Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

TSE Tokyo Price Index TOPIX / Technical Analysis

<ul>
<li>The MSCI ACWI index ACWI-US briefly fell below major support at $90.50-$91.50, though we do not consider it a "decisive" breakdown and we now see a false breakdown (bullish).</li>
<li>On MSCI ACWI (local currency), a false breakdown appears to already be in place, which is bullish as long as the index does not break to a new low.</li>
<li>MSCI EM (EEM-US) continues to hold above $36.50-$37 support, while MSCI ACWI ex-US (ACWX-US) and EAFE (EFA-US) remain above supports at $45 and $65-$66, respectively. Pullback is likely over.</li>
</ul>


The MSCI ACWI index ACWI-US briefly fell below major support at $90.50-$91.50, though we do not consider it a "decisive" breakdown and we now see a false breakdown (bullish).
On MSCI ACWI (local currency), a false breakdown appears to already be in place, which is bullish as long as the index does not break to a new low.
MSCI EM (EEM-US) continues to hold above $36.50-$37 support, while MSCI ACWI ex-US (ACWX-US) and EAFE (EFA-US) remain above supports at $45 and $65-$66, respectively. Pullback is likely over.


Japan Bullishly Inflecting; Constructive Outlook Intact; Global Pullback Likely Over

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

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>Japan's inflation hit a 41-year high at 4.3% in January, but gradually slowed down in the following months, reaching 3.3%, 3.2%, and 3.5% in February, March, and April 2023, respectively.</li>
<li>Although Fuel, Electricity, and Water prices declined, other items excluding fresh vegetables, maintained inflation at a similar pace, suggesting that cost-push inflation continues to impact the overall economic environment.</li>
<li>This insight examines the recent quarterly performance of Yakult, Nissin, and Seven &amp; I, our top picks in the Japan Consumer Staples Sector <a href="https://www.smartkarma.com/insights/japan-consumer-staples-sector-inflation-looks-a-blessing-in-disguise-for-those-with-pricing-power" target="_blank" rel="noopener">Smartkarma Original</a>.</li>
</ul>


Japan's inflation hit a 41-year high at 4.3% in January, but gradually slowed down in the following months, reaching 3.3%, 3.2%, and 3.5% in February, March, and April 2023, respectively.
Although Fuel, Electricity, and Water prices declined, other items excluding fresh vegetables, maintained inflation at a similar pace, suggesting that cost-push inflation continues to impact the overall economic environment.
This insight examines the recent quarterly performance of Yakult, Nissin, and Seven &amp; I, our top picks in the Japan Consumer Staples Sector Smartkarma Original.


Japan Consumer Staples Update: Inflation Looks a Blessing in Disguise for Those with Pricing Power

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nissin-foods-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:12548:1" rel="noopener">Nissin Foods Holdings (2897 JP)</a> to report FQ4 results on May 10th with ¥158.5bn revenue and ¥8.1bn operating profit expected according to revised Feb 2023 guidance.</li>
<li>Consensus predicts Nissin Foods' operating profit to be ¥6.6bn from a revenue of ¥167.8bn, which is lower than the company's latest annual guidance.</li>
<li>Meanwhile, a higher FQ4 operating profit of ¥10.5bn is expected based on our analysis, exceeding consensus by 59%.</li>
</ul>



Nissin Foods Holdings (2897 JP) to report FQ4 results on May 10th with ¥158.5bn revenue and ¥8.1bn operating profit expected according to revised Feb 2023 guidance.
Consensus predicts Nissin Foods' operating profit to be ¥6.6bn from a revenue of ¥167.8bn, which is lower than the company's latest annual guidance.
Meanwhile, a higher FQ4 operating profit of ¥10.5bn is expected based on our analysis, exceeding consensus by 59%.


Nissin Foods' FQ4 Earnings: A Possible 59% Operating Profit Surprise?

<ul>
<li>Having reached a 30 year high of 4% in December 2022, which is two times the BOJ’s target, Japanese companies are finding it hard to absorb cost inflation.</li>
<li>This macro environment presents an opportunity to appreciate the few Japanese Food and Beverages companies that have managed to maintain average pricing growth even in a deflationary environment.</li>
<li>With a lasting pricing-power and a relatively inelastic demand than competitors, we think <a href="https://www.smartkarma.com/entities/yakult-honsha-co-ltd" target="_blank" data-smartkarma-citation="entities:17153:1" rel="noopener">Yakult Honsha (2267 JP)</a> and <a href="https://www.smartkarma.com/entities/nissin-foods-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:12548:1" rel="noopener">Nissin Foods Holdings (2897 JP)</a> are in a great position to outperform competition. </li>
</ul>


Having reached a 30 year high of 4% in December 2022, which is two times the BOJ’s target, Japanese companies are finding it hard to absorb cost inflation.
This macro environment presents an opportunity to appreciate the few Japanese Food and Beverages companies that have managed to maintain average pricing growth even in a deflationary environment.
With a lasting pricing-power and a relatively inelastic demand than competitors, we think Yakult Honsha (2267 JP) and Nissin Foods Holdings (2897 JP) are in a great position to outperform competition. 


Japan Consumer Staples Sector : Inflation Looks a Blessing in Disguise for Those with Pricing Power

iShares MSCI ACWI ETF / Technical Analysis

<ul>
<li>In our latest int'l reports we have preached caution, and since January we have discussed our expectations for $93 to cap upside on the ACWI-US</li>
<li>Thus far, $93 has proven to be rock-solid resistance, and ACWI-US now displays a 4.5-month uptrend violation signaling the pullback has officially begun.</li>
<li>We would expect this pullback to continue down to $86-87 at minimum, and potentially $84 (December 2022 low). Even $75-77 (the 2022 lows) is not out of the question.</li>
</ul>


In our latest int'l reports we have preached caution, and since January we have discussed our expectations for $93 to cap upside on the ACWI-US
Thus far, $93 has proven to be rock-solid resistance, and ACWI-US now displays a 4.5-month uptrend violation signaling the pullback has officially begun.
We would expect this pullback to continue down to $86-87 at minimum, and potentially $84 (December 2022 low). Even $75-77 (the 2022 lows) is not out of the question.


MSCI ACWI Uptrend Break; Defensives to Shine; Ideas in Staples, Health Care, Telecomm, Utilities

Japan

NISSIN FOODS HOLDINGS CO.,LTD. produces instant noodle and processed food products.  The Company also develops pharmaceuticals.  NISSIN FOODS operates production facilities in overseas countries including Hong Kong, India, U.S., Singapore, and other countries.

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Nissin Foods Holdings (2897 JP)

Japan Bullishly Inflecting; Constructive Outlook Intact; Global Pullback Likely Over

The MSCI $ACWI briefly fell below our $90.50 support but quickly reclaimed, suggesting a false breakdown and the likely end to this pullback in...

Vermilion Research

Japan Consumer Staples Update: Inflation Looks a Blessing in Disguise for Those with Pricing Power

The prevailing inflationary environment presents an opportunity for specific Japanese Food and Beverages companies that have consistently achieved...

Oshadhi Kumarasiri

Nissin Foods' FQ4 Earnings: A Possible 59% Operating Profit Surprise?

While consensus estimates are on the conservative side, projecting an OP of ¥6.6bn in FQ4, our analysis and the company guidance suggest a higher...

Oshadhi Kumarasiri

Japan Consumer Staples Sector : Inflation Looks a Blessing in Disguise for Those with Pricing Power

This inflationary environment presents an opportunity to appreciate the few Japanese Food and Beverages companies that have managed to maintain...

Oshadhi Kumarasiri

MSCI ACWI Uptrend Break; Defensives to Shine; Ideas in Staples, Health Care, Telecomm, Utilities

$93 on $ACWI has proven to be rock-solid resistance, and it now displays a 4.5-month uptrend violation signaling the pullback has officially begun....

Vermilion Research

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52-week Range

Market Cap (USDm)

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Japan Bullishly Inflecting; Constructive Outlook Intact; Global Pullback Likely Over

​The MSCI $ACWI briefly fell below our $90.50 support but quickly reclaimed, suggesting a false breakdown and the likely end to this pullback in...

Vermilion Research

Japan Consumer Staples Update: Inflation Looks a Blessing in Disguise for Those with Pricing Power

The prevailing inflationary environment presents an opportunity for specific Japanese Food and Beverages companies that have consistently achieved...

Oshadhi Kumarasiri

Nissin Foods' FQ4 Earnings: A Possible 59% Operating Profit Surprise?

While consensus estimates are on the conservative side, projecting an OP of ¥6.6bn in FQ4, our analysis and the company guidance suggest a higher...

Oshadhi Kumarasiri

Japan Consumer Staples Sector : Inflation Looks a Blessing in Disguise for Those with Pricing Power

This inflationary environment presents an opportunity to appreciate the few Japanese Food and Beverages companies that have managed to maintain...

Oshadhi Kumarasiri

MSCI ACWI Uptrend Break; Defensives to Shine; Ideas in Staples, Health Care, Telecomm, Utilities

$93 on $ACWI has proven to be rock-solid resistance, and it now displays a 4.5-month uptrend violation signaling the pullback has officially begun....

Vermilion Research

The MSCI $ACWI briefly fell below our $90.50 support but quickly reclaimed, suggesting a false breakdown and the likely end to this pullback in...