Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/suzuki-motor-corp" target="_blank" data-smartkarma-citation="entities:732:1" rel="noopener">Suzuki Motor (7269 JP)</a>'s implied stub and simple ratio (Suzuki/ <a href="https://www.smartkarma.com/entities/maruti-suzuki-india-ltd" target="_blank" data-smartkarma-citation="entities:733:1" rel="noopener">Maruti Suzuki India (MSIL IN)</a>) are currently at all-time lows.</li>
<li>This bifurcation has become endemic in the relative value space, especially in Japan. </li>
<li>Maruti is trading rich amid its ongoing support for hybrid vehicles. That scenario won't play out well. </li>
</ul>



Suzuki Motor (7269 JP)'s implied stub and simple ratio (Suzuki/ Maruti Suzuki India (MSIL IN)) are currently at all-time lows.
This bifurcation has become endemic in the relative value space, especially in Japan. 
Maruti is trading rich amid its ongoing support for hybrid vehicles. That scenario won't play out well. 


Suzuki’s NAV Discount And Implied Stub Plumb New Lows. Again

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

NTT (Nippon Telegraph & Telephone) / Event-Driven

<ul>
<li>On 7 April, the JPX announced the changes to the Free Float Weights (FFW) for the TOPIX Index. There are some big changes due to the updated FFW methodology.</li>
<li>From April to June, we see a one-way turnover of 2.87% and a one-way trade of ¥2,285bn. Some stocks have opposite way flows in different months.</li>
<li>Stocks with inflows outperformed stocks with outflows from Oct-Dec 2021 before giving up all the gains. These stocks have started to outperform and could continue outperforming over the next quarter.</li>
</ul>


On 7 April, the JPX announced the changes to the Free Float Weights (FFW) for the TOPIX Index. There are some big changes due to the updated FFW methodology.
From April to June, we see a one-way turnover of 2.87% and a one-way trade of ¥2,285bn. Some stocks have opposite way flows in different months.
Stocks with inflows outperformed stocks with outflows from Oct-Dec 2021 before giving up all the gains. These stocks have started to outperform and could continue outperforming over the next quarter.


TOPIX FFW Transition - Big Flows from April to June

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.

Keisei Electric Railway Co / Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/keisei-electric-railway-co" target="_blank" data-smartkarma-citation="entities:10876:1" rel="noopener">Keisei Electric Railway Co (9009 JP)</a>, which owns 22.2% of <a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a> has failed to move in sync with Oriental Land’s valuation for an extended time period.</li>
<li>Keisei Electric’s share price only moved up by 8% since 2015 when its NAV rose by 127% driven primarily by Oriental Land’s valuation.</li>
<li>With investor activism picking up in Japan and Keisei meeting many attributes that draws activists towards the targets, there’s a chance that Keisei could be a target of investor activism.</li>
</ul>



Keisei Electric Railway Co (9009 JP), which owns 22.2% of Oriental Land (4661 JP) has failed to move in sync with Oriental Land’s valuation for an extended time period.
Keisei Electric’s share price only moved up by 8% since 2015 when its NAV rose by 127% driven primarily by Oriental Land’s valuation.
With investor activism picking up in Japan and Keisei meeting many attributes that draws activists towards the targets, there’s a chance that Keisei could be a target of investor activism.


Keisei Electric: Needs to Draw Activists Fast

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a> positively surprised the market with 3QFY22 revenue surpassing the consensus estimate by more than 13% through gradual easing of limits imposed on park attendance.</li>
<li>FY22 revenue and OP guidance were raised by ¥22.9bn and ¥16.6bn respectively despite expecting Q4 attendance to fall short of the original forecast through the new state of emergency measures.</li>
<li>Nonetheless, we think Oriental Land is too expensive at 33.6x FY24 OP, especially considering that attendance is expected to fall short of the original forecasts in the fourth quarter.</li>
</ul>



Oriental Land (4661 JP) positively surprised the market with 3QFY22 revenue surpassing the consensus estimate by more than 13% through gradual easing of limits imposed on park attendance.
FY22 revenue and OP guidance were raised by ¥22.9bn and ¥16.6bn respectively despite expecting Q4 attendance to fall short of the original forecast through the new state of emergency measures.
Nonetheless, we think Oriental Land is too expensive at 33.6x FY24 OP, especially considering that attendance is expected to fall short of the original forecasts in the fourth quarter.


Oriental Land: Price Reaction Unwarranted and There’s Significant Downside Risk in a Bear Market

<ul>
<li>A double dose of StubWorld this week as <a href="https://www.smartkarma.com/entities/keisei-electric-railway-co" target="_blank" data-smartkarma-citation="entities:10876:1" rel="noopener">Keisei Electric Railway Co (9009 JP)</a>'s extreme bifurcation with <a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a>, widens even more.</li>
<li>Preceding my comments on Keisei/Oriental Land, are the current setup/unwind tables for Asia-Pacific Holdcos. </li>
<li>These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.</li>
</ul>


A double dose of StubWorld this week as Keisei Electric Railway Co (9009 JP)'s extreme bifurcation with Oriental Land (4661 JP), widens even more.
Preceding my comments on Keisei/Oriental Land, are the current setup/unwind tables for Asia-Pacific Holdcos. 
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.


StubWorld: Keisei Electric Gets Taken For A Ride

Japan

ORIENTAL LAND CO., LTD. operates Tokyo Disney Resort.  The Company also operates restaurants within the complex and sells Disney merchandise.

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Oriental Land (4661 JP)

Suzuki’s NAV Discount And Implied Stub Plumb New Lows. Again

I'd be setting up the stub here - long Suzuki, short Maruti - once the momentum begins to turn. Maruti is supporting outdated tech, which will be...

David Blennerhassett

TOPIX FFW Transition - Big Flows from April to June

Changes to the Topix FFW methodology will result in a turnover of 2.87% & trade of ¥2,285bn from April to June. There is a lot to trade on some...

Brian Freitas

Keisei Electric: Needs to Draw Activists Fast

With investor activism picking up in Japan and Keisei meeting many attributes that draws activists towards the targets, there’s a chance that...

Oshadhi Kumarasiri

Oriental Land: Price Reaction Unwarranted and There’s Significant Downside Risk in a Bear Market

We think Oriental Land is too expensive at 33.6x FY24 OP, especially considering that attendance is expected to fall short of the original...

Oshadhi Kumarasiri

StubWorld: Keisei Electric Gets Taken For A Ride

This looks to be a straightforward set-up: long Keisei/Short Oriental. Or an outright long against Oriental and one or two similar-sized railway...

David Blennerhassett

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