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

<ul>
<li>Despite supply chain and material cost headwinds Mazda beat consensus FY OP estimates by 15% despite being in-line on revenue. </li>
<li>Guidance was also 17% above consensus but we think both should be ignored because guidance is being sandbagged and consensus remains clueless. </li>
<li>We expect sales volumes to beat Mazda’s guidance slightly and for OP generation to be ¥240-300bn rather than ¥120bn.</li>
</ul>


Despite supply chain and material cost headwinds Mazda beat consensus FY OP estimates by 15% despite being in-line on revenue. 
Guidance was also 17% above consensus but we think both should be ignored because guidance is being sandbagged and consensus remains clueless. 
We expect sales volumes to beat Mazda’s guidance slightly and for OP generation to be ¥240-300bn rather than ¥120bn.


Mazda – Guidance Is Actually MORE Conservative Than Peers

<ul>
<li>We have been consistently saying that the sell side is utterly clueless about Mazda’s profit structure. </li>
<li>The company just missed top line by 13.2% but beat on OP by 26% even excluding a reclassification of some costs to extraordinary losses. </li>
<li>The thesis here is simple – consensus projects a 3% OPM next FY and we believe Mazda will double that.</li>
</ul>


We have been consistently saying that the sell side is utterly clueless about Mazda’s profit structure. 
The company just missed top line by 13.2% but beat on OP by 26% even excluding a reclassification of some costs to extraordinary losses. 
The thesis here is simple – consensus projects a 3% OPM next FY and we believe Mazda will double that.


Event-Driven

<ul>
<li>After initially grinding up slowly but underperforming the Nikkei our suggested skew trade gave up ground during the new year sell off.</li>
<li>It did so slowly, however and was outperforming Nikkei when last we checked despite being down slightly. </li>
<li>Thankfully, a lot of the idiosyncratic volatility hurting the skew trade has reversed now and it is positive and outperforming Nikkei consistently.</li>
</ul>


After initially grinding up slowly but underperforming the Nikkei our suggested skew trade gave up ground during the new year sell off.
It did so slowly, however and was outperforming Nikkei when last we checked despite being down slightly. 
Thankfully, a lot of the idiosyncratic volatility hurting the skew trade has reversed now and it is positive and outperforming Nikkei consistently.


TOPIX-Nikkei Skew Trade Starting to Work Nicely

<ul>
<li>
<a href="https://asia.nikkei.com/Business/Automobiles/Toyota-plans-to-make-record-11m-cars-in-fiscal-year-starting-April" target="_blank" rel="noopener"> The Nikkei is reporting</a> that Toyota has set internal production targets of 11m units for the fiscal year ending March 2023. </li>
<li>That would imply a more than 20% YoY increase in production volumes. </li>
<li>And that in turn is very positive news not just for Toyota but for several other auto-related names.</li>
</ul>



 The Nikkei is reporting that Toyota has set internal production targets of 11m units for the fiscal year ending March 2023. 
That would imply a more than 20% YoY increase in production volumes. 
And that in turn is very positive news not just for Toyota but for several other auto-related names.


Toyota – 11m Unit Production Target Is a Positive Surprise

<ul>
<li>In keeping with its penchant for developing every type of technology imaginable, Toyota has been working on not just fuel cells but also hydrogen engines.</li>
<li>Now it is partnering with Mazda, Subaru, Yamaha and KHI to further expand on this concept and add synthetic carbon neutral fuels to the mix.</li>
<li>These efforts could potentially provide alternative zero carbon transition paths and are worth understanding.</li>
</ul>


In keeping with its penchant for developing every type of technology imaginable, Toyota has been working on not just fuel cells but also hydrogen engines.
Now it is partnering with Mazda, Subaru, Yamaha and KHI to further expand on this concept and add synthetic carbon neutral fuels to the mix.
These efforts could potentially provide alternative zero carbon transition paths and are worth understanding.


Toyota – Revving Up the Hydrogen Engine

Japan

Mazda Motor Corporation manufactures and sells automobiles, trucks, auto parts, and its accessories.  The Company operates its business worldwide.

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Mazda Motor (7261 JP)

Mazda – Guidance Is Actually MORE Conservative Than Peers

Mazda results and guidance beat consensus but we believe the best is yet to come and that the stock still has multi bagger potential remaining.

Mio Kato

Mazda – Profitability Is Surging

Mazda just missed top line by 13.2% but beat on underlying OP by 26%. The thesis here is simple – consensus projects a 3% OPM next FY and we...

Mio Kato

TOPIX-Nikkei Skew Trade Starting to Work Nicely

After initially grinding up slowly but underperforming the Nikkei our suggested skew trade gave up ground during the new year sell off. It is now...

Mio Kato

Toyota – 11m Unit Production Target Is a Positive Surprise

Toyota has set internal production targets of 11m units for the FY23 implying a more than 20% YoY increase which is very positive news not just for...

Mio Kato

Toyota – Revving Up the Hydrogen Engine

Toyota has been working on not just fuel cells but also hydrogen engines and is now partnering with Mazda, Subaru, Yamaha and KHI to potentially...

Mio Kato

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