Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>JPX-Nikkei 400 is composed of common stocks listed in the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.</li>
<li>A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year.</li>
<li>Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-<em>February 2022</em>.</li>
</ul>


JPX-Nikkei 400 is composed of common stocks listed in the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year.
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-February 2022.


JPX-Nikkei 400 Rebalance 2022: Leaderboard End-Feb 2022

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

Shanghai Shenzhen CSI 300 Inde / Technical Analysis

<p>Global equities (MSCI ACWI, ACWI ex-US, and EAFE) remain bullish with their uptrends intact, and the MSCI Emerging Markets index continues to hold above major support at $52 on the EEM-US. Additionally, Europe’s STOXX 50 and Hong Kong’s Hang Seng are on the cusp of short-term breakouts, while the major indexes in China (Shanghai Composite &amp; CSI 300) are currently breaking above short-term resistance... <em>see chart below</em>. Considering the absence of breakdowns and the fact that market dynamics remain largely positive, our overall constructive outlook remains appropriate.</p>

Global equities (MSCI ACWI, ACWI ex-US, and EAFE) remain bullish with their uptrends intact, and the MSCI Emerging Markets index continues to hold above major support at $52 on the EEM-US. Additionally, Europe’s STOXX 50 and Hong Kong’s Hang Seng are on the cusp of short-term breakouts, while the major indexes in China (Shanghai Composite &amp; CSI 300) are currently breaking above short-term resistance... see chart below. Considering the absence of breakdowns and the fact that market dynamics remain largely positive, our overall constructive outlook remains appropriate.

Chinese Indexes Headed Higher; Actionable Themes: Transportation, Materials, and Services

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>, <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/china-merchants-bank-co-ltd-3388a037-4214-4997-b45d-520518cfdb57" target="_blank" data-smartkarma-citation="entities:10987:1" rel="noopener">China Merchants Bank H (3968 HK)</a>, <a href="https://www.smartkarma.com/entities/wuxi-apptec-co-ltd-bf4a1265-beef-48b6-b82d-29308426030f" target="_blank" data-smartkarma-citation="entities:27795:1" rel="noopener">WuXi AppTec Co. Ltd. (2359 HK)</a> and <a href="https://www.smartkarma.com/entities/sunny-optical-tech" target="_blank" data-smartkarma-citation="entities:13363:1" rel="noopener">Sunny Optical (2382 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/ping-an-insurance-grp-co-of-china-ltd" target="_blank" data-smartkarma-citation="entities:12880:1" rel="noopener">Ping An Insurance (H) (2318 HK)</a>, <a href="https://www.smartkarma.com/entities/baidu-inc-a55ca720-5968-48f0-8194-ac94390d065c" target="_blank" data-smartkarma-citation="entities:32212:1" rel="noopener">Baidu (9888 HK)</a>, <a href="https://www.smartkarma.com/entities/haier-smart-home-co-ltd-b3ef445f-0f54-4586-8c58-9073de98d60e" target="_blank" data-smartkarma-citation="entities:31105:1" rel="noopener">Haier Smart Home Co Ltd (6690 HK)</a>, <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a> and <a href="https://www.smartkarma.com/entities/citic-securities-h" target="_blank" data-smartkarma-citation="entities:463:1" rel="noopener">Citic Securities (H) (6030 HK)</a>. Shorts increased in the Communication Services, Consumer Discretionary, Health Care and Real Estate sectors, and decreased in the Financials, Industrials, and Information Technology sectors.</p></div><div><p>In Japan, stocks that saw the most shorts were <a href="https://www.smartkarma.com/entities/lasertec-corp" target="_blank" data-smartkarma-citation="entities:4126:1" rel="noopener">Lasertec Corp (6920 JP)</a>, <a href="https://www.smartkarma.com/entities/anritsu-corp" target="_blank" data-smartkarma-citation="entities:3700:1" rel="noopener">Anritsu Corp (6754 JP)</a>, <a href="https://www.smartkarma.com/entities/daito-trust-construct-co-ltd" target="_blank" data-smartkarma-citation="entities:10503:1" rel="noopener">Daito Trust Construct (1878 JP)</a>, <a href="https://www.smartkarma.com/entities/jfe-holdings-inc" target="_blank" data-smartkarma-citation="entities:210:1" rel="noopener">JFE Holdings (5411 JP)</a> and <a href="https://www.smartkarma.com/entities/tokyu-fudosan-holdings-corp" target="_blank" data-smartkarma-citation="entities:8355:1" rel="noopener">Tokyu Fudosan Holdings (3289 JP)</a> while shorts decreased on <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a>, <a href="https://www.smartkarma.com/entities/ana-holdings-inc" target="_blank" data-smartkarma-citation="entities:5308:1" rel="noopener">Ana Holdings (9202 JP)</a>, <a href="https://www.smartkarma.com/entities/h-i-s-co-ltd" target="_blank" data-smartkarma-citation="entities:19311:1" rel="noopener">H I S Co Ltd (9603 JP)</a>, <a href="https://www.smartkarma.com/entities/outsourcing-inc" target="_blank" data-smartkarma-citation="entities:7431:1" rel="noopener">Outsourcing Inc (2427 JP)</a> and <a href="https://www.smartkarma.com/entities/euglena-co-ltd" target="_blank" data-smartkarma-citation="entities:8414:1" rel="noopener">Euglena Co Ltd (2931 JP)</a>. Shorts increased in the Real Estate and Consumer Discretionary sectors, and decreased in the Industrials sector.</p></div><div><p>In Korea, shorts increased on <a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" data-smartkarma-citation="entities:991:1" rel="noopener">Celltrion Inc (068270 KS)</a> and <a href="https://www.smartkarma.com/entities/hyundai-motor-co" target="_blank" data-smartkarma-citation="entities:155:1" rel="noopener">Hyundai Motor Co (005380 KS)</a> during the week while decreasing on <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <a href="https://www.smartkarma.com/entities/hyundai-heavy-industries" target="_blank" data-smartkarma-citation="entities:10155:1" rel="noopener">Hyundai Heavy Industries (009540 KS)</a> and <a href="https://www.smartkarma.com/entities/doosan-infracore-co-ltd" target="_blank" data-smartkarma-citation="entities:3982:1" rel="noopener">Doosan Infracore (042670 KS)</a>. The short sell ban has ended today and short selling will be permitted on <a href="https://www.smartkarma.com/entities/korea-stock-exchange-kospi-200-index" target="_blank" data-smartkarma-citation="entities:26021:1" rel="noopener">Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX)</a> and <a href="https://www.smartkarma.com/entities/kosdaq-150-index" target="_blank" data-smartkarma-citation="entities:31077:1" rel="noopener">KOSDAQ 150 Index (KOSDQ150 INDEX)</a> constituents from Monday, 3 May.</p></div><div><p>Stocks in Taiwan that saw the highest increase in shorts were <a href="https://www.smartkarma.com/entities/china-development-financial" target="_blank" data-smartkarma-citation="entities:13818:1" rel="noopener">China Development Financial (2883 TT)</a>, <a href="https://www.smartkarma.com/entities/yang-ming-marine-transport" target="_blank" data-smartkarma-citation="entities:8502:1" rel="noopener">Yang Ming Marine Transport (2609 TT)</a>, <a href="https://www.smartkarma.com/entities/evergreen-marine-corp-ltd" target="_blank" data-smartkarma-citation="entities:15428:1" rel="noopener">Evergreen Marine Corp (2603 TT)</a>, <a href="https://www.smartkarma.com/entities/walsin-lihwa-corp" target="_blank" data-smartkarma-citation="entities:17142:1" rel="noopener">Walsin Lihwa (1605 TT)</a> and <a href="https://www.smartkarma.com/entities/compal-electronics" target="_blank" data-smartkarma-citation="entities:4620:1" rel="noopener">Compal Electronics (2324 TT)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/au-optronics-corp" target="_blank" data-smartkarma-citation="entities:6704:1" rel="noopener">AU Optronics (2409 TT)</a>, <a href="https://www.smartkarma.com/entities/winbond-electronics-corp" target="_blank" data-smartkarma-citation="entities:9177:1" rel="noopener">Winbond Electronics (2344 TT)</a>, <a href="https://www.smartkarma.com/entities/asmedia-technology-inc" target="_blank" data-smartkarma-citation="entities:15732:1" rel="noopener">Asmedia Technology (5269 TT)</a>, <a href="https://www.smartkarma.com/entities/genius-electronic-optical-co-ltd" target="_blank" data-smartkarma-citation="entities:9632:1" rel="noopener">Genius Electronic Optical (3406 TT)</a> and <a href="https://www.smartkarma.com/entities/novatek-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:10904:1" rel="noopener">Novatek Microelectronics Corp (3034 TT)</a>.</p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Tencent Holdings (700 HK), Meituan (3690 HK), China Merchants Bank H (3968 HK), WuXi AppTec Co. Ltd. (2359 HK) and Sunny Optical (2382 HK) while there was short covering on Ping An Insurance (H) (2318 HK), Baidu (9888 HK), Haier Smart Home Co Ltd (6690 HK), Alibaba Group (9988 HK) and Citic Securities (H) (6030 HK). Shorts increased in the Communication Services, Consumer Discretionary, Health Care and Real Estate sectors, and decreased in the Financials, Industrials, and Information Technology sectors.In Japan, stocks that saw the most shorts were Lasertec Corp (6920 JP), Anritsu Corp (6754 JP), Daito Trust Construct (1878 JP), JFE Holdings (5411 JP) and Tokyu Fudosan Holdings (3289 JP) while shorts decreased on Toshiba Corp (6502 JP), Ana Holdings (9202 JP), H I S Co Ltd (9603 JP), Outsourcing Inc (2427 JP) and Euglena Co Ltd (2931 JP). Shorts increased in the Real Estate and Consumer Discretionary sectors, and decreased in the Industrials sector.In Korea, shorts increased on Celltrion Inc (068270 KS) and Hyundai Motor Co (005380 KS) during the week while decreasing on Samsung Electronics (005930 KS), Hyundai Heavy Industries (009540 KS) and Doosan Infracore (042670 KS). The short sell ban has ended today and short selling will be permitted on Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX) and KOSDAQ 150 Index (KOSDQ150 INDEX) constituents from Monday, 3 May.Stocks in Taiwan that saw the highest increase in shorts were China Development Financial (2883 TT), Yang Ming Marine Transport (2609 TT), Evergreen Marine Corp (2603 TT), Walsin Lihwa (1605 TT) and Compal Electronics (2324 TT) while shorts were covered on AU Optronics (2409 TT), Winbond Electronics (2344 TT), Asmedia Technology (5269 TT), Genius Electronic Optical (3406 TT) and Novatek Microelectronics Corp (3034 TT).

Asia Shorts: Tencent, CM Bank, Wuxi Apptec, Baidu, Anritsu, Daito, Ana, Yang Ming, Evergreen Marine

Quality-first, Business-perspective Strategy, Urbem (HK) Limited

Steven Chen

Quality-first, Business-perspective Strategy

Equity Bottom-Up

Matching Service Japan / Equity Bottom-Up

<ul>
<li>Recruitment agency businesses have their general attractions in Japan, but we would focus on the highest-quality names like JAC Recruitment and Matching Service Japan;</li>
<li>Both companies appear to compete advantageously partly thanks to their niche focuses;</li>
<li>Both shares trade at similar valuations;</li>
<li>We feel it way more difficult to pick between the two than set them apart from the larger crowd, but here is our No. 1 pick if we have to choose.</li>
</ul>


Recruitment agency businesses have their general attractions in Japan, but we would focus on the highest-quality names like JAC Recruitment and Matching Service Japan;
Both companies appear to compete advantageously partly thanks to their niche focuses;
Both shares trade at similar valuations;
We feel it way more difficult to pick between the two than set them apart from the larger crowd, but here is our No. 1 pick if we have to choose.


Two Japanese High-Quality, Niche-Focused Recruitment Agents

'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.

<blockquote>
<p>“I don’t believe BlackRock will be ever 100% back in [the] office - maybe 60% or 70%, and maybe that’s a rotation of people. I don’t believe we’ll ever have a full cadre of people in [the] office [again]. It’s going to be a new workforce. It’s going to be a new paradigm, but I do believe it will be a better paradigm for the firm."</p>
<h3>Larry Fink, CEO, Blackrock Inc.</h3>
<p><strong>Thursday 17rh September 2020</strong></p>
</blockquote><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/160/259/original/2020-09-21_08-28-32.png?1600644541" class="editor-image img-responsive" data-smartkarma-image-id="160259"></figure><div class="content-caption">Source for all charts: Japan Analytics</div><p><strong><a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit (6098 JP)</a></strong>- Since listing in October 2014 has been a key 'Abe-era stock' - rising by 284% from its February 2016 low. As a prime beneficiary of more flexible working practices and the rise of the temporary workforce in Japan.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/160/264/original/2020-09-21_08-56-49.png?1600646221" class="editor-image img-responsive" data-smartkarma-image-id="160264"></figure><p><strong>PEAK TEMP</strong> - Using a sample of all currently-listed companies, the number of temporary workers has increased tenfold to 4.7 million since 2000 and ratio of 'temps' to full-time employees has more than quadrupled, reaching a peak of 23.2% in 2018. Much of the rise has come at consolidated subsidiaries - the number of temps at head offices has not changed materially since reaching one million in 2006. As in other countries, many Japanese manufacturing companies face a material reduction in demand which will eventually result in 'reductions-in-force'  with temps bearing the initial brunt.  Also, tighter <a href="https://asia.nikkei.com/Politics/Japan-to-implement-fair-pay-rule-for-temporary-workers" target="_blank" rel="noopener">regulation</a> on abuse of the working terms conditions offered to temporary workers has forced many companies to offer full-time employment to temp staff.</p><p><strong>THE REVELATION OF WFH</strong> - The COVID-induced experience of working-from-home (WFH) has been a revelation for many office staff in central Tokyo who had previously endured tortuous two-hour-long-daily commutes on crowded trains. Many do not wish to return to the past ways of working and commuting, echoing Larry Fink thoughts above. For Japanese HR departments, WFH will require a substantial commitment in terms of IT infrastructure. In many companies, employees have to log out while in the office every time they leave their desk. It is unlikely that companies will make such an investment and extend such trust to temporary workers. With 20% of revenues generated in the US and a further 25% from 'Other Regions', Recruit is heavily exposed to global COVID and WFH trends. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/160/320/original/File%202020-09-21%2013%2023%2023.jpeg?1600662226" class="editor-image img-responsive" data-smartkarma-image-id="160320"></figure><p><strong>LESS OFFICE SPACE, LESS PAPERWORK, FEWER TEMPS</strong> - Overall, WFH will result in a decline in demand for CBD office space, but also will lead to less paperwork, more efficient working methods, and a reduction in the requirement for 'temps'. This trend has now been given government-backing with the creation of a new <a href="https://jp.reuters.com/article/us-japan-politics/japan-pm-suga-aims-to-get-flagship-digital-agency-running-by-autumn-2021-nikkei-idUSKBN2683DK" target="_blank" rel="noopener">Digital Agency</a> by 2021.   </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/160/280/original/2020-09-21_10-09-11.png?1600650563" class="editor-image img-responsive" data-smartkarma-image-id="160280"></figure><p><strong>REVENUES ▲</strong> - Recruit has grown revenues faster than any other larger Commercial Services company in Japan since 2013, outshining peers <a href="https://www.smartkarma.com/entities/temp-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1428:1" rel="noopener">Persol (2181 JP)</a> and <a href="https://www.smartkarma.com/entities/outsourcing-inc" target="_blank" data-smartkarma-citation="entities:7431:1" rel="noopener">Outsourcing (2427 JP)</a>.  </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/160/284/original/2020-09-21_10-13-19.png?1600650809" class="editor-image img-responsive" data-smartkarma-image-id="160284"></figure><p><strong>PROFITS ►</strong> - Recruit's 'bottom-lin'  has been much less impressive and since recovering from a period of losses in FY17, Comprehensive Income to Common (CITC) has failed to grow over the last three years.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/160/286/original/2020-09-21_10-16-07.png?1600650978" class="editor-image img-responsive" data-smartkarma-image-id="160286"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/160/287/original/2020-09-21_10-17-29.png?1600651062" class="editor-image img-responsive" data-smartkarma-image-id="160287"></figure><p><strong>MIDDLING MARGINS</strong> - Indeed, within the Employment and Staffing Services Peer Group, Recruit ranks eighteenth out sixty in terms of trailing CITC margin at 6.3%.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/160/290/original/2020-09-21_10-22-57.png?1600651387" class="editor-image img-responsive" data-smartkarma-image-id="160290"></figure><p><strong>RELATIVE PRICE SCORE ▲</strong> -Recruit accounts for 75% of its Peer Group's market capitalisation and has been the prime driver taking both to new Relative Price Score highs in recent weeks.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/160/291/original/2020-09-21_10-25-45.png?1600651558" class="editor-image img-responsive" data-smartkarma-image-id="160291"></figure><p><strong>RESULTS &amp; REVISION SCORE ▼ -</strong> The trend in Rescuit and the Peer Group's earning momentum since 2018 has been down, which COVID-19 has accelerated. </p><p>In the <strong>DETAIL</strong> below,  we shall review Recruit's financial performance and valuation and assess if Recruit is a 'structural short'.</p>


“I don’t believe BlackRock will be ever 100% back in [the] office - maybe 60% or 70%, and maybe that’s a rotation of people. I don’t believe we’ll ever have a full cadre of people in [the] office [again]. It’s going to be a new workforce. It’s going to be a new paradigm, but I do believe it will be a better paradigm for the firm."
Larry Fink, CEO, Blackrock Inc.
Thursday 17rh September 2020
Source for all charts: Japan AnalyticsRecruit (6098 JP)- Since listing in October 2014 has been a key 'Abe-era stock' - rising by 284% from its February 2016 low. As a prime beneficiary of more flexible working practices and the rise of the temporary workforce in Japan.PEAK TEMP - Using a sample of all currently-listed companies, the number of temporary workers has increased tenfold to 4.7 million since 2000 and ratio of 'temps' to full-time employees has more than quadrupled, reaching a peak of 23.2% in 2018. Much of the rise has come at consolidated subsidiaries - the number of temps at head offices has not changed materially since reaching one million in 2006. As in other countries, many Japanese manufacturing companies face a material reduction in demand which will eventually result in 'reductions-in-force'  with temps bearing the initial brunt.  Also, tighter regulation on abuse of the working terms conditions offered to temporary workers has forced many companies to offer full-time employment to temp staff.THE REVELATION OF WFH - The COVID-induced experience of working-from-home (WFH) has been a revelation for many office staff in central Tokyo who had previously endured tortuous two-hour-long-daily commutes on crowded trains. Many do not wish to return to the past ways of working and commuting, echoing Larry Fink thoughts above. For Japanese HR departments, WFH will require a substantial commitment in terms of IT infrastructure. In many companies, employees have to log out while in the office every time they leave their desk. It is unlikely that companies will make such an investment and extend such trust to temporary workers. With 20% of revenues generated in the US and a further 25% from 'Other Regions', Recruit is heavily exposed to global COVID and WFH trends. LESS OFFICE SPACE, LESS PAPERWORK, FEWER TEMPS - Overall, WFH will result in a decline in demand for CBD office space, but also will lead to less paperwork, more efficient working methods, and a reduction in the requirement for 'temps'. This trend has now been given government-backing with the creation of a new Digital Agency by 2021.   REVENUES ▲ - Recruit has grown revenues faster than any other larger Commercial Services company in Japan since 2013, outshining peers Persol (2181 JP) and Outsourcing (2427 JP).  PROFITS ► - Recruit's 'bottom-lin'  has been much less impressive and since recovering from a period of losses in FY17, Comprehensive Income to Common (CITC) has failed to grow over the last three years.MIDDLING MARGINS - Indeed, within the Employment and Staffing Services Peer Group, Recruit ranks eighteenth out sixty in terms of trailing CITC margin at 6.3%.RELATIVE PRICE SCORE ▲ -Recruit accounts for 75% of its Peer Group's market capitalisation and has been the prime driver taking both to new Relative Price Score highs in recent weeks.RESULTS &amp; REVISION SCORE ▼ - The trend in Rescuit and the Peer Group's earning momentum since 2018 has been down, which COVID-19 has accelerated. In the DETAIL below,  we shall review Recruit's financial performance and valuation and assess if Recruit is a 'structural short'.

🇯🇵 JAPAN • Recruit (6098 JP) & The 'New Workforce Paradigm'

Japan

BeNext-Yumeshin Group Co. provides temporary help services. The Company provides personnel staffing services, technician staffing services, overseas staffing services, and other services. BeNext-Yumeshin Group also provides office building leasing, restaurants management, vocational training, and other services.

MEITEC CORPORATION provides high-end engineering outsourcing services targeting the R&D sector in various industries such as automobile, telecommunication, semiconductors, consumer electronics, and industrial machinery.

en-japan inc. provides Internet-based recruiting solutions. The Company provides recruitment information for job seekers. en-japan's web site allows member employers to access its database of job seekers. The Company also provides recruitment consulting services.

TechnoPro Holdings, Inc. offers services and solutions in mechanical and electronic design, IT and software development, and wide range of technological fields through outsourcing. The Company also has presence in biological, chemical and construction management businesses.

JAC Recruitment Co., Ltd. provides recruiting agency services. The Company focuses on international business area that includes job offers from foreign companies and overseas subsidiaries of Japanese companies.

Funai Soken Holdings Inc. provides management and financial consulting services.  The Company, through its subsidiaries, also operates logistics information, publishing, and real estate businesses.

Pasona Group Inc. manages companies that provide placement and staffing services for clients in the information technology sector.

NOMURA Co., Ltd. is a contractor of displays and interior designs.  The Company mainly plans and provides display services for commercial, cultural, and exhibition facilities.  Nomura produces displays, interior designs, and promotional and advertising materials.

SIGMAXYZ Inc. was founded in 2008. The Company's line of business includes providing business consulting services on a contract or fee basis.

FULLCAST Holdings CO., LTD. provides personnel staffing services for short-term and full-time positions.  The Company also plans events.

CRA International Inc. is an economic and business consulting firm that serves a broad range of clients.  The Company provides legal and regulatory consulting and business consulting to clients such as law firms, corporations, government agencies, utilities, and national and international trade associations.

Kforce Inc. is a full-service, professional staffing firm providing flexible and permanent staffing solutions for organizations and career management for individuals.  The Company specializes in the areas of information technology, finance and accounting, human resources, engineering, pharmaceuticals, healthcare, legal, and scientific.  Kforce operates in North America.

Cendes Co. Ltd. provides architectural services. The Company mainly offers architectural design services for residential, commercial, and industrial buildings. Cendes serves customers in China.

IPH Limited is an intellectual property services firm. The Company offers a wide range of services for the protection, commercialisation, enforcement, and management of intellectual property. IPH provides these services across Australia, New Zealand, Papua New Guinea, the Pacific Islands, and Asia.

Barrett Business Services, Inc. provides outsourced solutions addressing the costs and complexities of employment-related issues for businesses.  The Company provides services in several categories, including payroll processing, employee benefits and administration, workers' compensation coverage, effective risk management and workplace safety programs, and human resource administration.

BlueFocus Communication Group Co., Ltd. provides public relation services and brand management services for corporations.  The Company's services include brand promotion, product promotion, hazard management, function management, digital media sales, and social responsibilities services.

Bluefocus Communication Group Co, Ltd. (300058 CH)

Applus Services, S.A. provides certification services. The Company offers consultancy, engineering, inspection, non-destructive testing, technical assistance, and type approval.

Synergie SA is a company based in France that specializes in human resource management.  The Company's services include temporary employment, out-placement, social engineering, recruitment and training services. Synergie operates throughout Europe and Canada.

PageGroup PLC operates as a recruitment consultancy. The Company provides permanent, contract, and temporary recruitment services for executives, qualified professionals, and clerical professionals across a broad range of industries. PageGroup offers its services worldwide.

Quess Corp Limited operates as an integrated business services provider. The Company offers IT staffing, industrial asset and facility management, skill development, and general recruitment services. Quess serves customers worldwide.

OUTSOURCING Inc. provides outsourcing services for manufacturing companies. The Company mainly provides services for industries such as food, electric equipment, transport machine, chemical, and metal.  Outsourcing also provides worker dispatching service.

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Outsourcing Inc (2427 JP)

JPX-Nikkei 400 Rebalance 2022: Leaderboard End-Feb 2022

A look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-February 2022.

Janaghan Jeyakumar, CFA

Chinese Indexes Headed Higher; Actionable Themes: Transportation, Materials, and Services

The evidence continues to suggest that value remains leadership and we recommend adding exposure to cyclical value on this minor pullback in the...

Vermilion Research

Asia Shorts: Tencent, CM Bank, Wuxi Apptec, Baidu, Anritsu, Daito, Ana, Yang Ming, Evergreen Marine

The Insight looks at large short interest movements across HK, Japan, Korea and Taiwan stocks and highlights large increases/decreases in shorts to...

Brian Freitas

Two Japanese High-Quality, Niche-Focused Recruitment Agents

We feel it way more difficult to pick between the two than set them apart from the larger crowd, but here is our No. 1 pick if we have to choose.

Steven Chen

🇯🇵 JAPAN • Recruit (6098 JP) & The 'New Workforce Paradigm'

“I don’t believe BlackRock will be ever 100% back in [the[ office,” Fink told the Morningstar Investment Conference on Thursday, according to CNBC....

Campbell Gunn

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