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

<ul>
<li>Renesas’ investor day today focused on providing more details on existing themes such as the progress of synergies from Dialog. </li>
<li>The strong overall growth outlook and progress offering integrated solutions was also emphasised. </li>
<li>However, what we found most interesting was some of their commentary on RISC-V developments.</li>
</ul>


Renesas’ investor day today focused on providing more details on existing themes such as the progress of synergies from Dialog. 
The strong overall growth outlook and progress offering integrated solutions was also emphasised. 
However, what we found most interesting was some of their commentary on RISC-V developments.


Renesas – Synergies Outperform and Some Potentially Bad News for Arm

Event-Driven

<ul>
<li>Yesterday <a href="https://www.bloomberg.com/news/articles/2022-02-27/toshiba-ceo-says-going-private-too-risky-as-activists-seek-sale" target="_blank" rel="noopener">Bloomberg published an interview</a> with Toshiba CEO Satoshi Tsunakawa where he effectively said a privatisation was not going to happen. </li>
<li>Today, Toshiba announced that Tsunakawa and his deputy, Mamoru Hatazawa would be resigning effective immediately. </li>
<li>What an interesting coincidence… one which could make shorting Toshiba quite attractive.</li>
</ul>


Yesterday Bloomberg published an interview with Toshiba CEO Satoshi Tsunakawa where he effectively said a privatisation was not going to happen. 
Today, Toshiba announced that Tsunakawa and his deputy, Mamoru Hatazawa would be resigning effective immediately. 
What an interesting coincidence… one which could make shorting Toshiba quite attractive.


Toshiba – Privatisation Rebuttal and Then a Change in CEO…

Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

<ul>
<li>Based on following the company for 25 years, I agree with Mio Kato: I do not think Rohm would or should acquire Toshiba's power semiconductor operations.</li>
<li>It would violate Rohm's commitment to a sound financial structure and saddle it with an integration problem that might never be solved.</li>
<li>Far better to keep working with the NEDO power device consortium while continuing to expand and improve its own power device business.</li>
</ul>


Based on following the company for 25 years, I agree with Mio Kato: I do not think Rohm would or should acquire Toshiba's power semiconductor operations.
It would violate Rohm's commitment to a sound financial structure and saddle it with an integration problem that might never be solved.
Far better to keep working with the NEDO power device consortium while continuing to expand and improve its own power device business.


Rohm (6963 JP): Probably Won't Buy Toshiba's Electronic Devices Business

<ul>
<li>We have made no secret of the fact that we consider Toshiba’s restructuring plans to be unspectacular. </li>
<li>Initially we saw no reason to separate the infrastructure business and saleable assets but with  that issue addressed it is the position of the devices business which concerns us. </li>
<li>This is because we feel it is rather undersized to stand on its own two feet… but we increasingly feel that Renesas could be the ideal home for the unit.</li>
</ul>


We have made no secret of the fact that we consider Toshiba’s restructuring plans to be unspectacular. 
Initially we saw no reason to separate the infrastructure business and saleable assets but with  that issue addressed it is the position of the devices business which concerns us. 
This is because we feel it is rather undersized to stand on its own two feet… but we increasingly feel that Renesas could be the ideal home for the unit.


Toshiba – Why Renesas Might Be a Better Option for the Devices Business than an IPO

<ul>
<li>Toshiba’s 3Q results were relatively strong with revenue beating by 2.8% and OP beating by 18.3%. </li>
<li>Given typical profit patterns and Toshiba’s new 4Q revenue guidance, FY OP would likely be close to ¥190bn so the downward revision from ¥170bn to ¥155bn looks unnecessary.</li>
<li>Toshiba also set March 24th as the date for its EGM to vote on the two-way split, simultaneously recommending against 3D’s proposals.</li>
</ul>


Toshiba’s 3Q results were relatively strong with revenue beating by 2.8% and OP beating by 18.3%. 
Given typical profit patterns and Toshiba’s new 4Q revenue guidance, FY OP would likely be close to ¥190bn so the downward revision from ¥170bn to ¥155bn looks unnecessary.
Toshiba also set March 24th as the date for its EGM to vote on the two-way split, simultaneously recommending against 3D’s proposals.


Toshiba – Decent 3Q Means Downward Revision Was Probably Unnecessary

Japan

Toshiba Corporation manufactures and markets electrical and electronic products. The Company's products include digital products such as PCs and televisions, NAND flash memories, and system LSIs (large-scale integrated), as well as social infrastructures such as power generators, medical equipment, and home appliances.

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Toshiba Corp (6502 JP)

Renesas – Synergies Outperform and Some Potentially Bad News for Arm

Renesas’ investor day today focused on providing more details on existing themes such as the progress of synergies from Dialog but what we found...

Mio Kato

Toshiba – Privatisation Rebuttal and Then a Change in CEO…

After downplaying prospects for a privatisation in a Bloomberg interview, CEO Tsunakawa just resigned. That is an interesting coincidence… one...

Mio Kato

Rohm (6963 JP): Probably Won't Buy Toshiba's Electronic Devices Business

Rohm will probably not acquire Toshiba's power device business. Instead, it will keep working with NEDO to expand its own capabilities. Down 24%...

Scott Foster

Toshiba – Why Renesas Might Be a Better Option for the Devices Business than an IPO

We believe a listing of Toshiba's device business would not create an especially attractive security for investors and that a sale to a domestic...

Mio Kato

Toshiba – Decent 3Q Means Downward Revision Was Probably Unnecessary

Toshiba’s 3Q results were relatively strong with revenue beating by 2.8% and OP beating by 18.3%. Toshiba also set March 24th as the date for its EGM.

Mio Kato

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