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>We have theorised previously that the upgraded Switch that everyone expects from Nintendo could utilise graphics partner, Nvidia’s DLSS technology. This could help the company close the gap with Sony and Microsoft and could have a variety of other implications which we discuss below.</p>

We have theorised previously that the upgraded Switch that everyone expects from Nintendo could utilise graphics partner, Nvidia’s DLSS technology. This could help the company close the gap with Sony and Microsoft and could have a variety of other implications which we discuss below.

Nintendo – DLSS Developments Have Implications for Switch “Pro”

<p>There have been some interesting moves made by Nintendo and graphics partner Nvidia which suggest to us that a 4K upgraded Switch could be on the way. There is now news that Nintendo is switching its online multiplayer system after about a decade. These moves point to some interesting changes at Nintendo and have ramifications for the question of whether this is the peak – a key concern for investors at present.</p>

There have been some interesting moves made by Nintendo and graphics partner Nvidia which suggest to us that a 4K upgraded Switch could be on the way. There is now news that Nintendo is switching its online multiplayer system after about a decade. These moves point to some interesting changes at Nintendo and have ramifications for the question of whether this is the peak – a key concern for investors at present.

Nintendo – Watch Monster Hunter Rise for Improved Multiplayer

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Thematic (Sector/Industry)

<div><p style="text-align: center;"><strong>• RESULTS &amp; REVISIONS SUMMARY - 1st FEBRUARY •</strong></p></div><div><p>Of Monday's 76 results announcements, 79% scored positively for earnings momentum despite trailing revenues falling by 5.2% on average and a 2.6 percentage point decline in operating margins. 11% of companies were in the red for the quarter.  65% of the 48 annual forecasts/revision announcements scored positively and the average Forecast/Revision score was +2.6 points.</p></div><p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p><p style="text-align: left;">Monday's best and worst large-cap pairing is <a href="https://www.smartkarma.com/entities/rohm-co-ltd" target="_blank" data-smartkarma-citation="entities:2953:1" rel="noopener">ROHM (6963 JP)</a> and <a href="https://www.smartkarma.com/entities/shionogi-co-ltd" target="_blank" data-smartkarma-citation="entities:19535:1" rel="noopener">Shionogi (4507 JP)</a>. We would also note the declining momentum at <a href="https://www.smartkarma.com/entities/lasertec-corp" target="_blank" data-smartkarma-citation="entities:4126:1" rel="noopener">Lasertec (6920 JP)</a> and <a href="https://www.smartkarma.com/entities/nintendo-co-ltd" target="_blank" data-smartkarma-citation="entities:5415:1" rel="noopener">Nintendo (7974 JP)</a>.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/154/original/2021-02-02_05-32-51.png?1612211584" class="editor-image img-responsive" data-smartkarma-image-id="186154"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/155/original/2021-02-02_05-33-53.png?1612211646" class="editor-image img-responsive" data-smartkarma-image-id="186155"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/156/original/2021-02-02_05-34-39.png?1612211691" class="editor-image img-responsive" data-smartkarma-image-id="186156"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/157/original/2021-02-02_05-35-09.png?1612211734" class="editor-image img-responsive" data-smartkarma-image-id="186157"></figure></section><div class="content-caption">    Source for all charts &amp; tables: Japan Analytics</div>

• RESULTS &amp; REVISIONS SUMMARY - 1st FEBRUARY •Of Monday's 76 results announcements, 79% scored positively for earnings momentum despite trailing revenues falling by 5.2% on average and a 2.6 percentage point decline in operating margins. 11% of companies were in the red for the quarter.  65% of the 48 annual forecasts/revision announcements scored positively and the average Forecast/Revision score was +2.6 points.• BEST &amp; WORST •Monday's best and worst large-cap pairing is ROHM (6963 JP) and Shionogi (4507 JP). We would also note the declining momentum at Lasertec (6920 JP) and Nintendo (7974 JP).    Source for all charts &amp; tables: Japan Analytics

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​02/​​​​​​​​​​​​​01 - Rohm, Shionogi..

<p>In our previous insight we noted that 3Q could see about 12.2m units of Switch, 70m software units, revenue of ¥650bn and OP of ¥208bn. Results were 11.6m units of Switch, 75.85m software units, revenue of ¥635bn and OP of ¥230bn. Hardware looks to have been slightly production constrained depressing revenue and strong software sales helped margins… but another round of Opex bloat did not…</p>

In our previous insight we noted that 3Q could see about 12.2m units of Switch, 70m software units, revenue of ¥650bn and OP of ¥208bn. Results were 11.6m units of Switch, 75.85m software units, revenue of ¥635bn and OP of ¥230bn. Hardware looks to have been slightly production constrained depressing revenue and strong software sales helped margins… but another round of Opex bloat did not…

Nintendo – Super Duper Mario 3! Now With Cost Pull-Forward!

<p>Koei Tecmo revised up guidance to ¥56bn in revenue (consensus ¥55.0bn), ¥22bn in OP (consensus ¥23.3bn) and ¥25.0bn in NP (consensus ¥22.4bn). These revisions remain conservative as 4Q is typically seasonally strong (though it will be less so this year due to the timing of various releases) and Koei Tecmo has already generated ¥19.4bn in OP in the last three quarters.</p>

Koei Tecmo revised up guidance to ¥56bn in revenue (consensus ¥55.0bn), ¥22bn in OP (consensus ¥23.3bn) and ¥25.0bn in NP (consensus ¥22.4bn). These revisions remain conservative as 4Q is typically seasonally strong (though it will be less so this year due to the timing of various releases) and Koei Tecmo has already generated ¥19.4bn in OP in the last three quarters.

Koei Tecmo – A Beat as Hyrule Warriors, Sangokushi Hadou and the Market Rally All Chip In

Japan

Nintendo Co., Ltd. develops, manufactures, and sells household leisure equipment. The Company produces home use video game hardware and software products. Nintendo markets its products throughout Japan.

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Nintendo (NTDOY US)

Nintendo – DLSS Developments Have Implications for Switch “Pro”

We examine recent developments for Nvidia's DLSS technology and consider the implications for the expected Switch "Pro", including for third party...

Mio Kato

Nintendo – Watch Monster Hunter Rise for Improved Multiplayer

There is now news that Nintendo is switching its online multiplayer system after about a decade and this could have ramifications for the question...

Mio Kato

🇯🇵 JAPAN • Results & Revisions 02/01 - Rohm, Shionogi..

Of Monday's 76 results announcements, 79% scored positively for earnings momentum despite trailing revenues falling by 5.2% on average and a 2.6...

Campbell Gunn

Nintendo – Super Duper Mario 3! Now With Cost Pull-Forward!

Nintendo's share price has been weak of late but strong 3Q earnings and expectations for Capcom's upcoming Monster Hunter Rise should help.

Mio Kato

Koei Tecmo – A Beat as Hyrule Warriors, Sangokushi Hadou and the Market Rally All Chip In

Koei Tecmo continues to perform strongly with both package games and mobile contributing. This should continue next year and YoY OP growth is...

Mio Kato

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Nintendo – DLSS Developments Have Implications for Switch “Pro”

We examine recent developments for Nvidia's DLSS technology and consider the implications for the expected Switch "Pro", including for third party...

Mio Kato

Nintendo – Watch Monster Hunter Rise for Improved Multiplayer

There is now news that Nintendo is switching its online multiplayer system after about a decade and this could have ramifications for the question...

Mio Kato

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​02/​​​​​​​​​​​​​01 - Rohm, Shionogi..

Of Monday's 76 results announcements, 79% scored positively for earnings momentum despite trailing revenues falling by 5.2% on average and a 2.6...

Campbell Gunn

Nintendo – Super Duper Mario 3! Now With Cost Pull-Forward!

Nintendo's share price has been weak of late but strong 3Q earnings and expectations for Capcom's upcoming Monster Hunter Rise should help.

Mio Kato

Koei Tecmo – A Beat as Hyrule Warriors, Sangokushi Hadou and the Market Rally All Chip In

Koei Tecmo continues to perform strongly with both package games and mobile contributing. This should continue next year and YoY OP growth is...

Mio Kato

🇯🇵 JAPAN • Results & Revisions 02/01 - Rohm, Shionogi..