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 Capital Markets

Bloomberg reported today that Roblox had filed confidentially for a public offering targeting a valuation of $8bn, roughly double the reported $4bn valuation at which it raised $150m in a series G that involved Andreesen Horowitz and Tencent. Below, we examine the company’s product and business model.

Bloomberg reported today that Roblox had filed confidentially for a public offering targeting a valuation of $8bn, roughly double the reported $4bn valuation at which it raised $150m in a series G that involved Andreesen Horowitz and Tencent. Below, we examine the company’s product and business model.

Roblox IPO Preview – Unique Positioning

Equity Bottom-Up

The online Tokyo Game Show over the weekend featured some strong interest in both Capcom and Koei-Tecmo and lent support to a continued positive stance on Nintendo. While there was nothing exceptionally surprising, some of the nuances of the new information provided were interesting and point to a well-defined third-party strategy and buy-in for the Switch.

The online Tokyo Game Show over the weekend featured some strong interest in both Capcom and Koei-Tecmo and lent support to a continued positive stance on Nintendo. While there was nothing exceptionally surprising, some of the nuances of the new information provided were interesting and point to a well-defined third-party strategy and buy-in for the Switch.

Tokyo Game Show – Capcom and Koei-Tecmo Presentations Look Good for Themselves and for Nintendo

Capcom announced two Monster Hunter games for the Switch at yesterday’s Nintendo Direct Partner Showcase. Monster Hunter Rise is looking like a big potential catalyst for Capcom with a 26 Mar 2021 launch while Monster Hunter Stories Two is likely to contribute some moderate sales later that year. In addition to these titles from Capcom, Nintendo also announced nine other quality titles from a variety of other publishers though none of them are likely to have quite the impact of Monster Hunter.

Capcom announced two Monster Hunter games for the Switch at yesterday’s Nintendo Direct Partner Showcase. Monster Hunter Rise is looking like a big potential catalyst for Capcom with a 26 Mar 2021 launch while Monster Hunter Stories Two is likely to contribute some moderate sales later that year. In addition to these titles from Capcom, Nintendo also announced nine other quality titles from a variety of other publishers though none of them are likely to have quite the impact of Monster Hunter.

Monster Hunter – Catalyst for Capcom, Start of 3rd Party Wave for Nintendo

Sony’s just concluded PS5 showcase finally revealed pricing at $500, with the digital version coming in at $400. These prices have been speculated on for some time and are not a real surprise though we did believe there was a possibility Sony would have tried to undercut Microsoft slightly. There were some small surprises in terms of exclusivity and the new PlayStation Plus Collection, however, and we discuss these below.

Sony’s just concluded PS5 showcase finally revealed pricing at $500, with the digital version coming in at $400. These prices have been speculated on for some time and are not a real surprise though we did believe there was a possibility Sony would have tried to undercut Microsoft slightly. There were some small surprises in terms of exclusivity and the new PlayStation Plus Collection, however, and we discuss these below.

Sony – What the PS5 Showcase Says About Gaming Ecosystems

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Event-Driven

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/159/033/original/2020-09-15_10-23-17.png?1600133037" class="editor-image img-responsive" data-smartkarma-image-id="159033"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div>THE BUFFETT TRADE - Much has already written on <a href="https://www.smartkarma.com/entities/berkshire-hathaway-inc-cl-b" target="_blank" data-smartkarma-citation="entities:8635:1" rel="noopener">Berkshire Hathaway</a>'s purchase of stakes in Japan's sogo shosha, including on this <a href="https://www.smartkarma.com/insights/a-quick-look-at-the-buffet-trade-and-the-most-obvious-follow-ons" target="_blank" data-smartkarma-citation="insights:43125" rel="noopener">platform</a>. The Japanese trading houses have a long and proud tradition and continue to attract the best talent from at home and abroad. In many respects, they have similarities with BH given their long-term approach to investing and focus on free cash flow generation. The differences are as striking, particularly the exposure to commodities and Asia, and the implications for both BH and Japan are profound.In this DETAIL section, we examine: -<ul>
<li>the macro 'logic' driving these investments,</li>
<li>a more appropriate analytical and valuation methodology for these companies</li>
<li>the historically most-correlated peer groups and companies from both a technical and fundamental perspective if this trade were to be applied more broadly to the Japanese market. </li>
</ul><div class="content-highlight">We can summarise our approach to understanding the rationale behind the Buffett trade in the chart below. The sogo shosha are, in aggregate, significant generators of Residual Comprehensive Income, particularly relative to their current market valuations. Priced at a historically low 0.93x book, Japan's trading houses are one of the world's better deep value trades.</div><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/159/053/original/2020-09-15_13-42-01.png?1600144936" class="editor-image img-responsive" data-smartkarma-image-id="159053"></figure>

Source for all charts &amp; tables: Japan AnalyticsTHE BUFFETT TRADE - Much has already written on Berkshire Hathaway's purchase of stakes in Japan's sogo shosha, including on this platform. The Japanese trading houses have a long and proud tradition and continue to attract the best talent from at home and abroad. In many respects, they have similarities with BH given their long-term approach to investing and focus on free cash flow generation. The differences are as striking, particularly the exposure to commodities and Asia, and the implications for both BH and Japan are profound.In this DETAIL section, we examine: -
the macro 'logic' driving these investments,
a more appropriate analytical and valuation methodology for these companies
the historically most-correlated peer groups and companies from both a technical and fundamental perspective if this trade were to be applied more broadly to the Japanese market. 
We can summarise our approach to understanding the rationale behind the Buffett trade in the chart below. The sogo shosha are, in aggregate, significant generators of Residual Comprehensive Income, particularly relative to their current market valuations. Priced at a historically low 0.93x book, Japan's trading houses are one of the world's better deep value trades.

🇯🇵 JAPAN • Analysing The "Buffett Trade", Valuing the Sogo Shosha & The Return of Asian Inflation

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)

Roblox IPO Preview – Unique Positioning

We preview the upcoming listing of minigame sandbox Roblox whose closest peers Minecraft and Fortnite underline its potential, but it is Roblox's...

Mio Kato

Tokyo Game Show – Capcom and Koei-Tecmo Presentations Look Good for Themselves and for Nintendo

The online Tokyo Game Show over the weekend featured some strong interest in both Capcom and Koei-Tecmo and lent support to a continued positive...

Mio Kato

Monster Hunter – Catalyst for Capcom, Start of 3rd Party Wave for Nintendo

Capcom announced two Monster Hunter games for the Switch at yesterday’s Nintendo Direct Partner Showcase. Monster Hunter Rise is looking like a big...

Mio Kato

Sony – What the PS5 Showcase Says About Gaming Ecosystems

Sony’s just concluded PS5 showcase finally revealed pricing at $500, with the digital version coming in at $400. These prices have been speculated...

Mio Kato

🇯🇵 JAPAN • Analysing The "Buffett Trade", Valuing the Sogo Shosha & The Return of Asian Inflation

THE BUFFETT TRADE - Much has written on $ber

Campbell Gunn

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