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 Capital Markets

<p>In <a href="https://www.smartkarma.com/insights/krafton-ipo-this-should-be-pulled" target="_blank" rel="noopener">(1) Krafton IPO – This Should Be Pulled | Smartkarma </a>we said:</p>
<blockquote>
<p>Given the increasingly aggressive moves in China to reign in tech companies we also believe that greater regulation of mobile gaming overall is not impossible. Not only is there a strong gambling element but it is not likely to be viewed as positive for productivity at a time when labour cost inflation is an increasing problem. We believe stricter curbs on mobile gaming in China are a matter of time though we do not yet have a clear idea as to when this might occur.</p>
</blockquote>
<p>Apparently that matter of time is <a href="https://asia.nikkei.com/Business/China-tech/Tencent-dives-after-Chinese-media-calls-gaming-spiritual-opium" target="_blank" rel="noopener">looking like it will be a lot sooner than we expected</a>.</p>

In (1) Krafton IPO – This Should Be Pulled | Smartkarma we said:

Given the increasingly aggressive moves in China to reign in tech companies we also believe that greater regulation of mobile gaming overall is not impossible. Not only is there a strong gambling element but it is not likely to be viewed as positive for productivity at a time when labour cost inflation is an increasing problem. We believe stricter curbs on mobile gaming in China are a matter of time though we do not yet have a clear idea as to when this might occur.

Apparently that matter of time is looking like it will be a lot sooner than we expected.

Equity Bottom-Up

<p>Koei Tecmo posted some stellar results today with ¥20.5bn in revenue (consensus ¥14.5) and OP of ¥9.7bn (consensus ¥5.9bn), putting the company on track to hit our ¥34-39bn FY OP target vs. consensus at ¥28.5bn. ¥8.7bn in income below the OP line was also a notable positive surprise thanks to strong investment income. How much of this is priced in though?</p>

Koei Tecmo posted some stellar results today with ¥20.5bn in revenue (consensus ¥14.5) and OP of ¥9.7bn (consensus ¥5.9bn), putting the company on track to hit our ¥34-39bn FY OP target vs. consensus at ¥28.5bn. ¥8.7bn in income below the OP line was also a notable positive surprise thanks to strong investment income. How much of this is priced in though?

Koei Tecmo – Beats Consensus but Is That Enough?

<p>Koei Tecmo generated ¥24.4bn in OP beating guidance of ¥22bn but coming in a touch below consensus of ¥25.0bn. Despite the slight miss and weak guidance of ¥24.5bn in OP vs. consensus ¥28.0bn for consensus we believe that consensus is too conservative, and OP will clear ¥30bn next year and potentially ¥45bn the year after. Despite THAT, however, we believe it may be time to step off this ride.</p>

Koei Tecmo generated ¥24.4bn in OP beating guidance of ¥22bn but coming in a touch below consensus of ¥25.0bn. Despite the slight miss and weak guidance of ¥24.5bn in OP vs. consensus ¥28.0bn for consensus we believe that consensus is too conservative, and OP will clear ¥30bn next year and potentially ¥45bn the year after. Despite THAT, however, we believe it may be time to step off this ride.

<p>Nintendo held its first Nintendo Direct in a while today, announcing a number of ported titles, remasters, expansions and providing an updated trailer for Monster Hunter Rise. They also announced a remaster of the Wii’s Legend of Zelda: Skyward Sword for a July release and the next Splatoon title, set to release in 2022.</p>

Nintendo held its first Nintendo Direct in a while today, announcing a number of ported titles, remasters, expansions and providing an updated trailer for Monster Hunter Rise. They also announced a remaster of the Wii’s Legend of Zelda: Skyward Sword for a July release and the next Splatoon title, set to release in 2022.

Nintendo – Direct Points to Improving Third Party Support and Holiday Launch for New Switch

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

<p>On our next Webinar, we welcome Insight Provider <a href="https://www.smartkarma.com/profiles/mio-kato" target="_blank" data-smartkarma-citation="accounts:713" rel="noopener">Mio Kato</a> to discuss stalwart Japanese video game publishers <a href="https://www.smartkarma.com/entities/koei-tecmo-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20277:1" rel="noopener">Koei Tecmo Holdings (3635 JP)</a> and <a href="https://www.smartkarma.com/entities/capcom-co-ltd" target="_blank" data-smartkarma-citation="entities:1459:1" rel="noopener">Capcom Co Ltd (9697 JP)</a> , both positioned for a strong 2021 with strong product line-ups and high demand from their audience.</p>
<h3>The webinar was hosted on Wednesday, 17 February 2021, 17:00 SGT/HKT.<a href="https://share.hsforms.com/1H9pFZOB-RF2J00kbvMmxcw2c5gj?zoom_webinar_id=85686282338" target="_blank" rel="noopener"></a>
</h3>
<p>Watch the session here:</p>
<p><iframe src="https://www.youtube.com/embed/fYxbY5zAYxU" width="560" height="315" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen="allowfullscreen"></iframe></p>
<p>Or subscribe to the podcast feed and listen on the go:</p>
<p><iframe src="https://open.spotify.com/embed-podcast/episode/5a7l2cL9wvaXrZ09mJQhB3" width="100%" height="232" frameborder="0" allowtransparency="true" allow="encrypted-media"></iframe></p>
<p>Mio Kato has over 15 years of experience looking at Japanese and Asian cyclically driven sectors such as Gaming, Factory Automation and Autos. He was previously with FrontPoint Partners LP, Arrowhawk Capital Partners, and Uzabase before founding LightStream Research.</p>

On our next Webinar, we welcome Insight Provider Mio Kato to discuss stalwart Japanese video game publishers Koei Tecmo Holdings (3635 JP) and Capcom Co Ltd (9697 JP) , both positioned for a strong 2021 with strong product line-ups and high demand from their audience.
The webinar was hosted on Wednesday, 17 February 2021, 17:00 SGT/HKT.

Watch the session here:

Or subscribe to the podcast feed and listen on the go:

Mio Kato has over 15 years of experience looking at Japanese and Asian cyclically driven sectors such as Gaming, Factory Automation and Autos. He was previously with FrontPoint Partners LP, Arrowhawk Capital Partners, and Uzabase before founding LightStream Research.

Smartkarma Webinar | Koei Tecmo - Capcom: Warriors and Monster Hunters on the Rise

Japan

Koei Tecmo Holdings Co.,Ltd. is a holding company which was established through the merger of Koei Co., Ltd. and Tecmo Ltd. The Company develops and distributes video game software for personal computers and home video game consoles. The Company also operates other media business such as marketing of books and CDs and amusement facility operation.

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Koei Tecmo Holdings (3635 JP)

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Smartkarma Webinar | Koei Tecmo - Capcom: Warriors and Monster Hunters on the Rise

On 17 Feb, 5pm SGT, join us and Mio Kato to discuss stalwart Japanese video game publishers Koei Tecmo and Capcom , both positioned for a strong...

Smartkarma Research

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