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

Hitachi Construction Machinery / Equity Bottom-Up

<ul>
<li>Hitachi Construction Machinery continues to trade under ¥3,000 following the revelation that it would not be bought out by Hitachi. </li>
<li>There was little new at its conference call following the Itochu stake purchase announcement save some potential positives on the logistics front. </li>
<li>Nevertheless, with the stock trading at five-year lows vs. TOPIX and Komatsu, and consensus looking light we are extremely bullish here.</li>
</ul>


Hitachi Construction Machinery continues to trade under ¥3,000 following the revelation that it would not be bought out by Hitachi. 
There was little new at its conference call following the Itochu stake purchase announcement save some potential positives on the logistics front. 
Nevertheless, with the stock trading at five-year lows vs. TOPIX and Komatsu, and consensus looking light we are extremely bullish here.


Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

Independent Leading Corporate Governance Research

Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

<ul>
<li>I attended an extraordinary briefing on Hitachi Construction Machinery and would like to update and discuss further in this report.</li>
<li>Maxell (6810) is a good case study of a subsidiary whose shares were transferred by Hitachi. Partners are important for HCM because of the competitive environment.</li>
<li>The share price is expected to return to that range of 3,300 yen for the time being which is the fair value as a result of the due diligence.</li>
</ul>


I attended an extraordinary briefing on Hitachi Construction Machinery and would like to update and discuss further in this report.
Maxell (6810) is a good case study of a subsidiary whose shares were transferred by Hitachi. Partners are important for HCM because of the competitive environment.
The share price is expected to return to that range of 3,300 yen for the time being which is the fair value as a result of the due diligence.


Japan's Governance: Hitachi Construction Machinery (6305): Extraordinary Briefing Session

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Hitachi Construction Machinery / Event-Driven

<ul>
<li>On Thursday we saw news of a Hitachi sale of half its stake in HCM. Friday the stock traded down hard. Friday night saw news that underwhelmed further. </li>
<li>The deal is big, but it is basically a deal to get Hitachi out as parent. There is no Capital Alliance and there is no Strategic Alliance yet. </li>
<li>There simply is not much there, there yet. And the stock is less liquid than it looks, and that won't get better any time soon.</li>
</ul>


On Thursday we saw news of a Hitachi sale of half its stake in HCM. Friday the stock traded down hard. Friday night saw news that underwhelmed further. 
The deal is big, but it is basically a deal to get Hitachi out as parent. There is no Capital Alliance and there is no Strategic Alliance yet. 
There simply is not much there, there yet. And the stock is less liquid than it looks, and that won't get better any time soon.


Hitachi Construction Machinery Deal To Change "Parent" - There's Not Much There There

<ul>
<li>An NHK report today post-close said <a href="https://www.smartkarma.com/entities/hitachi-ltd" target="_blank" data-smartkarma-citation="entities:7797:1" rel="noopener">Hitachi Ltd (6501 JP)</a> would sell "about half" its stake in sub <a href="https://www.smartkarma.com/entities/hitachi-construction-machinery" target="_blank" data-smartkarma-citation="entities:19433:1" rel="noopener">Hitachi Construction Machinery (6305 JP)</a> to Itochu and Japan Industrial Partners.</li>
<li>That is quite similar to the announcement 15 months ago in the Nikkei which precipitated a large drop. While unconfirmed, it smells like there is fire behind the smoke.</li>
<li>The big question is <em>What Next</em>? and <em>What Impact</em> for shareholders? That's a tough couple of questions. </li>
</ul>


An NHK report today post-close said Hitachi Ltd (6501 JP) would sell "about half" its stake in sub Hitachi Construction Machinery (6305 JP) to Itochu and Japan Industrial Partners.
That is quite similar to the announcement 15 months ago in the Nikkei which precipitated a large drop. While unconfirmed, it smells like there is fire behind the smoke.
The big question is What Next? and What Impact for shareholders? That's a tough couple of questions. 


Hitachi Finally Bailing on Hitachi Construction (6305); Too Early To Buy

<ul>
<li>NHK reports that Hitachi will be selling roughly half of its 51% stake in HCM to Itochu and Japan Industrial Partners. </li>
<li>HCM has outperformed Komatsu over the last year and it is possible that some investors were expecting a buyout. </li>
<li>If so, and if there is a negative reaction to this news we would be looking to buy.</li>
</ul>


NHK reports that Hitachi will be selling roughly half of its 51% stake in HCM to Itochu and Japan Industrial Partners. 
HCM has outperformed Komatsu over the last year and it is possible that some investors were expecting a buyout. 
If so, and if there is a negative reaction to this news we would be looking to buy.


HCM – Hitachi Partial Stake Sale to Itochu

Japan

Hitachi Construction Machinery Co., Ltd. develops, manufactures, sells, and repairs construction machinery. The Company's products include hydraulic excavators, crawler cranes, wheel loaders, shield machines, and bulldozers. Hitachi Construction Machinery, a subsidiary of Hitachi, Ltd., markets its products worldwide through sales offices overseas.

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Hitachi Construction Machinery (6305 JP)

HCM – Buy for the Commodity Upswing

There was little new at HCM's conference call on Itochu's stake purchase but with the stock trading at five-year lows vs. TOPIX and Komatsu, and...

Mio Kato

Japan's Governance: Hitachi Construction Machinery (6305): Extraordinary Briefing Session

On January 14, I attended an extraordinary briefing by Hitachi Construction Machinery, and I would like to report on it and consider future...

Metrical Inc

Hitachi Construction Machinery Deal To Change "Parent" - There's Not Much There There

The Hitachi deal to sell a 26% stake in Hitachi Construction Machinery to Itochu and Japan Industrial Partners is deceptive. It is just a trade...

Travis Lundy

Hitachi Finally Bailing on Hitachi Construction (6305); Too Early To Buy

NHK had an article out post-close saying Hitachi would sell "About half" it's stake in Hitachi Construction Machinery to Itochu and JIP. It will be...

Travis Lundy

HCM – Hitachi Partial Stake Sale to Itochu

NHK reports that Hitachi will be selling roughly half of its 51% stake in HCM to Itochu and Japan Industrial Partners. If there is a negative...

Mio Kato

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