Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

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

<a href="https://www.smartkarma.com/entities/olympus-corp/overview" target="_blank" rel="noopener">Olympus (7733 JP)</a> reported 1QFY03/2020 results on Friday (02nd August 2019) which saw a marginal YoY improvement in company revenue while operating profit increased 18% YoY on a comparable basis (excluding one-off expenses in 1QFY03/2019). On a segmental basis, the revenues of the key business segments increased YoY while the Imaging business continued to post decline in revenue coupled with operating losses of JPY2.3bn. Olympus has not revised its previous guidance for FY03/2020E which expects 0.8% YoY growth in revenue alongside JPY90bn in operating profit compared to JPY28.3bn in FY03/2019. The company is expecting its key businesses to continue to grow while it focuses on reorganising its Imaging business in an attempt to turnaround its deteriorating performance. We believe the company estimates for FY03/2020E are conservative and is in line to meet its target.We discuss the details below.

Olympus (7733 JP) reported 1QFY03/2020 results on Friday (02nd August 2019) which saw a marginal YoY improvement in company revenue while operating profit increased 18% YoY on a comparable basis (excluding one-off expenses in 1QFY03/2019). On a segmental basis, the revenues of the key business segments increased YoY while the Imaging business continued to post decline in revenue coupled with operating losses of JPY2.3bn. Olympus has not revised its previous guidance for FY03/2020E which expects 0.8% YoY growth in revenue alongside JPY90bn in operating profit compared to JPY28.3bn in FY03/2019. The company is expecting its key businesses to continue to grow while it focuses on reorganising its Imaging business in an attempt to turnaround its deteriorating performance. We believe the company estimates for FY03/2020E are conservative and is in line to meet its target.We discuss the details below.

Olympus: Key Businesses Continue to Grow; Shares Are Fairly Valued

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Quantitative Analysis

SPRING RESULTS &amp; REVISION SCORES - Better late than never, we Detail below lists the top and bottom-ranked companies measured by their Results &amp; Revision Scores as well as the top and bottom one-quarter changes and the Optimists (Forecasts &gt; TTM results) and Pessimists (TTM results &gt; Forecasts). For newcomers to these Insights, our Results &amp; Revision Scores, Results Scores, and Forecast/Revisions Scores provide a standardised 'scoring' of the trend and momentum in both results and initial forecasts/revisions for every listed Japanese company. The data series, which starts in 2008, covers over 160,000 quarterly results and 120,000 initial forecasts and subsequent forecast revisions. <div class="content-remarks"><ul>
<li>
Results Scores are calculated using the most recent eight quarters of data for revenues, operating income and operating margin and, for each, measure the rate, degree, and consistency of change. The score has a maximum of +30 and a minimum of -30 for each period. In cases where the data is insufficient, incomplete or non-comparable data, the score defaults to zero. Usually, 25% of Japanese company quarterly earnings show losses, and therefore scoring methodology is more revealing of trends than percentage changes.</li>
<li>The Forecast/Revision Score is based on both Annual and Interim period forecasts and compares changes from previous forecasts as well as against the trailing twelve-month (TTM) or past first-half results, with annual forecasts being double-weighted. This score also has a maximum of +30 and a minimum of -30 for each period.</li>
<li>The Results &amp; Revision Score is an average of the Results Scores and the Forecasts/Revision Score and is used to sort the universe by score and change in score in the tables below.</li>
</ul></div>

SPRING RESULTS &amp; REVISION SCORES - Better late than never, we Detail below lists the top and bottom-ranked companies measured by their Results &amp; Revision Scores as well as the top and bottom one-quarter changes and the Optimists (Forecasts &gt; TTM results) and Pessimists (TTM results &gt; Forecasts). For newcomers to these Insights, our Results &amp; Revision Scores, Results Scores, and Forecast/Revisions Scores provide a standardised 'scoring' of the trend and momentum in both results and initial forecasts/revisions for every listed Japanese company. The data series, which starts in 2008, covers over 160,000 quarterly results and 120,000 initial forecasts and subsequent forecast revisions. 

Results Scores are calculated using the most recent eight quarters of data for revenues, operating income and operating margin and, for each, measure the rate, degree, and consistency of change. The score has a maximum of +30 and a minimum of -30 for each period. In cases where the data is insufficient, incomplete or non-comparable data, the score defaults to zero. Usually, 25% of Japanese company quarterly earnings show losses, and therefore scoring methodology is more revealing of trends than percentage changes.
The Forecast/Revision Score is based on both Annual and Interim period forecasts and compares changes from previous forecasts as well as against the trailing twelve-month (TTM) or past first-half results, with annual forecasts being double-weighted. This score also has a maximum of +30 and a minimum of -30 for each period.
The Results &amp; Revision Score is an average of the Results Scores and the Forecasts/Revision Score and is used to sort the universe by score and change in score in the tables below.


🇯🇵 Japan • Spring Large Cap Results & Revision Scores

On Thursday (16th May), <a href="https://www.smartkarma.com/entities/fujifilm-holdings-corp/overview" target="_blank">Fujifilm (4901 JP)</a> announced that it has entered into an agreement to acquire medwork GmbH, headquartered in Bayern, Germany. medwork develops, manufactures and markets instruments for therapeutic and diagnostic endoscopy and following the acquisition, medwork will become a 100%-owned subsidiary of Fujifilm. The company has not provided more details regarding the deal. However, according to sources, Fujifilm will be paying close to JPY8-9bn for medwork. We expect the medwork acquisition to complement Fujifilm’s existing endoscopes business.
This comes as a part of Fujifilm’s focus on rapidly expanding its footprint in the growing healthcare sector. In March 2019, the company also announced the acquisition of Biogen Manufacturing, a manufacturing subsidiary of Biogen (Denmark) which is expected to strengthen Fujifilm’s Bio CDMO business.

On Thursday (16th May), Fujifilm (4901 JP) announced that it has entered into an agreement to acquire medwork GmbH, headquartered in Bayern, Germany. medwork develops, manufactures and markets instruments for therapeutic and diagnostic endoscopy and following the acquisition, medwork will become a 100%-owned subsidiary of Fujifilm. The company has not provided more details regarding the deal. However, according to sources, Fujifilm will be paying close to JPY8-9bn for medwork. We expect the medwork acquisition to complement Fujifilm’s existing endoscopes business.
This comes as a part of Fujifilm’s focus on rapidly expanding its footprint in the growing healthcare sector. In March 2019, the company also announced the acquisition of Biogen Manufacturing, a manufacturing subsidiary of Biogen (Denmark) which is expected to strengthen Fujifilm’s Bio CDMO business.

Fujifilm Continues to Increase Its Focus on Healthcare Sector Through the Acquisition of Medwork

<ul>
<li>
<a href="https://www.smartkarma.com/entities/olympus-corp/overview" target="_blank">Olympus Corporation (7733 JP)</a> reported its full-year FY03/19 results on Friday (10th May). The company reported 0.9% YoY growth in revenue for FY03/19 which was a touch above its own estimate and consensus. However, the OP for the year declined by 65.1% YoY while it fell below guidance as well as consensus by 35.7% and 35.1% respectively. The OP for the year was affected by several one-time expenditures and excluding these one-off items of JPY40.9bn, the OP declined by 14.6% YoY resulting in an OPM of 8.7% compared to the 3.6% reported by the company.</li>
<li>On a segmental basis, the revenues of the Medical segment grew 2.9% YoY in FY03/19 while OP declined 8.1% YoY during the year. The growth in revenue was mainly driven by Surgical and Endotherapy businesses while the OP decline was mainly due to the costs associated with the plea agreement with the US DOJ.</li>
<li>The Scientific Solutions segment saw its revenue growing 4.2% YoY while its OP increased 26.6% YoY for FY03/19. The strong performance of the segment could be attributed to growth in sales of biological microscopes for hospital and life science research in North America and China.</li>
<li>The Imaging Segment which has been struggling due to the contracting digital camera market, reported yet again another quarter of revenue decline as the segment’s revenue was under pressure due to intensifying competition in the mirrorless camera market.</li>
<li>For FY03/20, Olympus is forecasting revenue to grow 0.8% YoY to JPY800bn while it expects the OP to grow by more than three-fold to JPY90bn compared to JPY28.3bn reported for FY03/18. When compared to the adjusted OP of JPY69.2bn (excluding the one-off expenses), the OP will grow by 30.1% YoY.</li>
<li>Olympus is currently trading at JPY1,251 per share which we believe is overvalued based on our valuation. We believe such a premium is not justified given the governance related issues and the scandals currently faced by the company. Though we expect the company financials to improve, we expect the transformation plan to take a long-time to deliver meaningful changes in the way the company conducts itself.  In our view, the potential for a transformation in governance and business practices is already fully-discounted in the share price.</li>
</ul>



Olympus Corporation (7733 JP) reported its full-year FY03/19 results on Friday (10th May). The company reported 0.9% YoY growth in revenue for FY03/19 which was a touch above its own estimate and consensus. However, the OP for the year declined by 65.1% YoY while it fell below guidance as well as consensus by 35.7% and 35.1% respectively. The OP for the year was affected by several one-time expenditures and excluding these one-off items of JPY40.9bn, the OP declined by 14.6% YoY resulting in an OPM of 8.7% compared to the 3.6% reported by the company.
On a segmental basis, the revenues of the Medical segment grew 2.9% YoY in FY03/19 while OP declined 8.1% YoY during the year. The growth in revenue was mainly driven by Surgical and Endotherapy businesses while the OP decline was mainly due to the costs associated with the plea agreement with the US DOJ.
The Scientific Solutions segment saw its revenue growing 4.2% YoY while its OP increased 26.6% YoY for FY03/19. The strong performance of the segment could be attributed to growth in sales of biological microscopes for hospital and life science research in North America and China.
The Imaging Segment which has been struggling due to the contracting digital camera market, reported yet again another quarter of revenue decline as the segment’s revenue was under pressure due to intensifying competition in the mirrorless camera market.
For FY03/20, Olympus is forecasting revenue to grow 0.8% YoY to JPY800bn while it expects the OP to grow by more than three-fold to JPY90bn compared to JPY28.3bn reported for FY03/18. When compared to the adjusted OP of JPY69.2bn (excluding the one-off expenses), the OP will grow by 30.1% YoY.
Olympus is currently trading at JPY1,251 per share which we believe is overvalued based on our valuation. We believe such a premium is not justified given the governance related issues and the scandals currently faced by the company. Though we expect the company financials to improve, we expect the transformation plan to take a long-time to deliver meaningful changes in the way the company conducts itself.  In our view, the potential for a transformation in governance and business practices is already fully-discounted in the share price.


Olympus: FY03/19 Affected by One-Time Expenses; Yet to See Any Major Change in Culture

- MARKET COMPOSITE -<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/081/436/original/2019-03-10_11-07-01.png?1552183736" class="editor-image img-responsive" data-smartkarma-image-id="81436"></figure><div style="text-align: center;" class="content-caption">Source: Japan Analytics</div><div>
SOUTHBOUND - The upside we anticipated two weeks ago turned out to be only ¥6t before the harsh realities of some weak macro data intervened and sent the market 3% lower over the last two trading days suggesting the bear market rally is now over. After peaking at 48%, the market-value-based percentage above the weighted sum of moving averages has now retreated to 33%. </div><hr>- SECTORS - <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/081/437/original/2019-03-10_11-38-43.png?1552185548" class="editor-image img-responsive" data-smartkarma-image-id="81437"></figure><div style="text-align: left;" class="content-caption">
LEGEND: The 'sparklines' show the three-year trend in the weighted percentage above moving average relative to the Market Composite and the 'STDev' column is a measure of the variability of that relative measure. The table also provides averages for the breaks above and breaks below and the positive and negative crossovers.</div>SECTOR BREAKDOWN - The top six sectors remain domestic and defensive and are unchanged from two weeks ago with REITs, the clear leader. Equally predictable is the bottom half-dozen - Banks, Non-Bank Finance, Retail, Autos, and Metals remain from two weeks ago, with Machinery replacing Construction. Banks stay at the bottom, and the sector had its largest volume 'day' as measured by our Volume Score since September 21st, 2018 on Friday although many other sectors were 'active.' <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/081/440/original/2019-03-10_11-54-26.png?1552186476" class="editor-image img-responsive" data-smartkarma-image-id="81440"></figure><div class="content-caption">Source: Japan Analytics</div><hr>- COMPANIES -COMPANY MOVING AVERAGE OUTLIERS - As with the Market Composite and Sectors, the Moving Average Outlier indicator uses a weighted sum of each company's share price relative to its 5-day, 20-day, 60-day, 120-day and 240-day moving averages. 'Extreme' values are weighted sums greater than 100% and less than -100%. We would caution that this indicator is best used for timing shorter-term reversals and, in many cases, higher highs and lower lows will be seen. <div class="content-highlight">
In the DETAIL section below, we highlight the current top and bottom twenty-five large capitalisation outliers, as well as those companies that have seen the most significant positive and negative changes in their outlier percentage in the last two weeks and provide short comments on companies of particular note.
Our most extreme positive outlier two weeks ago, <a href="https://www.smartkarma.com/entities/26181" target="_blank" data-smartkarma-citation="entities:26181:1">Pksha Technology (3993 JP)</a> declined by 8% and 'tops' our most negative two-week change list, while the most negative outlier <a href="https://www.smartkarma.com/entities/24540" target="_blank" data-smartkarma-citation="entities:24540:1">SanBio (4592 JP)</a> rose by 3%. <a href="https://www.smartkarma.com/entities/8244" target="_blank" data-smartkarma-citation="entities:8244:1">Leopalace21 (8848 JP)</a> which was also featured recovered by 9%.
<a href="https://www.smartkarma.com/entities/2709" target="_blank" data-smartkarma-citation="entities:2709:1">AnGes (4563 JP)</a> is currently the most extreme large cap positive outlier having peaked at '492' on 26th February up from a 'trough' of -132 in December. Biotechnology peer <a href="https://www.smartkarma.com/entities/24540" target="_blank" data-smartkarma-citation="entities:24540:1">SanBio (4592 JP)</a> is, for the third time this year, the most extreme negative outlier, having topped the 13th January and 24th February positive outlier lists and is another 'round-tripper'. 
</div><div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/081/441/original/2019-03-10_12-13-00.png?1552187591" class="editor-image img-responsive" data-smartkarma-image-id="81441"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/081/442/original/2019-03-10_12-17-48.png?1552187878" class="editor-image img-responsive" data-smartkarma-image-id="81442"></figure>Source: Japan Analytics
</div>

- MARKET COMPOSITE -Source: Japan Analytics
SOUTHBOUND - The upside we anticipated two weeks ago turned out to be only ¥6t before the harsh realities of some weak macro data intervened and sent the market 3% lower over the last two trading days suggesting the bear market rally is now over. After peaking at 48%, the market-value-based percentage above the weighted sum of moving averages has now retreated to 33%. - SECTORS - 
LEGEND: The 'sparklines' show the three-year trend in the weighted percentage above moving average relative to the Market Composite and the 'STDev' column is a measure of the variability of that relative measure. The table also provides averages for the breaks above and breaks below and the positive and negative crossovers.SECTOR BREAKDOWN - The top six sectors remain domestic and defensive and are unchanged from two weeks ago with REITs, the clear leader. Equally predictable is the bottom half-dozen - Banks, Non-Bank Finance, Retail, Autos, and Metals remain from two weeks ago, with Machinery replacing Construction. Banks stay at the bottom, and the sector had its largest volume 'day' as measured by our Volume Score since September 21st, 2018 on Friday although many other sectors were 'active.' Source: Japan Analytics- COMPANIES -COMPANY MOVING AVERAGE OUTLIERS - As with the Market Composite and Sectors, the Moving Average Outlier indicator uses a weighted sum of each company's share price relative to its 5-day, 20-day, 60-day, 120-day and 240-day moving averages. 'Extreme' values are weighted sums greater than 100% and less than -100%. We would caution that this indicator is best used for timing shorter-term reversals and, in many cases, higher highs and lower lows will be seen. 
In the DETAIL section below, we highlight the current top and bottom twenty-five large capitalisation outliers, as well as those companies that have seen the most significant positive and negative changes in their outlier percentage in the last two weeks and provide short comments on companies of particular note.
Our most extreme positive outlier two weeks ago, Pksha Technology (3993 JP) declined by 8% and 'tops' our most negative two-week change list, while the most negative outlier SanBio (4592 JP) rose by 3%. Leopalace21 (8848 JP) which was also featured recovered by 9%.
AnGes (4563 JP) is currently the most extreme large cap positive outlier having peaked at '492' on 26th February up from a 'trough' of -132 in December. Biotechnology peer SanBio (4592 JP) is, for the third time this year, the most extreme negative outlier, having topped the 13th January and 24th February positive outlier lists and is another 'round-tripper'. 

Source: Japan Analytics


🇯🇵 Japan: Moving Average Outliers - AnGes, SanBio, Adastria, AIN, Sumco & Benefit One

Japan

OLYMPUS CORPORATION manufactures optoelectronic products.  The Company's products include cameras, video sets, endoscopes for medicine and industrial use, microscopes, analytical equipment, office communication systems, laseroptical scanners, and ionic printers.

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Olympus Corp (7733 JP)

Olympus: Key Businesses Continue to Grow; Shares Are Fairly Valued

Olympus (7733 JP) reported 1QFY03/2020 results on Friday (02nd August 2019) which saw a marginal YoY improvement in company revenue while operating...

Shifara Samsudeen, ACMA, CGMA

🇯🇵 Japan • Spring Large Cap Results & Revision Scores

SPRING RESULTS & REVISION SCORES - Better late than never, we Detail below lists the top and bottom-ranked companies measured by their Results...

Campbell Gunn

Fujifilm Continues to Increase Its Focus on Healthcare Sector Through the Acquisition of Medwork

On Thursday (16th May), Fujifilm (4901 JP) announced that it has entered into an agreement to acquire medwork GmbH, headquartered in Bayern,...

Shifara Samsudeen, ACMA, CGMA

Olympus: FY03/19 Affected by One-Time Expenses; Yet to See Any Major Change in Culture

Olympus Corporation (7733 JP) reported its full-year FY03/19 results on Friday (10th May). The company reported 0.9% YoY growth in revenue for...

Shifara Samsudeen, ACMA, CGMA

🇯🇵 Japan: Moving Average Outliers - AnGes, SanBio, Adastria, AIN, Sumco & Benefit One

- MARKET COMPOSITE - SOUTHBOUND - The upside we anticipated two weeks ago turned out to be only ¥6t before the harsh realities of some weak macro...

Campbell Gunn

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