'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

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.

Thematic (Sector/Industry)

<p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p><p style="text-align: left;">Our best and worst pair from Friday's announcements is retailer <a href="https://www.smartkarma.com/entities/shimamura-co-ltd" target="_blank" data-smartkarma-citation="entities:15213:1" rel="noopener">Shimamura (8227 JP)</a> and Toyota parts supplier <a href="https://www.smartkarma.com/entities/aisan-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:16945:1" rel="noopener">Aisan Industry (7283 JP)</a>.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/162/343/original/2020-09-29_05-51-10.png?1601326304" class="editor-image img-responsive" data-smartkarma-image-id="162343"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/162/344/original/2020-09-29_05-52-10.png?1601326345" class="editor-image img-responsive" data-smartkarma-image-id="162344"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div><div>
<hr>
<p style="text-align: center;"><strong>DAILY STATS</strong></p>
</div><hr><div><p style="text-align: center;"><strong>9 Quarterly Results</strong></p></div><div><ul style="list-style-type: disc;">
<li><p><strong>Results Score:</strong> 44% Positive / 22% Neutral / 34% Negative</p></li>
<li><p><strong>Average Results Score Change:</strong> +3.4 points</p></li>
<li><p><strong>Average % Change in Revenue:</strong> -10.4% Quarter YoY / -10.2% Rolling TTM YoY </p></li>
<li><p><strong>Average Operating Profit Margin Change:</strong> -1.8ppt</p></li>
<li><p><strong>Percentage Making Quarterly Losses:</strong> 33%</p></li>
</ul></div><hr><div><p style="text-align: center;"><strong>11 Annual • 9 Interim Forecasts/Revisions</strong></p></div><div><ul style="list-style-type: disc;">
<li><p><strong>Annual Forecast/Revision Score:</strong> 36% Positive / 0% Neutral / 64% Negative</p></li>
<li><p><strong>Interim Forecast/Revision Score Change:</strong> 44% Positive / 0% Neutral / 56% Negative</p></li>
<li><p><strong>Average Forecast/Revision Score Change:</strong> -2.7 points</p></li>
</ul></div>

• BEST &amp; WORST •Our best and worst pair from Friday's announcements is retailer Shimamura (8227 JP) and Toyota parts supplier Aisan Industry (7283 JP).Source for all charts &amp; tables: Japan Analytics

DAILY STATS
9 Quarterly Results
Results Score: 44% Positive / 22% Neutral / 34% Negative
Average Results Score Change: +3.4 points
Average % Change in Revenue: -10.4% Quarter YoY / -10.2% Rolling TTM YoY 
Average Operating Profit Margin Change: -1.8ppt
Percentage Making Quarterly Losses: 33%
11 Annual • 9 Interim Forecasts/Revisions
Annual Forecast/Revision Score: 36% Positive / 0% Neutral / 64% Negative
Interim Forecast/Revision Score Change: 44% Positive / 0% Neutral / 56% Negative
Average Forecast/Revision Score Change: -2.7 points


🇯🇵 JAPAN • Results & Revisions 09/​28 - Shimamura, On Yer [Asahi] Bike!, Heiwado, Stanley & Aisan

<div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/148/266/original/2020-07-28_06-42-44.png?1595886197" class="editor-image img-responsive" data-smartkarma-image-id="148266"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/148/267/original/2020-07-28_06-47-55.png?1595886499" class="editor-image img-responsive" data-smartkarma-image-id="148267"></figure><div class="content-caption">Source • Japan Analytics</div>
<p><a href="https://www.smartkarma.com/entities/koei-tecmo-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20277:1" rel="noopener">Koei Tecmo (3635 JP)</a> - Koei Tecmo produced the most-improved Results Score among large-cap companies yesterday. Colleague <a href="https://www.smartkarma.com/profiles/mio-kato-cfa" target="_blank" data-smartkarma-citation="accounts:713" rel="noopener">Mio Kato</a>'s April Insight<a href="https://www.smartkarma.com/insights/koei-tecmo-plenty-of-headroom-to-play-with" target="_blank" data-smartkarma-citation="insights:38880" rel="noopener"> Plenty of Headroom to Play With</a> called this correctly - <em>"the strength of Sangokushi Senryaku Ban and a strong game pipeline should help the company continue to outperform significantly."</em> The shares are now Overbought, and the valuation has never been as extreme. A Results Score of 30 is 'perfection'. We would trim into any results-induced move above ¥3,500.</p>
<p style="text-align: center;"><strong>DAILY STATS</strong></p>
</div><hr><div><p style="text-align: center;"><strong>40 Quarterly Results</strong></p></div><div><ul>
<li>
<strong>Results Score:</strong> 14 Positive / 0 Neutral / 26 Negative</li>
<li>
<strong>Average Results Score Change: -</strong>3.3</li>
<li>
<strong>Average % Change in Revenue:</strong> -10.6% Quarter YoY / -3.0% Rolling TTM YoY </li>
<li>
<strong>Average Operating Profit Margin Change:</strong> -1.1ppt</li>
<li>
<strong>Percentage Making Quarterly Losses:</strong> 18%</li>
</ul></div><hr><div><p style="text-align: center;"><br><strong>19 Annual • 12 Interim Forecasts/Revisions</strong></p></div><div><ul>
<li>
<strong>Annual Forecast/Revision Score:</strong> 6 Positive / 0 Neutral / 13 Negative</li>
<li>
<strong>Interim Forecast/Revision Score Change:</strong> 2 Positive / 0 Neutral / 10 Negative</li>
<li>
<strong>Average Forecast/Revision Score Change:</strong> -11.5</li>
</ul></div>


Source • Japan Analytics
Koei Tecmo (3635 JP) - Koei Tecmo produced the most-improved Results Score among large-cap companies yesterday. Colleague Mio Kato's April Insight Plenty of Headroom to Play With called this correctly - "the strength of Sangokushi Senryaku Ban and a strong game pipeline should help the company continue to outperform significantly." The shares are now Overbought, and the valuation has never been as extreme. A Results Score of 30 is 'perfection'. We would trim into any results-induced move above ¥3,500.
DAILY STATS
40 Quarterly Results

Results Score: 14 Positive / 0 Neutral / 26 Negative

Average Results Score Change: -3.3

Average % Change in Revenue: -10.6% Quarter YoY / -3.0% Rolling TTM YoY 

Average Operating Profit Margin Change: -1.1ppt

Percentage Making Quarterly Losses: 18%
 19 Annual • 12 Interim Forecasts/Revisions

Annual Forecast/Revision Score: 6 Positive / 0 Neutral / 13 Negative

Interim Forecast/Revision Score Change: 2 Positive / 0 Neutral / 10 Negative

Average Forecast/Revision Score Change: -11.5


🇯🇵 JAPAN • Results & Revisions 27th July - Koei Tecmo, Nitto Denko, MMC, Stanley Electric, Exedy

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/130/058/original/2020-04-28_05-09-49.png?1588018213" class="editor-image img-responsive" data-smartkarma-image-id="130058"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>THE 'UNLIMTED' BANK OF JAPAN</strong> - The Bank of Japan's well-telegraphed announcement that they will be free of any constraints in their purchases of fixed income securities had limited impact on the exchange rate and bond markets. In practice, the central bank is limited by the lack of availability of JGBs and yields already being current at their target rate of zero. However, the extension of the BoJ remit to cover corporate bonds and even 'household debt' did prompt short-covering of indebted deep cyclical sectors of the equity market. There were no new purchases of ETFs yesterday.</p><p><strong>FORECAST REVISION SCORE &lt; RESULTS SCORE</strong> - Our Forecast/Revision Score has been higher than our Results Score since February as companies with December year-ends released bullish forecasts for 2020. Many of these forecasts are now being revised down or, as in the case of <a href="https://www.smartkarma.com/entities/canon-inc" target="_blank" data-smartkarma-citation="entities:1:1" rel="noopener">Canon  (7751 JP)</a>, are being withdrawn.  This Score 'crossover' has been bearish for equities over the past decade, and we would require the reverse for a medium or long-term 'buy' signal for Japanese equities. One caveat is the large number of companies forgoing making initial forecasts for FY2021. Yesterday, only seventeen of the forty-four annual results declarations were accompanied by new forecasts. </p><p>In the <strong>DETAIL</strong> below, we shall review Monday's large-cap results, revisions and initial forecast announcements.  The positive/neutral/negative balance for the 52 results was 23:5:24; and for the 50 revisions/initial forecasts, the split was 22:2:26. Four companies, including <a href="https://www.smartkarma.com/entities/stanley-electric-co-ltd" target="_blank" data-smartkarma-citation="entities:1330:1" rel="noopener">Stanley Electric (6923 JP)</a>  cut their dividends; two increased. </p>

Source • Japan AnalyticsTHE 'UNLIMTED' BANK OF JAPAN - The Bank of Japan's well-telegraphed announcement that they will be free of any constraints in their purchases of fixed income securities had limited impact on the exchange rate and bond markets. In practice, the central bank is limited by the lack of availability of JGBs and yields already being current at their target rate of zero. However, the extension of the BoJ remit to cover corporate bonds and even 'household debt' did prompt short-covering of indebted deep cyclical sectors of the equity market. There were no new purchases of ETFs yesterday.FORECAST REVISION SCORE &lt; RESULTS SCORE - Our Forecast/Revision Score has been higher than our Results Score since February as companies with December year-ends released bullish forecasts for 2020. Many of these forecasts are now being revised down or, as in the case of Canon  (7751 JP), are being withdrawn.  This Score 'crossover' has been bearish for equities over the past decade, and we would require the reverse for a medium or long-term 'buy' signal for Japanese equities. One caveat is the large number of companies forgoing making initial forecasts for FY2021. Yesterday, only seventeen of the forty-four annual results declarations were accompanied by new forecasts. In the DETAIL below, we shall review Monday's large-cap results, revisions and initial forecast announcements.  The positive/neutral/negative balance for the 52 results was 23:5:24; and for the 50 revisions/initial forecasts, the split was 22:2:26. Four companies, including Stanley Electric (6923 JP)  cut their dividends; two increased. 

🇯🇵 JAPAN • Results & Revisions 28th April - The 'Unlimited' BoJ + Panasonic, T.Yuden, Kao, Kyocera

Equity Analyst, LightStream Research

Aqila Ali

Equity Analyst

Equity Bottom-Up

<p>On Monday, <a href="https://www.smartkarma.com/entities/stanley-electric-co-ltd" target="_blank" data-smartkarma-citation="entities:1330:1" rel="noopener">Stanley Electric (6923 JP)</a> announced that it acquired shares of “HexaTech, Inc.”  for JPY4.2bn (USD 39m). The deal makes Hexa Tech one of Stanley’s subsidiaries. According to Stanley, Hexa Tech’s Aluminium nitride (AlN) semiconductor substrates (a semi-conductor to help produce next generation devices) facilitates manufacturing deep ultraviolet LEDs (UV LEDs) and is likely to help Stanley in the development process of its LED lights.</p><p>In our opinion, the deal might support Stanley’s development efforts in ADAS sensors and help produce lighting products that are needed for AD purposes. Semiconductors, as known, are the base for sensor related technology and hence Hexa Tech’s expertise in a semiconductor type specifically suited for LEDs could have made it an inviting target for Stanley. The two companies have been working together since the beginning of this year and thus, Stanley’s plan to acquire the company is probably a result of some successful development that the two companies have participated in. This investment reminds us of,  <a href="https://www.smartkarma.com/entities/koito-manufacturing-co-ltd" target="_blank" data-smartkarma-citation="entities:15841:1" rel="noopener">Koito Manufacturing (7276 JP)</a>’s investment in BWV, as we mentioned in <a href="https://www.smartkarma.com/insights/koito-acquires-stake-in-brightway-vision-bwv-bwv-s-agit-to-support-adas-aims" target="_blank" data-smartkarma-citation="insights:30787" rel="noopener">Koito Acquires Stake in BrightWay Vision (BWV): BWV’s AGIT to Support ADAS Aims</a>. We believe that lighting players, like other auto part makers, are also strengthening their technology portfolios in preparation for a CASE future.</p>

On Monday, Stanley Electric (6923 JP) announced that it acquired shares of “HexaTech, Inc.”  for JPY4.2bn (USD 39m). The deal makes Hexa Tech one of Stanley’s subsidiaries. According to Stanley, Hexa Tech’s Aluminium nitride (AlN) semiconductor substrates (a semi-conductor to help produce next generation devices) facilitates manufacturing deep ultraviolet LEDs (UV LEDs) and is likely to help Stanley in the development process of its LED lights.In our opinion, the deal might support Stanley’s development efforts in ADAS sensors and help produce lighting products that are needed for AD purposes. Semiconductors, as known, are the base for sensor related technology and hence Hexa Tech’s expertise in a semiconductor type specifically suited for LEDs could have made it an inviting target for Stanley. The two companies have been working together since the beginning of this year and thus, Stanley’s plan to acquire the company is probably a result of some successful development that the two companies have participated in. This investment reminds us of,  Koito Manufacturing (7276 JP)’s investment in BWV, as we mentioned in Koito Acquires Stake in BrightWay Vision (BWV): BWV’s AGIT to Support ADAS Aims. We believe that lighting players, like other auto part makers, are also strengthening their technology portfolios in preparation for a CASE future.

Stanley Acquires Hexa Tech: AIN Substrates Might Allow Stanley to Compete on ADAS

<ul>
<li>On the 28th of October, <a href="https://www.smartkarma.com/entities/koito-manufacturing-co-ltd" target="_blank" data-smartkarma-citation="entities:15841:1" rel="noopener">Koito Manufacturing (7276 JP)</a> and <a href="https://www.smartkarma.com/entities/stanley-electric-co-ltd" target="_blank" data-smartkarma-citation="entities:1330:1" rel="noopener">Stanley Electric (6923 JP)</a> posted their 2QFY03/20 results which were weak, falling below market and our expectations.</li>
<li>Koito reported flat growth in revenue (+0.6% YoY) while Stanley registered a decline in revenue by -3.4% YoY during 2Q</li>
<li>On profitability, Koito registered a lower decline in OP at -10.4% YoY, compared to Stanley’s -27.4% YoY, with an OPM of 10.9% higher than the 8.5% OPM generated by Stanley.</li>
<li>Based on the results during 2Q, as we expected Koito surpassed its 1H revenue target but fell below its OP target. Stanley, on the contrary, fell below the revenue target but surpassed its 1H OP target.</li>
<li>As of 1H, both companies generate OPM at similar levels, indicating that despite Stanley’s expected decline in OP during 2Q, the latter has still managed to keep profitability at a level similar to its peer.</li>
<li>Following the rather underwhelming 2Q, the lighting players have both revised their FY03/20E targets downwards and appear on track to achieve their revised guidance.</li>
<li>Stanley opened -3.7% down, while Koito opened +0.2% up on 29<sup>th</sup> October following their earning release the previous day.</li>
</ul>


On the 28th of October, Koito Manufacturing (7276 JP) and Stanley Electric (6923 JP) posted their 2QFY03/20 results which were weak, falling below market and our expectations.
Koito reported flat growth in revenue (+0.6% YoY) while Stanley registered a decline in revenue by -3.4% YoY during 2Q
On profitability, Koito registered a lower decline in OP at -10.4% YoY, compared to Stanley’s -27.4% YoY, with an OPM of 10.9% higher than the 8.5% OPM generated by Stanley.
Based on the results during 2Q, as we expected Koito surpassed its 1H revenue target but fell below its OP target. Stanley, on the contrary, fell below the revenue target but surpassed its 1H OP target.
As of 1H, both companies generate OPM at similar levels, indicating that despite Stanley’s expected decline in OP during 2Q, the latter has still managed to keep profitability at a level similar to its peer.
Following the rather underwhelming 2Q, the lighting players have both revised their FY03/20E targets downwards and appear on track to achieve their revised guidance.
Stanley opened -3.7% down, while Koito opened +0.2% up on 29th October following their earning release the previous day.


A Failing 1H From the Lighting Players; US-China Trade Tension Being the Key Reason

Japan

Stanley Electric Co., Ltd. manufactures lighting equipment including head lights, HID (High Intensity Discharge) assist lamps, and rear combination lamps for automobiles.  The Company also produces LCD (Liquid Cristal Display) and LED (Light Emitted Diode) lamps for communication equipment, office automation equipment, and information displays.

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Stanley Electric (6923 JP)

🇯🇵 JAPAN • Results & Revisions 09/28 - Shimamura, On Yer [Asahi] Bike!, Heiwado, Stanley & Aisan

• BEST & WORST • DAILY STATS 9 Quarterly Results Results Score: 33% Positive / 0% Neutral / 67% Negative Average Results Score...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 27th July - Koei Tecmo, Nitto Denko, MMC, Stanley Electric, Exedy

Koei Tecmo (3635 JP) - Koei Tecmo produced the most-improved Results Score among large-cap companies yesterday. Colleague Mio Kato's April...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 28th April - The 'Unlimited' BoJ + Panasonic, T.Yuden, Kao, Kyocera

THE 'UNLIMTED' BANK OF JAPAN - The Bank of Japan's well-telegraphed announcement that they will be free of any constraints in their purchases of...

Campbell Gunn

Stanley Acquires Hexa Tech: AIN Substrates Might Allow Stanley to Compete on ADAS

On Monday, Stanley Electric (6923 JP) announced that it acquired shares of “HexaTech, Inc.” for JPY4.2bn (USD 39m). The deal makes Hexa Tech one...

Aqila Ali

A Failing 1H From the Lighting Players; US-China Trade Tension Being the Key Reason

On the 28th of October, Koito Manufacturing (7276 JP) and Stanley Electric (6923 JP) posted their 2QFY03/20 results which were weak, falling below...

Aqila Ali

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🇯🇵 JAPAN • Results & Revisions 09/​28 - Shimamura, On Yer [Asahi] Bike!, Heiwado, Stanley & Aisan

• BEST & WORST • DAILY STATS 9 Quarterly Results Results Score: 33% Positive / 0% Neutral / 67% Negative Average Results Score...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 27th July - Koei Tecmo, Nitto Denko, MMC, Stanley Electric, Exedy

Koei Tecmo (3635 JP) - Koei Tecmo produced the most-improved Results Score among large-cap companies yesterday. Colleague Mio Kato's April...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 28th April - The 'Unlimited' BoJ + Panasonic, T.Yuden, Kao, Kyocera

THE 'UNLIMTED' BANK OF JAPAN - The Bank of Japan's well-telegraphed announcement that they will be free of any constraints in their purchases of...

Campbell Gunn

Stanley Acquires Hexa Tech: AIN Substrates Might Allow Stanley to Compete on ADAS

On Monday, Stanley Electric (6923 JP) announced that it acquired shares of “HexaTech, Inc.” for JPY4.2bn (USD 39m). The deal makes Hexa Tech one...

Aqila Ali

A Failing 1H From the Lighting Players; US-China Trade Tension Being the Key Reason

On the 28th of October, Koito Manufacturing (7276 JP) and Stanley Electric (6923 JP) posted their 2QFY03/20 results which were weak, falling below...

Aqila Ali

🇯🇵 JAPAN • Results & Revisions 09/28 - Shimamura, On Yer [Asahi] Bike!, Heiwado, Stanley & Aisan