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

Upside momentum continues to wane for global equities. Price action this week has indeed confirmed lower highs for now in the MSCI ACWI, ACWI ex-US, EAFE, and EM indexes. These lower highs increase the probability for breakdowns and a deeper pullback, but we do not want to get ahead of ourselves. Until we see breakdowns we still view global equities as being in a period of consolidation. We outline important technical levels across markets and highlight actionable set ups within Technology, Health care and Staples.

Upside momentum continues to wane for global equities. Price action this week has indeed confirmed lower highs for now in the MSCI ACWI, ACWI ex-US, EAFE, and EM indexes. These lower highs increase the probability for breakdowns and a deeper pullback, but we do not want to get ahead of ourselves. Until we see breakdowns we still view global equities as being in a period of consolidation. We outline important technical levels across markets and highlight actionable set ups within Technology, Health care and Staples.

Global Equity Strategy: Stay Defensive With Technology, Health Care, Staples

Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

There are two numbers from Rakuten’s report that stand out for us. The first is a 58% increase in domestic shopping eCommerce platform sales in April as Japan went into emergency mode. That is quite remarkable for a business that was growing 10% in Q1 and explains why investors have bid shares up 49% from the 13 March low. The second is a ¥32bn operating loss for the mobile segment in Q1. That is ¥5bn higher than Q4 and ¥25bn higher than the year ago quarter and it comes before the official launch of service in early April. Management also seems keen on the potential for a global expansion of its mobile platform going as far to position it as a cloud-based service for overseas customers but a lack of detail on the domestic launch would have been helpful. On balance the new is more positive than not but shares already reflect that.

There are two numbers from Rakuten’s report that stand out for us. The first is a 58% increase in domestic shopping eCommerce platform sales in April as Japan went into emergency mode. That is quite remarkable for a business that was growing 10% in Q1 and explains why investors have bid shares up 49% from the 13 March low. The second is a ¥32bn operating loss for the mobile segment in Q1. That is ¥5bn higher than Q4 and ¥25bn higher than the year ago quarter and it comes before the official launch of service in early April. Management also seems keen on the potential for a global expansion of its mobile platform going as far to position it as a cloud-based service for overseas customers but a lack of detail on the domestic launch would have been helpful. On balance the new is more positive than not but shares already reflect that.   

Rakuten: Q1 20 Results – Pandemic Play but Mobile Losses Are a Concern

<a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank Corp (9434 JP)</a> FY19 financial results were mixed with a modest beat for revenue and operating income offset by a miss for net income. In contrast to DoCoMo and Z Holdings, Softbank Corp has published FY20 guidance, which calls for very modest growth in revenue and operating income with a corresponding uptick in the dividend. Initial expectations assume little impact from Covid-19 on the mobile business although we believe guidance for c. 1% consolidated revenue growth likely implies mobile erosion offset by Internet (Z Holdings) growth.  It also implies little disruption from Rakuten's facilities-based mobile launch, echoing comments from DoCoMo's results announcement the week before last.

Softbank Corp (9434 JP) FY19 financial results were mixed with a modest beat for revenue and operating income offset by a miss for net income. In contrast to DoCoMo and Z Holdings, Softbank Corp has published FY20 guidance, which calls for very modest growth in revenue and operating income with a corresponding uptick in the dividend. Initial expectations assume little impact from Covid-19 on the mobile business although we believe guidance for c. 1% consolidated revenue growth likely implies mobile erosion offset by Internet (Z Holdings) growth.  It also implies little disruption from Rakuten's facilities-based mobile launch, echoing comments from DoCoMo's results announcement the week before last. 

Softbank Corp: Guidance for Stability and A (Very Modest) Dividend Boost

Equity Analyst, LightStream Research

Supun Walpola

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 market reacted positively to <a href="https://www.smartkarma.com/entities/z-holdings-corp" target="_blank" data-smartkarma-citation="entities:19603:1" rel="noopener">Z Holdings (4689 JP)</a>’ 4Q FY03/20 results. Z’s share price has increased by c.5% since the results were released last Friday (30th April 2020). This coupled with some renewed enthusiasm over e-commerce stocks as COVID-19 beneficiaries have allowed Z’s share price to recover to its highs of late February.

The market reacted positively to Z Holdings (4689 JP)’ 4Q FY03/20 results. Z’s share price has increased by c.5% since the results were released last Friday (30th April 2020). This coupled with some renewed enthusiasm over e-commerce stocks as COVID-19 beneficiaries have allowed Z’s share price to recover to its highs of late February.

Z Holdings: 4Q Results Fail to Impress Despite a Favourable E-Commerce Landscape

Z Holdings closed FY19 with financial results slightly ahead of company estimates that had been firmed up last quarter.  The company did not provide any financial or dividend guidance - as with DoCoMo earlier this week, it said it will wait until it can provide reasonable estimates.  There were however some encouraging signs in the data as usage growth and ad revenue growth hit three-year highs whilst eCommerce platform sales continue to grow the mid-teens organically (pre-Zozo). There has been some downside (primarily lower O2O and related fintech), but it does appears Z Holdings is in good shape to weather the storm.

Z Holdings closed FY19 with financial results slightly ahead of company estimates that had been firmed up last quarter.  The company did not provide any financial or dividend guidance - as with DoCoMo earlier this week, it said it will wait until it can provide reasonable estimates.  There were however some encouraging signs in the data as usage growth and ad revenue growth hit three-year highs whilst eCommerce platform sales continue to grow the mid-teens organically (pre-Zozo). There has been some downside (primarily lower O2O and related fintech), but it does appears Z Holdings is in good shape to weather the storm. 

Z Holdings: FY19 Results Slightly Ahead of Guidance Range as Ad Revenue Growth Hits Three-Year High

Japan

Rakuten Group, Inc. provides Internet services. The Company offers Internet finance services which including "Rakuten Card" and "Rakuten Bank". Rakuten Group also provides digital content services including electronic book services.

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Rakuten (4755 JP)

Global Equity Strategy: Stay Defensive With Technology, Health Care, Staples

Upside momentum continues to wane for global equities. Price action this week has indeed confirmed lower highs for now in the MSCI ACWI, ACWI...

Vermilion Research

Rakuten: Q1 20 Results – Pandemic Play but Mobile Losses Are a Concern

There are two numbers from Rakuten’s report that stand out for us. The first is a 58% increase in domestic shopping eCommerce platform sales in...

Kirk Boodry

Softbank Corp: Guidance for Stability and A (Very Modest) Dividend Boost

Softbank Corp (9434 JP) FY19 financial results were mixed with a modest beat for revenue and operating income offset by a miss for net income. In...

Kirk Boodry

Z Holdings: 4Q Results Fail to Impress Despite a Favourable E-Commerce Landscape

The market reacted positively to Z Holdings (4689 JP)’ 4Q FY03/20 results. Z’s share price has increased by c.5% since the results were released...

Supun Walpola

Z Holdings: FY19 Results Slightly Ahead of Guidance Range as Ad Revenue Growth Hits Three-Year High

Z Holdings closed FY19 with financial results slightly ahead of company estimates that had been firmed up last quarter. The company did not...

Kirk Boodry

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