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>Nidec faces the issue of a decline in volumes for HDD motors and appears to be betting the farm on capturing the top share for EV traction motors. We aren’t at all convinced that they can, but even if they do, the early signs are that that might not be as lucrative as they imagined.</p>

Nidec faces the issue of a decline in volumes for HDD motors and appears to be betting the farm on capturing the top share for EV traction motors. We aren’t at all convinced that they can, but even if they do, the early signs are that that might not be as lucrative as they imagined.

Nidec – Early Results for the EV Business Look Terrible

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Event-Driven

<ul>
<li>Following up on our earlier cross-shareholding work, in this note we look to summarize our work so far by looking at where most of the selling will likely come.</li>
<li>Of the seven companies that we have looked at so far, collectively they have around US$102bn worth of shares to sell in 118 companies. </li>
<li>Of these, they have a combined stake of over US$1bn in 23 companies.</li>
</ul>


Following up on our earlier cross-shareholding work, in this note we look to summarize our work so far by looking at where most of the selling will likely come.
Of the seven companies that we have looked at so far, collectively they have around US$102bn worth of shares to sell in 118 companies. 
Of these, they have a combined stake of over US$1bn in 23 companies.


Japan Cross-Shareholding - Summary Matrix - Over US$100bn of Selling in 118 Companies

Independent Insight Provider, Japanese equities, LightStream Research

Scott Foster

Independent Insight Provider, Japanese equities

<ul>
<li>EV motors are out of the red, profits on appliance, commercial and industrial products are up, and the yen is much weaker than management's forecast assumes.</li>
<li>Despite economic uncertainty, achieving FY Mar-24 profit guidance should not be difficult. </li>
<li>Operating margin trends are generally positive and valuations not too high for longer-term investors. Buy into current pull-back.</li>
</ul>


EV motors are out of the red, profits on appliance, commercial and industrial products are up, and the yen is much weaker than management's forecast assumes.
Despite economic uncertainty, achieving FY Mar-24 profit guidance should not be difficult. 
Operating margin trends are generally positive and valuations not too high for longer-term investors. Buy into current pull-back.


Mitsubishi UFJ Financial (MUFG) / Event-Driven

<ul>
<li>Following up on our earlier cross-shareholding notes, in this note we look at <a href="https://www.smartkarma.com/entities/mitsubishi-ufj-financial-group" target="_blank" data-smartkarma-citation="entities:218:1" rel="noopener">Mitsubishi UFJ Financial (MUFG) (8306 JP)</a>’s cross-shareholding.</li>
<li>MUFG had a stake over US$100m in at least 47 listed Japanese stocks, amounting to a total of around US$19bn.</li>
<li>In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.</li>
</ul>


Following up on our earlier cross-shareholding notes, in this note we look at Mitsubishi UFJ Financial (MUFG) (8306 JP)’s cross-shareholding.
MUFG had a stake over US$100m in at least 47 listed Japanese stocks, amounting to a total of around US$19bn.
In this note, we take a look at its stakes in various companies to see which ones could possibly be candidates for further selldowns.


MUFG Cross-Shareholding - At Least US$20bn of Cross-Shareholding to Sell, Taking It Slow

Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

<ul>
<li>We had a call with <a href="https://www.smartkarma.com/entities/delta-electronics-inc" target="_blank" data-smartkarma-citation="entities:12688:1" rel="noopener">Delta Electronics (2308 TT)</a> management to understand the company’s latest developments, particularly in relation to its growing automotive and EV businesses.</li>
<li>Delta Thailand shares have rallied 55.4% in T$ terms, while Delta Taiwan has only rallied 9.3%.</li>
<li>Delta’s EV business is growing 50% per year and has major customers including Tesla, GM, and Volkswagen, however, our sense is the Taiwan entity has an advantage. </li>
</ul>


We had a call with Delta Electronics (2308 TT) management to understand the company’s latest developments, particularly in relation to its growing automotive and EV businesses.
Delta Thailand shares have rallied 55.4% in T$ terms, while Delta Taiwan has only rallied 9.3%.
Delta’s EV business is growing 50% per year and has major customers including Tesla, GM, and Volkswagen, however, our sense is the Taiwan entity has an advantage. 


Delta Electronics: Taiwan Vs. Thailand Pairs Monitor, Call with Management

Japan

Mitsubishi Electric Corporation develops, manufactures, and markets electronic equipment.  The Company's products include industrial machinery, heavy electric machinery, data communications systems, electronic devices, and consumer electronics.

Nidec Corporation operates as a world's leading manufacturer of motors. The Company produces small precision motors, automotive motors, home appliance motors, commercial and industrial motors, machinery motors, electronic and optical components, and other related products. Nidec supplies its products in home appliances, automotive markets, and other fields.

Fujikura Ltd. manufactures and sells wires and cables such as optical fiber cables and coaxial cables. The Company's products include optical transmission system, electronic materials, and telecommunication cables.

FUJI ELECTRIC CO.,LTD manufactures electric machinery and electronic devices. The Company's products include automatic vending machines, factory automation equipment, and power supplies, as well as information and electronic components such as power semiconductors and integrated circuits (ICs).

MABUCHI MOTOR CO., LTD. manufactures and markets small digital camera motors. The Company markets its products to a wide range of users, from audio-visual makers, automobile parts makers, consumer electronics makers, office automation equipment makers, precision machine makers to radio controlled-model cars and video game makers.  Mabuchi's products are produced primarily in China.

Furukawa Electric Co., Ltd. manufactures wires, cables, and metal products. The Company holds patents in optical fiber coating technology and produces optical fiber cables in the United States.  Furukawa Electric's metal products include aluminum cans, air conditioner parts, and shape memory alloys.

USHIO INC. manufactures lamps and optical equipment including projectors for movie theaters.  The Company produces halogen and Houdentou lamps for semiconductor and office automation equipment.  Ushio has subsidiaries in the US, Canada, Germany, Hong Kong, Netherlands, Singapore, South Korea, and Taiwan.

GS Yuasa Corporation is a holding company established through the merger of Yuasa Corp. and Japan Storage Battery Co., Ltd.  The Company manages financial operations for its subsidiaries, which manufactures storage batteries used for automobiles, motorcycles, computers, and lighting equipment.

TOYO TANSO CO., LTD. mainly manufactures carbon and graphite products for industrial use.  The Company's main products include isotropic graphite, carbon products for mechanical and electrical applications.

DAIHEN Corporation manufactures and repairs a diverse line of transformers, power distribution equipment, welding machines, industrial robots, and semiconductor manufacturing equipment.  The Company also produces other energyrelated equipment such as generators and power monitoring and control systems.

Bharat Heavy Electricals Limited manufactures power plant equipment. The Company's products include gas turbines, generators, thermal sets, diesel shunters, turbo sets, hydro sets, power transformers, switch gears, circuit breakers and boilers. The Company also manufactures compressors, valves, rectifiers, pumps, capacitors, oil rigs, as well as castings and forgings.

Sungrow Power Supply Company Limited develops, produces, sells and provides services for solar PV inverters, wind power converters and other power supply. The Company also provides system solutions to renewable energy industry users.

NARI Technology Co., Ltd. develops, manufactures and sells automation products for electricity distribution, converting stations, coal-fired power plants, and industrial process. The Company also provides services and system integration.

CG Power and Industrial Solutions Limited manufactures, distributes, installs and services electrical and allied equipment. The Company offers transformers, reactors, switchgear control equipment and accessories, industrial motors, pumps, and communication systems. CG Power and Industrial Solutions serves customers globally. 

Hubbell Incorporated manufactures electrical and electronic products for commercial, industrial, utility, and telecommunications markets.  The Company's products include plugs, receptacles, connectors, lighting fixtures, high voltage test and measurement equipment, and voice and data signal processing components. Hubbell operates in the United States and overseas.

ABB India Limited undertakes engineering and construction projects and manufactures heavy engineering and industrial equipment. The Company undertakes projects in the field of energy production, power transmission, transportation, process automation and pollution control. ABB India's products include pollution control equipment, switch gears and high current rectifiers.

Enphase Energy Inc. manufactures solar power solutions. The Company offers solutions to increase productivity and reliability of solar modules.

Havells India Limited manufactures electrical products. The Company's products include building circuit protection equipment, industrial switchgears, energy meters, cables & wires, modular switches, fans and lighting products.

Regal Rexnord Corporation designs, manufactures, and sells electric motors and controls. The Company offers gearboxes, automotive transmissions, rotary cutting tools, automatic transfer switches, and electric generators. Regal Beloit markets its products to distributors, original equipment manufacturers, and end users worldwide.

Luxshare Precision Industry Co., Ltd. researches, manufactures and sells connectors. The Company's products are widely used in computers, communication devices, consumer electronics products and automobiles.

NIDEC CORPORATION is the world's leading manufacturer of small precision motors mainly used in HDD and optical disk drives. The company has extended its focus to the home appliance and automotive markets. NIDEC is active in M&A and its subsidiaries include the world's leading manufacturers of LCD panel handling robots and camera shutters.

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Nidec Corp (6594 JP)

Nidec – Early Results for the EV Business Look Terrible

Nidec faces declining volumes for HDD motors and is betting the farm on capturing the top share for EV traction motors but early signs are that...

Mio Kato

Japan Cross-Shareholding - Summary Matrix - Over US$100bn of Selling in 118 Companies

In this note we summarize our work by looking at where most of the selling will likely come. Of the companies that we have looked, collectively...

Sumeet Singh

Nidec (6594 JP): Favorable Margin Trends

EV motors now profitable and OP margin on Appliance, Commercial & Industrial above 10%. Forex assumptions very conservative, making upward revision...

Scott Foster

MUFG Cross-Shareholding - At Least US$20bn of Cross-Shareholding to Sell, Taking It Slow

Following up on our earlier cross-shareholding notes, in this note we look at MUFG (8306 JP)’s cross-shareholding. MUFG had a stake of over US$100m...

Sumeet Singh

Delta Electronics: Taiwan Vs. Thailand Pairs Monitor, Call with Management

We had a call with Delta Electronics (2308 TT) management to understand the company’s latest developments, particularly in relation to its growing...

Vincent Fernando, CFA

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