'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. 

Thematic (Sector/Industry)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/116/176/original/2020-02-04_04-48-54.png?1580759358" class="editor-image img-responsive" data-smartkarma-image-id="116176"></figure><div class="content-caption">Source • Japan Analytics</div>3RD FEBRUARY ROUNDUP - The 107 Results and 44 Forecast/Revision announcements yesterday nudged both our Scores lower again as the Total Market Value reached a three-month low. We expect the Results Score to break below 0.58 and the Forecast/Revision Score to turn negative later in the week.<hr>• ALL-MARKET COMPOSITE •<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/116/180/original/2020-02-04_05-29-59.png?1580761820" class="editor-image img-responsive" data-smartkarma-image-id="116180"></figure><div class="content-caption">Source • Japan Analytics</div>ALL-MARKET COMPOSITE - As of Friday's close. the aggregate forecast for Operating Income is now ¥800 billion below the TTM results, while the Net Income forecast trails by ¥400 billion. The market's forward PE is still an elevated 16.9x based on a Total Market Value (TMV) of ¥666 trillion.  TTM Net income has declined by 18% in the last twelve months, while the TMV has risen by 19%.<hr>• SECTOR TIMELINE •<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/116/177/original/2020-02-04_04-59-01.png?1580759983" class="editor-image img-responsive" data-smartkarma-image-id="116177"></figure><div class="content-caption">Source • Japan Analytics</div>TIMELINE - The largest on-day move was from Non-Bank Finance following <a href="https://www.smartkarma.com/entities/orix-corp" target="_blank" data-smartkarma-citation="entities:9936:1" rel="noopener">Orix (8591 JP)</a>'s return to positive earnings momentum. <a href="https://www.smartkarma.com/entities/shionogi-co-ltd" target="_blank" data-smartkarma-citation="entities:19535:1" rel="noopener">Shionogi (4507 JP)</a>' s downward revision continued the downtrend in the Healthcare Sector, while <a href="https://www.smartkarma.com/entities/mitsubishi-electric-corp" target="_blank" data-smartkarma-citation="entities:11171:1" rel="noopener">Mitsubishi Electric (6503 JP)</a> put a 'dent' in the recovery of the Electrical Equipment Sector.  The Information Technology Sector is also losing momentum, as shown in <a href="https://www.smartkarma.com/entities/otsuka-corp" target="_blank" data-smartkarma-citation="entities:7327:1" rel="noopener">Otsuka (4768 JP)</a>' full-year results and FY2020 forecasts with revenue expected to decline by 3%.

Source • Japan Analytics3RD FEBRUARY ROUNDUP - The 107 Results and 44 Forecast/Revision announcements yesterday nudged both our Scores lower again as the Total Market Value reached a three-month low. We expect the Results Score to break below 0.58 and the Forecast/Revision Score to turn negative later in the week.• ALL-MARKET COMPOSITE •Source • Japan AnalyticsALL-MARKET COMPOSITE - As of Friday's close. the aggregate forecast for Operating Income is now ¥800 billion below the TTM results, while the Net Income forecast trails by ¥400 billion. The market's forward PE is still an elevated 16.9x based on a Total Market Value (TMV) of ¥666 trillion.  TTM Net income has declined by 18% in the last twelve months, while the TMV has risen by 19%.• SECTOR TIMELINE •Source • Japan AnalyticsTIMELINE - The largest on-day move was from Non-Bank Finance following Orix (8591 JP)'s return to positive earnings momentum. Shionogi (4507 JP)' s downward revision continued the downtrend in the Healthcare Sector, while Mitsubishi Electric (6503 JP) put a 'dent' in the recovery of the Electrical Equipment Sector.  The Information Technology Sector is also losing momentum, as shown in Otsuka (4768 JP)' full-year results and FY2020 forecasts with revenue expected to decline by 3%.

🇯🇵 JAPAN • Results & Revisions Daily Roundup - 3rd February ▲8591 6752 3064 ▼6503 4768 6920

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

We continue to see coronavirus concerns as helping correct the excess bullish sentiment across global equity markets in the short-term. Additionally, considering the dearth of breakdowns, we continue to believe this is a bull market until proven otherwise and a “buy the dip” strategy remains warranted. We recap importat technical levels across markets and highlight opportunities within the Services, Technology, Financial Services, and Staples Sectors.

We continue to see coronavirus concerns as helping correct the excess bullish sentiment across global equity markets in the short-term. Additionally, considering the dearth of breakdowns, we continue to believe this is a bull market until proven otherwise and a “buy the dip” strategy remains warranted. We recap importat technical levels across markets and highlight opportunities within the Services, Technology, Financial Services, and Staples Sectors.

Global Equity Strategy: Growth Over Value

Equity Analyst, LightStream Research

Aqila Ali

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.

The highlights for December are as follows:<ul><li>Panasonic:</li></ul><ul><li><ul>
<li>The labour shortage at the Nevada plant is said to be under control. Thus, delays in supply do not seem to be a concern.</li>
<li>A partnership with Tropos should strengthen the software side of Panasonic’s business. Motors. Panasonic’s software platform, OneConnect, to be used in Tropos manufactured EVs designed for use in last-mile applications and emergency.</li>
<li>Efforts by the company to improve its battery business and adopt CASE related technologies (as highlighted in our previous monthlies) are likely to bring in growth only over the medium term. For the upcoming quarter, consensus and our estimates are for a decline in revenue and OP given the unfavourable market conditions and struggle in battery business through last year.</li>
</ul></li></ul><ul>
<li>There will be no further cut in subsidy in China for NEVs. With the subsidy staying intact, demand for NEVs is likely to improve (or at least not decline further) suggesting better market conditions for battery players globally (who invested in China despite the country’s slowdown last year).</li>
<li>CATL was quiet last month, although there was news about the company being a possible buyer of the US luxury car brand-Aston Martin. This seems more likely to be merely a rumour and we feel that CATL does not seem to have strong synergies to do so.</li>
<li>South Korean players had no major battery highlights last month.</li>
<li>CATL’s share price continued to rise last month, followed by Panasonic, both outperforming the market. The Korean players and BYD continued to see relatively weak performance during the month.</li>
</ul><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/114/370/original/image_45031531121579491234217.png?1579491236" class="editor-image img-responsive" data-smartkarma-image-id="114370"></figure><div class="content-remarks">Source: CapIQ</div>

The highlights for December are as follows:Panasonic:
The labour shortage at the Nevada plant is said to be under control. Thus, delays in supply do not seem to be a concern.
A partnership with Tropos should strengthen the software side of Panasonic’s business. Motors. Panasonic’s software platform, OneConnect, to be used in Tropos manufactured EVs designed for use in last-mile applications and emergency.
Efforts by the company to improve its battery business and adopt CASE related technologies (as highlighted in our previous monthlies) are likely to bring in growth only over the medium term. For the upcoming quarter, consensus and our estimates are for a decline in revenue and OP given the unfavourable market conditions and struggle in battery business through last year.

There will be no further cut in subsidy in China for NEVs. With the subsidy staying intact, demand for NEVs is likely to improve (or at least not decline further) suggesting better market conditions for battery players globally (who invested in China despite the country’s slowdown last year).
CATL was quiet last month, although there was news about the company being a possible buyer of the US luxury car brand-Aston Martin. This seems more likely to be merely a rumour and we feel that CATL does not seem to have strong synergies to do so.
South Korean players had no major battery highlights last month.
CATL’s share price continued to rise last month, followed by Panasonic, both outperforming the market. The Korean players and BYD continued to see relatively weak performance during the month.
Source: CapIQ

EV Battery Monthly: No Further Cut in Subsidies for NEVs in China Suggests Better Market Conditions

Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

Equity Bottom-Up

<ul>
<li>The Japanese government's decision to provide a 15% tax break to domestic telecom carriers investing in 5G infrastructure and the exclusion of Huawei from the bidding process should restore the competitiveness of NEC's telecom equipment business.</li>
<li>Restructuring of over-staffed and unprofitable operations has resulted in significant increases in profitability and established a new base for growth.</li>
<li>Management has shifted its focus to investment in new technologies and the development of new market opportunities.</li>
<li>Our three-year forecast suggests 31% potential upside for the share price.</li>
<li>Risks to our estimates and the share price include a slowing global economy and a rising Yen. </li>
</ul>


The Japanese government's decision to provide a 15% tax break to domestic telecom carriers investing in 5G infrastructure and the exclusion of Huawei from the bidding process should restore the competitiveness of NEC's telecom equipment business.
Restructuring of over-staffed and unprofitable operations has resulted in significant increases in profitability and established a new base for growth.
Management has shifted its focus to investment in new technologies and the development of new market opportunities.
Our three-year forecast suggests 31% potential upside for the share price.
Risks to our estimates and the share price include a slowing global economy and a rising Yen. 


NEC (6701 JP): Restructuring, 5G & Other Advanced Technologies

Oshadhi Kumarasiri

Earlier this month, Kose announced that the company will begin verification testing of the “<a target="_blank">Snow Beauty Mirror</a>” at its newly opened “Maison Kose” concept store in Ginza. The Snow Beauty Mirror is a collaboration between Kose, Meiji University and Panasonic. It was developed using Panasonic’s cutting-edge image processing technologies while leveraging Kose’s development capabilities in cosmetics.

Earlier this month, Kose announced that the company will begin verification testing of the “Snow Beauty Mirror” at its newly opened “Maison Kose” concept store in Ginza. The Snow Beauty Mirror is a collaboration between Kose, Meiji University and Panasonic. It was developed using Panasonic’s cutting-edge image processing technologies while leveraging Kose’s development capabilities in cosmetics.

KOSÉ’s Magic Mirror Is Still a Fairy Tale

Japan

Panasonic Corporation manufactures electric and electronic products. The Company produces home appliances, car navigation systems, digital devices, computer peripherals, telecommunications, industrial equipment, and electronic parts. Panasonic has associated companies around the world.

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Panasonic Corp (6752 JP)

🇯🇵 JAPAN • Results & Revisions Daily Roundup - 3rd February ▲8591 6752 3064 ▼6503 4768 6920

3RD FEBRUARY ROUNDUP - The 107 Results and 44 Forecast/Revision announcements yesterday nudged both our Scores lower again as the Total Market...

Campbell Gunn

Global Equity Strategy: Growth Over Value

We continue to see coronavirus concerns as helping correct the excess bullish sentiment across global equity markets in the short-term....

Vermilion Research

EV Battery Monthly: No Further Cut in Subsidies for NEVs in China Suggests Better Market Conditions

The highlights for December are as follows:Panasonic: The labour shortage at the Nevada plant is said to be under control. Thus, delays in supply...

Aqila Ali

NEC (6701 JP): Restructuring, 5G & Other Advanced Technologies

The Japanese government's decision to provide a 15% tax break to domestic telecom carriers investing in 5G infrastructure and the exclusion of...

Scott Foster

KOSÉ’s Magic Mirror Is Still a Fairy Tale

Earlier this month, Kose announced that the company will begin verification testing of the “Snow Beauty Mirror” at its newly opened “Maison Kose”...

Oshadhi Kumarasiri

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