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

<ul>
<li>We are seeing signs that suggest this pullback may have run its course, as several global market indexes and Sectors appear to be making a higher low near logical support.</li>
<li>This includes the S&amp;P 500, Russell 2000, MSCI ACWI (local currency), TOPIX/TOPIX Small/Nikkei 225, MSCI ACWI Technology (IXN-US), Consumer Discretionary (RXI-US), Financials (IXG-US), Industrials and (EXI-US) -- add exposure.</li>
<li>While our overall outlook remains neutral, we continue to see a plethora of attractive buying opportunities in the new leaders.</li>
</ul>


We are seeing signs that suggest this pullback may have run its course, as several global market indexes and Sectors appear to be making a higher low near logical support.
This includes the S&amp;P 500, Russell 2000, MSCI ACWI (local currency), TOPIX/TOPIX Small/Nikkei 225, MSCI ACWI Technology (IXN-US), Consumer Discretionary (RXI-US), Financials (IXG-US), Industrials and (EXI-US) -- add exposure.
While our overall outlook remains neutral, we continue to see a plethora of attractive buying opportunities in the new leaders.


Pullback Complete?; Commodities Heading Lower; Buying Growth/Cyclicals & A Few Utilities

Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>Subaru's profitability is set to improve dramatically, driven by a weaker yen</li>
<li>After two painful years, production is starting to normalise post Covid</li>
<li>At 1xPBR, we think Subaru is significantly undervalued and see at least 30% upside</li>
</ul>


Subaru's profitability is set to improve dramatically, driven by a weaker yen
After two painful years, production is starting to normalise post Covid
At 1xPBR, we think Subaru is significantly undervalued and see at least 30% upside


Subaru (7270 JP) | Production Problems in the Rear View Mirror

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.

<ul>
<li>Subaru 4QFY22 was relatively strong compared to previous quarters with revenue of ¥737bn (+4.4% vs. consensus) but material prices pushed OP down to ¥13.3bn (-48.6% vs. consensus). </li>
<li>The FY23 guidance was relatively weak at just ¥3,500bn in revenue (+4.5% vs. consensus) and OP guidance of ¥200bn (-1.0% vs. consensus). </li>
<li>However with the yen where it is we believe Subaru is on track for a return to double digit OPM and OP of ¥370-450bn.</li>
</ul>


Subaru 4QFY22 was relatively strong compared to previous quarters with revenue of ¥737bn (+4.4% vs. consensus) but material prices pushed OP down to ¥13.3bn (-48.6% vs. consensus). 
The FY23 guidance was relatively weak at just ¥3,500bn in revenue (+4.5% vs. consensus) and OP guidance of ¥200bn (-1.0% vs. consensus). 
However with the yen where it is we believe Subaru is on track for a return to double digit OPM and OP of ¥370-450bn.


Subaru – One Of The Better Weak Yen Plays

<ul>
<li>Subaru’s 3QFY22 missed consensus with revenue of ¥666bn (-5.8% QoQ, -22.3% YoY) and OP of ¥42.0bn (6.3% OPM) both looking weak. </li>
<li>The reported revenue and OP were 11.2% and 2.8% lower than consensus estimates respectively. </li>
<li>The company revised OP guidance to ¥100bn from 2Q’s ¥150bn which itself was lowered from ¥200bn but this should be the last of the bad news.</li>
</ul>


Subaru’s 3QFY22 missed consensus with revenue of ¥666bn (-5.8% QoQ, -22.3% YoY) and OP of ¥42.0bn (6.3% OPM) both looking weak. 
The reported revenue and OP were 11.2% and 2.8% lower than consensus estimates respectively. 
The company revised OP guidance to ¥100bn from 2Q’s ¥150bn which itself was lowered from ¥200bn but this should be the last of the bad news.


Subaru – Improvement in Margins Despite Revenue Decline

<ul>
<li>In keeping with its penchant for developing every type of technology imaginable, Toyota has been working on not just fuel cells but also hydrogen engines.</li>
<li>Now it is partnering with Mazda, Subaru, Yamaha and KHI to further expand on this concept and add synthetic carbon neutral fuels to the mix.</li>
<li>These efforts could potentially provide alternative zero carbon transition paths and are worth understanding.</li>
</ul>


In keeping with its penchant for developing every type of technology imaginable, Toyota has been working on not just fuel cells but also hydrogen engines.
Now it is partnering with Mazda, Subaru, Yamaha and KHI to further expand on this concept and add synthetic carbon neutral fuels to the mix.
These efforts could potentially provide alternative zero carbon transition paths and are worth understanding.


Toyota – Revving Up the Hydrogen Engine

Japan

Subaru Corp manufactures passenger cars, buses, motor vehicle parts, and industrial machinery.  The Company also produces aircraft parts and supplies it to defense agency and Boeing Co.  The Company sells its passenger cars under the Subaru brand name.

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Subaru Corp (7270 JP)

Pullback Complete?; Commodities Heading Lower; Buying Growth/Cyclicals & A Few Utilities

Signs suggest this pullback may have run its course, as several global market indexes & Sectors appear to be making a higher low near logical...

Vermilion Research

Subaru (7270 JP) | Production Problems in the Rear View Mirror

We see 3 key reasons to be bullish: 1) profits recovery on weak yen. 2) production normalization; and 3) at 1x PBR, we think Subaru is undervalued...

Mark Chadwick

Subaru – One Of The Better Weak Yen Plays

Subaru guidance is excessively conservative and sell side analysts cannot be relied on to to understand its profit structure, but we believe it is...

Mio Kato

Subaru – Improvement in Margins Despite Revenue Decline

Subaru’s 3QFY22 missed consensus with revenue of ¥666bn (-5.8% QoQ, -22.3% YoY) and OP of ¥42.0bn (6.3% OPM) both looking weak. The downward...

Mio Kato

Toyota – Revving Up the Hydrogen Engine

Toyota has been working on not just fuel cells but also hydrogen engines and is now partnering with Mazda, Subaru, Yamaha and KHI to potentially...

Mio Kato

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