'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

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.

Thematic (Sector/Industry)

• LARGE CAP RESULTS - 5th APRIL •<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/198/987/original/image_46394735821617656683433.png?1617656684" class="editor-image img-responsive" data-smartkarma-image-id="198987"></figure><div class="content-caption"> Source for all charts &amp; tables: Japan Analytics</div>RESULTS - Of Friday's 23 results, only 10 scored positively; however, 73% of annual revisions were positive. Of the larger caps, <a href="https://www.smartkarma.com/entities/shimamura-co-ltd" target="_blank" data-smartkarma-citation="entities:15213:1" rel="noopener">Shimamura (8227 JP)</a> had a third-successive positive quarter, while <a href="https://www.smartkarma.com/entities/kewpie-corp" target="_blank" data-smartkarma-citation="entities:10681:1" rel="noopener">Kewpie (2809 JP)</a> and <a href="https://www.smartkarma.com/entities/adastria-co-ltd" target="_blank" data-smartkarma-citation="entities:11895:1" rel="noopener">Adastria (2685 JP)</a> had double-digit year-on-year sales declines, and drugstore <a href="https://www.smartkarma.com/entities/create-sd-holdings-co" target="_blank" data-smartkarma-citation="entities:12945:1" rel="noopener">Create SD (3148 JP)</a> saw profits decline.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/198/989/original/image_51513331531617657092402.png?1617657093" class="editor-image img-responsive" data-smartkarma-image-id="198989"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/198/990/original/image_56921939741617657150504.png?1617657151" class="editor-image img-responsive" data-smartkarma-image-id="198990"></figure>• LARGER CAP FORECASTS/REVISIONS - 5th APRIL • <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/198/991/original/image_89489650351617657220460.png?1617657221" class="editor-image img-responsive" data-smartkarma-image-id="198991"></figure>FORECASTS/REVISIONS - Adastria offset its weak results with a bullish FY22 forecast, as did restaurant chain <a href="https://www.smartkarma.com/entities/ichibanya-co-ltd" target="_blank" data-smartkarma-citation="entities:2914:1" rel="noopener">Ichibanya (7630 JP)</a>. Shimamura's interim forecast was much more bullish than for the full year. <a href="https://www.smartkarma.com/entities/kobe-steel-ltd" target="_blank" data-smartkarma-citation="entities:209:1" rel="noopener">Kobe Steel (5406 JP)</a> revised up further into the black, while <a href="https://www.smartkarma.com/entities/jins-holdings-inc" target="_blank" data-smartkarma-citation="entities:12002:1" rel="noopener">JINS (3046 JP)</a> revised its interim and full-year sales and operating income slightly lower.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/198/992/original/image_65197346461617657668077.png?1617657668" class="editor-image img-responsive" data-smartkarma-image-id="198992"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/198/993/original/image_33740867171617657704461.png?1617657705" class="editor-image img-responsive" data-smartkarma-image-id="198993"></figure>

• LARGE CAP RESULTS - 5th APRIL • Source for all charts &amp; tables: Japan AnalyticsRESULTS - Of Friday's 23 results, only 10 scored positively; however, 73% of annual revisions were positive. Of the larger caps, Shimamura (8227 JP) had a third-successive positive quarter, while Kewpie (2809 JP) and Adastria (2685 JP) had double-digit year-on-year sales declines, and drugstore Create SD (3148 JP) saw profits decline.• LARGER CAP FORECASTS/REVISIONS - 5th APRIL • FORECASTS/REVISIONS - Adastria offset its weak results with a bullish FY22 forecast, as did restaurant chain Ichibanya (7630 JP). Shimamura's interim forecast was much more bullish than for the full year. Kobe Steel (5406 JP) revised up further into the black, while JINS (3046 JP) revised its interim and full-year sales and operating income slightly lower.

🇯🇵 JAPAN • Results & Revisions 04/​05 - Shimamura & JINS

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

Major global indexes (MSCI ACWI, ACWI ex-US, EM, and EAFE) continue to trend higher and are devoid of bearish inflections. Additionally, the US dollar (DXY) is likely headed lower, something we view as a positive risk-on signal for global equities. As a result, we remain bullish and we continue to recommend adding exposure on pullbacks.

Major global indexes (MSCI ACWI, ACWI ex-US, EM, and EAFE) continue to trend higher and are devoid of bearish inflections. Additionally, the US dollar (DXY) is likely headed lower, something we view as a positive risk-on signal for global equities. As a result, we remain bullish and we continue to recommend adding exposure on pullbacks.

Japan Breaking Out; EM Remains Leadership

MSCI Emerging Markets Index / Technical Analysis

As we highlighted in last week’s Int’l Compass, the weight of the evidence suggests commodities are in the early stages of a new secular bull market. Global Materials remains a favorite Sector overweight and we believe outperformance is likely to continue considering the Sector’s long-term bullish RS reversal. Additionally, we are upgrading equal-weighted Energy to overweight due to bullish price and RS inflections -- add exposure with a focus on small- and mid-caps.

As we highlighted in last week’s Int’l Compass, the weight of the evidence suggests commodities are in the early stages of a new secular bull market. Global Materials remains a favorite Sector overweight and we believe outperformance is likely to continue considering the Sector’s long-term bullish RS reversal. Additionally, we are upgrading equal-weighted Energy to overweight due to bullish price and RS inflections -- add exposure with a focus on small- and mid-caps.

Global Commodity-Related Equity Sectors In Secular Bull

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/173/867/original/2020-11-25_11-14-58.png?1606270511" class="editor-image img-responsive" data-smartkarma-image-id="173867"></figure></section><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div>FOUR QUADRANTS - By combining our two scoring methodologies - the Relative Price Score (RPS) and the Results &amp; Revision Score (RRS), we can assign companies into four quadrants:-<ul>
<li>
CONTRARIAN BUYS - Companies with low Results &amp; Revision and Relative Price Scores</li>
<li>
CONTRARIAN SELLS - Companies with high Results &amp; Revision and Relative Price Scores</li>
<li>
TURNAROUNDS - Companies with high Results &amp; Revision Scores &amp; low Relative Price Scores</li>
<li>
EX-GROWTH - Companies with low Results &amp; Revision Scores &amp; high Relative Price Scores</li>
</ul>In the two Contrarian quadrants, companies can remain outliers for extended periods, such as <a href="https://www.smartkarma.com/entities/jfe-holdings-inc" target="_blank" data-smartkarma-citation="entities:210:1" rel="noopener">JFE (5411 JP)</a>  in Buys, <a href="https://www.smartkarma.com/entities/lasertec-corp" target="_blank" data-smartkarma-citation="entities:4126:1" rel="noopener">Lasertec (6920 JP)</a> in Sells. The other quadrants see much more 'turnover' and van can offer profitable trading opportunities such as <a href="https://www.smartkarma.com/entities/lixil-group-corp" target="_blank" data-smartkarma-citation="entities:454:1" rel="noopener">Lixil(5938 JP)</a> in Turnarounds, and <a href="https://www.smartkarma.com/entities/ariake-japan-co-ltd" target="_blank" data-smartkarma-citation="entities:4908:1" rel="noopener">Ariake Japan (2815 JP)</a> in the Ex-Growth quadrant.<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/173/896/original/2020-11-25_12-25-57.png?1606274769" class="editor-image img-responsive" data-smartkarma-image-id="173896"></figure><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/173/903/original/2020-11-25_12-56-49.png?1606276623" class="editor-image img-responsive" data-smartkarma-image-id="173903"></figure></section><a href="https://www.dropbox.com/s/7b61jl02dh0pzno/2020-11-25_12-43-55.png?dl=0" target="_blank" rel="noopener">CONTRARIAN BUYS</a> - In the DETAIL below, we shall review the current 'crop' of Contrarian Buys for potential opportunities. Subsequent Insights in this mini-series will look into the other three quadrants before concluding with one '2021 High Conviction' recommendation. </section>

Source for all charts &amp; tables: Japan AnalyticsFOUR QUADRANTS - By combining our two scoring methodologies - the Relative Price Score (RPS) and the Results &amp; Revision Score (RRS), we can assign companies into four quadrants:-

CONTRARIAN BUYS - Companies with low Results &amp; Revision and Relative Price Scores

CONTRARIAN SELLS - Companies with high Results &amp; Revision and Relative Price Scores

TURNAROUNDS - Companies with high Results &amp; Revision Scores &amp; low Relative Price Scores

EX-GROWTH - Companies with low Results &amp; Revision Scores &amp; high Relative Price Scores
In the two Contrarian quadrants, companies can remain outliers for extended periods, such as JFE (5411 JP)  in Buys, Lasertec (6920 JP) in Sells. The other quadrants see much more 'turnover' and van can offer profitable trading opportunities such as Lixil(5938 JP) in Turnarounds, and Ariake Japan (2815 JP) in the Ex-Growth quadrant.CONTRARIAN BUYS - In the DETAIL below, we shall review the current 'crop' of Contrarian Buys for potential opportunities. Subsequent Insights in this mini-series will look into the other three quadrants before concluding with one '2021 High Conviction' recommendation. 

🇯🇵 JAPAN • Four Quadrants - Contrarian Buys

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Event-Driven

Hitachi Construction Machinery / Event-Driven

The Nikkei reported today that Hitachi would sell about half of its stake in Hitachi Construction Machinery, surprising the market and us. We had expected HCM to be bought out and clearly the market had too as the stock was down 16.8%. We examine the implications below.

The Nikkei reported today that Hitachi would sell about half of its stake in Hitachi Construction Machinery, surprising the market and us. We had expected HCM to be bought out and clearly the market had too as the stock was down 16.8%. We examine the implications below.

Japan

Kobe Steel, Ltd. is a steelmaker, as well as a supplier of aluminum and copper products.  The products include steel plates and steel rods.  The Company also operates other businesses such as welding consumables, urban infrastructure, plant engineering, and industrial & construction machinery.  Kobe Steel has operating offices in the US, Europe, and Asia.

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Kobe Steel Ltd (5406 JP)

🇯🇵 JAPAN • Results & Revisions 04/05 - Shimamura & JINS

RESULTS - Of Friday's 23 results, only 10 scored positively; however, 73% of annual revisions were positive. Of the larger caps, Shimamura (8227...

Campbell Gunn

Japan Breaking Out; EM Remains Leadership

Major global indexes continue to trend higher and are devoid of bearish inflections. As a result, we remain bullish and we continue to recommend...

Vermilion Research

🇯🇵 JAPAN • Four Quadrants - Contrarian Buys

FOUR QUADRANTS - By combining our two scoring methodologies - the Relative Price Score (RPS) and the Results & Revision Score (RRS), we can assign...

Campbell Gunn

HCM – Hitachi’s Stake Sale Surprises

The Nikkei's report that Hitachi would sell half of its stake in HCM rather than buying the company out drove HCM shares down 16.8%. We examine the...

Mio Kato

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52-week Range

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🇯🇵 JAPAN • Results & Revisions 04/​05 - Shimamura & JINS

RESULTS - Of Friday's 23 results, only 10 scored positively; however, 73% of annual revisions were positive. Of the larger caps, Shimamura (8227...

Campbell Gunn

Japan Breaking Out; EM Remains Leadership

Major global indexes continue to trend higher and are devoid of bearish inflections. As a result, we remain bullish and we continue to recommend...

Vermilion Research

Global Commodity-Related Equity Sectors In Secular Bull

We believe commodities are in the early stages of a new secular bull market. Global Materials & Energy remain our favorite Sector overweights - add...

Vermilion Research

🇯🇵 JAPAN • Four Quadrants - Contrarian Buys

FOUR QUADRANTS - By combining our two scoring methodologies - the Relative Price Score (RPS) and the Results & Revision Score (RRS), we can assign...

Campbell Gunn

HCM – Hitachi’s Stake Sale Surprises

The Nikkei's report that Hitachi would sell half of its stake in HCM rather than buying the company out drove HCM shares down 16.8%. We examine the...

Mio Kato

🇯🇵 JAPAN • Results & Revisions 04/05 - Shimamura & JINS