Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

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>The share price has dropped back 10% in conjunction with the Omicron sell-off. Given the company's sales and profit growth trajectories, this looks like a buying opportunity.</li>
<li>Global Logic, power grids, automotive and other businesses are contributing to profit growth despite the semiconductor shortage and higher materials prices.</li>
<li>Raising share price target to ¥8,500 on revised sales and profit forecast. Upside potential 25%.</li>
</ul>


The share price has dropped back 10% in conjunction with the Omicron sell-off. Given the company's sales and profit growth trajectories, this looks like a buying opportunity.
Global Logic, power grids, automotive and other businesses are contributing to profit growth despite the semiconductor shortage and higher materials prices.
Raising share price target to ¥8,500 on revised sales and profit forecast. Upside potential 25%.


Hitachi Ltd. (6501 JP): Buy into the Pull-Back

Equity Long-Short Analyst

Pyari Menon

Thematic (Sector/Industry)

In this report, we have crawled through over ten years of technical publications to analyze the Fuel Cell space. The top five companies we screen from a technology perspective are <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a>, <a href="https://www.smartkarma.com/entities/honda-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:154:1" rel="noopener">Honda Motor (7267 JP)</a>, <a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" data-smartkarma-citation="entities:155:1" rel="noopener">Hyundai Motor Co (005380 KS)</a>, <a href="https://www.smartkarma.com/entities/general-motors-co" target="_blank" data-smartkarma-citation="entities:18811:1" rel="noopener">General Motors Co (GM US)</a>, and <a href="https://www.smartkarma.com/entities/bloom-energy-corp" target="_blank" data-smartkarma-citation="entities:34062:1" rel="noopener">Bloom Energy Corp (BE US)</a> Technologically automakers (Japanese in particular) dominate the fuel cell sector. Among pure plays, <a href="https://www.smartkarma.com/entities/bloom-energy-corp" target="_blank" data-smartkarma-citation="entities:34062:1" rel="noopener">Bloom Energy Corp (BE US)</a> and <a href="https://www.smartkarma.com/entities/ballard-power-systems-inc" target="_blank" data-smartkarma-citation="entities:25813:1" rel="noopener">Ballard Power Systems (BLDP CN)</a> are best positioned and perhaps the only ones who come somewhat close to the auto OEMs from a technology perspective. Some lesser-known private players that have gained traction in technological terms over the last five years are Dioxide Materials, 24M Technologies, and Bayotech.Currently, batteries have a decisive advantage over fuel cells, and as a business proposition, fuel cells have so far mostly failed to live up to their technological promise. However, fuel cells using hydrogen generated from renewables offer a much lower environmental impact across their lifecycle. This sustains investor interest in the hope that system price declines, economies of scale, lower cost of renewable energy generation, and maturation as a business could make FC competitive longer term.

In this report, we have crawled through over ten years of technical publications to analyze the Fuel Cell space. The top five companies we screen from a technology perspective are Toyota Motor (7203 JP), Honda Motor (7267 JP), Hyundai Motor Co (005380 KS), General Motors Co (GM US), and Bloom Energy Corp (BE US) Technologically automakers (Japanese in particular) dominate the fuel cell sector. Among pure plays, Bloom Energy Corp (BE US) and Ballard Power Systems (BLDP CN) are best positioned and perhaps the only ones who come somewhat close to the auto OEMs from a technology perspective. Some lesser-known private players that have gained traction in technological terms over the last five years are Dioxide Materials, 24M Technologies, and Bayotech.Currently, batteries have a decisive advantage over fuel cells, and as a business proposition, fuel cells have so far mostly failed to live up to their technological promise. However, fuel cells using hydrogen generated from renewables offer a much lower environmental impact across their lifecycle. This sustains investor interest in the hope that system price declines, economies of scale, lower cost of renewable energy generation, and maturation as a business could make FC competitive longer term.

Stock Ideas From Data Mining Technical Publications: A Look into Fuel Cells

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

<h3>What’s Original?</h3>
In this original, we have discussed some of the key aspects highlighted in Kishida’s policy statements along with the current status of these policies and companies that are likely to benefit.

What’s Original?
In this original, we have discussed some of the key aspects highlighted in Kishida’s policy statements along with the current status of these policies and companies that are likely to benefit.

Kishida as Prime Minister: The Path Ahead

Global Special Situations & Strategy, SR Services Ltd

David Lepper

Global Special Situations & Strategy

SR Services Ltd

SR Services provides Strategic Knowledge and Solutions services for Family Offices and Corporate Business. 

We deliver this via advisory services, strategic planning, opportunity analysis/sourcing, as well as solution implementation. 

Whilst, we create intellectual discipline and operational leverage for your projects or daily activities, our ultimate objective is to empower whilst enhancing your decision making. 

Strategic Knowledge and Solutions

Cross Asset Strategy

<ul>
<li>
Our Q3-2021 All Cap High-Risk screen of stocks produced a market-cap-weighted average price return of 2% and a simple average decline of 0.2%.</li>
<li>
Out of the 34 stocks that appeared in our Q3-2021 screen, 15 stocks saw an average share price decline of 11.5%, whilst 19 stocks appreciated on average by 14%. The two biggest declining stock  were down 25% and 19% respectively.</li>
<li>Our Q4 2021 screen, with 38 names (up from 34 seen in Q3 and Q2 2021) delivers an interesting composition this quarter, </li>
<li>
As in the previous few quarters, we anticipate the possibility of a risk of deteriorating credit metrics during the next few quarters: Q4 2021’s Altman Z score rests at 1.23, which is just up on Q3 2021’s level of 1.19.</li>
</ul>



Our Q3-2021 All Cap High-Risk screen of stocks produced a market-cap-weighted average price return of 2% and a simple average decline of 0.2%.

Out of the 34 stocks that appeared in our Q3-2021 screen, 15 stocks saw an average share price decline of 11.5%, whilst 19 stocks appreciated on average by 14%. The two biggest declining stock  were down 25% and 19% respectively.
Our Q4 2021 screen, with 38 names (up from 34 seen in Q3 and Q2 2021) delivers an interesting composition this quarter, 

As in the previous few quarters, we anticipate the possibility of a risk of deteriorating credit metrics during the next few quarters: Q4 2021’s Altman Z score rests at 1.23, which is just up on Q3 2021’s level of 1.19.


Screening the Silk Road: Q4 2021 High-Risk Names to Avoid

Hitachi Construction Machinery / Equity Bottom-Up

HCM 2QFY21 results were strong with ¥246bn in revenue (+7.6% QoQ, +28.7% YoY) and OP of ¥26bn (OPM of 10.7% compared to 3.2% and 5.2% respectively in 2QFY21 and 1QFY22). FY guidance was revised up to revenue of ¥920bn (+4.5% vs. previous guidance) and OP of ¥62bn (+19.4% but implying an OPM of 8% in 2HFY22).

HCM 2QFY21 results were strong with ¥246bn in revenue (+7.6% QoQ, +28.7% YoY) and OP of ¥26bn (OPM of 10.7% compared to 3.2% and 5.2% respectively in 2QFY21 and 1QFY22). FY guidance was revised up to revenue of ¥920bn (+4.5% vs. previous guidance) and OP of ¥62bn (+19.4% but implying an OPM of 8% in 2HFY22).

HCM – Could Retest All-Time Highs Given Time But…

Japan

Hitachi, Ltd. manufactures communications and electronic equipment, heavy electrical and industrial machinery, and consumer electronics.  The Company's diverse product line ranges from nuclear power systems to kitchen appliances. Hitachi also operates subsidiaries in the wire and cable, metal, and chemical industries.

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Hitachi Ltd Adr (HTHIY US)

Hitachi Ltd. (6501 JP): Buy into the Pull-Back

Share price down 10% in Omicron sell-off, but operating profit should continue to grow, most business contributing to growth and valuations...

Scott Foster

Stock Ideas From Data Mining Technical Publications: A Look into Fuel Cells

Fuel cells have a place in the green energy market but with poor economics, they have a problem finding where that is. Japanese automakers...

Pyari Menon

Kishida as Prime Minister: The Path Ahead

In this original, we have discussed some of the key aspects highlighted in Kishida’s policy statements along with the current status of these...

Mio Kato

Screening the Silk Road: Q4 2021 High-Risk Names to Avoid

As we move through into Q1 2022, we expect to see volatility around highly priced & leveraged names. This screen is a key starting point towards...

David Lepper

HCM – Could Retest All-Time Highs Given Time But…

HCM 2Q results reassured with margins rebounding and the stock is up 6.8% with guidance for 2H still looking far too conservative, but there is the...

Mio Kato

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