Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

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.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sony-corp" target="_blank" data-smartkarma-citation="entities:563:1" rel="noopener">Sony Corp (6758 JP)</a> announced on Thursday (09<sup>th</sup> April) that it has entered into a definitive agreement to acquire a 4.98% stake in China’s leading online platform for young generations, <a href="https://www.smartkarma.com/entities/bilibili-inc" target="_blank" data-smartkarma-citation="entities:26793:1" rel="noopener">Bilibili Inc (BILI US)</a>  for US$400m.</li>
<li>Sony’s wholly-owned subsidiary, Sony Corp America will purchase 17.3m newly issued Class Z ordinary shares of Bilibili at US$23.1071 per share. The transaction is expected to close on or before April 10, 2020, subject to customary closing conditions.</li>
<li>Bilibili’s shares (ADRs) closed at US$26.20 per ADS as at the end of Wednesday’s close, and the purchase price implies a discount of about 12% on Wednesday’s close.</li>
</ul>



Sony Corp (6758 JP) announced on Thursday (09th April) that it has entered into a definitive agreement to acquire a 4.98% stake in China’s leading online platform for young generations, Bilibili Inc (BILI US)  for US$400m.
Sony’s wholly-owned subsidiary, Sony Corp America will purchase 17.3m newly issued Class Z ordinary shares of Bilibili at US$23.1071 per share. The transaction is expected to close on or before April 10, 2020, subject to customary closing conditions.
Bilibili’s shares (ADRs) closed at US$26.20 per ADS as at the end of Wednesday’s close, and the purchase price implies a discount of about 12% on Wednesday’s close.


Sony Acquires a 4.98% Stake in Bilibili to Capture China’s Gen Z Through Mobile Games and Anime

'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/000/125/157/original/File%202020-03-28%2015%2042%2009.jpeg?1585378270" class="editor-image img-responsive" data-smartkarma-image-id="125157"></figure><div class="content-caption">Source • Mainichi Photography</div><p><strong>STAY AT HOME (PLEASE)</strong> - With the 2020 Olympics now destined for 2021, the authorities can focus on containing Covid-19 which continues to spread in Tokyo.  Governor Koike and the Governors of the surrounding prefectures have responded to the recent growth in cases in the metropolis by requesting that citizens stay at home this weekend. Parks and many shops and restaurants have closed, and inclement weather (it is snowing across most of the Kanto plain this Sunday) has resulted in a high degree of compliance.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/125/263/original/File%202020-03-29%206%2035%2050.jpeg?1585431441" class="editor-image img-responsive" data-smartkarma-image-id="125263"></figure><div class="content-caption">Source • aatishb.com</div><p><strong>CATCHING UP</strong> - Without the implementation of the measures adopted in China and South Korea, Japan is now moving more in line with the global trends shown above in terms of log-scale incremental rate of change. Sixty-three new cases were reported on Saturday, the largest single-day total to date. Over half of the new cases were in the 'Longevity General Hospital' in Taito Ward, taking the total for the capital to 362. For Japan as a whole, the total one cases for Saturday was 194 a 68% one-day increase. Covid-19 fatalities increased by six to 53.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/125/264/original/File%202020-03-29%206%2037%2003.jpeg?1585431468" class="editor-image img-responsive" data-smartkarma-image-id="125264"></figure><div class="content-caption">Source • aatishb.com</div><p><strong>THE SWEDISH MODEL </strong>- PM Abe is concerned that a full societal 'lockdown' would damage the economy and has yet to invoke his newly-minted emergency powers - which, in any case, do not provide for such a measure. For now, Japan is following Sweden's social experiment of permitting life to go on as usual as much as possible. Both countries have been criticised for their 'novel' approach; however, their trajectories are noticeably different from the US and Italy. Let us hope than Japan's remarkably low-incidence of, and CFR from, Covid-19 infection can hold.</p><p><strong>CORONA 'SHOKKU'</strong> - At a press conference yesterday Abe pledged to introduce an economic package that would exceed Japan's response to the "Lehman Shock" with a particular focus on SMEs and distressed households. The details are to be announced in the next ten days.</p><p><strong>RATIONING BOOK</strong> - In other news, Kinokuniya bookstore in Tokyo is limiting purchases of the now-existential necessity Camus' <em>The Plague</em>' to one per person.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/125/256/original/2020-03-28_08-20-51.png?1585429894" class="editor-image img-responsive" data-smartkarma-image-id="125256"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>PULLING OUT ALL THE STOPS</strong> - On Thursday the Bank of Japan's ETF purchase programme constituted 6% of Value Traded as the total interventions this month now total <strong>¥1.3 trillion</strong> has recovered <strong>18%</strong> from the last weeks' low and is 'only' <strong>16%</strong> below the December high. Our Results Score is now negative, and the Forecast/Revision Score will follow next week. With over 3 billion people around the world in some form of social isolation, we expect both of our Scores to reach new five year lows by May and for equities to follow, despite Governor Kuroda's machinations.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/125/260/original/2020-03-29_06-20-04.png?1585430434" class="editor-image img-responsive" data-smartkarma-image-id="125260"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>NO MAN'S LAND</strong> - As Aggregate TTM and Forecast Operating and Net Income head lower, the last week's bear-market-bounce has taken multiples back towards the long-term averages. With 3 quarters of results before a possible cycle low, Japanese equities are stuck in no man's land, neither overvalued not undervalued.  </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/125/158/original/2020-03-28_15-56-17.png?1585378601" class="editor-image img-responsive" data-smartkarma-image-id="125158"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/125/305/original/2020-03-29_08-40-46.png?1585438866" class="editor-image img-responsive" data-smartkarma-image-id="125305"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>FRIDAY 27th MARCH</strong> - Friday saw six companies reporting results, of which two - <strong><a href="https://www.smartkarma.com/entities/jastec-co-ltd" target="_blank" data-smartkarma-citation="entities:9201:1" rel="noopener">Jastec (9717 JP)</a></strong>- and<strong><a href="https://www.smartkarma.com/entities/niitaka-co-ltd" target="_blank" data-smartkarma-citation="entities:4911:1" rel="noopener">Niitaka (4465 JP)</a></strong> had positive scores. Fifteen companies revised their forecasts, and one - <a href="https://www.smartkarma.com/entities/imv-corp" target="_blank" data-smartkarma-citation="entities:14159:1" rel="noopener"><strong>IMV (7760 JP)</strong></a> withdrew its forecast entirely. In terms of our scoring system, the ratio of positive to negative 'scores' was <strong>6:10</strong>, with <a href="https://www.smartkarma.com/entities/jfe-holdings-inc" target="_blank" data-smartkarma-citation="entities:210:1" rel="noopener"><strong>JFE (5411 JP)</strong></a> being the largest negative-scoring company. High-tech lamp maker <strong><a href="https://www.smartkarma.com/entities/ushio-inc" target="_blank" data-smartkarma-citation="entities:6640:1" rel="noopener">Ushio (6925 JP)</a></strong> cut its forecast for Operating Income to ¥6b - which would be the lowest outcome since<strong> 1994</strong> and implies a fourth-quarter operating loss of <strong>¥0.35b</strong>.<strong><a href="https://www.smartkarma.com/entities/sony-corp" target="_blank" data-smartkarma-citation="entities:563:1" rel="noopener">Sony (6758 JP)</a></strong>announced that its forecasts made in February are now likely to be revised down and that the company may not be able to release FY2020 earnings as scheduled on 30th April due to delays in accounting procedures. <strong><a href="https://www.smartkarma.com/entities/honda-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:154:1" rel="noopener">Honda Motor (7267 JP)</a></strong>has shut down two plants in Japan, reflecting a weaker sales outlook.</p>

Source • Mainichi PhotographySTAY AT HOME (PLEASE) - With the 2020 Olympics now destined for 2021, the authorities can focus on containing Covid-19 which continues to spread in Tokyo.  Governor Koike and the Governors of the surrounding prefectures have responded to the recent growth in cases in the metropolis by requesting that citizens stay at home this weekend. Parks and many shops and restaurants have closed, and inclement weather (it is snowing across most of the Kanto plain this Sunday) has resulted in a high degree of compliance.Source • aatishb.comCATCHING UP - Without the implementation of the measures adopted in China and South Korea, Japan is now moving more in line with the global trends shown above in terms of log-scale incremental rate of change. Sixty-three new cases were reported on Saturday, the largest single-day total to date. Over half of the new cases were in the 'Longevity General Hospital' in Taito Ward, taking the total for the capital to 362. For Japan as a whole, the total one cases for Saturday was 194 a 68% one-day increase. Covid-19 fatalities increased by six to 53.Source • aatishb.comTHE SWEDISH MODEL - PM Abe is concerned that a full societal 'lockdown' would damage the economy and has yet to invoke his newly-minted emergency powers - which, in any case, do not provide for such a measure. For now, Japan is following Sweden's social experiment of permitting life to go on as usual as much as possible. Both countries have been criticised for their 'novel' approach; however, their trajectories are noticeably different from the US and Italy. Let us hope than Japan's remarkably low-incidence of, and CFR from, Covid-19 infection can hold.CORONA 'SHOKKU' - At a press conference yesterday Abe pledged to introduce an economic package that would exceed Japan's response to the "Lehman Shock" with a particular focus on SMEs and distressed households. The details are to be announced in the next ten days.RATIONING BOOK - In other news, Kinokuniya bookstore in Tokyo is limiting purchases of the now-existential necessity Camus' The Plague' to one per person.Source • Japan AnalyticsPULLING OUT ALL THE STOPS - On Thursday the Bank of Japan's ETF purchase programme constituted 6% of Value Traded as the total interventions this month now total ¥1.3 trillion has recovered 18% from the last weeks' low and is 'only' 16% below the December high. Our Results Score is now negative, and the Forecast/Revision Score will follow next week. With over 3 billion people around the world in some form of social isolation, we expect both of our Scores to reach new five year lows by May and for equities to follow, despite Governor Kuroda's machinations.Source • Japan AnalyticsNO MAN'S LAND - As Aggregate TTM and Forecast Operating and Net Income head lower, the last week's bear-market-bounce has taken multiples back towards the long-term averages. With 3 quarters of results before a possible cycle low, Japanese equities are stuck in no man's land, neither overvalued not undervalued.  Source • Japan AnalyticsFRIDAY 27th MARCH - Friday saw six companies reporting results, of which two - Jastec (9717 JP)- andNiitaka (4465 JP) had positive scores. Fifteen companies revised their forecasts, and one - IMV (7760 JP) withdrew its forecast entirely. In terms of our scoring system, the ratio of positive to negative 'scores' was 6:10, with JFE (5411 JP) being the largest negative-scoring company. High-tech lamp maker Ushio (6925 JP) cut its forecast for Operating Income to ¥6b - which would be the lowest outcome since 1994 and implies a fourth-quarter operating loss of ¥0.35b.Sony (6758 JP)announced that its forecasts made in February are now likely to be revised down and that the company may not be able to release FY2020 earnings as scheduled on 30th April due to delays in accounting procedures. Honda Motor (7267 JP)has shut down two plants in Japan, reflecting a weaker sales outlook.

🇯🇵 JAPAN • Revisions & Results Alert - 27th March - A Weekend at Home with the Swedish Model

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Quantitative Analysis

<div><p>Last year was Tuesday and Wednesday. The two years before were too. The year before that was Monday and Tuesday. Five years ago was Wednesday and Thursday, as it was the year before that. </p></div><div><h2>This Year it is Friday and Monday</h2></div><div><p>What is it about Tuesday and Wednesday? The answer, as it is every year (on days such as the above), is hundreds of billions of yen of flows from people who are obliged to allocate money on these particular days.</p></div><div><p>For most, the benchmark is this upcoming Friday.</p></div><div><p></p></div>

Last year was Tuesday and Wednesday. The two years before were too. The year before that was Monday and Tuesday. Five years ago was Wednesday and Thursday, as it was the year before that. This Year it is Friday and MondayWhat is it about Tuesday and Wednesday? The answer, as it is every year (on days such as the above), is hundreds of billions of yen of flows from people who are obliged to allocate money on these particular days.For most, the benchmark is this upcoming Friday.

JAPAN DELTA III - The Annual TOPIX Dividend Trade

<p>This is the next in a series of JAPAN DELTA insights regarding historical, recent, and forward flow dynamics of Japan equities. </p><p>The first in this series was <a href="https://www.smartkarma.com/insights/japan-delta-i-the-boj-ups-etf-buying" target="_blank" data-smartkarma-citation="insights:37528" rel="noopener">JAPAN DELTA I - The BOJ Ups ETF Buying</a>.</p><div><p>The TSE (now JPX) historically releases the data of <a href="http://www.jpx.co.jp/english/markets/statistics-equities/investor-type/index.html" target="_blank" rel="noopener">Trading by Type of Investors</a> on a weekly basis, by volume and by value. In that data set, the TSE tells you what the gross buys and sells and net flows are: </p></div><div><ul>
<li>All flows are first divided between proprietary and agency flows. </li>
<li>Gross customer flows are then separated into four major categories: trading by <strong>individuals</strong>, trading by <strong>foreigners</strong>, trading by <strong>institutions</strong>, and trading on behalf of other securities firms without seats on the exchange. </li>
<li>Institutions are separated between <strong>financial institutions</strong> (life and non-life insurers, banks, trust banks, other) and <strong>corporations</strong> (business corporations, other non-financials (which includes govt bodies acting directly (like the MoF)), and investment trusts).</li>
</ul></div><div>
<p>In terms of actual trading flow, if one measures the gross flows...</p>
<ul>
<li>
<strong>Individuals</strong> and <strong>Foreign Investors</strong> regularly make up 80-90% of trading volume by customers.</li>
<li>In terms of the absolute value of the net trading (summing up absolute values of nets), I<strong>ndividuals</strong> and <strong>Foreigners</strong> have a long-term average of 30% and 35% of summed nets of the 'customer' category. <strong>Trust Banks</strong> are about 15%. <strong>Investment Trusts</strong> and <strong>Businesses</strong> are ~5-7% each. The remainder is <strong>City Banks</strong> and <strong>Life Insurers</strong>, who trade relatively little.</li>
<li>
<strong>Corporations</strong> conduct IPOs (and Offerings) and buy back shares but only the buybacks show up in the TSE data. That means they are almost always - over a certain average period - net buyers. </li>
<li>That means on a net basis, Everybody Other Than Corporates is a net seller over time because for the past 15 years, buybacks are larger than IPOs and Offerings, and the IPOs and Offerings are not included in the TSE data.</li>
</ul>
<p>The above means, with virtual mathematical certainty, that over time, Foreigners and Individuals will end up doing the bulk of their buying from and selling to each other unless the trading volume splits change reasonably dramatically. The question is whether the buying and selling <strong>Foreigners</strong> and <strong>Individuals</strong> do with each other has a pattern. </p>
<p><em>Indeed, it does. Much more below the fold. </em></p>
</div>

This is the next in a series of JAPAN DELTA insights regarding historical, recent, and forward flow dynamics of Japan equities. The first in this series was JAPAN DELTA I - The BOJ Ups ETF Buying.The TSE (now JPX) historically releases the data of Trading by Type of Investors on a weekly basis, by volume and by value. In that data set, the TSE tells you what the gross buys and sells and net flows are: 
All flows are first divided between proprietary and agency flows. 
Gross customer flows are then separated into four major categories: trading by individuals, trading by foreigners, trading by institutions, and trading on behalf of other securities firms without seats on the exchange. 
Institutions are separated between financial institutions (life and non-life insurers, banks, trust banks, other) and corporations (business corporations, other non-financials (which includes govt bodies acting directly (like the MoF)), and investment trusts).

In terms of actual trading flow, if one measures the gross flows...


Individuals and Foreign Investors regularly make up 80-90% of trading volume by customers.
In terms of the absolute value of the net trading (summing up absolute values of nets), Individuals and Foreigners have a long-term average of 30% and 35% of summed nets of the 'customer' category. Trust Banks are about 15%. Investment Trusts and Businesses are ~5-7% each. The remainder is City Banks and Life Insurers, who trade relatively little.

Corporations conduct IPOs (and Offerings) and buy back shares but only the buybacks show up in the TSE data. That means they are almost always - over a certain average period - net buyers. 
That means on a net basis, Everybody Other Than Corporates is a net seller over time because for the past 15 years, buybacks are larger than IPOs and Offerings, and the IPOs and Offerings are not included in the TSE data.

The above means, with virtual mathematical certainty, that over time, Foreigners and Individuals will end up doing the bulk of their buying from and selling to each other unless the trading volume splits change reasonably dramatically. The question is whether the buying and selling Foreigners and Individuals do with each other has a pattern. 
Indeed, it does. Much more below the fold. 


JAPAN DELTA II - Foreigners And Trust Banks a WildCard

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

<p>With the BOJ announcing yesterday that it would double the upper limit of its ETF purchases to ¥12trn a year and its previous policy shift to favour TOPIX-based ETFs over Nikkei-based ETFs it made sense for TOPIX to outperform Nikkei today. However, we found the degree of outperformance to be slightly surprising as TOPIX rose 2.60% while the Nikkei barely squeaked out a +0.06% gain. Below, we examine some individual names within the two indices to try and identify pairs which could generate alpha based on this theme.</p>

With the BOJ announcing yesterday that it would double the upper limit of its ETF purchases to ¥12trn a year and its previous policy shift to favour TOPIX-based ETFs over Nikkei-based ETFs it made sense for TOPIX to outperform Nikkei today. However, we found the degree of outperformance to be slightly surprising as TOPIX rose 2.60% while the Nikkei barely squeaked out a +0.06% gain. Below, we examine some individual names within the two indices to try and identify pairs which could generate alpha based on this theme.

Japan

Sony Group Corporation manufactures and distributes electronics products and provides related solutions. The Company produces televisions, cameras, mobiles, audio and video products. game equipment, and more. Sony Group also engages in game production,  movie production, music production, and other businesses.

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Sony Corp (SONY US)

Sony Acquires a 4.98% Stake in Bilibili to Capture China’s Gen Z Through Mobile Games and Anime

Sony Corp (6758 JP) announced on Thursday (09th April) that it has entered into a definitive agreement to acquire a 4.98% stake in China’s...

Shifara Samsudeen, ACMA, CGMA

🇯🇵 JAPAN • Revisions & Results Alert - 27th March - A Weekend at Home with the Swedish Model

STAY AT HOME (PLEASE) - With the 2020 Olympics now destined for 2021, the authorities can focus on containing Covid-19 which continues to spread in...

Campbell Gunn

JAPAN DELTA III - The Annual TOPIX Dividend Trade

Last year was Tuesday and Wednesday. The two years before were too. The year before that was Monday and Tuesday. Five years ago was Wednesday and...

Travis Lundy

JAPAN DELTA II - Foreigners And Trust Banks a WildCard

This is the next in a series of JAPAN DELTA insights regarding historical, recent, and forward flow dynamics of Japan equities. The first in this...

Travis Lundy

The Topix Vs. Nikkei Skew

With the BOJ announcing yesterday that it would double the upper limit of its ETF purchases to ¥12trn a year and its previous policy shift to...

Mio Kato

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