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>Last week, rumours surfaced regarding a Sony mobile with six rear lenses. At present, three rear camera lenses are popular on phones, with Nokia having proposed five. If rumours stand true, Sony is the first company known to be working on six rear lenses on a phone.</li>
<li>It is a well known fact that Sony’s mobile division has been struggling to make profits. The Xperia brand continues to be popular in several Asian countries and Europe. However, the segment’s lacklustre performance has led to the recent withdrawal of products from several geographical regions.</li>
<li>Several changes have come to the mobile segment as of late as a means of turning the business profitable. The company has also stated that it does not have plans of getting rid of its mobile business. However, in its present stage, Sony would need to have an ace up its sleeve to turnaround the segment’s performance.</li>
</ul>


Last week, rumours surfaced regarding a Sony mobile with six rear lenses. At present, three rear camera lenses are popular on phones, with Nokia having proposed five. If rumours stand true, Sony is the first company known to be working on six rear lenses on a phone.
It is a well known fact that Sony’s mobile division has been struggling to make profits. The Xperia brand continues to be popular in several Asian countries and Europe. However, the segment’s lacklustre performance has led to the recent withdrawal of products from several geographical regions.
Several changes have come to the mobile segment as of late as a means of turning the business profitable. The company has also stated that it does not have plans of getting rid of its mobile business. However, in its present stage, Sony would need to have an ace up its sleeve to turnaround the segment’s performance.


Is Sony Finally Starting to Get Its Mobile Business on Track?

'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

• RELATIVE PRICE SCORE • <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/090/226/original/2019-06-13_16-47-07.png?1560412038" class="editor-image img-responsive" data-smartkarma-image-id="90226"></figure><div class="content-caption">Source: Japan Analytics</div>INTRODUCTION - The Relative Price Score (RPS) is a measure of stock price performance relative to TOPIX calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices. As all companies are thus on a comparable scale, 'Overbought' and 'Oversold' outliers and changes in scoring can reveal short-term and longer-term trading opportunities. Company outlier thresholds are set at +4 &amp; -2 and equate to the top and bottom first-to-second percentiles of historical observations from which mean reversion takes a matter of months. RPS outliers with a Score of greater than 10.0 are rare outside of the 2000 tech 'bubble'. <a href="https://www.smartkarma.com/entities/goldwin-inc" target="_blank" data-smartkarma-citation="entities:410:1">Goldwin (8111 JP)</a> has the distinction of being one of only two large-cap RPS 'ten-baggers' since that time.This insight updates our list of Overbought and Oversold companies, reviews the best and worst performing companies in terms of RPS over the last three months and adds some specific comments on stocks on each category.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/090/196/original/2019-06-13_11-15-27.png?1560392157" class="editor-image img-responsive" data-smartkarma-image-id="90196"></figure><div class="content-caption">Source: Japan Analytics</div>STATISTICS - Currently, of the 3,832 listed companies for which daily RPS data is available, 94 companies are 'Overbought', and 131 are 'Oversold' - 2.5% and 3.4%, respectively of the total. For the 758 companies with a market capitalisation of over ¥100b, there are 50 'Overbought' and 18 'Oversold' companies, 6.6% and 5.0%, respectively. As noted the companion Insight, <a href="https://www.smartkarma.com/insights/japan-june-relative-price-scores-market-sectors-peer-groups-more-of-the-same" target="_blank" data-smartkarma-citation="insights:30323">🇯🇵 Japan • June Relative Price Scores: Market, Sectors &amp; Peer Groups - More of The Same</a>, these numbers and percentages are unusual and were last seen in the Japanese market in 2000. <hr>• RELATIVE PRICE SCORE TOPS •<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/090/202/original/2019-06-13_13-06-49.png?1560398835" class="editor-image img-responsive" data-smartkarma-image-id="90202"></figure><div class="content-caption">Source: Japan Analytics</div>RPS 'TOPS' - In the last two years, 444 companies have achieved an RPS of '4' or more and the average Overbought 'persistence' is 43 days. 1.4% of the total of 1.29 million traded stock days were by companies with an RPS of over 4. For companies with a market capitalisation higher than ¥100b, the numbers are 96 companies and 75 days - demonstrating the superior persistence of large capitalisation companies in this regard. Some examples of RPS mean reversion in the last three months have been <a href="https://www.smartkarma.com/entities/descente-ltd" target="_blank" data-smartkarma-citation="entities:8225:1">Descente (8114 JP)</a>, <a href="https://www.smartkarma.com/entities/alfresa-holdings-corp" target="_blank" data-smartkarma-citation="entities:10610:1">Alfresa (2784 JP)</a>, <a href="https://www.smartkarma.com/entities/320" target="_blank" data-smartkarma-citation="entities:320:1">FamilyMart Uny (8028 JP)</a>, <a href="https://www.smartkarma.com/entities/kikkoman-corp" target="_blank" data-smartkarma-citation="entities:11720:1">Kikkoman (2801 JP)</a>, <a href="https://www.smartkarma.com/entities/kobayashi-pharmaceutical-co" target="_blank" data-smartkarma-citation="entities:14930:1">Kobayashi Pharmaceutical (4967 JP)</a>, and <a href="https://www.smartkarma.com/entities/eiken-chemical-co-ltd" target="_blank" data-smartkarma-citation="entities:12675:1">Eiken Chemical (4549 JP)</a>.  <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/090/201/original/2019-06-13_13-04-38.png?1560398780" class="editor-image img-responsive" data-smartkarma-image-id="90201"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/090/203/original/2019-06-13_13-08-46.png?1560398945" class="editor-image img-responsive" data-smartkarma-image-id="90203"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/090/204/original/2019-06-13_13-09-37.png?1560399049" class="editor-image img-responsive" data-smartkarma-image-id="90204"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/090/205/original/2019-06-13_13-12-01.png?1560399142" class="editor-image img-responsive" data-smartkarma-image-id="90205"></figure><div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/090/316/original/2019-06-15_19-45-47.png?1560595558" class="editor-image img-responsive" data-smartkarma-image-id="90316"></figure>Source: Japan Analytics
</div>RPS 'BOTTOMS' - 372 companies have seen their RPS fall to '-2' or below in the last two years, and the average Oversold 'persistence' is 61 days. 1.5% of the total of 1.29 million traded stock days were by companies with an RPS of less than -2.  For larger capitalisation companies, the numbers are 85 companies and 89 days. A recent example of positive RPS mean reversion is <a href="https://www.smartkarma.com/entities/k-o-energy-group-inc" target="_blank" data-smartkarma-citation="entities:17701:1">K&amp;O Energy (1663 JP)</a>.<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/090/207/original/2019-06-13_13-14-03.png?1560399270" class="editor-image img-responsive" data-smartkarma-image-id="90207"></figure>Source: Japan Analytics
</div><div class="content-highlight">In the DETAIL section below, we list the current very overbought (RPS&gt;5), too late to buy (RPS &gt;4&lt;5) and oversold (RPS &lt;-2) stocks as well as the most substantial three-month positive and negative changes in RPS.</div>

• RELATIVE PRICE SCORE • Source: Japan AnalyticsINTRODUCTION - The Relative Price Score (RPS) is a measure of stock price performance relative to TOPIX calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices. As all companies are thus on a comparable scale, 'Overbought' and 'Oversold' outliers and changes in scoring can reveal short-term and longer-term trading opportunities. Company outlier thresholds are set at +4 &amp; -2 and equate to the top and bottom first-to-second percentiles of historical observations from which mean reversion takes a matter of months. RPS outliers with a Score of greater than 10.0 are rare outside of the 2000 tech 'bubble'. Goldwin (8111 JP) has the distinction of being one of only two large-cap RPS 'ten-baggers' since that time.This insight updates our list of Overbought and Oversold companies, reviews the best and worst performing companies in terms of RPS over the last three months and adds some specific comments on stocks on each category.Source: Japan AnalyticsSTATISTICS - Currently, of the 3,832 listed companies for which daily RPS data is available, 94 companies are 'Overbought', and 131 are 'Oversold' - 2.5% and 3.4%, respectively of the total. For the 758 companies with a market capitalisation of over ¥100b, there are 50 'Overbought' and 18 'Oversold' companies, 6.6% and 5.0%, respectively. As noted the companion Insight, 🇯🇵 Japan • June Relative Price Scores: Market, Sectors &amp; Peer Groups - More of The Same, these numbers and percentages are unusual and were last seen in the Japanese market in 2000. • RELATIVE PRICE SCORE TOPS •Source: Japan AnalyticsRPS 'TOPS' - In the last two years, 444 companies have achieved an RPS of '4' or more and the average Overbought 'persistence' is 43 days. 1.4% of the total of 1.29 million traded stock days were by companies with an RPS of over 4. For companies with a market capitalisation higher than ¥100b, the numbers are 96 companies and 75 days - demonstrating the superior persistence of large capitalisation companies in this regard. Some examples of RPS mean reversion in the last three months have been Descente (8114 JP), Alfresa (2784 JP), FamilyMart Uny (8028 JP), Kikkoman (2801 JP), Kobayashi Pharmaceutical (4967 JP), and Eiken Chemical (4549 JP).  
Source: Japan Analytics
RPS 'BOTTOMS' - 372 companies have seen their RPS fall to '-2' or below in the last two years, and the average Oversold 'persistence' is 61 days. 1.5% of the total of 1.29 million traded stock days were by companies with an RPS of less than -2.  For larger capitalisation companies, the numbers are 85 companies and 89 days. A recent example of positive RPS mean reversion is K&amp;O Energy (1663 JP).
Source: Japan Analytics
In the DETAIL section below, we list the current very overbought (RPS&gt;5), too late to buy (RPS &gt;4&lt;5) and oversold (RPS &lt;-2) stocks as well as the most substantial three-month positive and negative changes in RPS.

🇯🇵 Japan • Relative Price Scores - Overbought & Oversold Companies - June 2019

Shifara Samsudeen, ACMA, CGMA

It was reported this week that <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd/overview" target="_blank">Samsung Electronics</a> has entered into a multi-year strategic partnership with <a href="https://www.smartkarma.com/entities/advanced-micro-devices/overview" target="_blank">Advanced Micro Devices (AMD)</a>. AMD will license its Radeon graphics technology to Samsung which will be incorporated into future Samsung chips. This will enable Samsung to focus on advanced graphics technologies and solutions which are critical for enhancing innovation across mobile applications including smartphones. According to AMD:
<blockquote>
“AMD (NASDAQ: AMD) and Samsung Electronics Co., Ltd. today announced a multi-year strategic partnership in ultra-low power, high performance mobile graphics IP based on AMD Radeon graphics technologies. As part of the partnership, Samsung will license AMD graphics IP and will focus on advanced graphics technologies and solutions that are critical for enhancing innovation across mobile applications including smartphones.”
</blockquote>
The key terms of the partnership include the following:
<ul>
<li>AMD will license custom graphics IP based on the recently announced, highly-scalable RDNA graphics architecture to Samsung for use in mobile devices, including smartphones, and other products that complement AMD product offerings.</li>
<li>Samsung will pay AMD technology license fees and royalties</li>
</ul>
We believe, both Samsung Electronics and AMD could emerge as big winners of the partnership unless Samsung fails to make the partnership work. We go through the details below.

It was reported this week that Samsung Electronics has entered into a multi-year strategic partnership with Advanced Micro Devices (AMD). AMD will license its Radeon graphics technology to Samsung which will be incorporated into future Samsung chips. This will enable Samsung to focus on advanced graphics technologies and solutions which are critical for enhancing innovation across mobile applications including smartphones. According to AMD:

“AMD (NASDAQ: AMD) and Samsung Electronics Co., Ltd. today announced a multi-year strategic partnership in ultra-low power, high performance mobile graphics IP based on AMD Radeon graphics technologies. As part of the partnership, Samsung will license AMD graphics IP and will focus on advanced graphics technologies and solutions that are critical for enhancing innovation across mobile applications including smartphones.”

The key terms of the partnership include the following:

AMD will license custom graphics IP based on the recently announced, highly-scalable RDNA graphics architecture to Samsung for use in mobile devices, including smartphones, and other products that complement AMD product offerings.
Samsung will pay AMD technology license fees and royalties

We believe, both Samsung Electronics and AMD could emerge as big winners of the partnership unless Samsung fails to make the partnership work. We go through the details below.

Samsung Electronics Partners with AMD to Reduce Its Reliance on Qualcomm for GPUs

Sony has made plans to change the entry level salaries for new recruits who possess high tech skills. The salary hike implies a gradual change in policy for the company from Japan’s corporate culture tradition which follows a seniority wage system. The salary hike is particularly for those with tech expertise in areas such as AI. Such recruits will see their salary increase by approx. 20% from current levels. In addition to slowly transitioning from a seniority wage system, the hike will also help Sony recruit skilled labour which may otherwise go overseas to international competitors who provide higher entry level salaries.

Sony has made plans to change the entry level salaries for new recruits who possess high tech skills. The salary hike implies a gradual change in policy for the company from Japan’s corporate culture tradition which follows a seniority wage system. The salary hike is particularly for those with tech expertise in areas such as AI. Such recruits will see their salary increase by approx. 20% from current levels. In addition to slowly transitioning from a seniority wage system, the hike will also help Sony recruit skilled labour which may otherwise go overseas to international competitors who provide higher entry level salaries.

Sony Plans Salary Hikes in Order to Attract Tech Talent for AI

Asia Long-Short PM/Analyst

Curtis Lehnert

Tech wreck. DeFANGed. FANG flush. TATS turmoil. All of these headlines have at one point been seen from many a financial news outlet. While most everyone is familiar with the term "FANG" or "FAANG", everyone may not be familiar with the Asian variant "TATS". The TATS stocks are the internet and tech leaders from around Asia, namely Tencent, Alibaba, TSMC and Samsung. Samsung Electronics is literally a household name, making everything from refrigerators and washing machines to high-end smartphones and world-class semiconductors. It has also ballooned into one of Asia's largest and most valuable companies and constitutes a whopping 27% of its home market equity index, the Kospi 200. With this kind of dominance, it is a good idea for all investors looking at Asia to be familiar with Samsung. This insight is for those who do not cover Samsung, or perhaps have not taken a close look at Samsung in a while.  This insight is for those who want to understand:<ul>
<li>the structure of Samsung's business units</li>
<li>a brief historical summary of the Samsung story</li>
<li>a look at the company's most important products</li>
<li>a better understanding of the competitive dynamics of each segment in which the company competes</li>
</ul>If you need a one-stop read to understand the business of Korea's largest listed company, this is the insight for you.  All of the facts, none of the fluff.

Tech wreck. DeFANGed. FANG flush. TATS turmoil. All of these headlines have at one point been seen from many a financial news outlet. While most everyone is familiar with the term "FANG" or "FAANG", everyone may not be familiar with the Asian variant "TATS". The TATS stocks are the internet and tech leaders from around Asia, namely Tencent, Alibaba, TSMC and Samsung. Samsung Electronics is literally a household name, making everything from refrigerators and washing machines to high-end smartphones and world-class semiconductors. It has also ballooned into one of Asia's largest and most valuable companies and constitutes a whopping 27% of its home market equity index, the Kospi 200. With this kind of dominance, it is a good idea for all investors looking at Asia to be familiar with Samsung. This insight is for those who do not cover Samsung, or perhaps have not taken a close look at Samsung in a while.  This insight is for those who want to understand:
the structure of Samsung's business units
a brief historical summary of the Samsung story
a look at the company's most important products
a better understanding of the competitive dynamics of each segment in which the company competes
If you need a one-stop read to understand the business of Korea's largest listed company, this is the insight for you.  All of the facts, none of the fluff.

Samsung Electronics (005930 KS): A Generalist's Guide

Japan

Sony Corporation manufactures audio, home video game consoles, communications, key device and information technology products for the consumer and professional markets.  The Company's other businesses include music, pictures, computer entertainment, and online businesses.

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Sony Corp (6758 JP)

Is Sony Finally Starting to Get Its Mobile Business on Track?

Last week, rumours surfaced regarding a Sony mobile with six rear lenses. At present, three rear camera lenses are popular on phones, with Nokia...

Farha Sabri

🇯🇵 Japan • Relative Price Scores - Overbought & Oversold Companies - June 2019

• RELATIVE PRICE SCORE • INTRODUCTION - The Relative Price Score (RPS) is a measure of stock price performance relative to TOPIX calculated by...

Campbell Gunn

Samsung Electronics Partners with AMD to Reduce Its Reliance on Qualcomm for GPUs

It was reported this week that Samsung Electronics has entered into a multi-year strategic partnership with Advanced Micro Devices (AMD). AMD will...

Shifara Samsudeen, ACMA, CGMA

Sony Plans Salary Hikes in Order to Attract Tech Talent for AI

Sony has made plans to change the entry level salaries for new recruits who possess high tech skills. The salary hike implies a gradual change in...

Farha Sabri

Samsung Electronics (005930 KS): A Generalist's Guide

Tech wreck. DeFANGed. FANG flush. TATS turmoil. All of these headlines have at one point been seen from many a financial news outlet. While most...

Curtis Lehnert

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