'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)

<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.

Macroeconomics

<p>The BOJ lifted its daily ETF purchase rate on 2 March to a then-record ¥100bn in response to market weakness the previous week and Monday morning in Asia time. </p><p>Two weeks later, true global central bank easing activity was launched. On 16 March, the BOJ announced <em>Enhancement of Monetary Easing in Light of the Impact of the Outbreak of the Novel Coronavirus (COVID-19).</em></p><p>As discussed in <a href="https://www.smartkarma.com/insights/japan-delta-i-the-boj-ups-etf-buying" target="_blank" data-smartkarma-citation="insights:37528" rel="noopener">JAPAN DELTA I - The BOJ Ups ETF Buying</a> this meant the BOJ would lift its ETF buying rate from ¥6 trillion a year to ¥12 trillion a year, including ¥11.7 trillion of purchases of TOPIX, Nikkei 225, and JPX Nikkei 400 ETFs.</p><p>In the six weeks since then, the BOJ has purchased ¥2.0038 trillion in ETFs, and has lifted its 3-month annualised purchase rate from ¥4.8trln as of the end of February to ¥13.5trln as of the end of last week. This stretches the concept of "upper limit on annualised purchases" but the BOJ has not shown reticence to buy on weakness. </p><p>An update below.</p>

The BOJ lifted its daily ETF purchase rate on 2 March to a then-record ¥100bn in response to market weakness the previous week and Monday morning in Asia time. Two weeks later, true global central bank easing activity was launched. On 16 March, the BOJ announced Enhancement of Monetary Easing in Light of the Impact of the Outbreak of the Novel Coronavirus (COVID-19).As discussed in JAPAN DELTA I - The BOJ Ups ETF Buying this meant the BOJ would lift its ETF buying rate from ¥6 trillion a year to ¥12 trillion a year, including ¥11.7 trillion of purchases of TOPIX, Nikkei 225, and JPX Nikkei 400 ETFs.In the six weeks since then, the BOJ has purchased ¥2.0038 trillion in ETFs, and has lifted its 3-month annualised purchase rate from ¥4.8trln as of the end of February to ¥13.5trln as of the end of last week. This stretches the concept of "upper limit on annualised purchases" but the BOJ has not shown reticence to buy on weakness. An update below.

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/terumo-corp" target="_blank" data-smartkarma-citation="entities:6708:1" rel="noopener">Terumo Corp (4543 JP)</a> provides innovative medical solutions through its extensive business portfolio which ranges from vascular intervention and cardio-surgical solutions, blood transfusion and cell therapy technology and other medical products essential for daily clinical practice.</li>
<li>It was reported by several news media outlets that Terumo’s blood purification and oxygenation system has been approved by the US FDA to treat patients with COVID-19.</li>
<li>Nikkei also reported that the Japanese government has decided to provide subsidies to companies that increase production of these heart-lung machines used to treat severe pneumonia in coronavirus infected patients.</li>
<li>In this insight, we discuss the company’s ECMO business alongside its other business segments, outlook and the valuation of the company.</li>
<li>We expect the company’s largest business segment, Cardiac and Vascular to see strong growth over the next couple of years driven by steady growth in demand for cardiac and vascular products globally. At the same time, we expect Terumo’s continued launch of new products to further support the growth of the segment.</li>
<li>We expect Terumo’s other two businesses, Hospital and Blood Company to continue to perform steadily over the forecast period.</li>
</ul>



Terumo Corp (4543 JP) provides innovative medical solutions through its extensive business portfolio which ranges from vascular intervention and cardio-surgical solutions, blood transfusion and cell therapy technology and other medical products essential for daily clinical practice.
It was reported by several news media outlets that Terumo’s blood purification and oxygenation system has been approved by the US FDA to treat patients with COVID-19.
Nikkei also reported that the Japanese government has decided to provide subsidies to companies that increase production of these heart-lung machines used to treat severe pneumonia in coronavirus infected patients.
In this insight, we discuss the company’s ECMO business alongside its other business segments, outlook and the valuation of the company.
We expect the company’s largest business segment, Cardiac and Vascular to see strong growth over the next couple of years driven by steady growth in demand for cardiac and vascular products globally. At the same time, we expect Terumo’s continued launch of new products to further support the growth of the segment.
We expect Terumo’s other two businesses, Hospital and Blood Company to continue to perform steadily over the forecast period.


Terumo: Not Just an Opportune COVID Play but a Business with Solid Long-Term Prospects

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 Corp (4543 JP)

🇯🇵 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

BOJ ETF Buying Update

The BOJ lifted its daily ETF purchase rate on 2 March to a then-record ¥100bn in response to market weakness the previous week and Monday morning...

Travis Lundy

Terumo: Not Just an Opportune COVID Play but a Business with Solid Long-Term Prospects

Terumo Corp (4543 JP) provides innovative medical solutions through its extensive business portfolio which ranges from vascular intervention and...

Shifara Samsudeen, ACMA, CGMA

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