Brief Japan: 🇯🇵 Japan • Winter Large Cap Results & Revision Scores – Contrarian Buys & Sells/​Peak & Ex-Growth and more

In this briefing:

1. 🇯🇵 Japan • Winter Large Cap Results & Revision Scores – Contrarian Buys & Sells/​Peak & Ex-Growth
2. Yungtay Noises Haven’t Produced a Result Yet

1. 🇯🇵 Japan • Winter Large Cap Results & Revision Scores – Contrarian Buys & Sells/​Peak & Ex-Growth

Source: Japan Analytics

LARGE CAP RESULTS & REVISION SCORES – The final instalment of our series of reviews of Japan’s most recent earnings and revisions announcements covers the Results & Revision Scores for Japan’s 785 larger capitalisation companies with a market capitalisation of over ¥100b.

In the DETAIL section below we look at:- 

• The 30 top and bottom-ranked companies by Results & Revision Score as well as the top and bottom thirty ranked by change in score over the last quarter and provide brief comments on companies and topics of note.
• By comparing Results Scores and Forecast/Revision Scores, we sort companies into‘Optimists’, ‘Pessimists’, ‘Increasingly Optimistic’ and ‘Increasingly Pessimistic‘ categories.
• As shown above, the relationship between the Results & Revision Score (RRS) and our Relative Price Score (RPS) for each company and divide the large-cap universe into four ‘quadrants’ – ‘Contrarian Buy’ (Low RRS & Low RPS) , ‘Contrarian Sell’ (High RRS & High RPS), ‘Peak Growth’ (High RRS & Low RPS) and ‘Ex-Growth/Turnaround’  (Low RRS & High RPS), highlighting the outliers in each quadrant.
  • In the two ‘Contrarian‘ quadrants, the market is aligned with the current earnings momentum of the companies suggesting opportunities exist only for those willing or brave enough to take a contrarian view. 
  • For ‘Peak Growth‘, the market is calling for a downturn in momentum that has yet to be reflected in quarterly earnings. Where the cycle is more prolonged than expected, there are often opportunities for short-term rebounds in what are normally relatively-inexpensive companies.
  • The ‘Ex-Growth‘ quadrant often consists of former ‘Contrarian Sell‘s where the market is reluctant to acknowledge that the cycle has turned. This quadrant can also contain ‘Turnarounds‘ – formerly ‘Contrarian Buys‘ where the market is correctly anticipating a change in fortunes.   
• Finally, we provide tables of the top and bottom five ranked companies in each of our 30 Sectors.

2. Yungtay Noises Haven’t Produced a Result Yet

After almost three months of preparation after the initial news came out in October, Hitachi Ltd (6501 JP) launched its Tender Offer for Yungtay Engineering (1507 TT) in mid-January 2019. 

The background of the two companies’ relationship, the board kerfuffle last year, and some detail on the financials and the growth of the Chinese mainland elevator market was discussed extensively in Going Up! Hitachi Tender for Yungtay Engineering (1507 TT)at the end of October. When the Tender Offer was confirmed as launched, additional details were provided in Hitachi Tender for Yungtay Engineering Launches.

Since then, there has been a litany of small “nuisance” events which so far have not resulted in any changes to the terms of the Tender Offer, but keeping a watchful eye is recommended.