In this briefing:
- Japan Stock Weekly
- SBS (2384) A Great Third Party Logistics Company Seeing Good Organic Growth as Well as Via M&A.
- The Dollar IS the Story; Gold Confounds, A Brexit Rabbit Hole; EUR Punished
- Global-Ex-U.S. Equity Strategy: Add Exposure To Technology, Communications
- Smartkarma’s Week That Was in JP/KR: Semiconductor Warnings, Exit of Chairman Cho, & 청년수당
1. Japan Stock Weekly
SBS (2384) – A great third party logisitcs company seeing good growth both organically and through M&A.
Nikon (7731) – Now very cheap, earnings still weak but time to start to consider this name?
Nidec (6594) – Near term concerns remain, but longer term the business looks to be in good shape.
2. SBS (2384) A Great Third Party Logistics Company Seeing Good Organic Growth as Well as Via M&A.
It is seeing decent organic growth, led by a focus on third party logistics (3PL). This will carry on. The recently acquired Ricoh Logistics should eventually see margins improve as it is integrated into SBS. This year’s operating profit forecast of Y9bn (+10%) is conservative. An increase of Y1bn this year will come from Ricoh Logistics alone, and then we have organic growth. In our view operating profit will be at least Y10bn. There is the unrealised profit on land, which add some Y85bn to a company whose market cap is Y71bn. Despite the outperformance over the last 12 months, this remains a decent long-term domestic buy, and one in which foreigners still own only 12%. The shares trade on 13x 12/19 assuming an operating profit of Y10bn.
3. The Dollar IS the Story; Gold Confounds, A Brexit Rabbit Hole; EUR Punished
- The dollar IS the story
- EUR punished for negative yields
- Chasing Brexit down a rabbit hole
- Gold confounds
- Bitcoin at an interesting juncture
The fact that the dollar has strengthened despite the dovish turn at the Fed this year and the significant fall in US rates and bond yields has confounded many analysts.
4. Global-Ex-U.S. Equity Strategy: Add Exposure To Technology, Communications
We view weakness in global equity markets over the past week as correcting a significant amount of the excess optimism. We recommend taking advantage of the pullback by adding exposure to our favorite areas – namely Technology. Our overall outlook on global equities (both the MSCI ACWI and ACWI ex-US) remains positive and we continue to expect higher equity prices going forward. In today’s report we provide a technical appraisal of all major markets and highlight actionable stocks throughout the int’l Technology and Communications sectors.
5. Smartkarma’s Week That Was in JP/KR: Semiconductor Warnings, Exit of Chairman Cho, & 청년수당
In the past week, there were earnings warnings from three major players in the global semiconductor sector, including Samsung Electronics (005930 KS), Micron Technology (MU US), and Infineon Technologies Ag (IFX GR).
In Korea, after the collapse of the talks between Trump and KJU, the biggest loser has been President Moon Jae-In whose popularity has been sinking in the past several weeks. Moon Jae-In’s popularity has been sinking from the 80-90% range when he was first elected two years ago to the low-to-mid 40% range now. There has been a tremendous gain of the conservative Liberty Korea Party, led by Hwang Kyo-Ahn. Many people in Korea have become very dissatisfied with failing economic policies of the incumbent Moon Jae-In party and its excessive populism.
In the past week, the following reports that are relevant for Japan and Korea have received a lot of interest among Smartkarma readers:
- Amarin–Our Talks With The CEO & An Update on New Trial Data Released at ACC Conference
- It’s The Annual Tuesday & Wednesday BUY TOPIX Trade
- Nissan: Atrocious Governance Should Be Rectified Before Even Thinking of a Merger
- Hitachi Bumps Yungtay Bid to NT$65. Take It.
- KOSPI 200 June 2019 Rebalancing: List of Addition/Deletion Candidates
- Samsung Electronics Voluntary Red Flag on 1Q Earnings
- The Final Countdown Between NPS Vs Korean Air Chairman Cho Yang-Ho
- SNK Corp IPO Preview
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