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

Consensus estimates for Honda suggest 1QFY22 OP could be roughly ¥112bn. We believe sell side analysts are not accounting for seasonality sufficiently and believe results could be materially higher than that figure driven by strength in North America.

Consensus estimates for Honda suggest 1QFY22 OP could be roughly ¥112bn. We believe sell side analysts are not accounting for seasonality sufficiently and believe results could be materially higher than that figure driven by strength in North America.

Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

Trudence Capital Advisors

Trudence Capital Advisors Private Limited is a SEBI-registered Research Analyst, holding SEBI registration number INH000015747. Our firm is dedicated to providing independent and unbiased research on Indian mid to large-cap companies. Trudence Capital is known for its counter-consensus views, with a focus on forensic research and on-ground primary investigations. Our research approach is thorough, involving detailed analysis of accounting practices and governance, alongside extensive channel checks.

Independent & Unbiased Research

In this insight, we present an on-ground narrative based on the channel interactions with dealers of <a href="https://www.smartkarma.com/entities/bajaj-auto-ltd" target="_blank" data-smartkarma-citation="entities:3613:1" rel="noopener">Bajaj Auto Ltd (BJAUT IN)</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> (two-wheelers) and <a href="https://www.smartkarma.com/entities/hero-motocorp-ltd" target="_blank" data-smartkarma-citation="entities:2391:1" rel="noopener">Hero Motocorp (HMCL IN)</a> . 
The channels we interacted with were based out of Maharashtra, Bihar, Gujarat. 
<h3>
 About India Channel Insight</h3>
<div>
Our objective with India Channel Insight is to share snippets from our channel interactions that are part of our research process. These snippets can potentially be signals for larger themes/ideas emerging out of these interactions.  
</div>

In this insight, we present an on-ground narrative based on the channel interactions with dealers of Bajaj Auto Ltd (BJAUT IN), Honda Motor (7267 JP) (two-wheelers) and Hero Motocorp (HMCL IN) . 
The channels we interacted with were based out of Maharashtra, Bihar, Gujarat. 

 About India Channel Insight

Our objective with India Channel Insight is to share snippets from our channel interactions that are part of our research process. These snippets can potentially be signals for larger themes/ideas emerging out of these interactions.  


India Channel Insight | Bajaj, Honda, Hero Motocorp

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Sona Blw Precision Forgings Lt / Equity Capital Markets

Sona Comstar (Sona) aims to raise around US$761m in its Indian IPO. The company is backed by Blackstone, which held a 66.2% stake prior to listing.Sona is an automotive technology company, designing, manufacturing and supplying highly engineered, mission critical automotive systems and components to automotive OEMs across US, Europe, India and China, for both electrified and non-electrified powertrain segments.Sona delivered a steady performance in 2019 with revenue up 16.6% and PAT up 24.1%. However, its revenue fell by 14.5% in FY20, although it still managed to grow its PAT by 4%. It registered a strong bounce bank in FY21 with 28.4% revenue growth but PAT was flat.While the company enjoys a long customer relationship, its largest customers haven’t consistently grown their contribution to revenue over the past few years.We have covered the deal background in our earlier note, <a href="https://www.smartkarma.com/insights/sona-comstar-pre-ipo-inconsistent-growth-patchy-disclosures" target="_blank" rel="noopener">Sona Comstar Pre-IPO - Inconsistent growth, patchy disclosures. </a>In this note, we will talk about the recent updates and run the deal through our ECM framework.

Sona Comstar (Sona) aims to raise around US$761m in its Indian IPO. The company is backed by Blackstone, which held a 66.2% stake prior to listing.Sona is an automotive technology company, designing, manufacturing and supplying highly engineered, mission critical automotive systems and components to automotive OEMs across US, Europe, India and China, for both electrified and non-electrified powertrain segments.Sona delivered a steady performance in 2019 with revenue up 16.6% and PAT up 24.1%. However, its revenue fell by 14.5% in FY20, although it still managed to grow its PAT by 4%. It registered a strong bounce bank in FY21 with 28.4% revenue growth but PAT was flat.While the company enjoys a long customer relationship, its largest customers haven’t consistently grown their contribution to revenue over the past few years.We have covered the deal background in our earlier note, Sona Comstar Pre-IPO - Inconsistent growth, patchy disclosures. In this note, we will talk about the recent updates and run the deal through our ECM framework.

Sona Comstar - Has Its Positives, but We Remain Unconvinced

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

In last week's Compass we highlighted what we view as compelling signals that risk appetites are improving, which is bullish for the broad market. The trend of improving risk appetites has only continued over the past week and we are moving toward an outright bullish outlook.

In last week's Compass we highlighted what we view as compelling signals that risk appetites are improving, which is bullish for the broad market. The trend of improving risk appetites has only continued over the past week and we are moving toward an outright bullish outlook.

U.S. Equity Strategy: Small-Caps Re-Emerging As Leadership

Honda reported its 4QFY21 results last Friday with revenue of ¥3,624bn (-2.3% QoQ, +4.8% YoY) and operating profit of ¥213bn (for an OPM of 5.9% compared to the OPM of -0.2% and 7.5% respectively in 4QFY20 and 3QFY21).4Q reported revenue was 4.9% higher than consensus estimates, while operating profit beat by ¥122bn (+135%). Guidance was more muted with Honda guiding 24% below consensus despite revenue guidance being 3.7% stronger.<table class="table table-striped"><tbody>
<tr>
<td style="width: 35.12%;">In ¥bn</td>
<td style="width: 23.66%;">Revenue </td>
<td style="width: 21.7%;">OP</td>
<td style="width: 19.52%;">OPM</td>
</tr>
<tr>
<td style="width: 35.12%;">Actual Results - 4QFY21</td>
<td style="width: 23.66%;">3,624</td>
<td style="width: 21.7%;">213</td>
<td style="width: 19.52%;">5.9%</td>
</tr>
<tr>
<td style="width: 35.12%;">Consensus - 4QFY21</td>
<td style="width: 23.66%;">3,453</td>
<td style="width: 21.7%;">91</td>
<td style="width: 19.52%;">2.6%</td>
</tr>
<tr>
<td style="width: 35.12%;">Surprise</td>
<td style="width: 23.66%;">4.9%</td>
<td style="width: 21.7%;">134.6%</td>
<td style="width: 19.52%;">3.3%</td>
</tr>
<tr>
<td style="width: 35.12%;"> </td>
<td style="width: 23.66%;"> </td>
<td style="width: 21.7%;"> </td>
<td style="width: 19.52%;"> </td>
</tr>
<tr>
<td style="width: 35.12%;">Guidance - FY22</td>
<td style="width: 23.66%;">15,200</td>
<td style="width: 21.7%;">660</td>
<td style="width: 19.52%;">4.3%</td>
</tr>
<tr>
<td style="width: 35.12%;">Consensus - FY22</td>
<td style="width: 23.66%;">14,664</td>
<td style="width: 21.7%;">869</td>
<td style="width: 19.52%;">5.9%</td>
</tr>
<tr>
<td style="width: 35.12%;">Difference</td>
<td style="width: 23.66%;">3.7%</td>
<td style="width: 21.7%;">-24.0%</td>
<td style="width: 19.52%;">-1.6%</td>
</tr>
</tbody></table><div style="text-align: left;" class="content-caption">Source: Company disclosures, CapIQ</div>

Honda reported its 4QFY21 results last Friday with revenue of ¥3,624bn (-2.3% QoQ, +4.8% YoY) and operating profit of ¥213bn (for an OPM of 5.9% compared to the OPM of -0.2% and 7.5% respectively in 4QFY20 and 3QFY21).4Q reported revenue was 4.9% higher than consensus estimates, while operating profit beat by ¥122bn (+135%). Guidance was more muted with Honda guiding 24% below consensus despite revenue guidance being 3.7% stronger.

In ¥bn
Revenue 
OP
OPM


Actual Results - 4QFY21
3,624
213
5.9%


Consensus - 4QFY21
3,453
91
2.6%


Surprise
4.9%
134.6%
3.3%


 
 
 
 


Guidance - FY22
15,200
660
4.3%


Consensus - FY22
14,664
869
5.9%


Difference
3.7%
-24.0%
-1.6%

Source: Company disclosures, CapIQ

Honda – Margin Guidance Is Conservative but Credit Provisions Could Still Drive a YoY Decline

Japan

Honda Motor Co., Ltd. develops, manufactures, and distributes motorcycles, automobiles, and power products such as generators and farm machinery. The Company also operates a financial credit business. Honda Motor has manufacturing facilities in the US, Canada, the UK, France, Italy, Spain, Brazil, Mexico, India, and Thailand.

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Honda Motor (7267 JP)

Honda – Potential for a 1QFY22 Blowout

We believe sell side analysts are underestimating Honda's seasonality and that OP could be materially higher than the ¥112bn project by consensus...

Mio Kato

India Channel Insight | Bajaj, Honda, Hero Motocorp

In this Insight, We present an on-ground narrative based on channel interactions with dealers of Bajaj Auto Ltd (BJAUT IN), Honda Motor (7267 JP)...

Pranav Bhavsar

Sona Comstar - Has Its Positives, but We Remain Unconvinced

Sona Comstar aims to raise around US$761m in its Indian IPO. The company is backed by Blackstone, which held a 66.2% stake prior to listing.

Sumeet Singh

U.S. Equity Strategy: Small-Caps Re-Emerging As Leadership

We continue to see compelling signals that suggest risk appetites are improving, which is bullish for the broad market. As a result, we are moving...

Vermilion Research

Honda – Margin Guidance Is Conservative but Credit Provisions Could Still Drive a YoY Decline

Honda's automotive business continues to meander but the motorcycle business remains strong and is supporting profitability.

Mio Kato

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