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

<p>There has been a lot of newsprint lately regarding Apple seeking partners to tie-up with to produce EVs. Bloomberg reports discussion with at least six automakers including Hyundai and Japanese manufacturers, though timelines for launch are still far out at about five years. Bloomberg’s latest report suggests that <a href="https://www.bloomberg.com/news/articles/2021-02-05/apple-talks-with-hyundai-kia-on-electric-car-paused-recently" target="_blank" rel="noopener">talks with Hyundai have been paused</a> so the question is whether one of the Japanese automakers might step in instead.</p>

There has been a lot of newsprint lately regarding Apple seeking partners to tie-up with to produce EVs. Bloomberg reports discussion with at least six automakers including Hyundai and Japanese manufacturers, though timelines for launch are still far out at about five years. Bloomberg’s latest report suggests that talks with Hyundai have been paused so the question is whether one of the Japanese automakers might step in instead.

Does an Apple Tie-Up Make Sense for J-Autos?

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<div>
<p>This week in StubWorld ...</p>
</div>
<div>
<div>
<div class="content-highlight">
<p>Ahead of the three-year anniversary lock-up expiring next month, enabling <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a>/<a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> to sell more shares of <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>,  Naspers' look-thru discount of 55% compares with 34% at the time of the Prosus spin-off in September 2019. </p>
</div>
</div>
</div>
<div>
<p>Preceding my comments on Naspers/Prosus/Tencent <em>and </em><a href="https://www.smartkarma.com/entities/pccw-ltd" target="_blank" data-smartkarma-citation="entities:873:1" rel="noopener">PCCW Ltd (8 HK)</a>, are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
</div>
<div>
<div>
<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
</div>
</div>
<div>
<p>As always, more below the fold.</p>
</div>


This week in StubWorld ...




Ahead of the three-year anniversary lock-up expiring next month, enabling Prosus (PRX NA)/Naspers (NPN SJ) to sell more shares of Tencent Holdings (700 HK),  Naspers' look-thru discount of 55% compares with 34% at the time of the Prosus spin-off in September 2019. 




Preceding my comments on Naspers/Prosus/Tencent and PCCW Ltd (8 HK), are the weekly setup/unwind tables for Asia-Pacific Holdcos.



These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.



As always, more below the fold.


StubWorld: Naspers' Unsustainable Look-Through

<p>Mazda is up 17% after generating ¥844bn in revenue (consensus ¥833bn) and ¥20.9bn in OP (consensus ¥8.5bn) in 3Q. Guidance was revised to breakeven vs. consensus expectations for a ¥21.2bn loss. These were good results but the size of this move shows that sentiment had become far too negative on the company. We believe that will continue to change.</p>

Mazda is up 17% after generating ¥844bn in revenue (consensus ¥833bn) and ¥20.9bn in OP (consensus ¥8.5bn) in 3Q. Guidance was revised to breakeven vs. consensus expectations for a ¥21.2bn loss. These were good results but the size of this move shows that sentiment had become far too negative on the company. We believe that will continue to change.

Mazda – To Chase or Not to Chase? Zoom Zoom Goes 2021 Conviction Pick

Event-Driven

Brilliance China Automotive / Event-Driven

<div>
<p>Last September, Reuters <a href="https://www.reuters.com/article/brilliance-china-take-private-idUSKCN26F0FF" target="_blank" rel="noopener">reported</a> that state-controlled Liaoning Provincial Transportation Investment Group (LPTIG),  was planning to lead a consortium of Chinese investors to take PRC-automaker (&amp; BMW's main Chinese JV partner) <a href="https://www.smartkarma.com/entities/brilliance-china-automotive" target="_blank" data-smartkarma-citation="entities:469:1" rel="noopener">Brilliance China Automotive (1114 HK)</a> private. No deal transpired, allegedly due to "<em>differences in valuations and financing difficulties</em>".</p>
<p>A possible take-private transaction is <a href="https://www.reuters.com/article/us-faw-group-brilliance-china-m-a-exclus/exclusive-chinas-faw-considers-acquiring-bmw-partner-brilliance-for-about-7-2-billion-sources-idUSKBN2A30I5?il=0" target="_blank" rel="noopener">again in the press</a>, this time from state-owned <a href="https://www.smartkarma.com/entities/faw-car-company-limited-a" target="_blank" data-smartkarma-citation="entities:6497:1" rel="noopener">Faw Car Company Limited A (000800 CH)</a>, China’s No. 2 automaker.</p>
<p>Reportedly FAW will acquire the 30.43% stake held by Huachen Automotive Group, Liaoning’s state asset regulator, and 11.89% from LPTIG, triggering a Mandatory General Offer (MGO). The Offer price is rumoured to be HK$11/share, a 73% premium to the undisturbed price. </p>
<p>The on-again, off-again, transaction comes amid HAG's <a href="https://www.scmp.com/business/companies/article/3107281/parent-bmws-chinese-partner-defaults-bond-declining-car-sales" target="_blank" rel="noopener">inability</a> to repay a corporate bond that matured in October last year, culminating in the group <a href="https://www.shine.cn/biz/auto/2011210271/" target="_blank" rel="noopener">entering</a> a bankruptcy restructuring the following month.</p>
<p>Brilliance has <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0203/2021020300609.pdf" target="_blank" rel="noopener">announced</a> it has no knowledge of the potential acquisition of shares and the privatisation of the company.</p>
</div>
<div>
<p>As always, more below the fold.</p>
<hr>
<p><em>Concerning the title, one of the automotive world’s most distinctive features, that immediately identifies a BMW as being a BMW, is its ‘kidney grille’.</em></p>
</div>


Last September, Reuters reported that state-controlled Liaoning Provincial Transportation Investment Group (LPTIG),  was planning to lead a consortium of Chinese investors to take PRC-automaker (&amp; BMW's main Chinese JV partner) Brilliance China Automotive (1114 HK) private. No deal transpired, allegedly due to "differences in valuations and financing difficulties".
A possible take-private transaction is again in the press, this time from state-owned Faw Car Company Limited A (000800 CH), China’s No. 2 automaker.
Reportedly FAW will acquire the 30.43% stake held by Huachen Automotive Group, Liaoning’s state asset regulator, and 11.89% from LPTIG, triggering a Mandatory General Offer (MGO). The Offer price is rumoured to be HK$11/share, a 73% premium to the undisturbed price. 
The on-again, off-again, transaction comes amid HAG's inability to repay a corporate bond that matured in October last year, culminating in the group entering a bankruptcy restructuring the following month.
Brilliance has announced it has no knowledge of the potential acquisition of shares and the privatisation of the company.


As always, more below the fold.

Concerning the title, one of the automotive world’s most distinctive features, that immediately identifies a BMW as being a BMW, is its ‘kidney grille’.


Brilliance China (1114 HK): Grilling Kidneys

Travis Lundy

<p>With one day to go until the annual, but this time/year delayed, TOPIX FFW Rebalance, which should see up to $32bn in two-way flow, it appears as if those who put on an anticipatory trade prior to the actual announcement on 8 January have started to exit. </p><p>This is as I had warned in <a href="https://www.smartkarma.com/insights/the-delayed-topix-ffw-rebalance-32bn-to-trade" target="_blank" data-smartkarma-citation="insights:46902" rel="noopener">The Delayed TOPIX FFW Rebalance: $32bn To Trade</a>. </p><p>More below the fold. </p>

With one day to go until the annual, but this time/year delayed, TOPIX FFW Rebalance, which should see up to $32bn in two-way flow, it appears as if those who put on an anticipatory trade prior to the actual announcement on 8 January have started to exit. This is as I had warned in The Delayed TOPIX FFW Rebalance: $32bn To Trade. More below the fold. 

TOPIX FFW Rebal: Proceeding But Not Ahead of Plan

Japan

Toyota Motor Corporation manufactures, sells, leases, and repairs passenger cars, trucks, buses, and their related parts worldwide. The Company also operates financing services through their subsidiaries. Toyota Motor builds homes, produces pleasure boats, and develops intelligent transportation systems including radar cruise control and electronic toll collection systems.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Toyota Motor Corp Spon Adr (TM US)

Does an Apple Tie-Up Make Sense for J-Autos?

In the search for potential suitors for Apple's entry into the EV space we examine the likelihood of the major Japanese auto manufacturers...

Mio Kato

StubWorld: Naspers' Unsustainable Look-Through

Long Naspers vs Tencent, is the obvious trade at the current look-through value. IF Naspers+Prosus decides to sell some more Tencent, expect...

David Blennerhassett

Mazda – To Chase or Not to Chase? Zoom Zoom Goes 2021 Conviction Pick

Mazda is up 17% after delivering good but not stunning results, illustrating how excessively negative sentiment in the sector had become. Zoom Zoom

Mio Kato

Brilliance China (1114 HK): Grilling Kidneys

Brilliance is cheap with respect to peers, ostensibly held back by HAG's financial concerns. Brilliance is even cheaper when taking into account...

David Blennerhassett

TOPIX FFW Rebal: Proceeding But Not Ahead of Plan

TOPIX FFW Rebalance is 28 January at the close. $32 billion in two-way flows with some big names to trade. The Top 50 Buys have seen, on average,...

Travis Lundy

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)