Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

On 19 February, we published an insight on the just-announced news of small cap <a href="https://www.smartkarma.com/entities/nippon-rietec-co-ltd" target="_blank" data-smartkarma-citation="entities:20794:1" rel="noopener">Nippon Rietec (1938 JP)</a>'s ascension to the TSE's First Section. That was called <a href="https://www.smartkarma.com/insights/nippon-rietec-1938-super-interesting-events-unfolding" target="_blank" data-smartkarma-citation="insights:36778" rel="noopener">Nippon Rietec (1938) - SUPER Interesting Events Unfolding</a>. That may have sounded a bit optimistic. Nippon Rietec is a 60+ year-old company which many investors would consider boring. They are in the railway electrical equipment and electrical construction business. If it has to do with trains, and electricity, they do it. They do signals, signal monitoring systems, installation of signals, testing systems, electronic gates on platforms and ticket readers, communications systems, electrical transformer stations, overhead electrical lines, electrification of non-electric lines, transmission lines, and all manner of construction around train lines (platform construction, maintenance, enhancement, protective fences, safety barriers, signage, etc. Trains R Us.The three years of trading (weekly data) until that point were as in the chart below.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/130/223/original/Screenshot%202020-04-28%20at%207.15.30%20PM.png?1588072569" class="editor-image img-responsive" data-smartkarma-image-id="130223"></figure><div class="content-caption">source: tradingview.com, Quiddity</div>But the shareholder structure was such that despite a huge 1 million share offering launched at the same time, there could easily be a squeeze.And there was.The daily chart below shows the announcement, the COVID-19 Global Market Panic, and then the Return To Risk starting in the last week of March. <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/130/233/original/Screenshot%202020-04-28%20at%208.08.26%20PM.png?1588075796" class="editor-image img-responsive" data-smartkarma-image-id="130233"></figure><div class="content-caption">source: tradingview.com, Quiddity</div>From the ¥1660 open the day following my first insight until TOPIX inclusion today, the total return was 39.9% against total return of TOPIX at -13.0% for the same period.That leaves us at crossroads for the stock. More discussion below.

On 19 February, we published an insight on the just-announced news of small cap Nippon Rietec (1938 JP)'s ascension to the TSE's First Section. That was called Nippon Rietec (1938) - SUPER Interesting Events Unfolding. That may have sounded a bit optimistic. Nippon Rietec is a 60+ year-old company which many investors would consider boring. They are in the railway electrical equipment and electrical construction business. If it has to do with trains, and electricity, they do it. They do signals, signal monitoring systems, installation of signals, testing systems, electronic gates on platforms and ticket readers, communications systems, electrical transformer stations, overhead electrical lines, electrification of non-electric lines, transmission lines, and all manner of construction around train lines (platform construction, maintenance, enhancement, protective fences, safety barriers, signage, etc. Trains R Us.The three years of trading (weekly data) until that point were as in the chart below.source: tradingview.com, QuiddityBut the shareholder structure was such that despite a huge 1 million share offering launched at the same time, there could easily be a squeeze.And there was.The daily chart below shows the announcement, the COVID-19 Global Market Panic, and then the Return To Risk starting in the last week of March. source: tradingview.com, QuiddityFrom the ¥1660 open the day following my first insight until TOPIX inclusion today, the total return was 39.9% against total return of TOPIX at -13.0% for the same period.That leaves us at crossroads for the stock. More discussion below.

Nippon Rietec's (1938) Gangbusters TOPIX Inclusion

Japan

TOTETSU KOGYO CO., LTD. constructs and maintains railways for East Japan Railway Co..  The Company performs civil engineering works for bridges, tunnels, subways, and highways.  Totetsu Kogyo also builds commercial, institutional, and residential buildings.  Additionally, the company develops real estate for residential areas.

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Totetsu Kogyo (1835 JP)

Nippon Rietec's (1938) Gangbusters TOPIX Inclusion

On 19 February, we published an insight on the just-announced news of small cap Nippon Rietec (1938 JP)'s ascension to the TSE's First Section....

Travis Lundy

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