Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<p>Major global indexes (MSCI ACWI, ACWI ex-US, EM, and EAFE) continue to trend higher and are devoid of bearish inflections. Additionally, the US dollar (DXY) is likely headed lower, something we view as a positive risk-on signal for global equities. As a result, we remain bullish and we continue to recommend adding exposure on pullbacks.</p>

Major global indexes (MSCI ACWI, ACWI ex-US, EM, and EAFE) continue to trend higher and are devoid of bearish inflections. Additionally, the US dollar (DXY) is likely headed lower, something we view as a positive risk-on signal for global equities. As a result, we remain bullish and we continue to recommend adding exposure on pullbacks.

Japan Breaking Out; EM Remains Leadership

'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><p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p></div><div>
<p>Our best and worst pair from Wednesday's 54 results and 32 forecasts/revisions announcements is <a href="https://www.smartkarma.com/entities/fanuc-corp" target="_blank" data-smartkarma-citation="entities:752:1" rel="noopener">Fanuc (6954 JP)</a> and <a href="https://www.smartkarma.com/entities/shin-etsu-chemical-co-ltd" target="_blank" data-smartkarma-citation="entities:4481:1" rel="noopener">Shin Etsu Chemical (4063 JP)</a>.  A second pairing would be the OverBought <a href="https://www.smartkarma.com/entities/nomura-research-institute-ltd" target="_blank" data-smartkarma-citation="entities:18129:1" rel="noopener">Nomura Research Institute (4307 JP),</a> and <a href="https://www.smartkarma.com/entities/cyberagent-inc" target="_blank" data-smartkarma-citation="entities:8197:1" rel="noopener">CyberAgent (4751 JP)</a>. </p>
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</div><div class="content-caption">  Source for all charts &amp; tables: Japan Analytics</div>

• BEST &amp; WORST •
Our best and worst pair from Wednesday's 54 results and 32 forecasts/revisions announcements is Fanuc (6954 JP) and Shin Etsu Chemical (4063 JP).  A second pairing would be the OverBought Nomura Research Institute (4307 JP), and CyberAgent (4751 JP). 

  Source for all charts &amp; tables: Japan Analytics

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​01/​​​​​​​​​​​27 Fanuc, Shin-Etsu....

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Equity Bottom-Up

<p>Fanuc’s 3Q results were strong with revenue of ¥145bn (consensus ¥128bn) and OP of ¥32.9bn (consensus ¥22.0bn) and the company revised up guidance to ¥105.8bn in OP (20.5% above consensus). These are excellent results and new guidance is above our projection of ¥93.3bn. There are some positives here to be sure, but we are unconvinced that this changes the potential peak earnings in this next cycle which we expect to be about ¥185bn over the next fiscal year.</p>

Fanuc’s 3Q results were strong with revenue of ¥145bn (consensus ¥128bn) and OP of ¥32.9bn (consensus ¥22.0bn) and the company revised up guidance to ¥105.8bn in OP (20.5% above consensus). These are excellent results and new guidance is above our projection of ¥93.3bn. There are some positives here to be sure, but we are unconvinced that this changes the potential peak earnings in this next cycle which we expect to be about ¥185bn over the next fiscal year.

Fanuc – Great Results but FA Segment Continues to Worry Us

<p>We spoke to Yaskawa this afternoon to get further colour on regional trends within its businesses. In our last note we said:</p><blockquote><ul><li>We would also note that margins for the motion control segment have also started outperforming our model again. <ul>
<li>The previous peak in China resulted in very strong outperformance compared to our earnings model and given that the current nascent recovery is also very China-focused, it stands to reason that we could see outperformance again.</li>
<li>Due to these positive moves at the underlying OPM level, we believe our thinking that OP could exceed ¥30bn for the fiscal year is not unrealistic. Consensus at ¥24.4bn is too low here.</li>
</ul>
</li></ul></blockquote><p>Consensus has belatedly moved up to ¥28.1bn for estimates made after 3Q earnings, following the typical pattern of being just slightly above guidance which has now moved up to ¥27.2bn from ¥24.2bn. We stick with our previous estimate and expect OP to come in slightly above ¥30bn for the year. This should be both a positive surprise and nowhere close to being enough to justify current prices. The question then is how to trade this.</p>

We spoke to Yaskawa this afternoon to get further colour on regional trends within its businesses. In our last note we said:We would also note that margins for the motion control segment have also started outperforming our model again. 
The previous peak in China resulted in very strong outperformance compared to our earnings model and given that the current nascent recovery is also very China-focused, it stands to reason that we could see outperformance again.
Due to these positive moves at the underlying OPM level, we believe our thinking that OP could exceed ¥30bn for the fiscal year is not unrealistic. Consensus at ¥24.4bn is too low here.

Consensus has belatedly moved up to ¥28.1bn for estimates made after 3Q earnings, following the typical pattern of being just slightly above guidance which has now moved up to ¥27.2bn from ¥24.2bn. We stick with our previous estimate and expect OP to come in slightly above ¥30bn for the year. This should be both a positive surprise and nowhere close to being enough to justify current prices. The question then is how to trade this.

Yaskawa – Overvalued, But Is It Time to Long Yaskawa, Short Fanuc Again?

<p>As with other FA names, Keyence benefitted from strong demand from China in 2Q which propelled a YoY increase in overseas revenue even as the domestic market dropped almost 20%. Nevertheless, rates of decline the US and Europe were not as steep in 2Q and the company’s earnings call also suggested a positive outlook</p>

As with other FA names, Keyence benefitted from strong demand from China in 2Q which propelled a YoY increase in overseas revenue even as the domestic market dropped almost 20%. Nevertheless, rates of decline the US and Europe were not as steep in 2Q and the company’s earnings call also suggested a positive outlook

Japan

FANUC CORPORATION manufactures factory automation (FA) systems and equipments, and robots. The Company's products include computerized numerically-controlled (CNC) equipment, servo motors, laser systems, industrial robots, wire-cut electric discharge machines, and CNC drill.  Fanuc participates in a joint venture with General Electric in the FA field.

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Fanuc Corp (6954 JP)

Japan Breaking Out; EM Remains Leadership

Major global indexes continue to trend higher and are devoid of bearish inflections. As a result, we remain bullish and we continue to recommend...

Vermilion Research

🇯🇵 JAPAN • Results & Revisions 01/27 Fanuc, Shin-Etsu....

Our best and worst pair from Wednesday's 54 results and 32 forecasts/revisions announcements is Fanuc (6954 JP) and Shin Etsu Chemical (4063 JP).

Campbell Gunn

Fanuc – Great Results but FA Segment Continues to Worry Us

While Fanuc's results were extremely strong and we expect continued growth over the next few quarters, valuations are highly stretched and the next...

Mio Kato

Yaskawa – Overvalued, But Is It Time to Long Yaskawa, Short Fanuc Again?

We expect the strength of Chinese demand to support Yaskawa's earnings growth and believe that this regional skew will favour Yaskawa over more US...

Mio Kato

Keyence – Recovery Inbound

China drove an improvement in Keyence's 2Q results just like its competitors. We continue to prefer the name vs. peers but that does not mean the...

Mio Kato

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Japan Breaking Out; EM Remains Leadership

Major global indexes continue to trend higher and are devoid of bearish inflections. As a result, we remain bullish and we continue to recommend...

Vermilion Research

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​01/​​​​​​​​​​​27 Fanuc, Shin-Etsu....

Our best and worst pair from Wednesday's 54 results and 32 forecasts/revisions announcements is Fanuc (6954 JP) and Shin Etsu Chemical (4063 JP).

Campbell Gunn

Fanuc – Great Results but FA Segment Continues to Worry Us

While Fanuc's results were extremely strong and we expect continued growth over the next few quarters, valuations are highly stretched and the next...

Mio Kato

Yaskawa – Overvalued, But Is It Time to Long Yaskawa, Short Fanuc Again?

We expect the strength of Chinese demand to support Yaskawa's earnings growth and believe that this regional skew will favour Yaskawa over more US...

Mio Kato

Keyence – Recovery Inbound

China drove an improvement in Keyence's 2Q results just like its competitors. We continue to prefer the name vs. peers but that does not mean the...

Mio Kato

🇯🇵 JAPAN • Results & Revisions 01/27 Fanuc, Shin-Etsu....