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 Bottom-Up

<p>Two days ago Nintendo released an announcement about Hyrule Warriors: Age of Calamity (Aka Zelda Musou). This is a tie-up with Koei Tecmo and will be essentially a Zelda skin on KT’s Dynasty Warriors series… except it isn’t. More below.</p>

Two days ago Nintendo released an announcement about Hyrule Warriors: Age of Calamity (Aka Zelda Musou). This is a tie-up with Koei Tecmo and will be essentially a Zelda skin on KT’s Dynasty Warriors series… except it isn’t. More below.

Koei Tecmo – The Market Is Sleeping on the Zelda Musou Nintendo Tie-Up for Switch but Shouldn’t

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Thematic (Sector/Industry)

<p style="text-align: center;"><strong>•BEST &amp; WORST 3rd AUGUST •</strong></p><p style="text-align: left;">The 'best' and 'worst' from yesterday's large-cap announcements came from <a href="https://www.smartkarma.com/entities/kyorin-holdings-inc" target="_blank" data-smartkarma-citation="entities:15216:1" rel="noopener">Kyorin (4569 JP)</a> and <a href="https://www.smartkarma.com/entities/japan-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1184:1" rel="noopener">Japan Airlines (9201 JP)</a>.  More extensive coverage follows in the DETAIL section below. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/150/264/original/2020-08-04_06-29-14.png?1596490167" class="editor-image img-responsive" data-smartkarma-image-id="150264"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/150/265/original/2020-08-04_06-30-03.png?1596490220" class="editor-image img-responsive" data-smartkarma-image-id="150265"></figure><div class="content-caption">Source • Japan Analytics</div><hr><div><p style="text-align: center;"><strong>DAILY STATS</strong></p></div><div><p><strong>PERCENTAGES </strong>- 66% of quarterly results,  61% of annual forecasts/revisions and 64% of interim forecasts have negative Scores and 26% of companies reporting lost money for the quarter.</p></div><hr><div><p style="text-align: center;"><strong>105 Quarterly Result</strong>s</p></div><div><ul>
<li>
<strong>Results Score</strong>: 29% Positive / 6% Neutral / 66% Negative</li>
<li>
<strong>Average Results Score Change:</strong> -2.5 points</li>
<li>
<strong>Average % Change in Revenue:</strong> -7.4% Quarter YoY / -1.3% Rolling TTM YoY </li>
<li>
<strong>Average Operating Profit Margin Change:</strong> -0.8 ppt</li>
<li>
<strong>Percentage Making Quarterly Losses:</strong> 26%</li>
</ul></div><hr><div><p style="text-align: center;"><br><strong>36 Annual • 25 Interim Forecasts/Revisions</strong></p></div><div><ul>
<li>
<strong>Annual Forecast/Revision Score:</strong> 31% Positive / 8% Neutral / 61% Negative</li>
<li>
<strong>Interim Forecast/Revision Score Change:</strong> 32% Positive / 4% Neutral / 64% Negative</li>
<li>
<strong>Average Forecast/Revision Score Change:</strong> -7.0 points</li>
</ul></div>

•BEST &amp; WORST 3rd AUGUST •The 'best' and 'worst' from yesterday's large-cap announcements came from Kyorin (4569 JP) and Japan Airlines (9201 JP).  More extensive coverage follows in the DETAIL section below. Source • Japan AnalyticsDAILY STATSPERCENTAGES - 66% of quarterly results,  61% of annual forecasts/revisions and 64% of interim forecasts have negative Scores and 26% of companies reporting lost money for the quarter.105 Quarterly Results

Results Score: 29% Positive / 6% Neutral / 66% Negative

Average Results Score Change: -2.5 points

Average % Change in Revenue: -7.4% Quarter YoY / -1.3% Rolling TTM YoY 

Average Operating Profit Margin Change: -0.8 ppt

Percentage Making Quarterly Losses: 26%
 36 Annual • 25 Interim Forecasts/Revisions

Annual Forecast/Revision Score: 31% Positive / 8% Neutral / 61% Negative

Interim Forecast/Revision Score Change: 32% Positive / 4% Neutral / 64% Negative

Average Forecast/Revision Score Change: -7.0 points


🇯🇵 JAPAN • Results & Revisions 3rd August - Capcom, K's, Kikkoman, USS, Eisai

<p>KT delivered strong results yesterday with OP of ¥4.4bn exceeding consensus’ ¥3.6bn estimate by 22%. When we last wrote on KT back in April we suggested that consensus OP estimates for the FY (¥19.3bn) could be exceeded by 50%+. Since then consensus has risen to ¥22.4bn but we feel there is still more upside.</p>

KT delivered strong results yesterday with OP of ¥4.4bn exceeding consensus’ ¥3.6bn estimate by 22%. When we last wrote on KT back in April we suggested that consensus OP estimates for the FY (¥19.3bn) could be exceeded by 50%+. Since then consensus has risen to ¥22.4bn but we feel there is still more upside.

Koei Tecmo – Two New Sangokushi Games on Deck

<div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/148/266/original/2020-07-28_06-42-44.png?1595886197" class="editor-image img-responsive" data-smartkarma-image-id="148266"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/148/267/original/2020-07-28_06-47-55.png?1595886499" class="editor-image img-responsive" data-smartkarma-image-id="148267"></figure><div class="content-caption">Source • Japan Analytics</div>
<p><a href="https://www.smartkarma.com/entities/koei-tecmo-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20277:1" rel="noopener">Koei Tecmo (3635 JP)</a> - Koei Tecmo produced the most-improved Results Score among large-cap companies yesterday. Colleague <a href="https://www.smartkarma.com/profiles/mio-kato-cfa" target="_blank" data-smartkarma-citation="accounts:713" rel="noopener">Mio Kato</a>'s April Insight<a href="https://www.smartkarma.com/insights/koei-tecmo-plenty-of-headroom-to-play-with" target="_blank" data-smartkarma-citation="insights:38880" rel="noopener"> Plenty of Headroom to Play With</a> called this correctly - <em>"the strength of Sangokushi Senryaku Ban and a strong game pipeline should help the company continue to outperform significantly."</em> The shares are now Overbought, and the valuation has never been as extreme. A Results Score of 30 is 'perfection'. We would trim into any results-induced move above ¥3,500.</p>
<p style="text-align: center;"><strong>DAILY STATS</strong></p>
</div><hr><div><p style="text-align: center;"><strong>40 Quarterly Results</strong></p></div><div><ul>
<li>
<strong>Results Score:</strong> 14 Positive / 0 Neutral / 26 Negative</li>
<li>
<strong>Average Results Score Change: -</strong>3.3</li>
<li>
<strong>Average % Change in Revenue:</strong> -10.6% Quarter YoY / -3.0% Rolling TTM YoY </li>
<li>
<strong>Average Operating Profit Margin Change:</strong> -1.1ppt</li>
<li>
<strong>Percentage Making Quarterly Losses:</strong> 18%</li>
</ul></div><hr><div><p style="text-align: center;"><br><strong>19 Annual • 12 Interim Forecasts/Revisions</strong></p></div><div><ul>
<li>
<strong>Annual Forecast/Revision Score:</strong> 6 Positive / 0 Neutral / 13 Negative</li>
<li>
<strong>Interim Forecast/Revision Score Change:</strong> 2 Positive / 0 Neutral / 10 Negative</li>
<li>
<strong>Average Forecast/Revision Score Change:</strong> -11.5</li>
</ul></div>


Source • Japan Analytics
Koei Tecmo (3635 JP) - Koei Tecmo produced the most-improved Results Score among large-cap companies yesterday. Colleague Mio Kato's April Insight Plenty of Headroom to Play With called this correctly - "the strength of Sangokushi Senryaku Ban and a strong game pipeline should help the company continue to outperform significantly." The shares are now Overbought, and the valuation has never been as extreme. A Results Score of 30 is 'perfection'. We would trim into any results-induced move above ¥3,500.
DAILY STATS
40 Quarterly Results

Results Score: 14 Positive / 0 Neutral / 26 Negative

Average Results Score Change: -3.3

Average % Change in Revenue: -10.6% Quarter YoY / -3.0% Rolling TTM YoY 

Average Operating Profit Margin Change: -1.1ppt

Percentage Making Quarterly Losses: 18%
 19 Annual • 12 Interim Forecasts/Revisions

Annual Forecast/Revision Score: 6 Positive / 0 Neutral / 13 Negative

Interim Forecast/Revision Score Change: 2 Positive / 0 Neutral / 10 Negative

Average Forecast/Revision Score Change: -11.5


🇯🇵 JAPAN • Results & Revisions 27th July - Koei Tecmo, Nitto Denko, MMC, Stanley Electric, Exedy

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

<p>Global indexes remain overwhelmingly positive which is supported by the fact that there is a dearth of breakdowns. Overall our big picture view remains unchanged; overhead longer-term resistance on the MSCI EM, EAFE, and ACWI ex-US indexes (all priced in local currency) is something to be aware of, however if the ACWI-US is above $70 our intermediate-term outlook remains bullish and we suggest buying any dips. In today's report we highlight attractive charts within defensives (<strong>Consumer Staples &amp; Utilities</strong>), cyclicals (<strong>Consumer Discretionary, Energy, Financial, &amp; Materials</strong>), and in-between Sectors (<strong>Communications, Services, &amp; Health Care</strong>)</p>

Global indexes remain overwhelmingly positive which is supported by the fact that there is a dearth of breakdowns. Overall our big picture view remains unchanged; overhead longer-term resistance on the MSCI EM, EAFE, and ACWI ex-US indexes (all priced in local currency) is something to be aware of, however if the ACWI-US is above $70 our intermediate-term outlook remains bullish and we suggest buying any dips. In today's report we highlight attractive charts within defensives (Consumer Staples &amp; Utilities), cyclicals (Consumer Discretionary, Energy, Financial, &amp; Materials), and in-between Sectors (Communications, Services, &amp; Health Care)

Global Equity Strategy: Stick With Technology

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)

Koei Tecmo – The Market Is Sleeping on the Zelda Musou Nintendo Tie-Up for Switch but Shouldn’t

Two days ago Nintendo released an announcement that Hyrule Warriors: Age of Calamity (Aka Zelda Musou). This is a tie-up with Koei Tecmo and will...

Mio Kato

🇯🇵 JAPAN • Results & Revisions 3rd August - Capcom, K's, Kikkoman, USS, Eisai

•BEST & WORST 3rd AUGUST •The 'best' and 'worst' from yesterday's large-cap announcements came from Kyorin (4569 JP) and Japan Airlines (9201...

Campbell Gunn

Koei Tecmo – Two New Sangokushi Games on Deck

KT delivered strong results yesterday with OP of ¥4.4bn exceeding consensus’ ¥3.6bn estimate by 22%. When we last wrote on KT back in April we...

Mio Kato

🇯🇵 JAPAN • Results & Revisions 27th July - Koei Tecmo, Nitto Denko, MMC, Stanley Electric, Exedy

Koei Tecmo (3635 JP) - Koei Tecmo produced the most-improved Results Score among large-cap companies yesterday. Colleague Mio Kato's April...

Campbell Gunn

Global Equity Strategy: Stick With Technology

Global indexes remain overwhelmingly positive which is supported by the fact that there is a dearth of breakdowns. Overall our big picture view...

Vermilion Research

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