'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

Former Japan Equity PM with over 30 of experience now providing database-driven analysis of the market, sectors, peer groups and stocks for LightStream Research.

Leveraging data and graphic analysis provided by Japan Analytics, and the related Japan Analytics iPad App, we provide insights on companies are often ignored by the sell-side as well as challenging conventional wisdom on the market overall.

'Quantamental' Japan Specialist

GMO Internet (9447 JP) - Grossly or Modestly Overrated?

Horiba (6856 JP): Bad News Largely Discounted

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Quantitative Analysis

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/074/731/original/2019-01-06_08-51-40.png?1546732310" class="editor-image img-responsive" data-smartkarma-image-id="74731"></figure>2018 - TOP 30 PERFORMING LARGE CAPS - The best performing stock in Japan over the last twelve-months rose by an average of 49%, with three companies more than doubling. Only one traditional manufacturing company - <a href="https://www.smartkarma.com/entities/11858" target="_blank" data-smartkarma-citation="entities:11858:1">Toyo Seikan (5901 JP)</a> - features on a list otherwise led by Healthcare (5), Retail (3), Real Estate (3), Restaurants (3), Transportation (3), and Other Consumer Products (3). Two companies - <a href="https://www.smartkarma.com/entities/4461" target="_blank" data-smartkarma-citation="entities:4461:1">Daikyo (8840 JP)</a> and <a href="https://www.smartkarma.com/entities/4221" target="_blank" data-smartkarma-citation="entities:4221:1">NTT Urban Development (8933 JP)</a> are in the process of being acquired. Four companies are currently 'Overbought (Relative Price Score &gt;4), 'Fully Priced' and have a declining Results/Revision Score - <a href="https://www.smartkarma.com/entities/8467" target="_blank" data-smartkarma-citation="entities:8467:1">Workman (7564 JP)</a>, <a href="https://www.smartkarma.com/entities/15862" target="_blank" data-smartkarma-citation="entities:15862:1">Fancl (4921 JP)</a>, <a href="https://www.smartkarma.com/entities/20438" target="_blank" data-smartkarma-citation="entities:20438:1">Systena (2317 JP)</a>, and <a href="https://www.smartkarma.com/entities/11720" target="_blank" data-smartkarma-citation="entities:11720:1">Kikkoman (2801 JP)</a>, and are candidates for profit-taking/short selling, as are <a href="https://www.smartkarma.com/entities/410" target="_blank" data-smartkarma-citation="entities:410:1">Goldwin (8111 JP)</a> and <a href="https://www.smartkarma.com/entities/320" target="_blank" data-smartkarma-citation="entities:320:1">Familymart Uny (8028 JP)</a> based on their Relative Price Scores alone.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/074/762/original/2019-01-06_14-07-13.png?1546751251" class="editor-image img-responsive" data-smartkarma-image-id="74762"></figure>2018 - BOTTOM 30 PERFORMING LARGE CAPS - The worst-performing list is led by Machinery (8), Technology Hardware (6), and Electrical Equipment (3) sector companies. 'Malfeasance' is the thread connecting <a href="https://www.smartkarma.com/entities/6267" target="_blank" data-smartkarma-citation="entities:6267:1">Suruga Bank (8358 JP)</a>, <a href="https://www.smartkarma.com/entities/23714" target="_blank" data-smartkarma-citation="entities:23714:1">Tateru (1435 JP)</a>, <a href="https://www.smartkarma.com/entities/14750" target="_blank" data-smartkarma-citation="entities:14750:1">Rizap (2928 JP)</a>, <a href="https://www.smartkarma.com/entities/16609" target="_blank" data-smartkarma-citation="entities:16609:1">KYB (7242 JP)</a>, and <a href="https://www.smartkarma.com/entities/10768" target="_blank" data-smartkarma-citation="entities:10768:1">Fujikura (5803 JP)</a>. Only seven companies on the list have positive Results/Revision Scores; the average one-year change in that score was -15. Seven of the top-ten declining stocks were loss-making as of the most recent trailing-twelve-months. Only one stock - <a href="https://www.smartkarma.com/entities/10238" target="_blank" data-smartkarma-citation="entities:10238:1">Harmonic Drive Systems (6324 JP)</a> remains 'Fully Priced' and only one - <a href="https://www.smartkarma.com/entities/8175" target="_blank" data-smartkarma-citation="entities:8175:1">Hosiden Corp (6804 JP)</a> - is now in our 'Deep Value' category.In the DETAIL below, we review the outlier stock in terms of our Relative Price Score/Results &amp; Revision Score matrix which highlights outliers in four categories - Peak Growth, Contrarian Sell, Contrarian Buy, and Ex-Growth/Turnaround - looking at the performance of 2018's outliers as well as identifying each category's current outliers. We conclude with tables of the best and worst performers in each of our thirty market sectors. We wish all investors in Japan 'tight lines' in 2019.<hr> NOTES ON SCORING METHODOLOGY<ul>
<li>
The Results/Revision Score (RRS) is the average of the Japan Analytics' Results Score and Forecasts/Revision Score for each company: -<ul>
<li>The Results Score is calculated quarterly since 2008, using the most recent eight quarters of company data for revenues, operating income and operating margin and measure the rate, degree and consistency of change for each metric. The Results Score has a maximum of +30 and a minimum of -30 for each period. </li>
<li>
The Forecast/Revision Score is based on Annual and Interim period company forecasts and compares changes from previous forecasts as well as against the trailing twelve-month (TTM) or previous first-half results, with annual forecasts being double-weighted. This score also has a maximum of +30 and a minimum of -30 for each period. 
</li>
</ul>
</li>
<li>The Relative Price Score (RPS) measures the difference between the current relative share price and the mean absolute deviation of relative prices since listing which allows for a comparison of all companies on the same scale. Deviations in the top or bottom percentiles of historical observations of Relative Price Score are deemed to be 'Overbought' (OB) and 'Oversold' (OS), respectively. The company 'thresholds' are '+4' for Overbought and '-2' of Oversold. </li>
<li>
Lastly, valuation 'QUADrants' group companies into the top and bottom 20% of TTM PER and PBR ranges and categorise outliers in both into four quadrants: "FP" = Fully Priced, "SP" = Speculative, "MT" = Mature and "DV" = Deep Value. "NE' is assigned to companies which are loss-making in the most the recent trailing-twelve-month period.  <hr> </li>
</ul>

2018 - TOP 30 PERFORMING LARGE CAPS - The best performing stock in Japan over the last twelve-months rose by an average of 49%, with three companies more than doubling. Only one traditional manufacturing company - Toyo Seikan (5901 JP) - features on a list otherwise led by Healthcare (5), Retail (3), Real Estate (3), Restaurants (3), Transportation (3), and Other Consumer Products (3). Two companies - Daikyo (8840 JP) and NTT Urban Development (8933 JP) are in the process of being acquired. Four companies are currently 'Overbought (Relative Price Score &gt;4), 'Fully Priced' and have a declining Results/Revision Score - Workman (7564 JP), Fancl (4921 JP), Systena (2317 JP), and Kikkoman (2801 JP), and are candidates for profit-taking/short selling, as are Goldwin (8111 JP) and Familymart Uny (8028 JP) based on their Relative Price Scores alone.2018 - BOTTOM 30 PERFORMING LARGE CAPS - The worst-performing list is led by Machinery (8), Technology Hardware (6), and Electrical Equipment (3) sector companies. 'Malfeasance' is the thread connecting Suruga Bank (8358 JP), Tateru (1435 JP), Rizap (2928 JP), KYB (7242 JP), and Fujikura (5803 JP). Only seven companies on the list have positive Results/Revision Scores; the average one-year change in that score was -15. Seven of the top-ten declining stocks were loss-making as of the most recent trailing-twelve-months. Only one stock - Harmonic Drive Systems (6324 JP) remains 'Fully Priced' and only one - Hosiden Corp (6804 JP) - is now in our 'Deep Value' category.In the DETAIL below, we review the outlier stock in terms of our Relative Price Score/Results &amp; Revision Score matrix which highlights outliers in four categories - Peak Growth, Contrarian Sell, Contrarian Buy, and Ex-Growth/Turnaround - looking at the performance of 2018's outliers as well as identifying each category's current outliers. We conclude with tables of the best and worst performers in each of our thirty market sectors. We wish all investors in Japan 'tight lines' in 2019. NOTES ON SCORING METHODOLOGY

The Results/Revision Score (RRS) is the average of the Japan Analytics' Results Score and Forecasts/Revision Score for each company: -
The Results Score is calculated quarterly since 2008, using the most recent eight quarters of company data for revenues, operating income and operating margin and measure the rate, degree and consistency of change for each metric. The Results Score has a maximum of +30 and a minimum of -30 for each period. 

The Forecast/Revision Score is based on Annual and Interim period company forecasts and compares changes from previous forecasts as well as against the trailing twelve-month (TTM) or previous first-half results, with annual forecasts being double-weighted. This score also has a maximum of +30 and a minimum of -30 for each period. 



The Relative Price Score (RPS) measures the difference between the current relative share price and the mean absolute deviation of relative prices since listing which allows for a comparison of all companies on the same scale. Deviations in the top or bottom percentiles of historical observations of Relative Price Score are deemed to be 'Overbought' (OB) and 'Oversold' (OS), respectively. The company 'thresholds' are '+4' for Overbought and '-2' of Oversold. 

Lastly, valuation 'QUADrants' group companies into the top and bottom 20% of TTM PER and PBR ranges and categorise outliers in both into four quadrants: "FP" = Fully Priced, "SP" = Speculative, "MT" = Mature and "DV" = Deep Value. "NE' is assigned to companies which are loss-making in the most the recent trailing-twelve-month period.   


Japan: 2018 Company Review - Fishing Among the Outliers