Equity Analyst, LightStream Research

Farha Sabri

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

<ul>
<li>Sony showed strong performance in 1HFY03/19, leading the company to revise full year guidance for both revenue and OP. Software sales in the gaming segments were a key catalyst in driving the company's financial performance.</li>
<li>Sony is currently trading at a FY1 PE multiple of 12.8x, which is at a discount to its historical median of 19.4x. </li>
</ul>


Sony showed strong performance in 1HFY03/19, leading the company to revise full year guidance for both revenue and OP. Software sales in the gaming segments were a key catalyst in driving the company's financial performance.
Sony is currently trading at a FY1 PE multiple of 12.8x, which is at a discount to its historical median of 19.4x. 


Sony Upgrades FY03/19 Guidance Following Strong Gaming Software Sales

'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/000/068/507/original/2018-11-02_10-20-29.png?1541121653" class="editor-image img-responsive" data-smartkarma-image-id="68507"></figure>Source: Japan Analytics
NB: companies are colour-coded by sector
</div>28 YEARS OF NON-FINANCIAL MARKET LEADERSHIP - To offer some light relief from the current market, we have compiled a graphic illustrating the evolution in the ranking of the leading non-financial Japanese companies by market capitalisation measured at the end of each of the last 28 years.METHODOLOGY - Our comments follow in the detail below, but first a few notes:-<ul>
<li>In the interests of clarity (/sanity?), financials have been omitted. Twelve of the Top 20-ranked companies in 1990 were financials. However, only <a href="https://www.smartkarma.com/entities/742" target="_blank" data-smartkarma-citation="entities:742:1">Nomura (8604 JP)</a>, <a href="https://www.smartkarma.com/entities/6483" target="_blank" data-smartkarma-citation="entities:6483:1">Aozora (8304 JP)</a> and <a href="https://www.smartkarma.com/entities/16897" target="_blank" data-smartkarma-citation="entities:16897:1">Shinsei (8303 JP)</a> have survived in their original corporate structure and have the same ticker code. Our chart would have otherwise have included the now-merged IBJ, Fuji Bank, Dai-Ichi Kangyo Bank, Mitsubishi Bank, Sakura Bank, Sumitomo Bank, Tokai Bank, Sanwa Bank and Mitsubishi Trust Bank.  Excluded from the present-day Top 20 are <a href="https://www.smartkarma.com/entities/218" target="_blank" data-smartkarma-citation="entities:218:1">Mitsubishi UFJ (8306 JP)</a>, <a href="https://www.smartkarma.com/entities/217" target="_blank" data-smartkarma-citation="entities:217:1">Sumitomo Mitsui Financial (8316 JP)</a>, <a href="https://www.smartkarma.com/entities/838" target="_blank" data-smartkarma-citation="entities:838:1">Japan Post Bank (7182 JP)</a>, <a href="https://www.smartkarma.com/entities/359" target="_blank" data-smartkarma-citation="entities:359:1">Japan Post Holdings (6178 JP)</a> and <a href="https://www.smartkarma.com/entities/219" target="_blank" data-smartkarma-citation="entities:219:1">Mizuho Financial (8411 JP)</a> from the present day.</li>
<li>Only companies that were in the Top 20 in 1990 or 2018, as well as those companies that have been in the Top 10 for at least three of the last 28 years, have been included. </li>
<li>Two companies from 1990's Top 20 - Seibu Railway and Japan Airlines - have since been delisted. Although they have relisted as <a href="https://www.smartkarma.com/entities/458" target="_blank" data-smartkarma-citation="entities:458:1">Seibu Holdings (9024 JP)</a> and <a href="https://www.smartkarma.com/entities/1184" target="_blank" data-smartkarma-citation="entities:1184:1">Japan Airlines (9201 JP)</a>, they are no longer highly-ranked.</li>
<li>Seven current Top 20 companies - (<a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">Softbank (9984 JP)</a>, <a href="https://www.smartkarma.com/entities/1089" target="_blank" data-smartkarma-citation="entities:1089:1">NTT Docomo (9437 JP)</a>, <a href="https://www.smartkarma.com/entities/639" target="_blank" data-smartkarma-citation="entities:639:1">KDDI (9433 JP)</a>, <a href="https://www.smartkarma.com/entities/13498" target="_blank" data-smartkarma-citation="entities:13498:1">Japan Tobacco (2914 JP)</a>, <a href="https://www.smartkarma.com/entities/13520" target="_blank" data-smartkarma-citation="entities:13520:1">Central Japan Railway (9022 JP)</a>, <a href="https://www.smartkarma.com/entities/751" target="_blank" data-smartkarma-citation="entities:751:1">Fast Retailing (9983 JP)</a> and <a href="https://www.smartkarma.com/entities/15070" target="_blank" data-smartkarma-citation="entities:15070:1">Recruit (6098 JP)</a>)  - have listed during the last 28 years. </li>
</ul>THE 2050 RANKING?- Which of the current market leaders will still be in the Top 20 in 2050 in their current guise? For those still around to read this in 32 year's time, we would wager on just three - <a href="https://www.smartkarma.com/entities/3077" target="_blank" data-smartkarma-citation="entities:3077:1">Keyence (6861 JP)</a>, <a href="https://www.smartkarma.com/entities/73" target="_blank" data-smartkarma-citation="entities:73:1">Toyota Motor (7203 JP)</a> and <a href="https://www.smartkarma.com/entities/563" target="_blank" data-smartkarma-citation="entities:563:1">Sony (6758 JP)</a>.


Source: Japan Analytics
NB: companies are colour-coded by sector
28 YEARS OF NON-FINANCIAL MARKET LEADERSHIP - To offer some light relief from the current market, we have compiled a graphic illustrating the evolution in the ranking of the leading non-financial Japanese companies by market capitalisation measured at the end of each of the last 28 years.METHODOLOGY - Our comments follow in the detail below, but first a few notes:-
In the interests of clarity (/sanity?), financials have been omitted. Twelve of the Top 20-ranked companies in 1990 were financials. However, only Nomura (8604 JP), Aozora (8304 JP) and Shinsei (8303 JP) have survived in their original corporate structure and have the same ticker code. Our chart would have otherwise have included the now-merged IBJ, Fuji Bank, Dai-Ichi Kangyo Bank, Mitsubishi Bank, Sakura Bank, Sumitomo Bank, Tokai Bank, Sanwa Bank and Mitsubishi Trust Bank.  Excluded from the present-day Top 20 are Mitsubishi UFJ (8306 JP), Sumitomo Mitsui Financial (8316 JP), Japan Post Bank (7182 JP), Japan Post Holdings (6178 JP) and Mizuho Financial (8411 JP) from the present day.
Only companies that were in the Top 20 in 1990 or 2018, as well as those companies that have been in the Top 10 for at least three of the last 28 years, have been included. 
Two companies from 1990's Top 20 - Seibu Railway and Japan Airlines - have since been delisted. Although they have relisted as Seibu Holdings (9024 JP) and Japan Airlines (9201 JP), they are no longer highly-ranked.
Seven current Top 20 companies - (Softbank (9984 JP), NTT Docomo (9437 JP), KDDI (9433 JP), Japan Tobacco (2914 JP), Central Japan Railway (9022 JP), Fast Retailing (9983 JP) and Recruit (6098 JP))  - have listed during the last 28 years. 
THE 2050 RANKING?- Which of the current market leaders will still be in the Top 20 in 2050 in their current guise? For those still around to read this in 32 year's time, we would wager on just three - Keyence (6861 JP), Toyota Motor (7203 JP) and Sony (6758 JP). 

Japan: The Evolution Of (Non-Financial) Market Leadership

Supun Walpola

Thematic (Sector/Industry)

<a href="https://www.smartkarma.com/entities/25895" target="_blank" data-smartkarma-citation="entities:25895:1">Bitcoin (XBTUSD CURNCY)</a> almost touched the USD7,000 mark last Monday (15th October) with the news on Fidelity's new institutional platform for cryptos and jitters surrounding the stablecoin Tether, but stabilized around the USD6,500 mark later that day and for the rest of the week. Goldman Sachs' investment in the cryptocurrency custodian service BitGo was another positive. 
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/067/300/original/BTC.PNG?1540148387" class="editor-image img-responsive" data-smartkarma-image-id="67300"></figure>
<div style="text-align: left;" class="content-caption">Source: Coinmarketcap</div>
A report published by Glassdoor last week showed that cryptocurrency and blockchain related job openings in the US are up 300% this year. Another report by EY suggested that top ICOs are down 86% this year. 
In Japan, Epoch launched the first crypto-fund IPO and <a href="https://www.smartkarma.com/entities/13003" target="_blank" data-smartkarma-citation="entities:13003:1">Fisco Ltd (3807 JP)</a> has decided to acquire the troubled cryptocurrency exchange Zaif.  In South Korea, lawmakers are to decide on ICO legalization in November.

Bitcoin (XBTUSD CURNCY) almost touched the USD7,000 mark last Monday (15th October) with the news on Fidelity's new institutional platform for cryptos and jitters surrounding the stablecoin Tether, but stabilized around the USD6,500 mark later that day and for the rest of the week. Goldman Sachs' investment in the cryptocurrency custodian service BitGo was another positive. 

Source: Coinmarketcap
A report published by Glassdoor last week showed that cryptocurrency and blockchain related job openings in the US are up 300% this year. Another report by EY suggested that top ICOs are down 86% this year. 
In Japan, Epoch launched the first crypto-fund IPO and Fisco Ltd (3807 JP) has decided to acquire the troubled cryptocurrency exchange Zaif.  In South Korea, lawmakers are to decide on ICO legalization in November.  

Last Week in Blockchain & Cryptos: Cryptos Recover with Institutional Support

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

TSE Tokyo Price Index TOPIX / Technical Analysis

The current pullback within Japan’s TOPIX and Nikkei 225 indexes is offering an opportunity to add exposure to attractive constituents. Consumer electronics manufacturers are particularly attractive. Today we direct your attention to four stocks with the best setups in the group: Sony (6758-JP), Nintendo (7974-JP), FUJIFILM (4901-JP), and Zenrin (9474-JP). Add exposure.

The current pullback within Japan’s TOPIX and Nikkei 225 indexes is offering an opportunity to add exposure to attractive constituents. Consumer electronics manufacturers are particularly attractive. Today we direct your attention to four stocks with the best setups in the group: Sony (6758-JP), Nintendo (7974-JP), FUJIFILM (4901-JP), and Zenrin (9474-JP). Add exposure.

Amid the Turmoil, Buy Opportunities in Japan: Sony, Nintendo, FUJIFILM, Zenrin

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

In my previous insight, <a href="https://www.smartkarma.com/insights/tencent-music-pre-ipo-review-the-final-countdown-growth-doesn-t-seem-to-be-slowing-down" target="_blank">Tencent Music Pre-IPO Review - The Final Countdown - Growth Doesn’t Seem to Be Slowing Down</a> and <a href="https://www.smartkarma.com/insights/tencent-music-pre-ipo-this-is-how-we-do-it-a-quick-look-at-how-the-apps-work" target="_blank">Tencent Music Pre-IPO - This Is How We Do It - A Quick Look at How the Apps Work</a>, I covered most aspects of the company's performance and the working of its four apps.
In this insight, I'll touch upon why the China Music industry only generated revenue amounting to 5% that of the US. The reason why 90% of the industry's revenue comes through digital sales, mostly streaming, and in which TME has a 70%+ market share. The share of streaming is in stark contrast to most developed markets.
A little bit of background study of the industry also helps one understand why the music labels aren't in a rush to raise royalty charges in China. They are probably quite happy for now to see some money flowing in, the payments that they are receiving from TME are already a lot higher than what the China industry has been generating as a whole. Which is also what I refer to in one more music-related title (in case you were wondering, this is only for TME string of insights)  - "Don't Cry", as in the past that is probably what the labels execs were singing when they saw their annual revenue numbers from China. The current growth in the industry seems to be benefitting everyone and no one is likely to be complaining in the near term of not enough revenue being shared. This also gets us to why Karaoke works in China even though it might be almost unheard of in the West. 
I'll also touch upon one of the potential hurdles for TME, that music content is no longer going to be exclusive in China. Although, its integration with WeChat will probably allow TME to still maintain its hold on the market.

In my previous insight, Tencent Music Pre-IPO Review - The Final Countdown - Growth Doesn’t Seem to Be Slowing Down and Tencent Music Pre-IPO - This Is How We Do It - A Quick Look at How the Apps Work, I covered most aspects of the company's performance and the working of its four apps.
In this insight, I'll touch upon why the China Music industry only generated revenue amounting to 5% that of the US. The reason why 90% of the industry's revenue comes through digital sales, mostly streaming, and in which TME has a 70%+ market share. The share of streaming is in stark contrast to most developed markets.
A little bit of background study of the industry also helps one understand why the music labels aren't in a rush to raise royalty charges in China. They are probably quite happy for now to see some money flowing in, the payments that they are receiving from TME are already a lot higher than what the China industry has been generating as a whole. Which is also what I refer to in one more music-related title (in case you were wondering, this is only for TME string of insights)  - "Don't Cry", as in the past that is probably what the labels execs were singing when they saw their annual revenue numbers from China. The current growth in the industry seems to be benefitting everyone and no one is likely to be complaining in the near term of not enough revenue being shared. This also gets us to why Karaoke works in China even though it might be almost unheard of in the West. 
I'll also touch upon one of the potential hurdles for TME, that music content is no longer going to be exclusive in China. Although, its integration with WeChat will probably allow TME to still maintain its hold on the market.

Tencent Music Pre-IPO - Industry - Don't Cry - In 2010 a Little Red Dot Almost Overtook the Dragon

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 Upgrades FY03/19 Guidance Following Strong Gaming Software Sales

Sony showed strong performance in 1HFY03/19, leading the company to revise full year guidance for both revenue and OP. Software sales in the...

Farha Sabri

Japan: The Evolution Of (Non-Financial) Market Leadership

28 YEARS OF NON-FINANCIAL MARKET LEADERSHIP - To offer some light relief from the current market, we have compiled a graphic illustrating the...

Campbell Gunn

Last Week in Blockchain & Cryptos: Cryptos Recover with Institutional Support

Bitcoin (XBTUSD CURNCY) almost touched the USD7,000 mark last Monday (15th October) with the news on Fidelity's new institutional platform for...

Supun Walpola

Amid the Turmoil, Buy Opportunities in Japan: Sony, Nintendo, FUJIFILM, Zenrin

The current pullback within Japan’s TOPIX and Nikkei 225 indexes is offering an opportunity to add exposure to attractive constituents. Consumer...

Vermilion Research

Tencent Music Pre-IPO - Industry - Don't Cry - In 2010 a Little Red Dot Almost Overtook the Dragon

In my previous insight, Tencent Music Pre-IPO Review - The Final Countdown - Growth Doesn’t Seem to Be Slowing Down and Tencent Music Pre-IPO -...

Sumeet Singh

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