In today’s briefing:
- The Olympus Peer-Relative Crash – Due to ADR Cancellation Overhang?
- Toshiba – Preparing for 2QFY23
- CyberAgent (4751) | World Cup Winners
- CyberAgent 1QFY09/2023: Earnings Miss, Struggling Gaming and Huge FIFA Cost Add to the Woes
- Nidec (6594): A V-Shaped Recovery Cannot Be Taken for Granted
- Nippon Light Metal (5703 JP) Is On The Verge Of Confirming Bullish MT Trend Change
- Maybe There Are Many Companies in Japan that Have the Resources but Neglect Efforts to Increase ROA
The Olympus Peer-Relative Crash – Due to ADR Cancellation Overhang?
- Olympus has been sold down relatively hard in the last couple of months. At the same time, we are at crunch time for the cancellation of the US ADR.
- This may create short-term overhang, but the medium-term overhang from substantial foreign net buying in H1 when USDJPY was going up may be larger.
- This insight looks at the relative performance vs Peers, vs forward earnings expectations, USDJPY, etc.
Toshiba – Preparing for 2QFY23
- We have turned slightly more bearish on Toshiba’s near term fundamental prospects as we now have concerns about the industrial side of its semiconductor business.
- The re-emergence of a WDC-Kioxia deal and the likelihood of a change in BOJ policy make us wonder whether bankers might want to wait a little on financing.
- As such, while recent weakness makes an aggressively negative view difficult we do not feel that upside risks are particularly threatening either.
CyberAgent (4751) | World Cup Winners
- CyberAgent Q1 loss on one-off expenses from World Cup streaming. We see Q1 as a bottom this fiscal year
- Share price already discounted weak FY9/23 guidance last October and focus is now on recovery
- The World Cup was a success for the Japanese National side and for Abema
CyberAgent 1QFY09/2023: Earnings Miss, Struggling Gaming and Huge FIFA Cost Add to the Woes
- CyberAgent Inc (4751 JP) reported 1QFY09/2023 results. Revenue declined 2.1% YoY to JPY167.6bn (vs consensus JPY176.1bn) while OP turned negative JPY1.25bn (vs consensus OP of JPY4.1bn.
- CA’s largest investment to-date was for FIFA 2022 but top line growth has largely been in line with previous quarter. WAU have dropped to pre-FIFA levels.
- Though AbemaTV’s monetisation strategy seems to work, the growth prospects for other two segments are concerning and likely to drag down the consolidated performance.
Nidec (6594): A V-Shaped Recovery Cannot Be Taken for Granted
- Nidec is headed into the red due to market disruption in China, restructuring charges and stagflation.
- The first two of these factors should be temporary, but the third points to longer term pressure on margins. Competition in EV motors is another problem that won’t go away.
- In a weak economy characterized by stagflation, it is too early to turn bullish.
Nippon Light Metal (5703 JP) Is On The Verge Of Confirming Bullish MT Trend Change
- At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. 1) Response to key levels. 2) Price action. 3) Momentum confirmation.
- Every recommendation requires definitive evidence of all 3 pillars to be regarded as a high probability outcome.
- 5703 JP has a LT double bottom in place and comprehensive MT uptrend confirmation (weekly RSI). Only an appropriate weekly close is required this week to confirm the MT uptrend.
Maybe There Are Many Companies in Japan that Have the Resources but Neglect Efforts to Increase ROA
- If we read “improved asset efficiency” as “ROA,” it would fit better. ROA, along with ROE, correlates with valuation, and higher ROA can be expected to trigger higher stock prices.
- Companies with high ROA tend to have advanced corporate governance initiatives. In Metrical Universe of 1,779 companies, ROA (historical 3-year average) for many of corporate governance metrics are significantly correlated.
- Whether Japanese stocks are undervalued is another question, but if companies have resources but are neglecting company-wide efforts to increase margins and turnover, activist investors are likely to be interested.
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