Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

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>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

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Event-Driven

<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

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>The virtuous cycle of shareholder return commences as <a href="https://www.smartkarma.com/entities/china-mobile-ltd" target="_blank" data-smartkarma-citation="entities:27:1" rel="noopener">China Mobile (941 HK)</a> starts buying its H-shares.</li>
<li>
<a href="https://www.smartkarma.com/entities/suzuki-motor-corp" target="_blank" data-smartkarma-citation="entities:732:1" rel="noopener">Suzuki (7269 JP)</a>'s implied stub is currently around its all-time low, as is the simple ratio. <a href="https://www.smartkarma.com/entities/maruti-suzuki-india-ltd" target="_blank" data-smartkarma-citation="entities:733:1" rel="noopener">Maruti Suzuki (MSIL IN)</a> remains steadfast in its support for hybrid vehicles. That's a liability.</li>
<li>Quarz's intervention in <a href="https://www.smartkarma.com/entities/mapletree-north-asia-commercial-trust" target="_blank" data-smartkarma-citation="entities:5127:1" rel="noopener">Mapletree North Asia Commercial (MAGIC SP)</a> is NOT surprising. They have some past experience complaining about Singaporean REIT mergers and other takeovers. But their analysis is surprising.</li>
</ul>


The virtuous cycle of shareholder return commences as China Mobile (941 HK) starts buying its H-shares.

Suzuki (7269 JP)'s implied stub is currently around its all-time low, as is the simple ratio. Maruti Suzuki (MSIL IN) remains steadfast in its support for hybrid vehicles. That's a liability.
Quarz's intervention in Mapletree North Asia Commercial (MAGIC SP) is NOT surprising. They have some past experience complaining about Singaporean REIT mergers and other takeovers. But their analysis is surprising.


Last Week in Event SPACE: China Mobile, Suzuki, Mapletree Merger, Bapcor, Toyota Industries/Motor

<ul>
<li>Toshiba’s second IR day produced little of extra value as details on its new MTP did not add anything particularly new. </li>
<li>The company did a reasonable job of breaking down sources of growth and technological strengths but there were few immediate growth drivers. </li>
<li>As prospects for strong growth look to be shifting further out an SOTP analysis does not favour Toshiba.</li>
</ul>


Toshiba’s second IR day produced little of extra value as details on its new MTP did not add anything particularly new. 
The company did a reasonable job of breaking down sources of growth and technological strengths but there were few immediate growth drivers. 
As prospects for strong growth look to be shifting further out an SOTP analysis does not favour Toshiba.


Toshiba – Underwhelming MTP With Execution Risk

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)

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

Last Week in Event SPACE: China Mobile, Suzuki, Mapletree Merger, Bapcor, Toyota Industries/Motor

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Toshiba – Underwhelming MTP With Execution Risk

Toshiba’s second IR day produced little of extra value and as prospects for strong growth look to be shifting further out an SOTP analysis does not...

Mio Kato

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