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.

Equity Bottom-Up

<p>Terumo reported its 1QFY03/2021 results on Thursday (06<sup>th</sup> August 2020) which saw both revenue and operating profit declining YoY by 14% and 38% respectively. Although revenues from the cardiac and vascular segment and general hospital segment declined, the blood and cell technology segment managed to grow its revenue by a marginal 2% YoY.</p><p>The reported revenue was 4.2% below consensus estimates, however, the company managed to beat consensus on operating profit by 4.2% during the quarter.</p><table class="table table-striped"><tbody>
<tr>
<td style="width: 49.75pt;"><p style="text-align: center;"><strong>JPY (bn)</strong></p></td>
<td style="width: 72.9pt;"><p style="text-align: center;"><strong>1QFY03/2020</strong></p></td>
<td style="width: 72.9pt;"><p style="text-align: center;"><strong>1QFY03/2021</strong></p></td>
<td style="width: 44.95pt;"><p style="text-align: center;"><strong>% YoY</strong></p></td>
<td style="width: 58.95pt;"><p style="text-align: center;"><strong>Consensus</strong></p></td>
<td style="width: 75.7pt;"><p style="text-align: center;"><strong>Actual v Consensus</strong></p></td>
</tr>
<tr>
<td style="width: 49.75pt;"><p>Revenue</p></td>
<td style="width: 72.9pt;"><p style="text-align: right;">152.5</p></td>
<td style="width: 72.9pt;"><p style="text-align: right;">131.3</p></td>
<td style="width: 44.95pt;"><p style="text-align: right;">-13.9%</p></td>
<td style="width: 58.95pt;"><p style="text-align: right;">137.0</p></td>
<td style="width: 75.7pt;"><p style="text-align: right;">-4.2%</p></td>
</tr>
<tr>
<td style="width: 49.75pt;"><p>OP</p></td>
<td style="width: 72.9pt;"><p style="text-align: right;">29.2</p></td>
<td style="width: 72.9pt;"><p style="text-align: right;">18.1</p></td>
<td style="width: 44.95pt;"><p style="text-align: right;">-38.0%</p></td>
<td style="width: 58.95pt;"><p style="text-align: right;">17.4</p></td>
<td style="width: 75.7pt;"><p style="text-align: right;">4.2%</p></td>
</tr>
<tr>
<td style="width: 49.75pt;"><p>OPM</p></td>
<td style="width: 72.9pt;"><p style="text-align: right;">19.1%</p></td>
<td style="width: 72.9pt;"><p style="text-align: right;">13.8%</p></td>
<td style="width: 44.95pt;"><p> </p></td>
<td style="width: 58.95pt;"><p style="text-align: right;">12.7%</p></td>
<td style="width: 75.7pt;"><p> </p></td>
</tr>
</tbody></table><div class="content-caption"><em>Source: Company disclosures, CapIQ</em></div><p>The decline in revenue was mainly due to the sharp decline in Terumo’s largest segment, cardiac and vascular.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/151/551/original/image_21426346931596998931586.png?1596998934" class="editor-image img-responsive" data-smartkarma-image-id="151551"></figure><div class="content-caption"><em>Source: Company disclosures</em></div>

Terumo reported its 1QFY03/2021 results on Thursday (06th August 2020) which saw both revenue and operating profit declining YoY by 14% and 38% respectively. Although revenues from the cardiac and vascular segment and general hospital segment declined, the blood and cell technology segment managed to grow its revenue by a marginal 2% YoY.The reported revenue was 4.2% below consensus estimates, however, the company managed to beat consensus on operating profit by 4.2% during the quarter.

JPY (bn)
1QFY03/2020
1QFY03/2021
% YoY
Consensus
Actual v Consensus


Revenue
152.5
131.3
-13.9%
137.0
-4.2%


OP
29.2
18.1
-38.0%
17.4
4.2%


OPM
19.1%
13.8%
 
12.7%
 

Source: Company disclosures, CapIQThe decline in revenue was mainly due to the sharp decline in Terumo’s largest segment, cardiac and vascular.Source: Company disclosures

Terumo: Pandemic Impacts Q1 but Recovery Is Expected in the 2nd Half

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Thematic (Sector/Industry)

<p style="text-align: center;"><strong>•BEST &amp; WORST 6th AUGUST •</strong></p><p style="text-align: left;">The 'best' and 'worst' from yesterday's large-cap announcements came from <a href="https://www.smartkarma.com/entities/square-enix-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15003:1" rel="noopener">Square Enix (9684 JP)</a> and <a href="https://www.smartkarma.com/entities/shiseido-company-limited" target="_blank" data-smartkarma-citation="entities:5718:1" rel="noopener">Shiseido (4911 JP)</a>, respectively - the latter as flagged in <a href="https://www.smartkarma.com/insights/shiseido-4911-jp-downward-revision-imminent" target="_blank" data-smartkarma-citation="insights:41874" rel="noopener">Downward Revision Imminent</a>  More extensive coverage follows in the DETAIL section below.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/151/081/original/2020-08-07_05-30-09.png?1596745840" class="editor-image img-responsive" data-smartkarma-image-id="151081"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/151/082/original/2020-08-07_05-31-27.png?1596745907" class="editor-image img-responsive" data-smartkarma-image-id="151082"></figure><div style="text-align: center;" class="content-caption">Source • Japan Analytics<hr>
</div><p></p><div><p style="text-align: center;"><strong>DAILY STATS</strong></p></div><hr><div><p><strong>PERCENTAGES</strong> -<strong> 64%</strong> of quarterly results,  <strong>78%</strong> of annual forecasts/revisions and<strong> 79%</strong> of interim forecasts have negative Scores and <strong>28%</strong> of companies reporting lost money for the quarter.</p></div><hr><div><p style="text-align: center;"><strong>332 Quarterly Results</strong></p></div><div><ul>
<li>
<strong>Results Score: </strong>29% Positive / 7% Neutral / 64% Negative</li>
<li>
<strong>Average Results Score Change:</strong> -3.0 points</li>
<li>
<strong>Average % Change in Revenue: </strong>-9.7% Quarter YoY / -3.5% Rolling TTM YoY </li>
<li>
<strong>Average Operating Profit Margin Change:</strong> -0.7 ppt</li>
<li>
<strong>Percentage Making Quarterly Losses:</strong> 28%</li>
</ul></div><hr><div><p style="text-align: center;"><strong>121 Annual • 76 Interim Forecasts/Revisions</strong></p></div><div><ul>
<li>
<strong>Annual Forecast/Revision Score:</strong> 17% Positive / 6% Neutral / 78% Negative</li>
<li>
<strong>Interim Forecast/Revision Score Change:</strong> 17% Positive / 4% Neutral / 79% Negative</li>
<li>
<strong>Average Forecast/Revision Score Change:</strong> -11.2 points</li>
</ul></div>

•BEST &amp; WORST 6th AUGUST •The 'best' and 'worst' from yesterday's large-cap announcements came from Square Enix (9684 JP) and Shiseido (4911 JP), respectively - the latter as flagged in Downward Revision Imminent  More extensive coverage follows in the DETAIL section below.Source • Japan Analytics
DAILY STATSPERCENTAGES - 64% of quarterly results,  78% of annual forecasts/revisions and 79% of interim forecasts have negative Scores and 28% of companies reporting lost money for the quarter.332 Quarterly Results

Results Score: 29% Positive / 7% Neutral / 64% Negative

Average Results Score Change: -3.0 points

Average % Change in Revenue: -9.7% Quarter YoY / -3.5% Rolling TTM YoY 

Average Operating Profit Margin Change: -0.7 ppt

Percentage Making Quarterly Losses: 28%
121 Annual • 76 Interim Forecasts/Revisions

Annual Forecast/Revision Score: 17% Positive / 6% Neutral / 78% Negative

Interim Forecast/Revision Score Change: 17% Positive / 4% Neutral / 79% Negative

Average Forecast/Revision Score Change: -11.2 points


🇯🇵 JAPAN • Results & Revisions 6th August - Nintendo, Yamada Denki, Terumo, Toyota, Shiseido

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/134/299/original/2020-05-19_06-46-49.png?1589838438" class="editor-image img-responsive" data-smartkarma-image-id="134299"></figure><div class="content-caption">Source • Japan Analytics</div><div><p>As this quarter's results and revisions announcements wind down, in the<strong> DETAIL</strong> below, we shall review Monday's updates:-</p></div><div><ul>
<li>The balance between positive/neutral/negative of the <strong>50</strong> results announcements was <strong>23:2:25</strong>. </li>
<li>For the <strong>24</strong> revisions/initial forecasts, the split was <strong>6:0:18</strong>, and the average Revision Score was <strong>-6.1</strong>. </li>
</ul></div>

Source • Japan AnalyticsAs this quarter's results and revisions announcements wind down, in the DETAIL below, we shall review Monday's updates:-
The balance between positive/neutral/negative of the 50 results announcements was 23:2:25. 
For the 24 revisions/initial forecasts, the split was 6:0:18, and the average Revision Score was -6.1. 


🇯🇵 JAPAN • Results & Revisions 18th May - Panasonic, Komatsu, Terumo, Sundrug & The Corona Valley

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/133/748/original/2020-05-16_08-18-15.png?1589584720" class="editor-image img-responsive" data-smartkarma-image-id="133748"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>"WORSENING"</strong> - The Cabinet Office updated their Business Condition Leading Indicator for March this week, confirming the trend already apparent from our Results &amp; Revision Score data series. The correlation between the series is 0.80, with the only significant deviation occurring in 2016, Coincident conditions are assessed as "worsening" wording that is unchanged since August 2019. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/133/788/original/2020-05-16_12-10-50.png?1589598664" class="editor-image img-responsive" data-smartkarma-image-id="133788"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>DECOMPOSED</strong> - Our Score is decomposed into a Results Score, an Annual Forecast/Revision Score and an Interim Forecast Revision Score.  The last two are ten-year lows; the first should join them next week. A notable limiting factor is the shortage of forecasts being made. Without this reticence, both forecast Scores would be considerably lower.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/133/795/original/2020-05-16_12-47-02.png?1589600841" class="editor-image img-responsive" data-smartkarma-image-id="133795"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>RETICENCE</strong> - 77% by number and 81% by value of companies with year-ends in  March, June, September, or December have already reported. Of these 2,464 companies representing ¥438 trillion of market cap, just 1,119 have issued annual forecasts for the current year, and 583 have made interim forecasts. Of all listed companies, one-third by market value are currently unable to see ahead twelve months and only 16% by value and 23% by number are prepared to look forward four-and-a-half months. This unusual degree of reticence leaves the sell-side without their regular anchoring comfort blanket.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/133/802/original/2020-05-16_13-27-57.png?1589605282" class="editor-image img-responsive" data-smartkarma-image-id="133802"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>NOT CHEAP</strong> -  Even allowing for the lack of a full complement of forecasts, the market's forward multiple is at a five-year high with Net Income expected to reach levels first seen in 2015, 37% below the December 2018 peak. The ten-year peak trailing multiple was 29 on aggregate Net Income of  ¥14.6 trillion, which was ten times the 2009 trough.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/133/801/original/2020-05-16_14-00-16.png?1589605245" class="editor-image img-responsive" data-smartkarma-image-id="133801"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>FIDDLING ABOUT</strong> - The Bank of Japan has reduced the amount of its daily ETF program for a second time; however, intervened for the last three days of last week seemingly intent on keeping the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> above 20,000. The cumulative total of BoJ purchases represents over 5% of the Total Market Value.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/133/884/original/2020-05-17_12-54-22.png?1589687679" class="editor-image img-responsive" data-smartkarma-image-id="133884"></figure><div class="content-caption">Source • Japan Analytics</div><p>In the <strong>DETAIL</strong> below, we review some market data trends, look at the Results &amp; Revision Score trends by Sector (a 15-year timeline is shown above), apply some KPMG 'recovery analysis' to Japan and look at Friday's results and revisions.</p><div><ul>
<li>The balance between positive/neutral/negative of the <strong>490</strong> results announcements was <strong>206:45:239</strong>. The average change in Results Score was <strong>-0.2</strong>.</li>
<li>For the <strong>205</strong> revisions/initial forecasts, the split was <strong>49:10:146</strong>, and the average Revision Score was <strong>-7.5</strong>. Of the <strong>364</strong> companies declaring full-year results, <strong>47%</strong> made forecasts for the current year.</li>
<li>Fifty-one will announce today, the largest of which by market capitalisation will be <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a>, <a href="https://www.smartkarma.com/entities/terumo-corp" target="_blank" data-smartkarma-citation="entities:6708:1" rel="noopener">Terumo Corp (4543 JP)</a>, and <a href="https://www.smartkarma.com/entities/komatsu-ltd" target="_blank" data-smartkarma-citation="entities:8416:1" rel="noopener">Komatsu (6301 JP).</a>
</li>
</ul></div>

Source • Japan Analytics"WORSENING" - The Cabinet Office updated their Business Condition Leading Indicator for March this week, confirming the trend already apparent from our Results &amp; Revision Score data series. The correlation between the series is 0.80, with the only significant deviation occurring in 2016, Coincident conditions are assessed as "worsening" wording that is unchanged since August 2019. Source • Japan AnalyticsDECOMPOSED - Our Score is decomposed into a Results Score, an Annual Forecast/Revision Score and an Interim Forecast Revision Score.  The last two are ten-year lows; the first should join them next week. A notable limiting factor is the shortage of forecasts being made. Without this reticence, both forecast Scores would be considerably lower.Source • Japan AnalyticsRETICENCE - 77% by number and 81% by value of companies with year-ends in  March, June, September, or December have already reported. Of these 2,464 companies representing ¥438 trillion of market cap, just 1,119 have issued annual forecasts for the current year, and 583 have made interim forecasts. Of all listed companies, one-third by market value are currently unable to see ahead twelve months and only 16% by value and 23% by number are prepared to look forward four-and-a-half months. This unusual degree of reticence leaves the sell-side without their regular anchoring comfort blanket.Source • Japan AnalyticsNOT CHEAP -  Even allowing for the lack of a full complement of forecasts, the market's forward multiple is at a five-year high with Net Income expected to reach levels first seen in 2015, 37% below the December 2018 peak. The ten-year peak trailing multiple was 29 on aggregate Net Income of  ¥14.6 trillion, which was ten times the 2009 trough.Source • Japan AnalyticsFIDDLING ABOUT - The Bank of Japan has reduced the amount of its daily ETF program for a second time; however, intervened for the last three days of last week seemingly intent on keeping the Nikkei 225 (NKY INDEX) above 20,000. The cumulative total of BoJ purchases represents over 5% of the Total Market Value.Source • Japan AnalyticsIn the DETAIL below, we review some market data trends, look at the Results &amp; Revision Score trends by Sector (a 15-year timeline is shown above), apply some KPMG 'recovery analysis' to Japan and look at Friday's results and revisions.
The balance between positive/neutral/negative of the 490 results announcements was 206:45:239. The average change in Results Score was -0.2.
For the 205 revisions/initial forecasts, the split was 49:10:146, and the average Revision Score was -7.5. Of the 364 companies declaring full-year results, 47% made forecasts for the current year.
Fifty-one will announce today, the largest of which by market capitalisation will be Softbank Group (9984 JP), Terumo Corp (4543 JP), and Komatsu (6301 JP).



🇯🇵 JAPAN MARKET UPDATE 18th May - "Worsening"

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Quantitative Analysis

<p>Three days ago I wrote <a href="https://www.smartkarma.com/insights/boj-etf-buying-update" target="_blank" data-smartkarma-citation="insights:38783" rel="noopener">BOJ ETF Buying Update</a> which described the impact of the BOJ buying ETFs on the underlying constituents. </p><p>This morning, the BOJ made a small clarification, or possibly amendment, to their purchasing plan. </p><p>This changes the daily purchasing constituent basket slightly, favouring the Nikkei 225 vs what the market <em>probably</em> thought it was doing since mid-March. </p><p>A quick refresher course on BOJ ETF buying constituency is below.</p>

Three days ago I wrote BOJ ETF Buying Update which described the impact of the BOJ buying ETFs on the underlying constituents. This morning, the BOJ made a small clarification, or possibly amendment, to their purchasing plan. This changes the daily purchasing constituent basket slightly, favouring the Nikkei 225 vs what the market probably thought it was doing since mid-March. A quick refresher course on BOJ ETF buying constituency is below.

Japan

Terumo Corporation is a manufacturer and supplier of pharmaceuticals and medical tools and equipment. The Company's products include health foods, transfusion and infusion equipment, disposable medical supply, clinical testing systems, artificial organs, and electronic thermometers. Terumo markets the products through its subsidiaries and sales offices in the US, Europe, and Asia.

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Terumo (4543 JT)

Terumo: Pandemic Impacts Q1 but Recovery Is Expected in the 2nd Half

Terumo reported its 1QFY03/2021 results on Thursday (06th August 2020) which saw both revenue and operating profit declining YoY by 14% and 38%...

Shifara Samsudeen, ACMA, CGMA

🇯🇵 JAPAN • Results & Revisions 6th August - Nintendo, Yamada Denki, Terumo, Toyota, Shiseido

•BEST & WORST 6th AUGUST •The 'best' and 'worst' from yesterday's large-cap announcements came from Square Enix (9684 JP) and Shiseido (4911...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 18th May - Panasonic, Komatsu, Terumo, Sundrug & The Corona Valley

As this quarter's results and revisions announcements wind down, in the DETAIL below, we shall review Monday's updates:- The balance between...

Campbell Gunn

🇯🇵 JAPAN MARKET UPDATE 18th May - "Worsening"

"WORSENING" - The Cabinet Office updated their Business Condition Leading Indicator for March this week, confirming the trend already apparent from...

Campbell Gunn

BOJ ETF Buying Composition Clarified

Three days ago I wrote BOJ ETF Buying Update which described the impact of the BOJ buying ETFs on the underlying constituents. This morning, the...

Travis Lundy

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