Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>Oil prices have had a good run, and so have oil stocks, but INPEX can still double from here</li>
<li>High oil prices and rising production will generate strong operating cash flow growth</li>
<li>Total shareholder returns will be close to 10% this year, meanwhile the valuation languishes at 0.6x P/B, way below global peers</li>
</ul>


Oil prices have had a good run, and so have oil stocks, but INPEX can still double from here
High oil prices and rising production will generate strong operating cash flow growth
Total shareholder returns will be close to 10% this year, meanwhile the valuation languishes at 0.6x P/B, way below global peers


INPEX (1605) | The Cheapest Oil Stock in the World

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>Inpex delivered the expected strong 1Q with revenue of ¥485bn (+6.5% vs. consensus) and OP of ¥228bn (-3.8% vs. consensus). </li>
<li>Guidance was revised to ¥1,851bn (+7.2% vs. consensus) at the revenue line and to ¥924bn (+9.5% vs. consensus) at the OP line. </li>
<li>The company’s revised guidance reasonably matches with 1Q market conditions for crude oil prices and ¥/$ but the depreciating yen means upside still remains.</li>
</ul>


Inpex delivered the expected strong 1Q with revenue of ¥485bn (+6.5% vs. consensus) and OP of ¥228bn (-3.8% vs. consensus). 
Guidance was revised to ¥1,851bn (+7.2% vs. consensus) at the revenue line and to ¥924bn (+9.5% vs. consensus) at the OP line. 
The company’s revised guidance reasonably matches with 1Q market conditions for crude oil prices and ¥/$ but the depreciating yen means upside still remains.


Inpex – Upside Remains After Revised Guidance

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Quantitative Analysis

<ul>
<li>We look at short interest across Hong Kong, Japan, Korea and Taiwan in April to identify stocks/sectors that have seen the largest changes in each market.</li>
<li>Korea and Taiwan are showing a clear divergence with short notional increasing as the market moves lower, indicative of new shorts being initiated.</li>
<li>
<a href="https://www.smartkarma.com/entities/china-merchants-bank-co-ltd-3388a037-4214-4997-b45d-520518cfdb57" target="_blank" data-smartkarma-citation="entities:10987:1" rel="noopener">China Merchants Bank H (3968 HK)</a> has seen the largest short covering as the stock has tumbled in the last couple of weeks.</li>
</ul>


We look at short interest across Hong Kong, Japan, Korea and Taiwan in April to identify stocks/sectors that have seen the largest changes in each market.
Korea and Taiwan are showing a clear divergence with short notional increasing as the market moves lower, indicative of new shorts being initiated.

China Merchants Bank H (3968 HK) has seen the largest short covering as the stock has tumbled in the last couple of weeks.


Asia Short Interest: Large Moves in April

<ul>
<li>While Inpex has almost tripled from its late 2020 bottom the stock is up just 17.5% compared to the beginning of Jan 2020. </li>
<li>With crude prices 77% higher than at that time that suggests that there is plenty of upside left in this trade. </li>
<li>This is further supported by plans for volume expansion and relatively healthy reserves.</li>
</ul>


While Inpex has almost tripled from its late 2020 bottom the stock is up just 17.5% compared to the beginning of Jan 2020. 
With crude prices 77% higher than at that time that suggests that there is plenty of upside left in this trade. 
This is further supported by plans for volume expansion and relatively healthy reserves.


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

Petroleo Brasileiro  / Technical Analysis

<ul>
<li>Our neutral outlook has come down to price supports holding on the broad global indexes, including $54 on MSCI ACWIex-US (ACWX-US), $76.50 on EAFE (EFA-US), and $99 on ACWI (ACWI-US).</li>
<li>These support levels are now breaking which tilts our stance to bearish at the index level as long as the aforementioned indexes remain below their previous support levels.</li>
<li>We still see the EURO STOXX 50 and TOPIX as holding above support, while the Hang Seng and Bovespa appear to be bottoming, none of which paint a bearish picture.</li>
</ul>


Our neutral outlook has come down to price supports holding on the broad global indexes, including $54 on MSCI ACWIex-US (ACWX-US), $76.50 on EAFE (EFA-US), and $99 on ACWI (ACWI-US).
These support levels are now breaking which tilts our stance to bearish at the index level as long as the aforementioned indexes remain below their previous support levels.
We still see the EURO STOXX 50 and TOPIX as holding above support, while the Hang Seng and Bovespa appear to be bottoming, none of which paint a bearish picture.


Broad Indexes Violate Support But Bright Spots Remain; Buying Energy, Staples, and Utilities

Japan

INPEX CORPORATION is a holding company established through the reorganization of INPEX Corp and Teikoku Oil.  The Company manages subsidiaries that explores, produces, and sells oil and natural gas.

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Inpex Corp (1605 JP)

INPEX (1605) | The Cheapest Oil Stock in the World

Inpex is the cheapest oil major in the world at 0.6x P/B. High oil prices will drive higher cashflows and shareholder returns. 10% TSR is too good...

Mark Chadwick

Inpex – Upside Remains After Revised Guidance

Inpex delivered strong 1Q results and a punchy upward guidance revision but these only incorporate 1Q conditions and do not factor in the weakening...

Mio Kato

Asia Short Interest: Large Moves in April

Short notional in Korea and Taiwan has been increasing as the market has been moving lower. Shorts on China Merchant Bank have been covered in...

Brian Freitas

Inpex – Plenty of Headroom Left

While Inpex has almost tripled from its late 2020 bottom the stock is up just 17.5% compared to the beginning of Jan 2020 with crude prices 77%...

Mio Kato

Broad Indexes Violate Support But Bright Spots Remain; Buying Energy, Staples, and Utilities

We are highlighting Energy again because it is easily our favorite Sector. Additionally, defensive Sectors including Staples and Utilities display...

Vermilion Research

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