Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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

Contemporary Amperex Technology (CATL) / Equity Bottom-Up

<p><a href="https://asia.nikkei.com/Spotlight/Electric-cars-in-China/CATL-goes-all-in-on-next-gen-sodium-ion-EV-batteries" target="_blank" rel="noopener">CATL continues to invest heavily in material diversification</a>. We warned as far back as <a href="https://www.smartkarma.com/insights/a-common-concern-is-there-enough-lithium-to-support-the-expected-growth-in-evs" target="_blank" rel="noopener">three and a half years ago</a> that investors were too complacent about lithium supply and as we head towards the middle of this decade with the prospect of supply crunches for battery grade lithium and nickel looking increasingly likely, CATL appears to be hedging its bets.</p>

CATL continues to invest heavily in material diversification. We warned as far back as three and a half years ago that investors were too complacent about lithium supply and as we head towards the middle of this decade with the prospect of supply crunches for battery grade lithium and nickel looking increasingly likely, CATL appears to be hedging its bets.

CATL – Sodium-Ion Battery Development Highlights the Issues with Lithium

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Thematic (Sector/Industry)

<div><p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p></div><div>
<p>Monday's best and worst pairing is <a href="https://www.smartkarma.com/entities/yamaha-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:7411:1" rel="noopener">Yamaha Motor (7272 JP)</a> (already <a href="https://www.smartkarma.com/insights/yamaha-motor-what-a-turnaround" target="_blank" data-smartkarma-citation="insights:45102" rel="noopener">covered</a> by Mio) and <a href="https://www.smartkarma.com/entities/jfe-holdings-inc" target="_blank" data-smartkarma-citation="entities:210:1" rel="noopener">JFE (5411 JP)</a>.</p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/170/418/original/2020-11-10_06-23-38.png?1604957031" class="editor-image img-responsive" data-smartkarma-image-id="170418"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/170/420/original/2020-11-10_06-24-52.png?1604957104" class="editor-image img-responsive" data-smartkarma-image-id="170420"></figure></section>
</div><div><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div></div><hr><div><p style="text-align: center;"><strong>DAILY STATS</strong></p></div><hr><div><p style="text-align: center;"><strong>203 Quarterly Results</strong></p></div><div><ul style="list-style-type: disc;">
<li><p><strong>Results Score:</strong> 45% Positive / 7% Neutral / 48% Negative</p></li>
<li><p><strong>Average Results Score Change:</strong> -0.7 points</p></li>
<li><p><strong>Average % Change in Revenue:</strong> -9.4% Quarter YoY / -5.4% Rolling TTM YoY </p></li>
<li><p><strong>Average Operating Profit Margin Change:</strong> -2.1 ppt</p></li>
<li><p><strong>Percentage Making Quarterly Losses:</strong> 17%</p></li>
</ul></div><hr><div><p style="text-align: center;"><strong>90 Annual • 20 Interim Forecasts/Revisions</strong></p></div><div><ul style="list-style-type: disc;">
<li><p><strong>Annual Forecast/Revision Score:</strong> 49% Positive / 7% Neutral / 44% Negative</p></li>
<li><p><strong>Interim Forecast/Revision Score Change:</strong> 40% Positive / 0% Neutral / 60% Negative</p></li>
<li><p><strong>Average Forecast/Revision Score Change:</strong> 0.0 points</p></li>
</ul></div>

• BEST &amp; WORST •
Monday's best and worst pairing is Yamaha Motor (7272 JP) (already covered by Mio) and JFE (5411 JP).

Source for all charts &amp; tables: Japan AnalyticsDAILY STATS203 Quarterly Results
Results Score: 45% Positive / 7% Neutral / 48% Negative
Average Results Score Change: -0.7 points
Average % Change in Revenue: -9.4% Quarter YoY / -5.4% Rolling TTM YoY 
Average Operating Profit Margin Change: -2.1 ppt
Percentage Making Quarterly Losses: 17%
90 Annual • 20 Interim Forecasts/Revisions
Annual Forecast/Revision Score: 49% Positive / 7% Neutral / 44% Negative
Interim Forecast/Revision Score Change: 40% Positive / 0% Neutral / 60% Negative
Average Forecast/Revision Score Change: 0.0 points


🇯🇵 JAPAN • Results & Revisions 11/​​​​​​​​​​​​​​​​​​​​​​​​09 -Hamamatsu, Secom, Sumitomo Metal Min

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. 

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/116/923/original/2020-02-08_18-15-45.png?1581196263" class="editor-image img-responsive" data-smartkarma-image-id="116923"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/116/924/original/2020-02-09_06-34-51.png?1581197706" class="editor-image img-responsive" data-smartkarma-image-id="116924"></figure><div class="content-caption">Source • Japan Analytics</div><div class="content-caption"></div><p><strong>OOOPS!</strong> - The 480 quarterly results announced on Friday subtracted a further 20 basis points from our Results Score. If the remaining 38% of companies continue this trend, the current quarter will equal CQ2019-1 and CQ2018-2 in seeing a 200 basis point Results Score decline. 169 forecasts or revision announcements added  5bps to the Forecast/Revision Score, supported by slight upward revisions from <a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank Corp (9434 JP)</a> and <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>.  The Results Score has dipped below the Forecast/Revision Score for the first time since July 2016 and is a necessary precursor of the bottoming of the cycle. Japan is now in a recession and could see a decline in GDP for the calendar year. The market's current optimism (aided by the Bank of Japan's buy-the-dips support programme) is more appropriate to the middle of the cycle and, with two further poor earnings quarters ahead, suggests limited further upside. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/116/925/original/2020-02-08_10-48-19.png?1581199859" class="editor-image img-responsive" data-smartkarma-image-id="116925"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>18x EARNINGS</strong> - Trailing-twelve-month (TTM) Operating Income for the composite of listed companies has declined to ¥57.4t, 10% below the peak of early 2019. TTM Net Income has declined by 20% over the same period, resulting in a 6.1 point increase in the market price-earnings ratio to 17.6 times.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/116/927/original/2020-02-08_10-55-21.png?1581200256" class="editor-image img-responsive" data-smartkarma-image-id="116927"></figure><div class="content-caption">Source • Japan Analytics</div><p style="text-align: left;"><strong>TTM RESULTS</strong> - TTM Operating Profits have been declining quarter-on-quarter for five straight quarters, and are 8.1% lower year-on-year. The Operating Margin has declined from 7.45% to 6.80%. TTM Revenues are now also falling and have only increased by 0.7% year-on-year.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/116/928/original/2020-02-08_10-59-00.png?1581200533" class="editor-image img-responsive" data-smartkarma-image-id="116928"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>FORECASTS</strong> - The year-on-year Operating Profit decline using current forecasts is 8.5%, while Revenues are flat. Revenue forecasts have been falling quarter-on-quarter for three quarters in a row. The 'uplift' from TTM to Forecast is just ¥3t for sales and ¥0.3t for OP. </p>

Source • Japan AnalyticsOOOPS! - The 480 quarterly results announced on Friday subtracted a further 20 basis points from our Results Score. If the remaining 38% of companies continue this trend, the current quarter will equal CQ2019-1 and CQ2018-2 in seeing a 200 basis point Results Score decline. 169 forecasts or revision announcements added  5bps to the Forecast/Revision Score, supported by slight upward revisions from Softbank Corp (9434 JP) and Honda Motor (7267 JP).  The Results Score has dipped below the Forecast/Revision Score for the first time since July 2016 and is a necessary precursor of the bottoming of the cycle. Japan is now in a recession and could see a decline in GDP for the calendar year. The market's current optimism (aided by the Bank of Japan's buy-the-dips support programme) is more appropriate to the middle of the cycle and, with two further poor earnings quarters ahead, suggests limited further upside. Source • Japan Analytics18x EARNINGS - Trailing-twelve-month (TTM) Operating Income for the composite of listed companies has declined to ¥57.4t, 10% below the peak of early 2019. TTM Net Income has declined by 20% over the same period, resulting in a 6.1 point increase in the market price-earnings ratio to 17.6 times.Source • Japan AnalyticsTTM RESULTS - TTM Operating Profits have been declining quarter-on-quarter for five straight quarters, and are 8.1% lower year-on-year. The Operating Margin has declined from 7.45% to 6.80%. TTM Revenues are now also falling and have only increased by 0.7% year-on-year.Source • Japan AnalyticsFORECASTS - The year-on-year Operating Profit decline using current forecasts is 8.5%, while Revenues are flat. Revenue forecasts have been falling quarter-on-quarter for three quarters in a row. The 'uplift' from TTM to Forecast is just ¥3t for sales and ¥0.3t for OP. 

🇯🇵 JAPAN • Results & Revisions Daily Roundup - 7th February ▲2121 7267 5713 ▼ 5401 9616 3407

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

Northern Star Resources / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/4243" target="_blank" data-smartkarma-citation="entities:4243:1">Northern Star Resources (NST AU)</a> plans to raise up to US$127m (A$175m) to part fund its purchase of the 4.1Moz Pogo gold mine in Alaska. While the deal appears to be accretive and will add significantly to reserves and production, it's unclear why the placement is needed as NST has ample cash to fund the acquisition and its stated FY19 capex plans. Nonetheless, NST has a great track record of past performance and the deal scores well on our framework. </p>

Northern Star Resources (NST AU) plans to raise up to US$127m (A$175m) to part fund its purchase of the 4.1Moz Pogo gold mine in Alaska. While the deal appears to be accretive and will add significantly to reserves and production, it's unclear why the placement is needed as NST has ample cash to fund the acquisition and its stated FY19 capex plans. Nonetheless, NST has a great track record of past performance and the deal scores well on our framework. 

Northern Star Resources Placement - Great Track Record Helps, Although It Already Has Enough Cash

<p>We have been incorrectly positive on Dowa holdings for some time and in particular, the stock is down 29% this year, underperforming TPNMET (which has itself underperformed) by 11%. Part of this is the result of the 6.6% fall in the stock yesterday following 1Q earnings which showed CP down 5.3% vs. FY guidance for a 4.5% increase.</p><h2>Silver Powder and Especially Zinc are the Downside Risks</h2><p>To some extent the reaction is understandable as zinc prices have declined to about USD2,600/ton (vs. the…</p>

We have been incorrectly positive on Dowa holdings for some time and in particular, the stock is down 29% this year, underperforming TPNMET (which has itself underperformed) by 11%. Part of this is the result of the 6.6% fall in the stock yesterday following 1Q earnings which showed CP down 5.3% vs. FY guidance for a 4.5% increase.Silver Powder and Especially Zinc are the Downside RisksTo some extent the reaction is understandable as zinc prices have declined to about USD2,600/ton (vs. the…

Dowa Holdings: Silver Powder/Zinc Weakness May Cause 4% FY Undershoot but 8.0x PE Too Cheap

Japan

Sumitomo Metal Mining Co., Ltd. develops and mines non-ferrous metals in Japan and overseas.  The Company's primary products include copper, gold, silver, nickel, lead, and zinc.  The Company refines, produces, and sells precious metals.  Sumitomo Metal Mining also produces and markets electronic & housing construction materials and provides civil engineering works.

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Sumitomo Metal Mining (5713 JP)

CATL – Sodium-Ion Battery Development Highlights the Issues with Lithium

As we head towards the middle of this decade the prospect of supply crunches for battery grade lithium and nickel looking increasingly likely and...

Mio Kato

🇯🇵 JAPAN • Results & Revisions 11/09 -Hamamatsu, Secom, Sumitomo Metal Min

• BEST & WORST • Monday's best and worst pairing is Yamaha Motor (7272 JP) (already covered by Mio) and JFE (5411 JP)................

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions Daily Roundup - 7th February ▲2121 7267 5713 ▼ 5401 9616 3407

OOOPS! - The 480 quarterly results announced on Friday subtracted a further 20 basis points from our Results Score. If the remaining 38% of...

Campbell Gunn

Northern Star Resources Placement - Great Track Record Helps, Although It Already Has Enough Cash

Northern Star Resources (NST AU) plans to raise up to US$127m (A$175m) to part fund its purchase of the 4.1Moz Pogo gold mine in Alaska. While the...

Sumeet Singh

Dowa Holdings: Silver Powder/Zinc Weakness May Cause 4% FY Undershoot but 8.0x PE Too Cheap

We have been incorrectly positive on Dowa holdings for some time and in particular, the stock is down 29% this year, underperforming TPNMET (which...

Mio Kato

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

CATL – Sodium-Ion Battery Development Highlights the Issues with Lithium

As we head towards the middle of this decade the prospect of supply crunches for battery grade lithium and nickel looking increasingly likely and...

Mio Kato

🇯🇵 JAPAN • Results & Revisions 11/​​​​​​​​​​​​​​​​​​​​​​​​09 -Hamamatsu, Secom, Sumitomo Metal Min

• BEST & WORST • Monday's best and worst pairing is Yamaha Motor (7272 JP) (already covered by Mio) and JFE (5411 JP)................

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions Daily Roundup - 7th February ▲2121 7267 5713 ▼ 5401 9616 3407

OOOPS! - The 480 quarterly results announced on Friday subtracted a further 20 basis points from our Results Score. If the remaining 38% of...

Campbell Gunn

Northern Star Resources Placement - Great Track Record Helps, Although It Already Has Enough Cash

Northern Star Resources (NST AU) plans to raise up to US$127m (A$175m) to part fund its purchase of the 4.1Moz Pogo gold mine in Alaska. While the...

Sumeet Singh

Dowa Holdings: Silver Powder/Zinc Weakness May Cause 4% FY Undershoot but 8.0x PE Too Cheap

We have been incorrectly positive on Dowa holdings for some time and in particular, the stock is down 29% this year, underperforming TPNMET (which...

Mio Kato

🇯🇵 JAPAN • Results & Revisions 11/09 -Hamamatsu, Secom, Sumitomo Metal Min