Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

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.

Equity Bottom-Up

<ul>
<li>FY Mar-25 sales and profit guidance has been raised and new orders are trending up, pointing to continued growth next year. </li>
<li>Supported by investment in AI, foundry and high-bandwidth memory related demand are driving growth for semiconductor production equipment.</li>
<li>Attractively valued at 12x projected earnings with share price bottoming out. Buy for the medium to long term. </li>
</ul>


FY Mar-25 sales and profit guidance has been raised and new orders are trending up, pointing to continued growth next year. 
Supported by investment in AI, foundry and high-bandwidth memory related demand are driving growth for semiconductor production equipment.
Attractively valued at 12x projected earnings with share price bottoming out. Buy for the medium to long term. 


Screen Holdings (7735 JP): Bad News in the Price, Guidance Raised

<ul>
<li>The share price was up 4.4% on Friday - and up 2.3x since the end of October - raising forward valuations to the high side of their usual range.</li>
<li>Management raised FY Mar-24 operating profit guidance slightly after 3Q results that were strong YoY but flat QoQ. 4Q should be better as finished goods inventory is shipped.</li>
<li>Operating efficiency has improved and a new semiconductor up-cycle has begun, but the numbers suggest caution. Take profits and reassess.</li>
</ul>


The share price was up 4.4% on Friday - and up 2.3x since the end of October - raising forward valuations to the high side of their usual range.
Management raised FY Mar-24 operating profit guidance slightly after 3Q results that were strong YoY but flat QoQ. 4Q should be better as finished goods inventory is shipped.
Operating efficiency has improved and a new semiconductor up-cycle has begun, but the numbers suggest caution. Take profits and reassess.


Screen Holdings (7735): Share Price Straight Up, Financials Not so Simple

<ul>
<li>Screen has rebounded from its recent low, but strong 1H results, the recent weakening of the Yen and reasonable valuation point to further short-term upside. </li>
<li>However, management is guiding for slightly lower operating profit in 2H, and Intel's capex cuts also support a cautious outlook. </li>
<li>Screen expects slower growth in 2025 wafer fab equipment demand than SEMI, and neither appear to have factored in concern over insufficient return on investment in AI. </li>
</ul>


Screen has rebounded from its recent low, but strong 1H results, the recent weakening of the Yen and reasonable valuation point to further short-term upside. 
However, management is guiding for slightly lower operating profit in 2H, and Intel's capex cuts also support a cautious outlook. 
Screen expects slower growth in 2025 wafer fab equipment demand than SEMI, and neither appear to have factored in concern over insufficient return on investment in AI. 


Screen Holdings (7735 JP): Still a Buy for the Bounce

<ul>
<li>FY Mar-24 results were ahead of guidance, but management's FY Mar-25 forecast has sales flat and profits down in the second half.</li>
<li>The shares have dropped back 24% from their all-time high, bringing the forward P/E ratio down to 22X.</li>
<li>China and foundry remain strong while North America and memory pick up. Guidance is probably conservative. Buy into the weakness.</li>
</ul>


FY Mar-24 results were ahead of guidance, but management's FY Mar-25 forecast has sales flat and profits down in the second half.
The shares have dropped back 24% from their all-time high, bringing the forward P/E ratio down to 22X.
China and foundry remain strong while North America and memory pick up. Guidance is probably conservative. Buy into the weakness.


Screen Holdings (7735 JP): Guiding for Lower Profits in H2

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

Event-Driven

<ul>
<li>There were index review announcements for the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">HSI</a>, <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">HSCEI INDEX</a>, <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">HSTECH</a>, HSCI, HSIII and some global indices last week.</li>
<li>There are a bunch of review cutoffs early in the coming week followed by announcements for the <a href="https://www.smartkarma.com/entities/sse-science-and-technology-innovation-board-50-index" target="_blank" data-smartkarma-citation="entities:29279:1" rel="noopener">STAR50 INDEX</a> and STAR100 Index later in the week.</li>
<li>Another week of outflows for <a href="https://www.smartkarma.com/entities/tracker-fund-of-hong-kong-ltd" target="_blank" data-smartkarma-citation="entities:29257:1" rel="noopener">Tracker Fund of Hong Kong (2800 HK)</a> and <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index-etf" target="_blank" data-smartkarma-citation="entities:25:1" rel="noopener">Hang Seng H Share ETF (2828 HK)</a> as inflows to <a href="https://www.smartkarma.com/entities/ishares-msci-emerging-markets-223f5da3-7054-4e4f-bc55-b7f0852c2581" target="_blank" data-smartkarma-citation="entities:31998:1" rel="noopener">iShares Emerging Markets ex-China (EMXC US)</a> continue.</li>
</ul>


There were index review announcements for the HSI, HSCEI INDEX, HSTECH, HSCI, HSIII and some global indices last week.
There are a bunch of review cutoffs early in the coming week followed by announcements for the STAR50 INDEX and STAR100 Index later in the week.
Another week of outflows for Tracker Fund of Hong Kong (2800 HK) and Hang Seng H Share ETF (2828 HK) as inflows to iShares Emerging Markets ex-China (EMXC US) continue.


Index Rebalance & ETF Flow Recap: HSI, Screen Holdings, GMRI, SEA EM, MVIS, SET50, JP Positioning

Japan

SCREEN Holdings Co Ltd.  manufactures and sell semiconductors, FPD devices, commercial printing and printed circuit boards(PCB). The company also provides additional services for its products.

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SCREEN Holdings (7735 JP)