Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>OVERSEAS. Strong ADP numbers drive bond and equity sell off; SPX -0.8% as all sectors in the red  as reality of further Fed hikes get real; EV Truce in China</li>
<li>JAPAN. NKY Futs -1.1% vs Cash; USDJPY 144.1; Expect further follow through of yesterday's NKY sell off; Yen strength won't help - as we head into weekend, correction finally here?</li>
<li>NUGGET. Profit Renaissance for Japan's Defense Industry. From big (MHI, Melco, etc) to Small - expect numerous beneficiaries of the policy changes afoot. </li>
</ul>


OVERSEAS. Strong ADP numbers drive bond and equity sell off; SPX -0.8% as all sectors in the red  as reality of further Fed hikes get real; EV Truce in China
JAPAN. NKY Futs -1.1% vs Cash; USDJPY 144.1; Expect further follow through of yesterday's NKY sell off; Yen strength won't help - as we head into weekend, correction finally here?
NUGGET. Profit Renaissance for Japan's Defense Industry. From big (MHI, Melco, etc) to Small - expect numerous beneficiaries of the policy changes afoot. 


Ohayo Japan |Rates Rocket-Equities Take Heed; NUGGET: Profit Renaissance for Japan's Defense Sector

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Toshiba is trading at a 12-13% annualised return on the arb when using the expected Tender Offer Start Date proposed in the Takeover Announcement on 23 March 2023.</li>
<li>On Day 1-2 post-announcement, Toshiba traded at an 11-13% annualised spread. Since the announcement, a 12-name Peer Basket is up 11+% meaning Toshiba back end risk has shrunk.</li>
<li>Forward consensus EPS ratios have fallen, in part due to the shift forward one fiscal year by comps. We'll see where those lie in a week when earnings come.</li>
</ul>


Toshiba is trading at a 12-13% annualised return on the arb when using the expected Tender Offer Start Date proposed in the Takeover Announcement on 23 March 2023.
On Day 1-2 post-announcement, Toshiba traded at an 11-13% annualised spread. Since the announcement, a 12-name Peer Basket is up 11+% meaning Toshiba back end risk has shrunk.
Forward consensus EPS ratios have fallen, in part due to the shift forward one fiscal year by comps. We'll see where those lie in a week when earnings come.


Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

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>Upward trend in new orders suggest that guidance is conservative.</li>
<li>Long-Term prospects good with digitalization, 5G and optical-electronic technology for 6G.</li>
<li>Lagging share price offers attractive valuations and 42% potential upside to previous high.</li>
</ul>


Upward trend in new orders suggest that guidance is conservative.
Long-Term prospects good with digitalization, 5G and optical-electronic technology for 6G.
Lagging share price offers attractive valuations and 42% potential upside to previous high.


NEC (6701 JP): Positive Orders Trend, Lagging Share Price

<ul>
<li>OVERSEAS. SPX -1.2% ahead of Fed; Tech pulls back after torrid MTD; Eyes on Fed as Consensus converges on 25bp hike; More earnings ahead as FAANG(you get it) this week</li>
<li>JAPAN. NKY Futs  vs CASh -0.1%; USDJPY 130.44. ; Calls for more Activists?! Foreign Tourist Spend normalizes; KEPCO Nuclear plant powers down; Notable Earnings beats:  OLC, Omron; NEC; Misses: Canon </li>
<li>DAILY NUGGETS. Suzuki embraces carbon neutrality in a different form - yes a very different form...see below !</li>
</ul>


OVERSEAS. SPX -1.2% ahead of Fed; Tech pulls back after torrid MTD; Eyes on Fed as Consensus converges on 25bp hike; More earnings ahead as FAANG(you get it) this week
JAPAN. NKY Futs  vs CASh -0.1%; USDJPY 130.44. ; Calls for more Activists?! Foreign Tourist Spend normalizes; KEPCO Nuclear plant powers down; Notable Earnings beats:  OLC, Omron; NEC; Misses: Canon 
DAILY NUGGETS. Suzuki embraces carbon neutrality in a different form - yes a very different form...see below !


Good Morning Japan |RETREAT ! SPX Fails at 4100 (Again) Ahead of Fed; Calls for More Activists in JP

<ul>
<li>We remain bullish on NEC as we believe that the company is one of the key beneficiaries of the shift to standalone 5G</li>
<li>NEC’s Network Services registered double-digit revenue and profit gains in Q3 on the back of growth in 5G equipment sales and IP income.</li>
<li>We believe that the current share price (+4% over the past 12m) and valuation (10x PE, 0.8x PB) do not reflect the positive mid-term outlook</li>
</ul>


We remain bullish on NEC as we believe that the company is one of the key beneficiaries of the shift to standalone 5G
NEC’s Network Services registered double-digit revenue and profit gains in Q3 on the back of growth in 5G equipment sales and IP income.
We believe that the current share price (+4% over the past 12m) and valuation (10x PE, 0.8x PB) do not reflect the positive mid-term outlook


Japan

NEC Corporation manufactures and markets computers, telecommunication equipment, electronic devices, semiconductors, and software.  The Company's products include printers, modems, cellular phones, plasma display panels (PDP), network systems, memory, integrated circuits (IC), thin film transistor-liquid crystal display (TFT-LCD), and printed circuit boards (PCB). NEC operates worldwide.

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NEC Corp (6701 JP)

Ohayo Japan |Rates Rocket-Equities Take Heed; NUGGET: Profit Renaissance for Japan's Defense Sector

ADP numbers drive Bond and Equity Sell off; NKY Futs -1.1% vs Cash; USDJPY 144.1; Expect further follow through of yesterday's NKY sell off; Yen...

Mark Chadwick

Toshiba (6502) - Thinking About the Arb

Toshiba has seen shares rise a bit since Day1 post-anncmt ~6 weeks ago, but Peers have risen further and the earnings shift on forward consensus is...

Travis Lundy

Good Morning Japan |RETREAT ! SPX Fails at 4100 (Again) Ahead of Fed; Calls for More Activists in JP

JAPAN. NKY Futs vs CASh -0.1%; USDJPY 130.44. ; Calls for more Activists?! Foreign Tourist Spend normalizes; KEPCO Nuclear plant powers down;...

Mark Chadwick

NEC (6701) | Strong Network Revenues

We remain bullish on NEC as we believe that the company is one of the key beneficiaries of the shift to standalone 5G. The stock price is...

Mark Chadwick

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Ohayo Japan |Rates Rocket-Equities Take Heed; NUGGET: Profit Renaissance for Japan's Defense Sector

ADP numbers drive Bond and Equity Sell off; NKY Futs -1.1% vs Cash; USDJPY 144.1; Expect further follow through of yesterday's NKY sell off; Yen...

Mark Chadwick

Toshiba (6502) - Thinking About the Arb

Toshiba has seen shares rise a bit since Day1 post-anncmt ~6 weeks ago, but Peers have risen further and the earnings shift on forward consensus is...

Travis Lundy

NEC (6701 JP): Positive Orders Trend, Lagging Share Price

Orders trend positive through Q3. FY Mar-23 guidance looks conservative. Digitalization and 5G/6G trends positive for mid- to long-term growth....

Scott Foster

Good Morning Japan |RETREAT ! SPX Fails at 4100 (Again) Ahead of Fed; Calls for More Activists in JP

JAPAN. NKY Futs vs CASh -0.1%; USDJPY 130.44. ; Calls for more Activists?! Foreign Tourist Spend normalizes; KEPCO Nuclear plant powers down;...

Mark Chadwick

NEC (6701) | Strong Network Revenues

We remain bullish on NEC as we believe that the company is one of the key beneficiaries of the shift to standalone 5G. The stock price is...

Mark Chadwick