'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)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/132/848/original/2020-05-12_05-39-47.png?1589229610" class="editor-image img-responsive" data-smartkarma-image-id="132848"></figure><div class="content-caption">Source • Japan Analytics</div>NEW INTERIM LOW - As we have noted in earlier Insights in this series, only half of the companies with March year-ends are issuing forecasts for the current year. Of those that do, two-thirds are also providing forecasts for the six months to September 2020. As was the case in 2019, our Interim data series is a clear signal of the depth of this recession.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/132/853/original/2020-05-12_06-49-09.png?1589233760" class="editor-image img-responsive" data-smartkarma-image-id="132853"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/132/854/original/2020-05-12_06-49-50.png?1589233810" class="editor-image img-responsive" data-smartkarma-image-id="132854"></figure><div class="content-caption">Source • Japan Analytics</div>In the DETAIL below, we shall review the results, revisions and initial forecast announcements made by larger-cap (¥75b+) companies yesterday:-<ul>
<li>The balance between positive/neutral/negative of the 238 results announcements was 103:17:118. The average change in Results Score was -0.8.</li>
<li>For the 137 revisions/initial forecasts, the split was 46:12:79, and the average Revision Score was -5.4. Of the 183 companies declaring full-year results, 52% made forecasts for the current year.</li>
<li>263 will announce on Monday, the largest of which by market capitalisation will be <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a>, <a href="https://www.smartkarma.com/entities/honda-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:154:1" rel="noopener">Honda Motor (7267 JP)</a>, and <a href="https://www.smartkarma.com/entities/daikin-industries-ltd" target="_blank" data-smartkarma-citation="entities:16696:1" rel="noopener">Daikin (6367 JP)</a>.</li>
<li>Monday's 'best' and 'worst' scoring results were from  <a href="https://www.smartkarma.com/entities/nissin-foods-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:12548:1" rel="noopener">Nissin Foods (2897 JP)</a>  and amusement centre operator <a href="https://www.smartkarma.com/entities/round-one-corp" target="_blank" data-smartkarma-citation="entities:7057:1" rel="noopener">Round One (4680 JP)</a>, respectively. </li>
</ul>

Source • Japan AnalyticsNEW INTERIM LOW - As we have noted in earlier Insights in this series, only half of the companies with March year-ends are issuing forecasts for the current year. Of those that do, two-thirds are also providing forecasts for the six months to September 2020. As was the case in 2019, our Interim data series is a clear signal of the depth of this recession.Source • Japan AnalyticsIn the DETAIL below, we shall review the results, revisions and initial forecast announcements made by larger-cap (¥75b+) companies yesterday:-
The balance between positive/neutral/negative of the 238 results announcements was 103:17:118. The average change in Results Score was -0.8.
For the 137 revisions/initial forecasts, the split was 46:12:79, and the average Revision Score was -5.4. Of the 183 companies declaring full-year results, 52% made forecasts for the current year.
263 will announce on Monday, the largest of which by market capitalisation will be Toyota Motor (7203 JP), Honda Motor (7267 JP), and Daikin (6367 JP).
Monday's 'best' and 'worst' scoring results were from  Nissin Foods (2897 JP)  and amusement centre operator Round One (4680 JP), respectively. 


🇯🇵 JAPAN • Results & Revisions 11th May - Nissin, Seria, Mitsubishi Electric, Asahi Group

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Japanese beer giant <a href="https://www.smartkarma.com/entities/kirin-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:16977:1" rel="noopener">Kirin Holdings (2503 JP)</a><a href="https://pdf.irpocket.com/C2503/D5nz/gium/abkM.pdf" target="_blank" rel="noopener">announced</a> a large buyback on 7 November 2019 as one way to mollify activists who had been pressuring the company to improve capital returns. The buyback was to repurchase up to 60,000,000 shares (6.8% of shares out) for up to ¥100bn over the course of the next year. Given the shares were trading at a level which only allowed for 43.5mm shares to be bought back with the money, and only 40 million shares to be bought based on the next day's trading price, and the shares traded an average 2.7mm shares a day the previous three years, that was 6.0% of expected volume.There were cross-holdings which looked like they could fall (because of the sheer breadth - 1500+ companies), and the announcement was light on execution details, so I expected ToSTNeT-3 buybacks before other companies' FY-end would be possible. That made the market impact less exciting. Today, the company <a href="https://pdf.irpocket.com/C2503/fwbV/pVYc/C8Yr.pdf" target="_blank" rel="noopener">announced</a> that it had repurchased 44,464,000 million shares with its ¥100 billion, and the buyback was completed in 5 months rather than 12.So that's done. Analysis follows. There is an interesting trading model shown of Kirin vs comps.

Japanese beer giant Kirin Holdings (2503 JP)announced a large buyback on 7 November 2019 as one way to mollify activists who had been pressuring the company to improve capital returns. The buyback was to repurchase up to 60,000,000 shares (6.8% of shares out) for up to ¥100bn over the course of the next year. Given the shares were trading at a level which only allowed for 43.5mm shares to be bought back with the money, and only 40 million shares to be bought based on the next day's trading price, and the shares traded an average 2.7mm shares a day the previous three years, that was 6.0% of expected volume.There were cross-holdings which looked like they could fall (because of the sheer breadth - 1500+ companies), and the announcement was light on execution details, so I expected ToSTNeT-3 buybacks before other companies' FY-end would be possible. That made the market impact less exciting. Today, the company announced that it had repurchased 44,464,000 million shares with its ¥100 billion, and the buyback was completed in 5 months rather than 12.So that's done. Analysis follows. There is an interesting trading model shown of Kirin vs comps.

Kirin's Big Buyback Ended - A Trading and Signal Model for Kirin Going Forward

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/747" target="_blank" data-smartkarma-citation="entities:747:1">Dena Co Ltd (2432 JP)</a> used to be the GO-GO internet stock for both retail and institutional investors in Japan during the previous bull run before 2008 and trading at 40-50x PER. The multiples have since then collapsed to 10-20x PER although the business prospect remains solid if not better. Benefiting from the increasing regulation in China, DeNA signed an agreement with <a href="https://www.smartkarma.com/entities/26" target="_blank" data-smartkarma-citation="entities:26:1">Tencent Holdings (700 HK)</a> to distribute Arena of Valor in Japan which will boost revenue and improve margin. At 14x PER and 1.2x PBR, DeNA looks attractive.

Dena Co Ltd (2432 JP) used to be the GO-GO internet stock for both retail and institutional investors in Japan during the previous bull run before 2008 and trading at 40-50x PER. The multiples have since then collapsed to 10-20x PER although the business prospect remains solid if not better. Benefiting from the increasing regulation in China, DeNA signed an agreement with Tencent Holdings (700 HK) to distribute Arena of Valor in Japan which will boost revenue and improve margin. At 14x PER and 1.2x PBR, DeNA looks attractive. 

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Narrow-moat <a href="https://www.smartkarma.com/entities/12548" target="_blank" data-smartkarma-citation="entities:12548:1">Nissin Foods Holdings Co Ltd (2897 JP)</a>’s third-quarter results came in below our expectations due to limited growth in Brazil and decelerated profit growth in Japan. While we had anticipated growth to slowdown in the second half, unexpected deterioration in the product mix depressed the operating margin despite a sizable cut in marketing spend. We remain skeptical about the company’s double-digit growth target for sales in China and Brazil. It appears that Nissin failed to achieve a share gain in China as local rivals are raising their presence in the premium noodle segment with increased product offerings.We have made no change to our forecasts and fair value estimates. We think the market has been pinning a high hope for Nissin’s growth prospects on the overseas markets and the implied targets of double-digit top-line growth with substantial margin expansion seeming challenging. We thus view the current share price trading at a 18% premium to our fair value estimate of JPY 6,600 as overvalued. As an indication of the market’s high expectation, our full-year profit forecasts are nearly 5% above the guidance on the back of a higher growth assumption for the domestic profits.Analyst: Jeanie Chen

Narrow-moat Nissin Foods Holdings Co Ltd (2897 JP)’s third-quarter results came in below our expectations due to limited growth in Brazil and decelerated profit growth in Japan. While we had anticipated growth to slowdown in the second half, unexpected deterioration in the product mix depressed the operating margin despite a sizable cut in marketing spend. We remain skeptical about the company’s double-digit growth target for sales in China and Brazil. It appears that Nissin failed to achieve a share gain in China as local rivals are raising their presence in the premium noodle segment with increased product offerings.We have made no change to our forecasts and fair value estimates. We think the market has been pinning a high hope for Nissin’s growth prospects on the overseas markets and the implied targets of double-digit top-line growth with substantial margin expansion seeming challenging. We thus view the current share price trading at a 18% premium to our fair value estimate of JPY 6,600 as overvalued. As an indication of the market’s high expectation, our full-year profit forecasts are nearly 5% above the guidance on the back of a higher growth assumption for the domestic profits.Analyst: Jeanie Chen

Overseas Growth Lackluster; Nissin Foods Share Price Indicating Market Pinning a High Hope

Making sense of the Global Market, Euromonitor International Ltd.

Yu Mitsuhashi

Making sense of the Global Market

Euromonitor International Ltd.

We are a global market research company focused on industries, countries, economies and consumers worldwide. Our cross-country comparable research helps your organisation identify opportunities and develop growth strategies in countries and regions across the globe. With offices around the world, 1,200 analysts in 100 countries and market research on every key trend and driver, we give you powerful access to the real story behind consumer change.

<ul><li>Most product areas see slight foodservice volume decline in 2017</li></ul><ul><li>Frozen fruit and prepared salads strongest growth areas with 5% and 4% foodservice volume growth respectively in 2017</li></ul><ul><li>Chewing gum and sunflower oil see sharpest foodservice volume decline of 8% and 6% respectively in 2017</li></ul><ul><li>Number of consumer foodservice outlets declines marginally from 2016 to reach 737,490 in 2017</li></ul><ul><li>Ongoing slow foodservice volume decline expected for most areas of packaged food in forecast period</li></ul>

Most product areas see slight foodservice volume decline in 2017Frozen fruit and prepared salads strongest growth areas with 5% and 4% foodservice volume growth respectively in 2017Chewing gum and sunflower oil see sharpest foodservice volume decline of 8% and 6% respectively in 2017Number of consumer foodservice outlets declines marginally from 2016 to reach 737,490 in 2017Ongoing slow foodservice volume decline expected for most areas of packaged food in forecast period

Sector Briefing: Packaged Food in Japan (Food Service: Key Trends and Developments)

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 • Results & Revisions 11th May - Nissin, Seria, Mitsubishi Electric, Asahi Group

NEW INTERIM LOW - As we have noted in earlier Insights in this series, only half of the companies with March year-ends are issuing forecasts for...

Campbell Gunn

Kirin's Big Buyback Ended - A Trading and Signal Model for Kirin Going Forward

Japanese beer giant Kirin Holdings (2503 JP)announced a large buyback on 7 November 2019 as one way to mollify activists who had been pressuring...

Travis Lundy

DeNA (2432): Undervalued Internet Stock

Dena Co Ltd (2432 JP) used to be the GO-GO internet stock for both retail and institutional investors in Japan during the previous bull run before...

Henry Soediarko

Sector Briefing: Packaged Food in Japan (Food Service: Key Trends and Developments)

Most product areas see slight foodservice volume decline in 2017Frozen fruit and prepared salads strongest growth areas with 5% and 4% foodservice...

Euromonitor International Ltd.

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

🇯🇵 JAPAN • Results & Revisions 11th May - Nissin, Seria, Mitsubishi Electric, Asahi Group

NEW INTERIM LOW - As we have noted in earlier Insights in this series, only half of the companies with March year-ends are issuing forecasts for...

Campbell Gunn

Kirin's Big Buyback Ended - A Trading and Signal Model for Kirin Going Forward

Japanese beer giant Kirin Holdings (2503 JP)announced a large buyback on 7 November 2019 as one way to mollify activists who had been pressuring...

Travis Lundy

DeNA (2432): Undervalued Internet Stock

Dena Co Ltd (2432 JP) used to be the GO-GO internet stock for both retail and institutional investors in Japan during the previous bull run before...

Henry Soediarko

Overseas Growth Lackluster; Nissin Foods Share Price Indicating Market Pinning a High Hope

Narrow-moat Nissin Foods Holdings Co Ltd (2897 JP)’s third-quarter results came in below our expectations due to limited growth in Brazil and...

Morningstar, Inc.

Sector Briefing: Packaged Food in Japan (Food Service: Key Trends and Developments)

Most product areas see slight foodservice volume decline in 2017Frozen fruit and prepared salads strongest growth areas with 5% and 4% foodservice...

Euromonitor International Ltd.