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

Most major indexes are currently trading at the lower end of their May trading ranges. Barring improving headlines regarding tariffs &amp; trade or comments from the Fed suggesting a potential rate cut on the horizon we believe global markets are vulnerable to further weakness. We review all major markets and highlight attractive opportunities within Japan, and global real estate developers, and consumer staples stocks.

Most major indexes are currently trading at the lower end of their May trading ranges. Barring improving headlines regarding tariffs &amp; trade or comments from the Fed suggesting a potential rate cut on the horizon we believe global markets are vulnerable to further weakness. We review all major markets and highlight attractive opportunities within Japan, and global real estate developers, and consumer staples stocks.

Major Indexes Testing Support & Vulnerable to Further Weakness

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Sekisui House Reit / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/7497" target="_blank" data-smartkarma-citation="entities:7497:1">Sekisui House Reit (3309 JP)</a> (SHR) unveiled plans to raise up to JPY41.0 billion ($373 million) through a placement of new units. SHR is a diversified REIT with core assets of high-quality residential properties and office buildings in Japan.<div class="content-highlight">The proceeds from the placement will be used to partly fund the JPY70.1 billion ($637 million) acquisitions of seven properties. The properties are developed by <a href="https://www.smartkarma.com/entities/4508" target="_blank" data-smartkarma-citation="entities:4508:1">Sekisui House (1928 JP)</a>, its sponsor, and comprise of three office buildings (two of which are additional acquisitions) and four residential properties. Overall, we would be tempted to participate in the placement.</div>

Sekisui House Reit (3309 JP) (SHR) unveiled plans to raise up to JPY41.0 billion ($373 million) through a placement of new units. SHR is a diversified REIT with core assets of high-quality residential properties and office buildings in Japan.The proceeds from the placement will be used to partly fund the JPY70.1 billion ($637 million) acquisitions of seven properties. The properties are developed by Sekisui House (1928 JP), its sponsor, and comprise of three office buildings (two of which are additional acquisitions) and four residential properties. Overall, we would be tempted to participate in the placement.

Sekisui House REIT Placement: Accretive Acquisitions in Line with Strategy

'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. 

Quantitative Analysis

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/082/163/original/2019-03-17_07-32-23.png?1552775594" class="editor-image img-responsive" data-smartkarma-image-id="82163"></figure>Source: Japan Analytics
</div>SIDEWAYS - Japanese equities have gove up half of their late-February gains in US dollar terms over the last two weeks. Poised just 1.7% above the fifty-day moving average, last breached to the downside six months ago, the market needs fresh catalysts. <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/082/164/original/2019-03-17_07-54-56.png?1552777022" class="editor-image img-responsive" data-smartkarma-image-id="82164"></figure><div class="content-caption">Source: Japan Analytics</div>BOJ IS BACK - After almost a one-month hiatus, the Bank of Japan resumed purchases of exchange-traded funds, intervening four times in the last nine trading days. Further intervention is to be expected as the market adjusts to the continuing stream of weak macro data.  <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/082/165/original/2019-03-17_08-15-44.png?1552778203" class="editor-image img-responsive" data-smartkarma-image-id="82165"></figure><div class="content-caption">Source: Japan Analytics</div>THANK YOU, MIZUHO - <a href="https://www.smartkarma.com/entities/219" target="_blank" data-smartkarma-citation="entities:219:1">Mizuho' s (8411 JP)</a> ¥680b retail branch, software and foreign bond write down, and net profit forecast of ¥80b for FY 2018 has resulted in the market composite forecast for net income falling to ¥43.6t, 5.6% below the November peak. Forecast net income is now 1.2% below the level of one year ago, and seven sectors' forecasts are more than 10% lower than a year ago.   MARKET/SECTOR STRATEGY- We continue to recommend an underweight position in Japan in global portfolios and favour undervalued domestically-orientated companies in the Information Technology, Internet, Media, Transportation, Healthcare and Telecommunications sectors. We would avoid or short the financial sectors Banks, Non-Bank Finance and Multi-Industry. We would underweight the Auto, Machinery, Retail and Other Consumer Products sectors as consumer spending contracts further in the US, Europe, China and Japan. In the DETAIL section below, we will review Sector performance, company results, revisions and stock performance over the previous two weeks, as well as adding some brief comments on the Auto sector,  <a href="https://www.smartkarma.com/entities/1411" target="_blank" data-smartkarma-citation="entities:1411:1">Sumitomo Realty (8830 JP)</a>, <a href="https://www.smartkarma.com/entities/4508" target="_blank" data-smartkarma-citation="entities:4508:1">Sekisui House (1928 JP)</a>, <a href="https://www.smartkarma.com/entities/3294" target="_blank" data-smartkarma-citation="entities:3294:1">Pigeon (7956 JP)</a>, <a href="https://www.smartkarma.com/entities/8723" target="_blank" data-smartkarma-citation="entities:8723:1">Fuji Seal (7864 JP)</a>, and <a href="https://www.smartkarma.com/entities/3548" target="_blank" data-smartkarma-citation="entities:3548:1">Kawasaki Kisen (9107 JP)</a>


Source: Japan Analytics
SIDEWAYS - Japanese equities have gove up half of their late-February gains in US dollar terms over the last two weeks. Poised just 1.7% above the fifty-day moving average, last breached to the downside six months ago, the market needs fresh catalysts. Source: Japan AnalyticsBOJ IS BACK - After almost a one-month hiatus, the Bank of Japan resumed purchases of exchange-traded funds, intervening four times in the last nine trading days. Further intervention is to be expected as the market adjusts to the continuing stream of weak macro data.  Source: Japan AnalyticsTHANK YOU, MIZUHO - Mizuho' s (8411 JP) ¥680b retail branch, software and foreign bond write down, and net profit forecast of ¥80b for FY 2018 has resulted in the market composite forecast for net income falling to ¥43.6t, 5.6% below the November peak. Forecast net income is now 1.2% below the level of one year ago, and seven sectors' forecasts are more than 10% lower than a year ago.   MARKET/SECTOR STRATEGY- We continue to recommend an underweight position in Japan in global portfolios and favour undervalued domestically-orientated companies in the Information Technology, Internet, Media, Transportation, Healthcare and Telecommunications sectors. We would avoid or short the financial sectors Banks, Non-Bank Finance and Multi-Industry. We would underweight the Auto, Machinery, Retail and Other Consumer Products sectors as consumer spending contracts further in the US, Europe, China and Japan. In the DETAIL section below, we will review Sector performance, company results, revisions and stock performance over the previous two weeks, as well as adding some brief comments on the Auto sector,  Sumitomo Realty (8830 JP), Sekisui House (1928 JP), Pigeon (7956 JP), Fuji Seal (7864 JP), and Kawasaki Kisen (9107 JP)

🇯🇵 Japan • Fortnightly Update - Reverse Gear

Thematic (Sector/Industry)

TATTERED - After rising 1.6% in four days at the start of the week before last, our Market Composite then fell by 3%, ended the period down 1.3% and only 1% above the one-year 'low' of March 23rd 2018. Japanese equities are currently trading on a trailing-twelve-month (TTM) earnings multiple of just 13.9x - a three-year low. Of the factors driving prices lower, we highlight 'Trust' and 'Trade' and focus on <a href="https://www.smartkarma.com/entities/23714" target="_blank" data-smartkarma-citation="entities:23714:1">Tateru (1435)</a> and <a href="https://www.smartkarma.com/entities/6267" target="_blank" data-smartkarma-citation="entities:6267:1">Suruga Bank (8358)</a> concerning the former.OUTLOOK - The rally we envisaged based on recent volume patterns lasted only for a week. The market is now overdue a bounce, at least in terms of the five-day relative strength index. Further, seasonality trends - <a href="https://www.smartkarma.com/insights/japan-seasonality-sell-in-july-and-say-goodbye-please-come-back-on-culture-day" target="_blank" data-smartkarma-citation="insights:23682">Japan: Seasonality - "Sell in July and Say Goodbye...Please Come Back on Culture Day"</a> - favour a rising equity market and weaker Yen into the end of the month, absent any adverse developments on the trade front.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/063/229/original/2018-09-08_21-25-10.png?1536481486" class="editor-image img-responsive" data-smartkarma-image-id="63229"></figure><div class="content-caption">Source: Japan Analytics</div>SECTOR RECOMMENDATIONS - Our sector recommendations have an implicit 3 'unit' market short by being overweight five sectors and underweight eight and have 'outperformed' by 2.3% over two weeks and by 12.3% over the last three months. COMPANIES - Our results and revision and stock performance reviews contain short comments on <a href="https://www.smartkarma.com/entities/3294" target="_blank" data-smartkarma-citation="entities:3294:1">Pigeon Corp (7956)</a> <a href="https://www.smartkarma.com/entities/4508" target="_blank" data-smartkarma-citation="entities:4508:1">Sekisui House (1928)</a> <a href="https://www.smartkarma.com/entities/11074" target="_blank" data-smartkarma-citation="entities:11074:1">Takara (2531)</a> <a href="https://www.smartkarma.com/entities/391" target="_blank" data-smartkarma-citation="entities:391:1">Sharp (6753)</a> <a href="https://www.smartkarma.com/entities/8467" target="_blank" data-smartkarma-citation="entities:8467:1">Workman (7564)</a> <a href="https://www.smartkarma.com/entities/9145" target="_blank" data-smartkarma-citation="entities:9145:1">Tokai Carbon (5301)</a> <a href="https://www.smartkarma.com/entities/237" target="_blank" data-smartkarma-citation="entities:237:1">Daiwa House (1925)</a> <a href="https://www.smartkarma.com/entities/4481" target="_blank" data-smartkarma-citation="entities:4481:1">Shin Etsu Chemical (4063)</a> <a href="https://www.smartkarma.com/entities/379" target="_blank" data-smartkarma-citation="entities:379:1">Sumco (3436)</a> <a href="https://www.smartkarma.com/entities/280" target="_blank" data-smartkarma-citation="entities:280:1">Tokyo Electron (8035)</a> <a href="https://www.smartkarma.com/entities/2" target="_blank" data-smartkarma-citation="entities:2:1">Yamato Holdings (9064)</a> and <a href="https://www.smartkarma.com/entities/22772" target="_blank" data-smartkarma-citation="entities:22772:1">LINE (3938)</a>.

TATTERED - After rising 1.6% in four days at the start of the week before last, our Market Composite then fell by 3%, ended the period down 1.3% and only 1% above the one-year 'low' of March 23rd 2018. Japanese equities are currently trading on a trailing-twelve-month (TTM) earnings multiple of just 13.9x - a three-year low. Of the factors driving prices lower, we highlight 'Trust' and 'Trade' and focus on Tateru (1435) and Suruga Bank (8358) concerning the former.OUTLOOK - The rally we envisaged based on recent volume patterns lasted only for a week. The market is now overdue a bounce, at least in terms of the five-day relative strength index. Further, seasonality trends - Japan: Seasonality - "Sell in July and Say Goodbye...Please Come Back on Culture Day" - favour a rising equity market and weaker Yen into the end of the month, absent any adverse developments on the trade front.Source: Japan AnalyticsSECTOR RECOMMENDATIONS - Our sector recommendations have an implicit 3 'unit' market short by being overweight five sectors and underweight eight and have 'outperformed' by 2.3% over two weeks and by 12.3% over the last three months. COMPANIES - Our results and revision and stock performance reviews contain short comments on Pigeon Corp (7956) Sekisui House (1928) Takara (2531) Sharp (6753) Workman (7564) Tokai Carbon (5301) Daiwa House (1925) Shin Etsu Chemical (4063) Sumco (3436) Tokyo Electron (8035) Yamato Holdings (9064) and LINE (3938).

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.

Equity Bottom-Up

Toyota’s current dividend and buyback yields are 3.1% and 2.1% respectively (at the current market price of JPY7,199 as of 22nd June 2018) bringing Toyota’s current cash yield (dividend yield plus buyback yield) to 5.2%. Toyota’s cash yield has been above the 5% mark consistently since FY03/15.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/055/962/original/Toyota.PNG?1529972342" class="editor-image img-responsive" data-smartkarma-image-id="55962"></figure><div class="content-remarks">Source: Capital IQ and LSR Calculations</div>We find Toyota’s high cash yield attractive as markets head towards bear territory. Toyota is in the higher end of the dividend yield spectrum among the Nikkei 225…

Toyota’s current dividend and buyback yields are 3.1% and 2.1% respectively (at the current market price of JPY7,199 as of 22nd June 2018) bringing Toyota’s current cash yield (dividend yield plus buyback yield) to 5.2%. Toyota’s cash yield has been above the 5% mark consistently since FY03/15.Source: Capital IQ and LSR CalculationsWe find Toyota’s high cash yield attractive as markets head towards bear territory. Toyota is in the higher end of the dividend yield spectrum among the Nikkei 225…

Toyota for Bears: How Attractive Are Income Yields?

Japan

Sekisui House, Ltd. builds and sells steel-frame and wooden housings. The Company constructs single-family houses, condominiums, and apartment buildings.  Sekisui House also operates real estate brokerage and leasing businesses.  Additionally, the Company sells construction materials.

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Sekisui House (1928 JP)

Major Indexes Testing Support & Vulnerable to Further Weakness

Most major indexes are currently trading at the lower end of their May trading ranges. Barring improving headlines regarding tariffs & trade or...

Vermilion Research

Sekisui House REIT Placement: Accretive Acquisitions in Line with Strategy

Sekisui House Reit (3309 JP) (SHR) unveiled plans to raise up to JPY41.0 billion ($373 million) through a placement of new units. SHR is a...

Arun George

🇯🇵 Japan • Fortnightly Update - Reverse Gear

SIDEWAYS - Japanese equities have gove up half of their late-February gains in US dollar terms over the last two weeks. Poised just 1.7% above the...

Campbell Gunn

Japan Fortnightly Update: Tattered

TATTERED - After rising 1.6% in four days at the start of the week before last, our Market Composite then fell by 3%, ended the period down 1.3%...

Campbell Gunn

Toyota for Bears: How Attractive Are Income Yields?

Toyota’s current dividend and buyback yields are 3.1% and 2.1% respectively (at the current market price of JPY7,199 as of 22nd June 2018) bringing...

Supun Walpola

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