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>Toyota blew out 3Q earnings as revenue of ¥8,150bn (consensus ¥7,577bn) and OP ¥988bn (consensus ¥567bn) came in extremely strong. OP and OPM hit their all-time highs since FY03. Toyota continues to go from strength to strength and the 8% YoY growth in revenue and 12.1% OPM posted this quarter show that Toyota is clearly separating from the pack.</p>

Toyota blew out 3Q earnings as revenue of ¥8,150bn (consensus ¥7,577bn) and OP ¥988bn (consensus ¥567bn) came in extremely strong. OP and OPM hit their all-time highs since FY03. Toyota continues to go from strength to strength and the 8% YoY growth in revenue and 12.1% OPM posted this quarter show that Toyota is clearly separating from the pack.

<p><a href="https://www.bloomberg.com/news/articles/2021-02-09/toyota-autonomous-vehicle-startup-aurora-enter-self-driving-cars-partnership" target="_blank" rel="noopener">Toyota and Denso have reportedly struck a long-term partnership with key autonomous technology startup Aurora Innovation</a>. Part of our core thesis for automakers is that increasingly confident shifts into electrified technologies and later autonomous would reveal the immaturity and deficiencies of EV makers, popping this bubble. We do not expect this to happen overnight but there is one more step being taken here to shine light on the underlying reality in the space.</p>

Toyota and Denso have reportedly struck a long-term partnership with key autonomous technology startup Aurora Innovation. Part of our core thesis for automakers is that increasingly confident shifts into electrified technologies and later autonomous would reveal the immaturity and deficiencies of EV makers, popping this bubble. We do not expect this to happen overnight but there is one more step being taken here to shine light on the underlying reality in the space.

Toyota – Strengthening Autonomous with Aurora Partnership

<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

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<p>This week in StubWorld ...</p>
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<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>
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<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>
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<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>
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<p>As always, more below the fold.</p>
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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

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.

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Toyota Motor (7203 JP)

Toyota – Real Strength Shining Through

Toyota posted extremely strong results in 3Q posting all-time quarterly highs for OP and OPM despite the challenging environment. We believe this...

Mio Kato

Toyota – Strengthening Autonomous with Aurora Partnership

A partnership between Toyota and Denso and autonomous startup Aurora Innovation continues the trend of traditional automakers partnering with tech...

Mio Kato

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

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