Japan/Asia Long-Short, LightStream Research

Mio Kato

Over 15 years analysing Japanese and Asian stocks from a long/short perspective

I focus on cyclically driven sectors such as Gaming, Factory Automation and Autos

An eclectic background as a long-short analyst, upper management at a financial data startup through its listing, and as the founder of a team analysing big/alternative data, all of which supports independent and differentiated views... we hope

An appreciation for Mathematics drives the development of a "Micro-Quantamental" process which can provide a data-driven, historically-informed and semi-automated foundation upon which to layer more qualitative and judgemental analysis, thus improving investment decision-making speed and accuracy

Japan/Asia Long-Short

Conviction Call Mazda – 1Q and FY OP Beats Should Be Biggest in Sector

Suzuki – Could Be the Only J-Auto to Miss at 1Q

Honda – Strong Margins but Downward Volume Guidance Revision Leaves a Bad Impression

Honda – GM Strategic Alliance Unlikely to Achieve Much

Honda – Profit Jump as Costs Are Suppressed

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

Honda reported its 4QFY21 results last Friday with revenue of ¥3,624bn (-2.3% QoQ, +4.8% YoY) and operating profit of ¥213bn (for an OPM of 5.9% compared to the OPM of -0.2% and 7.5% respectively in 4QFY20 and 3QFY21).4Q reported revenue was 4.9% higher than consensus estimates, while operating profit beat by ¥122bn (+135%). Guidance was more muted with Honda guiding 24% below consensus despite revenue guidance being 3.7% stronger.<table class="table table-striped"><tbody>
<tr>
<td style="width: 35.12%;">In ¥bn</td>
<td style="width: 23.66%;">Revenue </td>
<td style="width: 21.7%;">OP</td>
<td style="width: 19.52%;">OPM</td>
</tr>
<tr>
<td style="width: 35.12%;">Actual Results - 4QFY21</td>
<td style="width: 23.66%;">3,624</td>
<td style="width: 21.7%;">213</td>
<td style="width: 19.52%;">5.9%</td>
</tr>
<tr>
<td style="width: 35.12%;">Consensus - 4QFY21</td>
<td style="width: 23.66%;">3,453</td>
<td style="width: 21.7%;">91</td>
<td style="width: 19.52%;">2.6%</td>
</tr>
<tr>
<td style="width: 35.12%;">Surprise</td>
<td style="width: 23.66%;">4.9%</td>
<td style="width: 21.7%;">134.6%</td>
<td style="width: 19.52%;">3.3%</td>
</tr>
<tr>
<td style="width: 35.12%;"> </td>
<td style="width: 23.66%;"> </td>
<td style="width: 21.7%;"> </td>
<td style="width: 19.52%;"> </td>
</tr>
<tr>
<td style="width: 35.12%;">Guidance - FY22</td>
<td style="width: 23.66%;">15,200</td>
<td style="width: 21.7%;">660</td>
<td style="width: 19.52%;">4.3%</td>
</tr>
<tr>
<td style="width: 35.12%;">Consensus - FY22</td>
<td style="width: 23.66%;">14,664</td>
<td style="width: 21.7%;">869</td>
<td style="width: 19.52%;">5.9%</td>
</tr>
<tr>
<td style="width: 35.12%;">Difference</td>
<td style="width: 23.66%;">3.7%</td>
<td style="width: 21.7%;">-24.0%</td>
<td style="width: 19.52%;">-1.6%</td>
</tr>
</tbody></table><div style="text-align: left;" class="content-caption">Source: Company disclosures, CapIQ</div>

Honda reported its 4QFY21 results last Friday with revenue of ¥3,624bn (-2.3% QoQ, +4.8% YoY) and operating profit of ¥213bn (for an OPM of 5.9% compared to the OPM of -0.2% and 7.5% respectively in 4QFY20 and 3QFY21).4Q reported revenue was 4.9% higher than consensus estimates, while operating profit beat by ¥122bn (+135%). Guidance was more muted with Honda guiding 24% below consensus despite revenue guidance being 3.7% stronger.

In ¥bn
Revenue 
OP
OPM


Actual Results - 4QFY21
3,624
213
5.9%


Consensus - 4QFY21
3,453
91
2.6%


Surprise
4.9%
134.6%
3.3%


 
 
 
 


Guidance - FY22
15,200
660
4.3%


Consensus - FY22
14,664
869
5.9%


Difference
3.7%
-24.0%
-1.6%

Source: Company disclosures, CapIQ

Honda – Margin Guidance Is Conservative but Credit Provisions Could Still Drive a YoY Decline

Honda Motor

Honda – Margin Guidance Is Conservative but Credit Provisions Could Still Drive a YoY Decline