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.

Event-Driven

<ul>
<li>After initially grinding up slowly but underperforming the Nikkei our suggested skew trade gave up ground during the new year sell off.</li>
<li>It did so slowly, however and was outperforming Nikkei when last we checked despite being down slightly. </li>
<li>Thankfully, a lot of the idiosyncratic volatility hurting the skew trade has reversed now and it is positive and outperforming Nikkei consistently.</li>
</ul>


After initially grinding up slowly but underperforming the Nikkei our suggested skew trade gave up ground during the new year sell off.
It did so slowly, however and was outperforming Nikkei when last we checked despite being down slightly. 
Thankfully, a lot of the idiosyncratic volatility hurting the skew trade has reversed now and it is positive and outperforming Nikkei consistently.


TOPIX-Nikkei Skew Trade Starting to Work Nicely

Equity Bottom-Up

<ul>
<li>Omron reported its 3QFY22 results on 28th January which saw revenues of ¥190.9bn (+5.8% QoQ, +13.4% YoY) and OP of ¥19.2bn. </li>
<li>The reported results were 0.6% and 17.1% lower than the consensus estimates for revenue and OP respectively. </li>
<li>This weakness also lead to a downgrade in guidance the size of which was a touch surprising.</li>
</ul>


Omron reported its 3QFY22 results on 28th January which saw revenues of ¥190.9bn (+5.8% QoQ, +13.4% YoY) and OP of ¥19.2bn. 
The reported results were 0.6% and 17.1% lower than the consensus estimates for revenue and OP respectively. 
This weakness also lead to a downgrade in guidance the size of which was a touch surprising.


Omron – Downgrade on Normalising Profitability

Keyence has been our boring top pick within the factory automation sector for some time and has boringly and consistently outperformed peers. We still consider it the highest quality name within the sector but given valuations, we are reluctantly disembarking here.

Keyence has been our boring top pick within the factory automation sector for some time and has boringly and consistently outperformed peers. We still consider it the highest quality name within the sector but given valuations, we are reluctantly disembarking here.

Keyence – Time to Step Off and Some Warning Signs for Markets

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

Wisdomtree Japan Hedged Eq / Technical Analysis

Market dynamics continue to send mixed signals, but the bottom line is that not one MSCI ACWI Sector is breaking down, and important price support levels are holding in the US, Europe, and Japan. Additionally, the MSCI ACWI, ACWI ex-US, and EAFE indexes all remain above critical support levels. Until supports start to break we cannot be bearish. It is also worth noting that various indicators could be making a turn for the better, including early signs of interest rates bottoming in the US and Germany, a potential false breakdown in crude oil, and high yield spreads leveling-out.

Market dynamics continue to send mixed signals, but the bottom line is that not one MSCI ACWI Sector is breaking down, and important price support levels are holding in the US, Europe, and Japan. Additionally, the MSCI ACWI, ACWI ex-US, and EAFE indexes all remain above critical support levels. Until supports start to break we cannot be bearish. It is also worth noting that various indicators could be making a turn for the better, including early signs of interest rates bottoming in the US and Germany, a potential false breakdown in crude oil, and high yield spreads leveling-out.

Critical Supports Holding in the US, Europe, & Japan; Buying Health Care, Utilities, Materials, Tech

Omron Corp reported 4QFY21 results on Tuesday (27th April), which saw both revenues and operating profits increase YoY by 3.5% and 36.7% respectively. These were beats of 5.4% on revenue and 20.9% on OP vs. consensus.

Omron Corp reported 4QFY21 results on Tuesday (27th April), which saw both revenues and operating profits increase YoY by 3.5% and 36.7% respectively. These were beats of 5.4% on revenue and 20.9% on OP vs. consensus.

Japan

OMRON Corporation manufactures electronic components, equipment and systems used for factory automation. The Company provides products and services in a variety of fields including industrial automation, electronic components, automotive electronics, social systems such as ticket gate machines and traffic control, and healthcare.

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Omron Corp (6645 JP)

TOPIX-Nikkei Skew Trade Starting to Work Nicely

After initially grinding up slowly but underperforming the Nikkei our suggested skew trade gave up ground during the new year sell off. It is now...

Mio Kato

Omron – Downgrade on Normalising Profitability

Omron's reported results were 0.6% and 17.1% lower than consensus estimates for revenue and OP respectively. This weakness lead to a downgrade in...

Mio Kato

Keyence – Time to Step Off and Some Warning Signs for Markets

Keyence has been our top pick in the FA sector and has outperformed peers consistently but while we still consider it the highest quality name...

Mio Kato

Critical Supports Holding in the US, Europe, & Japan; Buying Health Care, Utilities, Materials, Tech

Various indicators are making a turn for the better, including early signs of interest rates bottoming in the US and Germany, a false breakdown in...

Vermilion Research

Omron – Momentum More Than Priced In

Omron beat consensus on results and posted guidance that was above consensus on both the revenue and OP lines. Nevertheless, valuations are...

Mio Kato

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