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>It seems investors are starting to move past the fears of Japan Tobacco’s exposure to Russia and Ukraine with shares rising 6% following a steep decline alongside Russia’s Ukraine invasion.</li>
<li>Meanwhile, we expect the company’s OP to continue trending upwards with the weakening yen helping the International Tobacco segment and price hikes benefiting the Domestic business.</li>
<li>If OP reaches the 2014 level, we think <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> shares could go up around 90% to ¥4,000 per share over the next 12 months.</li>
</ul>


It seems investors are starting to move past the fears of Japan Tobacco’s exposure to Russia and Ukraine with shares rising 6% following a steep decline alongside Russia’s Ukraine invasion.
Meanwhile, we expect the company’s OP to continue trending upwards with the weakening yen helping the International Tobacco segment and price hikes benefiting the Domestic business.
If OP reaches the 2014 level, we think Japan Tobacco (2914 JP) shares could go up around 90% to ¥4,000 per share over the next 12 months.


Japan Tobacco 2022 High Conviction Update: Time to Double Down

<ul>
<li>
<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 share price fell 14% from the bottom end of the upward trend channel and underperformed Topix by 6% over the last 15 days.</li>
<li>Even if Russia yields zero dollars, we think the impact on JT’s valuation could be around 20%.</li>
<li>With demand for cigarettes expected to go up during these war times, we think the market reaction of this scale is unwarranted.</li>
</ul>



Japan Tobacco (2914 JP)’s share price fell 14% from the bottom end of the upward trend channel and underperformed Topix by 6% over the last 15 days.
Even if Russia yields zero dollars, we think the impact on JT’s valuation could be around 20%.
With demand for cigarettes expected to go up during these war times, we think the market reaction of this scale is unwarranted.


Japan Tobacco 2022 High Conviction Update: The Russia Ukraine War Impact Is a Bit Overdone

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

Thematic (Sector/Industry)

<ul>
<li>Japanese are developing a growing love for frozen foods, creating new opportunities for food brands and retailers.  </li>
<li>Frozen foods were long overlooked within the supply chain because of a traditional emphasis on fresh foods but frozen </li>
<li>As supply has increased, consumer demand has grown to match and now, with the growth of e-commerce and home delivery, frozen foods offer key advantages to both consumers and retailers.</li>
</ul>


Japanese are developing a growing love for frozen foods, creating new opportunities for food brands and retailers.  
Frozen foods were long overlooked within the supply chain because of a traditional emphasis on fresh foods but frozen 
As supply has increased, consumer demand has grown to match and now, with the growth of e-commerce and home delivery, frozen foods offer key advantages to both consumers and retailers.


Pan Pacific International Holdings / Equity Bottom-Up

<ul>
<li>With momentum behind defensive/semi defensive names in the Japanese market, <a href="https://www.smartkarma.com/entities/pan-pacific-international-holdings-corporation" target="_blank" data-smartkarma-citation="entities:13475:1" rel="noopener">Pan Pacific International Holdings (7532 JP)</a>’ seems to have one of the best risk reward ratios among Japanese retail players.</li>
<li>PPI’s undervaluation is visible in valuation multiples across the board with all multiples trading near the past 10-year low level.</li>
<li>Thus, we would buy PPI with a target of 40% upside in the short term.</li>
</ul>


With momentum behind defensive/semi defensive names in the Japanese market, Pan Pacific International Holdings (7532 JP)’ seems to have one of the best risk reward ratios among Japanese retail players.
PPI’s undervaluation is visible in valuation multiples across the board with all multiples trading near the past 10-year low level.
Thus, we would buy PPI with a target of 40% upside in the short term.


Pan Pacific International Valuation: All Signs Points to a Large Upside in the Short Term

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

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 2022 High Conviction Update: Time to Double Down

With the yen weakening to levels last seen in 2016 and regular price hikes in the range of 8% per annum in the Domestic business, we could expect...

Oshadhi Kumarasiri

Japan Tobacco 2022 High Conviction Update: The Russia Ukraine War Impact Is a Bit Overdone

We think the market is worrying unnecessarily towards JT’s Russia exposure as growth in demand during war times could offset at least around 50% of...

Oshadhi Kumarasiri

Japan's New Food Boom: Frozen Food

Frozen food sales have boomed during the pandemic but the new enthusiasm for all things frozen is a long-term trend and some retailers and...

Michael Causton

Pan Pacific International Valuation: All Signs Points to a Large Upside in the Short Term

With momentum shifting positive, we think PPI has the largest upside potential among the Japanese semi defensive names with a possible 40% upside...

Oshadhi Kumarasiri

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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