Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

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>Combustible tobacco is declining globally, but <a href="https://www.smartkarma.com/entities/japan-tobacco-inc" target="_blank" data-smartkarma-citation="entities:13498:1" rel="noopener">Japan Tobacco (2914 JP)</a> is defying the odds by outperforming the industry significantly through capturing market share from competitors.</li>
<li>Also in Heated Tobacco, Japan Tobacco is slowly but steadily capturing market share from IQOS and other heated tobacco makers.</li>
<li>There will be no price hikes this year, but we think that there's enough spillover from the price hikes in the past 3-4 years to maintain JT's OP growth momentum.</li>
</ul>


Combustible tobacco is declining globally, but Japan Tobacco (2914 JP) is defying the odds by outperforming the industry significantly through capturing market share from competitors.
Also in Heated Tobacco, Japan Tobacco is slowly but steadily capturing market share from IQOS and other heated tobacco makers.
There will be no price hikes this year, but we think that there's enough spillover from the price hikes in the past 3-4 years to maintain JT's OP growth momentum.


Japan Tobacco High Conviction Call: No Price Hikes This Year, But Profits Poised to Soar

Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>OVERSEAS. SPX eakes out gains despite weak ISM Manufacutring in light trading ahead of July 4th Independence Day Holiday; TESLA +6.9% on big 2Q delivery numbers </li>
<li>JAPAN. NKY Futs -0.4% vs Cash; JPYUSD 144.7; Strong BOJ Tankan print drives NKY to new highs;  JP land prices continue to rise; Support for JP foundry goals from IBM</li>
<li>NUGGET.  Japan's passing of the GX Promotion Law enables the issuance of ¥20 trillion in bonds and promotes ¥150 trillion of decarbonization investment over the next decade. Investment opportunities abound!</li>
</ul>


OVERSEAS. SPX eakes out gains despite weak ISM Manufacutring in light trading ahead of July 4th Independence Day Holiday; TESLA +6.9% on big 2Q delivery numbers 
JAPAN. NKY Futs -0.4% vs Cash; JPYUSD 144.7; Strong BOJ Tankan print drives NKY to new highs;  JP land prices continue to rise; Support for JP foundry goals from IBM
NUGGET.  Japan's passing of the GX Promotion Law enables the issuance of ¥20 trillion in bonds and promotes ¥150 trillion of decarbonization investment over the next decade. Investment opportunities abound!


Ohayo Japan| SPX Gains Despite Weak Factory PMI; NUGGET: Japan's GX Promotion Law - Opportunity !

<ul>
<li>OVERSEAS. SPX +0.4% AS Banks lead after passing Fed's stress test= PAYOUTS ! 2 Fed hikes more likely says Swaps markets; US 1Q GDP REVISED UP to 2%.</li>
<li>JAPAN. NKY Futs +0.3% vs Cash; USDJPY 144.8; End of Month/Quarter; Flat NKY Today = +18.5% QTD..best Quarter in a Decade !  Big Japan AGM Week -Biz leaders get heat.</li>
<li>NUGGET. Kandenko(1942) set to benefit from the massive drive to decarbonize by  key client TEPCO.  Co is still trading below book, is net cash, with earnings set to grow !</li>
</ul>


OVERSEAS. SPX +0.4% AS Banks lead after passing Fed's stress test= PAYOUTS ! 2 Fed hikes more likely says Swaps markets; US 1Q GDP REVISED UP to 2%.
JAPAN. NKY Futs +0.3% vs Cash; USDJPY 144.8; End of Month/Quarter; Flat NKY Today = +18.5% QTD..best Quarter in a Decade !  Big Japan AGM Week -Biz leaders get heat.
NUGGET. Kandenko(1942) set to benefit from the massive drive to decarbonize by  key client TEPCO.  Co is still trading below book, is net cash, with earnings set to grow !


Ohayo Japan |NUGGET: Tepco ¥9 Trillion on Decarbonization - Boon for KANDENDO

<ul>
<li>Japan Tobacco's 1Q23 performance exceeded consensus expectations, with revenue and OP surpassing by 5.3% and 12.3%, respectively.</li>
<li>Consensus expected no volume growth for Japan Tobacco in declining combustible tobacco market; targeted mid-single digit constant currency revenue growth via pricing.</li>
<li>Higher cigarette prices are expected to contribute to <a href="https://www.smartkarma.com/entities/japan-tobacco-inc" target="_blank" data-smartkarma-citation="entities:13498:1" rel="noopener">Japan Tobacco (2914 JP)</a>'s OP growth, which we anticipate will exceed its historical peak levels in the next few years.</li>
</ul>


Japan Tobacco's 1Q23 performance exceeded consensus expectations, with revenue and OP surpassing by 5.3% and 12.3%, respectively.
Consensus expected no volume growth for Japan Tobacco in declining combustible tobacco market; targeted mid-single digit constant currency revenue growth via pricing.
Higher cigarette prices are expected to contribute to Japan Tobacco (2914 JP)'s OP growth, which we anticipate will exceed its historical peak levels in the next few years.


Japan Tobacco High Conviction Update: Potential 62% Upside

<ul>
<li>OVERSEAS. SPX  up +0.8%WoW but slipped -0.2% Friday as Hawkish Waller came out amid weak US March Retail Sales data;  Musk jump's into Generative AI; Boeing Production Woes</li>
<li>JAPAN.NKY Futs flat vs Cash USDJPY 133.8; Security Concerns ahead of by-elections as PM Kishida smoke Bombed;  Panasonic to build 3rd US batt plant; JT ramps up heated stick products</li>
<li>NUGGET. Elon Musk's aggressive push into Generative AI to rival/beat ChatGPT; A boon for NDVIDIA and by extension, Japan's Advantest(6857)</li>
</ul>


OVERSEAS. SPX  up +0.8%WoW but slipped -0.2% Friday as Hawkish Waller came out amid weak US March Retail Sales data;  Musk jump's into Generative AI; Boeing Production Woes
JAPAN.NKY Futs flat vs Cash USDJPY 133.8; Security Concerns ahead of by-elections as PM Kishida smoke Bombed;  Panasonic to build 3rd US batt plant; JT ramps up heated stick products
NUGGET. Elon Musk's aggressive push into Generative AI to rival/beat ChatGPT; A boon for NDVIDIA and by extension, Japan's Advantest(6857)


Good Morning Japan| Recession Fears Spook Equities;NUGGET- Musk Jumps in AI Race, Boon for Advantest

Japan

Japan Tobacco, Inc. operates as an tobacco product company. The Company manufactures, markets and sells cigarettes and other tobacco products internationally. Japan Tobacco is also engaged in pharmaceutical and food businesses.

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Japan Tobacco (2914 JP)

Japan Tobacco High Conviction Call: No Price Hikes This Year, But Profits Poised to Soar

Japan Tobacco is defying the decline in combustible tobacco by capturing market share. They are also gaining ground in heated tobacco. Despite no...

Oshadhi Kumarasiri

Ohayo Japan| SPX Gains Despite Weak Factory PMI; NUGGET: Japan's GX Promotion Law - Opportunity !

SPX gains ahead of 4th July holidays; NKY Futs -0.4% vs Cash; JPYUSD 144.7; Strong BOJ Tankan print drives NKY to new highs; JP land prices...

Mark Chadwick

Ohayo Japan |NUGGET: Tepco ¥9 Trillion on Decarbonization - Boon for KANDENDO

SPX up lead by Banks; NKY Futs +0.3% vs Cash; USDJPY 144.8; End of Month/Quarter; Flat NKY Today = +18.5% QTD..best Quarter in a Decade ! Big...

Mark Chadwick

Japan Tobacco High Conviction Update: Potential 62% Upside

At ¥4,750 per share, Japan Tobacco's forward EV/OP multiple would be 11.7x, lower than historical levels despite earnings being near cyclical...

Oshadhi Kumarasiri

Good Morning Japan| Recession Fears Spook Equities;NUGGET- Musk Jumps in AI Race, Boon for Advantest

Expect a broadly quiet start in Japan. Panasonic plans to establish its third US battery plant;. JT increasing its focus on heated stick products;...

Mark Chadwick

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Japan Tobacco High Conviction Call: No Price Hikes This Year, But Profits Poised to Soar

​Japan Tobacco is defying the decline in combustible tobacco by capturing market share. They are also gaining ground in heated tobacco. Despite no...

Oshadhi Kumarasiri

Ohayo Japan| SPX Gains Despite Weak Factory PMI; NUGGET: Japan's GX Promotion Law - Opportunity !

SPX gains ahead of 4th July holidays; NKY Futs -0.4% vs Cash; JPYUSD 144.7; Strong BOJ Tankan print drives NKY to new highs; JP land prices...

Mark Chadwick

Ohayo Japan |NUGGET: Tepco ¥9 Trillion on Decarbonization - Boon for KANDENDO

SPX up lead by Banks; NKY Futs +0.3% vs Cash; USDJPY 144.8; End of Month/Quarter; Flat NKY Today = +18.5% QTD..best Quarter in a Decade ! Big...

Mark Chadwick

Japan Tobacco High Conviction Update: Potential 62% Upside

At ¥4,750 per share, Japan Tobacco's forward EV/OP multiple would be 11.7x, lower than historical levels despite earnings being near cyclical...

Oshadhi Kumarasiri

Good Morning Japan| Recession Fears Spook Equities;NUGGET- Musk Jumps in AI Race, Boon for Advantest

Expect a broadly quiet start in Japan. Panasonic plans to establish its third US battery plant;. JT increasing its focus on heated stick products;...

Mark Chadwick

Japan Tobacco is defying the decline in combustible tobacco by capturing market share. They are also gaining ground in heated tobacco. Despite no...