'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

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.

Thematic (Sector/Industry)

<p style="text-align: center;"><strong>• 'WORST' &amp; BEST •</strong></p><p style="text-align: left;">All the large-caps that announced results or forecasts yesterday had positive scores, and none saw a quarter-on-quarter decline in Results &amp; Revisions Score. Therefore, the 'worst' side of our daily pair is a company where earnings momentum has already peaked out, and the upward revision to full-year earnings is below the trailing result - <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>. Conversely, the company with the largest undiscounted 'surprise' is <a href="https://www.smartkarma.com/entities/macnica-fuji-electronics-hol" target="_blank" data-smartkarma-citation="entities:26074:1" rel="noopener">Macnica Fuji Electronics (3132 JP)</a>. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/184/502/original/2021-01-26_06-07-10.png?1611608842" class="editor-image img-responsive" data-smartkarma-image-id="184502"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/184/504/original/2021-01-26_06-12-39.png?1611609171" class="editor-image img-responsive" data-smartkarma-image-id="184504"></figure></section><div class="content-caption"> Source for all charts &amp; tables: Japan Analytics</div>

• 'WORST' &amp; BEST •All the large-caps that announced results or forecasts yesterday had positive scores, and none saw a quarter-on-quarter decline in Results &amp; Revisions Score. Therefore, the 'worst' side of our daily pair is a company where earnings momentum has already peaked out, and the upward revision to full-year earnings is below the trailing result - Koei Tecmo (3635 JP). Conversely, the company with the largest undiscounted 'surprise' is Macnica Fuji Electronics (3132 JP).  Source for all charts &amp; tables: Japan Analytics

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​01/​​​​​​​​​25 - Koei-Tecmo & Nidec

<p style="text-align: center;"><strong>• RELATIVE PRICE SCORE OUTLIERS •</strong></p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/304/original/2021-01-18_07-21-17.png?1611015356" class="editor-image img-responsive" data-smartkarma-image-id="183304"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/305/original/2021-01-19_09-18-35.png?1611015525" class="editor-image img-responsive" data-smartkarma-image-id="183305"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div></section><p><strong>POLES APART</strong><strong>&amp; ECHOES OF 2000</strong>- As the Japanese equity market continues to rise the 'spread' between the percentage of listed companies that are OverSold (Relative Price Score &lt;-2.0) and those that are OverBought (RPS &gt; 4.0) remains at extreme levels as does the spread in terms of market weight. 7.2% of listed companies are Oversold; while 2.2% are OverBought, but the latter account for 13.7% of market value; the former just 5.4%. The last time both pairs of metrics were at these levels was the 2000 technology bubble.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/321/original/2021-01-19_10-25-51.png?1611019564" class="editor-image img-responsive" data-smartkarma-image-id="183321"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/323/original/2021-01-19_10-27-10.png?1611019660" class="editor-image img-responsive" data-smartkarma-image-id="183323"></figure></section><p><strong>BLOW OUT</strong> - As was the case in 2000, the total number of Sectors either OverBought or Oversold is also at an extreme level having peaked at 13 in December. This number has been exceeded only twice in the last fifty years  - in December 1999 (16) and February 2000 (14).   </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/363/original/2021-01-19_12-45-46.png?1611027961" class="editor-image img-responsive" data-smartkarma-image-id="183363"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/367/original/2021-01-19_13-09-06.png?1611029374" class="editor-image img-responsive" data-smartkarma-image-id="183367"></figure></section><div><p>In the<strong> DETAIL</strong> section below, we provide an update on  Sector, Peer Group and individual company Relative Price Score trends and outliers and make some stock-specific recommendations.</p></div><div><div><div class="content-highlight"><p><strong>THE JAPAN ANALYTICS RELATIVE PRICE SCORE</strong> -  The Relative Price Score (RPS) is a measure of price performance relative to TOPIX calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices over the last 28 years and 24 months, respectively. As all companies on a comparable scale, 'Overbought' and 'Oversold' outliers and short-term changes in scoring can offer some trading opportunities. The data for all 3,919 currently-listed Companies is cap-weight-aggregated into Relative Price Scores for our 328 Peer Groups and 30 Sectors. The Overbought and Oversold outlier 'thresholds are set' at +4 &amp; -2 for Companies, +3 &amp; -1.5 for Peer Groups and +2 and -1 for Sectors, respectively. These thresholds equate with the top and bottom percentiles of over 3.2 million observations.</p></div></div></div>

• RELATIVE PRICE SCORE OUTLIERS •Source for all charts &amp; tables: Japan AnalyticsPOLES APART&amp; ECHOES OF 2000- As the Japanese equity market continues to rise the 'spread' between the percentage of listed companies that are OverSold (Relative Price Score &lt;-2.0) and those that are OverBought (RPS &gt; 4.0) remains at extreme levels as does the spread in terms of market weight. 7.2% of listed companies are Oversold; while 2.2% are OverBought, but the latter account for 13.7% of market value; the former just 5.4%. The last time both pairs of metrics were at these levels was the 2000 technology bubble.BLOW OUT - As was the case in 2000, the total number of Sectors either OverBought or Oversold is also at an extreme level having peaked at 13 in December. This number has been exceeded only twice in the last fifty years  - in December 1999 (16) and February 2000 (14).   In the DETAIL section below, we provide an update on  Sector, Peer Group and individual company Relative Price Score trends and outliers and make some stock-specific recommendations.THE JAPAN ANALYTICS RELATIVE PRICE SCORE -  The Relative Price Score (RPS) is a measure of price performance relative to TOPIX calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices over the last 28 years and 24 months, respectively. As all companies on a comparable scale, 'Overbought' and 'Oversold' outliers and short-term changes in scoring can offer some trading opportunities. The data for all 3,919 currently-listed Companies is cap-weight-aggregated into Relative Price Scores for our 328 Peer Groups and 30 Sectors. The Overbought and Oversold outlier 'thresholds are set' at +4 &amp; -2 for Companies, +3 &amp; -1.5 for Peer Groups and +2 and -1 for Sectors, respectively. These thresholds equate with the top and bottom percentiles of over 3.2 million observations.

🇯🇵 JAPAN • January Relative Price Scores -  Actionable Mean Reversion Trades

Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

Equity Bottom-Up

<p>Nidec has reported a 12% YoY increase in operating profit on flat sales in 1H of FY Mar-21 (ended September) and a 20% YoY increase in operating profit on a 6% increase in sales in 2Q. Compared with 4Q of last fiscal year, 2Q operating profit was up 2.9 times.</p><p>The recovery has been driven by strong demand for HDD motors, a rebound in the profits of the Automotive segment, and efficiency gains in other segments. This demonstrates the company's sound management practices and strategy.</p><p>The operating margin of the Automotive segment increased from 0.1% in 1Q to 4.7% in 2Q. This is encouraging, but it is still a long way to the 9% recorded a year earlier, let alone the peak of 16% reached in the three months to September 2018.</p><p>The full recovery of Automotive profitability is likely to take at least two or three years due to heavy investments in facilities for the production of traction motor systems for electric vehicles.</p><p>Nidec is targeting annual capacity of five million units at factories in China, Europe and Mexico by 2025. This is expected to cost somewhere between ¥500 billion and ¥1 trillion according to CEO Nagamori, who wants 25% of the global market for EV motors by 2025 and 40% by 2030.</p><p>He told the press, "To me, it is clear that electric motors will become the core in every transportation system in the future. Both ships and airplanes will also eventually be electrified."</p><p>With the shares having more than doubled since April and selling at more than 60x EPS guidance for FY Mar-21, long-term investors must share this vision. On a short-term view, we recommend taking profits.</p>

Nidec has reported a 12% YoY increase in operating profit on flat sales in 1H of FY Mar-21 (ended September) and a 20% YoY increase in operating profit on a 6% increase in sales in 2Q. Compared with 4Q of last fiscal year, 2Q operating profit was up 2.9 times.The recovery has been driven by strong demand for HDD motors, a rebound in the profits of the Automotive segment, and efficiency gains in other segments. This demonstrates the company's sound management practices and strategy.The operating margin of the Automotive segment increased from 0.1% in 1Q to 4.7% in 2Q. This is encouraging, but it is still a long way to the 9% recorded a year earlier, let alone the peak of 16% reached in the three months to September 2018.The full recovery of Automotive profitability is likely to take at least two or three years due to heavy investments in facilities for the production of traction motor systems for electric vehicles.Nidec is targeting annual capacity of five million units at factories in China, Europe and Mexico by 2025. This is expected to cost somewhere between ¥500 billion and ¥1 trillion according to CEO Nagamori, who wants 25% of the global market for EV motors by 2025 and 40% by 2030.He told the press, "To me, it is clear that electric motors will become the core in every transportation system in the future. Both ships and airplanes will also eventually be electrified."With the shares having more than doubled since April and selling at more than 60x EPS guidance for FY Mar-21, long-term investors must share this vision. On a short-term view, we recommend taking profits.

Nidec (6594 JP): Good Results, Excessive Valuation

<div><p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p></div><p>Our best and worst pair from yesterday's announcements is <a href="https://www.smartkarma.com/entities/shimano-inc" target="_blank" data-smartkarma-citation="entities:3777:1" rel="noopener">Shimano (7309 JP)</a> and <a href="https://www.smartkarma.com/entities/fujitsu-ltd" target="_blank" data-smartkarma-citation="entities:16968:1" rel="noopener">Fujitsu (6702 JP)</a>.</p><div><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/167/904/original/2020-10-28_05-35-42.png?1603830956" class="editor-image img-responsive" data-smartkarma-image-id="167904"></figure></div><div><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/167/905/original/2020-10-28_05-36-25.png?1603831001" class="editor-image img-responsive" data-smartkarma-image-id="167905"></figure></div><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div><hr><div><p style="text-align: center;"><strong>DAILY STATS</strong></p></div><hr><div><p style="text-align: center;"><strong>57 Quarterly Results</strong></p></div><div><ul style="list-style-type: disc;">
<li><p><strong>Results Score:</strong> 49% Positive / 9% Neutral / 42% Negative</p></li>
<li><p><strong>Average Results Score Change</strong>: -1.7 points</p></li>
<li><p><strong>Average % Change in Revenue:</strong> -6.4% Quarter YoY / -5.9% Rolling TTM YoY </p></li>
<li><p><strong>Average Operating Profit Margin Change:</strong> -1.4ppt</p></li>
<li><p><strong>Percentage Making Quarterly Losses:</strong> 12%</p></li>
</ul></div><hr><div><p style="text-align: center;"><strong>39 Annual • 36 Interim Forecasts/Revisions</strong></p></div><div><ul style="list-style-type: disc;">
<li><p><strong>Annual Forecast/Revision Score:</strong> 36% Positive / 8% Neutral / 56% Negative</p></li>
<li><p><strong>Interim Forecast/Revision Score Change:</strong> 53% Positive / 6% Neutral / 42% Negative</p></li>
<li><p><strong>Average Forecast/Revision Score Change:</strong> -1.1 points</p></li>
</ul></div>

• BEST &amp; WORST •Our best and worst pair from yesterday's announcements is Shimano (7309 JP) and Fujitsu (6702 JP).Source for all charts &amp; tables: Japan AnalyticsDAILY STATS57 Quarterly Results
Results Score: 49% Positive / 9% Neutral / 42% Negative
Average Results Score Change: -1.7 points
Average % Change in Revenue: -6.4% Quarter YoY / -5.9% Rolling TTM YoY 
Average Operating Profit Margin Change: -1.4ppt
Percentage Making Quarterly Losses: 12%
39 Annual • 36 Interim Forecasts/Revisions
Annual Forecast/Revision Score: 36% Positive / 8% Neutral / 56% Negative
Interim Forecast/Revision Score Change: 53% Positive / 6% Neutral / 42% Negative
Average Forecast/Revision Score Change: -1.1 points


🇯🇵 JAPAN • Results & Revisions 10/​​​​​​​​​​​​​​​​​​27 Online Brokers, Hoya, Shin-Etsu, Fujitsu..

<p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p><p>Our best and worst pairing from Monday's announcements is <a href="https://www.smartkarma.com/entities/nidec-corp" target="_blank" data-smartkarma-citation="entities:7245:1" rel="noopener">Nidec (6594 JP)</a> and <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>. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/167/689/original/2020-10-27_05-41-07.png?1603744887" class="editor-image img-responsive" data-smartkarma-image-id="167689"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/167/690/original/2020-10-27_05-42-32.png?1603744992" class="editor-image img-responsive" data-smartkarma-image-id="167690"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div></section><hr><div><p style="text-align: center;"><strong>DAILY STATS</strong></p></div><hr><div><p style="text-align: center;"><strong>232Quarterly Results</strong></p></div><div><ul style="list-style-type: disc;">
<li><p><strong>Results Score:</strong> 31% Positive / 9% Neutral / 59% Negative</p></li>
<li><p><strong>Average Results Score Change:</strong> -1.9 points</p></li>
<li><p><strong>Average % Change in Revenue:</strong> -10.0% Quarter YoY / -4.8% Rolling TTM YoY </p></li>
<li><p><strong>Average Operating Profit Margin Change:</strong> -0.8ppt</p></li>
<li><p><strong>Percentage Making Quarterly Losses:</strong> 6%</p></li>
</ul></div><hr><div><p style="text-align: center;"><strong>33 Annual • 29 Interim Forecasts/Revisions</strong></p></div><div><ul style="list-style-type: disc;">
<li><p><strong>Annual Forecast/Revision Score:</strong> 39% Positive / 12% Neutral / 49% Negative</p></li>
<li><p><strong>Interim Forecast/Revision Score Change:</strong> 59% Positive / 0% Neutral / 41% Negative</p></li>
<li><p><strong>Average Forecast/Revision Score Change:</strong> +1.1 points</p></li>
</ul></div>

• BEST &amp; WORST •Our best and worst pairing from Monday's announcements is Nidec (6594 JP) and Koei Tecmo (3635 JP). Source for all charts &amp; tables: Japan AnalyticsDAILY STATS232Quarterly Results
Results Score: 31% Positive / 9% Neutral / 59% Negative
Average Results Score Change: -1.9 points
Average % Change in Revenue: -10.0% Quarter YoY / -4.8% Rolling TTM YoY 
Average Operating Profit Margin Change: -0.8ppt
Percentage Making Quarterly Losses: 6%
33 Annual • 29 Interim Forecasts/Revisions
Annual Forecast/Revision Score: 39% Positive / 12% Neutral / 49% Negative
Interim Forecast/Revision Score Change: 59% Positive / 0% Neutral / 41% Negative
Average Forecast/Revision Score Change: +1.1 points


🇯🇵 JAPAN • Results & Revisions 10/​​​​​​​​​​​​​​​​​26 Nidec, Canon, OBIC, Koei Tecmo, Nitto Denko

Japan

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)

🇯🇵 JAPAN • Results & Revisions 01/25 - Koei-Tecmo & Nidec

All the large-caps that announced results or forecasts yesterday had positive scores, and none saw a quarter-on-quarter decline in Results &...

Campbell Gunn

🇯🇵 JAPAN • January Relative Price Scores - Actionable Mean Reversion Trades

As the Japanese equity market continues to rise the 'spread' between the percentage of listed companies that are OverSold and those that are...

Campbell Gunn

Nidec (6594 JP): Good Results, Excessive Valuation

Nidec is benefitting from strong demand for data storage and efficiency gains while gearing up to become a dominant supplier of EV motors. But this...

Scott Foster

🇯🇵 JAPAN • Results & Revisions 10/27 Online Brokers, Hoya, Shin-Etsu, Fujitsu..

• BEST & WORST • Our best and worst pair from yesterday's announcements is Shimano (7309 JP) and Fujitsu (6702 JP).____________

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 10/26 Nidec, Canon, OBIC, Koei Tecmo, Nitto Denko

• BEST & WORST • Our best and worst pairing from Monday's announcements is Nidec (6594 JP) and Koei Tecmo (3635...

Campbell Gunn

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🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​01/​​​​​​​​​25 - Koei-Tecmo & Nidec

All the large-caps that announced results or forecasts yesterday had positive scores, and none saw a quarter-on-quarter decline in Results &...

Campbell Gunn

🇯🇵 JAPAN • January Relative Price Scores - Actionable Mean Reversion Trades

As the Japanese equity market continues to rise the 'spread' between the percentage of listed companies that are OverSold and those that are...

Campbell Gunn

Nidec (6594 JP): Good Results, Excessive Valuation

Nidec is benefitting from strong demand for data storage and efficiency gains while gearing up to become a dominant supplier of EV motors. But this...

Scott Foster

🇯🇵 JAPAN • Results & Revisions 10/​​​​​​​​​​​​​​​​​​27 Online Brokers, Hoya, Shin-Etsu, Fujitsu..

• BEST & WORST • Our best and worst pair from yesterday's announcements is Shimano (7309 JP) and Fujitsu (6702 JP).____________

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 10/​​​​​​​​​​​​​​​​​26 Nidec, Canon, OBIC, Koei Tecmo, Nitto Denko

• BEST & WORST • Our best and worst pairing from Monday's announcements is Nidec (6594 JP) and Koei Tecmo (3635...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 01/25 - Koei-Tecmo & Nidec

🇯🇵 JAPAN • Results & Revisions 10/27 Online Brokers, Hoya, Shin-Etsu, Fujitsu..

🇯🇵 JAPAN • Results & Revisions 10/26 Nidec, Canon, OBIC, Koei Tecmo, Nitto Denko