Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>Komatsu's operating profits for FY3/24 of Y607 billion (+24% YoY) surpassed estimates on strong U.S. equipment sales</li>
<li>Komatsu guides for FY3/25 operating profits of ¥557 billion (-8.3% YoY), assuming ¥140/US$</li>
<li>We believe that the market remains too focused on the near-term growth slowdown, while we believe that Komatsu is attractively priced at under 10x EV/EBIT</li>
</ul>


Komatsu's operating profits for FY3/24 of Y607 billion (+24% YoY) surpassed estimates on strong U.S. equipment sales
Komatsu guides for FY3/25 operating profits of ¥557 billion (-8.3% YoY), assuming ¥140/US$
We believe that the market remains too focused on the near-term growth slowdown, while we believe that Komatsu is attractively priced at under 10x EV/EBIT


Komatsu (6301) | 6% TSR and Clean Energy Winner

<ul>
<li>We turned bullish on Komatsu a year ago and the stock has since returned over 50%.</li>
<li>Komatsu is trading at 10x EV/EBIT versus an historical average of 11x, with a target price of ¥5,100/share.</li>
<li>Komatsu represents a cheaper way to play the theme of onshoring and long-term mining demand from electrification.</li>
</ul>


We turned bullish on Komatsu a year ago and the stock has since returned over 50%.
Komatsu is trading at 10x EV/EBIT versus an historical average of 11x, with a target price of ¥5,100/share.
Komatsu represents a cheaper way to play the theme of onshoring and long-term mining demand from electrification.


Komatsu (6301) | A Winning Bet on Onshoring and Electrification

<ul>
<li>We remain bullish on Komatsu despite returning a positive 37% return over the past year. </li>
<li>Q1 results are likely to exceed expectations and guidance is likely to be cautious, due to forex, pricing and cost factors.</li>
<li>Komatsu is still attractively valued compared to its peers and historical averages, and has 20% upside potential.</li>
</ul>


We remain bullish on Komatsu despite returning a positive 37% return over the past year. 
Q1 results are likely to exceed expectations and guidance is likely to be cautious, due to forex, pricing and cost factors.
Komatsu is still attractively valued compared to its peers and historical averages, and has 20% upside potential.


Komatsu (6301) | The Back Test Worked. Now What?

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>At the October rebalance, there are 970 stocks that will have a lower FFW while 114 stocks will have a higher FFW. 493 stocks will undergo a Phased Weight Reduction.</li>
<li>Estimated one-way turnover is 2.54% resulting in a one-way trade of ¥1.815tn. 500 stocks have over 4 days ADV to trade, 100 stocks have over 9 days ADV to trade.</li>
<li>Setting the threshold at +/-US$50m to trade, the stocks with inflows have outperformed the stocks with outflows by 6.5% over the last four months.</li>
</ul>


At the October rebalance, there are 970 stocks that will have a lower FFW while 114 stocks will have a higher FFW. 493 stocks will undergo a Phased Weight Reduction.
Estimated one-way turnover is 2.54% resulting in a one-way trade of ¥1.815tn. 500 stocks have over 4 days ADV to trade, 100 stocks have over 9 days ADV to trade.
Setting the threshold at +/-US$50m to trade, the stocks with inflows have outperformed the stocks with outflows by 6.5% over the last four months.


TOPIX October Rebalance: BIG One With ¥1.8tn a Side to Trade

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/cimc-vehicles-group-co-ltd" target="_blank" data-smartkarma-citation="entities:28012:1" rel="noopener">CIMC Vehicle Group Co Ltd (1839 HK)</a> announced the H Share buyback offer, excluding CIMC’s shares, is at HK$7.50, a 16.5% premium to the undisturbed price. The offer is final.</li>
<li>The key condition is approval by at least 75% of independent H Shareholders (&lt;10% of all independent H Shareholders rejection) along with a 90% minimum acceptance condition.  </li>
<li>Excluding the irrevocables, the 90% threshold requires an independent H Shareholder acceptance rate of 77.7%, which could be challenging due to a light offer. Risk/reward unfavourable. </li>
</ul>



CIMC Vehicle Group Co Ltd (1839 HK) announced the H Share buyback offer, excluding CIMC’s shares, is at HK$7.50, a 16.5% premium to the undisturbed price. The offer is final.
The key condition is approval by at least 75% of independent H Shareholders (&lt;10% of all independent H Shareholders rejection) along with a 90% minimum acceptance condition.  
Excluding the irrevocables, the 90% threshold requires an independent H Shareholder acceptance rate of 77.7%, which could be challenging due to a light offer. Risk/reward unfavourable. 


CIMC Vehicles (1839 HK): Min Acceptance Condition a Risk for the Final HK$7.50 Offer

Japan

KOMATSU LTD. manufactures and sells construction and mining machinery, including excavators, bulldozers, and wheel loaders.  The Company, operating on a global scale, also produces forklift trucks and engineering equipment such as press system.

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Komatsu Ltd (6301 JP)

Komatsu (6301) | 6% TSR and Clean Energy Winner

Komatsu stands to benefit from the global shift towards clean energy technologies, which drive demand for critical minerals essential in their...

Mark Chadwick

Komatsu (6301) | A Winning Bet on Onshoring and Electrification

Komatsu stock has surged over 50% in a year but remains undervalued, making it an attractive investment for onshoring and mining demand related to...

Mark Chadwick

Komatsu (6301) | The Back Test Worked. Now What?

Komatsu: A strong buy with 20% upside. Q1 results to beat expectations, guidance is too cautious. Valuation still attractive.

Mark Chadwick

TOPIX October Rebalance: BIG One With ¥1.8tn a Side to Trade

Lower FFWs on 970 stocks and higher FFWs on 114 stocks will result in one-way turnover of 2.52% leading to a one-way trade of ¥1.8tn at the close...

Brian Freitas

CIMC Vehicles (1839 HK): Min Acceptance Condition a Risk for the Final HK$7.50 Offer

The 90% min acceptance condition is a key risk in the context of a light offer. Risk/reward is unfavourable as the downside (9.9% to undisturbed...

Arun George

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52-week Range

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Komatsu (6301) | 6% TSR and Clean Energy Winner

Komatsu stands to benefit from the global shift towards clean energy technologies, which drive demand for critical minerals essential in their...

Mark Chadwick

Komatsu (6301) | A Winning Bet on Onshoring and Electrification

​Komatsu stock has surged over 50% in a year but remains undervalued, making it an attractive investment for onshoring and mining demand related to...

Mark Chadwick

Komatsu (6301) | The Back Test Worked. Now What?

Komatsu: A strong buy with 20% upside. Q1 results to beat expectations, guidance is too cautious. Valuation still attractive.

Mark Chadwick

TOPIX October Rebalance: BIG One With ¥1.8tn a Side to Trade

Lower FFWs on 970 stocks and higher FFWs on 114 stocks will result in one-way turnover of 2.52% leading to a one-way trade of ¥1.8tn at the close...

Brian Freitas

CIMC Vehicles (1839 HK): Min Acceptance Condition a Risk for the Final HK$7.50 Offer

The 90% min acceptance condition is a key risk in the context of a light offer. Risk/reward is unfavourable as the downside (9.9% to undisturbed...

Arun George

Komatsu stock has surged over 50% in a year but remains undervalued, making it an attractive investment for onshoring and mining demand related to...