811" class="editor-image img-responsive" data-smartkarma-image-id="82959"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/082/963/original/2019-03-24_10-37-51.png?1553391481" class="editor-image img-responsive" data-smartkarma-image-id="82963"></figure>Source: Japan Analytics
</div>

- MARKET COMPOSITE -Source: Japan AnalyticsFIVE-MONTH HIGH - This bear market rally is now ending. The market composite rose by 15% from the Christmas Day low, peaking on 26th February at ¥659t. The market-value-based percentage above moving averages reached a five-month on Friday. However, the three-month change in that percentage is suggesting that a new bear phase will now commence.Source: Japan AnalyticsSELL SIGNAL - The three-month change in the market-value-based percentage above moving averages reached 38 on Friday. Although this indicator is not always reliable as a long-term indicator, it has been helpful over shorter periods and has called the most recent peak in October and December's trough.  We now expect at least a decline in the market composite to below ¥600t and, if economic conditions continue to weaken, a re-test of the December low. - SECTORS - 
NB: The 'sparklines' show the three-year trend in the weighted percentage above moving average relative to the Market Composite and the 'STDev' column is a measure of the variability of that relative measure. The table also provides averages for the breaks above and breaks below and the positive and negative crossovers.SECTOR BREAKDOWN - The top six sectors remain mostly domestic and defensive. REITs,Restaurants, Healthcare, Transportation, and Utilities continue from our previous review with Other Commercial Products replacing Information Technology. Equally predictable is the bottom half-dozen - Banks, Non-Bank Finance, Autos, Retail, and Metals remain from two weeks ago, with Energy replacing Construction. With the Yen having broken the ¥110 level against the US dollar on Friday, we would expect the Autos, Machinery, Electrical Equipment, Technology Hardware, and Chemicals sectors to weaken further as indicated by their Negative Crossover percentages. - COMPANIES -COMPANY MOVING AVERAGE OUTLIERS - As with the Market Composite and Sectors, the Moving Average Outlier indicator uses a weighted sum of each company's share price relative to its 5-day, 20-day, 60-day, 120-day and 240-day moving averages. 'Extreme' values are weighted sums greater than 100% and less than -100%. We would caution that this indicator is best used for timing shorter-term reversals and, in many cases, higher highs and lower lows will be seen. 
In the DETAIL section below, we highlight the current top and bottom twenty-five large capitalisation outliers, as well as those companies that have seen the most significant positive and negative changes in their outlier percentage in the last two weeks and provide short comments on companies of particular note.
Our most extreme positive outlier two weeks ago, AnGes (4563 JP) is still the most extreme large cap positive outlier and gained a further 8% over the fortnight. We recommend taking short-term profits.
In the same sector Eisai (4523 JP) is the most extreme negative outlier after falling by 16.6% on Friday on the discontinuation of the clinical phase 3 trials of Biogen's Alzheimer's treatment Aducanumab as the primary endpoint is unlikely to be reached. Now at an eight-month Relative Price Score low, a short-term recovery to above ¥8,000 is likely.


Source: Japan Analytics


🇯🇵 Japan: Moving Average Outliers - Market Sell Signal Generated + 6920, 8036, 6758, 2326, 3064

Asia Healthcare Analyst, Pathology Associates Limited

Dion Stéfan Büchner M.D., FCAP

Asia Healthcare Analyst

Pathology Associates Limited

Equity Bottom-Up

Key highlights<ul>
<li>Lenvima, Eisai’s key revenue driver, performed across regions (+43% to ¥14.3b in the US, +170% to ¥4.3b in Japan and +40% to ¥3.7b in EU)</li>
<li>Domestic operations also got a boost by Humira, which grew ~10% to ¥24b (~15% of Japan sales).</li>
<li>However, the highlight was a ¥22.2b milestone from Merck (due to Lenvima’s approval for HCC in the US, EU and China) which drove overall sales by 8.8% to ¥310b and gross margin expansion by almost 600bps to 70%</li>
<li>While Core SG&amp;A grew ~17% to ¥105b, primarily due to inclusion of ¥7.9b paid to Merck &amp; Co., under the strategic collaboration for Lenvima, Core R&amp;D declined by 9% to ¥60b</li>
<li>As a result, Core EBIT and EPS almost doubled to ¥53b and ¥126 / share respectively</li>
<li>While FY18 sales guidance was revised marginally (+0.7% to ¥636.5b), Reported EBIT guidance was revised by +5% to ¥90b due to improved efficiency YTD (we however attribute it to further visibility on potential milestones from Merck &amp; Co.)</li>
</ul>

Key highlights
Lenvima, Eisai’s key revenue driver, performed across regions (+43% to ¥14.3b in the US, +170% to ¥4.3b in Japan and +40% to ¥3.7b in EU)
Domestic operations also got a boost by Humira, which grew ~10% to ¥24b (~15% of Japan sales).
However, the highlight was a ¥22.2b milestone from Merck (due to Lenvima’s approval for HCC in the US, EU and China) which drove overall sales by 8.8% to ¥310b and gross margin expansion by almost 600bps to 70%
While Core SG&amp;A grew ~17% to ¥105b, primarily due to inclusion of ¥7.9b paid to Merck &amp; Co., under the strategic collaboration for Lenvima, Core R&amp;D declined by 9% to ¥60b
As a result, Core EBIT and EPS almost doubled to ¥53b and ¥126 / share respectively
While FY18 sales guidance was revised marginally (+0.7% to ¥636.5b), Reported EBIT guidance was revised by +5% to ¥90b due to improved efficiency YTD (we however attribute it to further visibility on potential milestones from Merck &amp; Co.)


Eisai 1H FY18 (YE Mar'19) Results - First Glance

Japan TMT Analyst

Pelham Smithers

Market Intel on Asian Tech with a Japan focus

Pelham Smithers Associates

Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods. 

Research is provided by the following:
Pelham Smithers: Macro, consumer electronics, telecoms & pharma
Joel Scheiman: Electronics materials / components
Julie Boote: Autos
Will Nestuk: Capital goods, machinery & transportation equipment parts
Thao Nguyen: eCommerce, internet content, marketing & advertising

Firms have spent billions of dollars developing a means of reversing Alzheimer's Disease. A new report suggests that they've been looking in the wrong direction. If the report is correct, this is great news for Alzheimer's patients, their families and there carers. It is not so good for the pharmaceutical industry, particularly those companies pushing to get their drugs approved because there is no alternative on the market.

Firms have spent billions of dollars developing a means of reversing Alzheimer's Disease. A new report suggests that they've been looking in the wrong direction. If the report is correct, this is great news for Alzheimer's patients, their families and there carers. It is not so good for the pharmaceutical industry, particularly those companies pushing to get their drugs approved because there is no alternative on the market.

Alzheimer's Disease and the Link with the Herpes Simplex Virus

Thematic (Sector/Industry)

CYCLICAL SECTORS RALLY WITH THE MARKET - Japanese equities have rallied 3.6% over the last two weeks, and the market composite is now flat since the end of April. Mean reversion was widespread and the range from worst to best three-month change narrowed from 22.5% to 18.1%. Banks, Energy, Chemicals, and Metals led, while REITs, Media,Telcom and Retail lagged. Domestic growth sectors (Internet, Commercial Services, Information Technology and Healthcare) are still well ahead over three months…

CYCLICAL SECTORS RALLY WITH THE MARKET - Japanese equities have rallied 3.6% over the last two weeks, and the market composite is now flat since the end of April. Mean reversion was widespread and the range from worst to best three-month change narrowed from 22.5% to 18.1%. Banks, Energy, Chemicals, and Metals led, while REITs, Media,Telcom and Retail lagged. Domestic growth sectors (Internet, Commercial Services, Information Technology and Healthcare) are still well ahead over three months…

Japan Fortnightly Update: Banks to Neutral/Utilities to Negative - Results Momentum Still Slowing

Background - <a href="https://www.smartkarma.com/entities/21001" target="_blank" data-smartkarma-citation="entities:21001:1">Eisai Co Ltd (4523 JP)</a> on December 21, 2017, announced that 12 months data on BAN2401 did not meet its primary endpoint (<a href="https://www.eisai.com/news/news201773.html" target="_blank">link</a>), leaving little hope for 18 months data.As a result, earlier on July 6, 2018, when Eisai announced positive efficacy at the highest treatment dose of 10mg/kg (monthly / bi-weekly) from the same study, based on 18 months data, we advised caution (<a href="https://www.smartkarma.com/insights/ban2401demonstrates-statistically-significant-clinical-data-for-18-months-study" target="_blank" data-smartkarma-citation="insights:21938">BAN2401Demonstrates Statistically Significant Clinical Data for 18 Months Study</a>) on the positive stock reaction…

Background - Eisai Co Ltd (4523 JP) on December 21, 2017, announced that 12 months data on BAN2401 did not meet its primary endpoint (link), leaving little hope for 18 months data.As a result, earlier on July 6, 2018, when Eisai announced positive efficacy at the highest treatment dose of 10mg/kg (monthly / bi-weekly) from the same study, based on 18 months data, we advised caution (BAN2401Demonstrates Statistically Significant Clinical Data for 18 Months Study) on the positive stock reaction…

BAN2401 Detailed Data Presented at AAIC 2018 Validates Our Initial Concerns

Japan

Eisai Co., Ltd. produces prescription drugs and medical equipment and sells mainly to sales agents and subsidiaries.  Through its subsidiary, Sanko Junyaku, the Company produces and sells diagnostic drugs.  Eisai also markets its products through related companies in the US, Europe, and Asia.  The Company also manufactures and sells foods, livestock feeds, chemical, and agrochemicals.

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Eisai Co Ltd (4523 JP)

🇯🇵 Japan: Moving Average Outliers - Market Sell Signal Generated + 6920, 8036, 6758, 2326, 3064

- MARKET COMPOSITE -FIVE-MONTH HIGH - This bear market rally is now ending. The market composite rose by 15% from the Christmas Day low, peaking on...

Campbell Gunn

Eisai 1H FY18 (YE Mar'19) Results - First Glance

Key highlights Lenvima, Eisai’s key revenue driver, performed across regions (+43% to ¥14.3b in the US, +170% to ¥4.3b in Japan and +40% to ¥3.7b...

Dion Stéfan Büchner M.D., FCAP

Alzheimer's Disease and the Link with the Herpes Simplex Virus

Firms have spent billions of dollars developing a means of reversing Alzheimer's Disease. A new report suggests that they've been looking in the...

Pelham Smithers Associates

Japan Fortnightly Update: Banks to Neutral/Utilities to Negative - Results Momentum Still Slowing

CYCLICAL SECTORS RALLY WITH THE MARKET - Japanese equities have rallied 3.6% over the last two weeks, and the market composite is now flat since...

Campbell Gunn

BAN2401 Detailed Data Presented at AAIC 2018 Validates Our Initial Concerns

Background - Eisai Co Ltd (4523 JP) on December 21, 2017, announced that 12 months data on BAN2401 did not meet its primary endpoint (link),...

Dion Stéfan Büchner M.D., FCAP

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