Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

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

NIDEC CORPORATION is the world's leading manufacturer of small precision motors mainly used in HDD and optical disk drives. The company has extended its focus to the home appliance and automotive markets. NIDEC is active in M&A and its subsidiaries include the world's leading manufacturers of LCD panel handling robots and camera shutters.

<ul>
<li>Shipping the first water-based cooling systems for servers equipped with Nvidia's new Blackwell GPUs and building two new motor factories in India.</li>
<li>Moving beyond excessive dependence on China while restructuring operations to reduce costs. Sales short of 1H guidnce, but operating profit up. </li>
<li>Share price down 30% since May and close to its 52-week low. Selling at 17.5x this fiscal year's EPS guidance, the lowest P/E multiple in a decade. </li>
</ul>


Shipping the first water-based cooling systems for servers equipped with Nvidia's new Blackwell GPUs and building two new motor factories in India.
Moving beyond excessive dependence on China while restructuring operations to reduce costs. Sales short of 1H guidnce, but operating profit up. 
Share price down 30% since May and close to its 52-week low. Selling at 17.5x this fiscal year's EPS guidance, the lowest P/E multiple in a decade. 


Nidec (6594 JP): India & Nvidia Point the Way Forward

Mitsubishi Heavy Industries / Equity Bottom-Up

Mitsubishi Heavy Industries, Ltd. is a comprehensive heavy machinery maker. The Company manufactures machinery, ships, turbines and engines, prime movers, aircrafts, and machine parts for military and commercial use.  Mitsubishi Heavy Industries also researches and develops nuclear power plants.

<ul>
<li>MHI shot up 13% on U.S. election day, but dropped back this morning. A degree of optimism is warranted, but there are negatives as well as positives.</li>
<li>Full year FY-Mar-25 orders guidance has been raised, but the increase came in Energy, not Aircraft, Defense &amp; Space, and total orders are still likely to be down this year.</li>
<li>An increase in defense orders can be expected, however, as Trump forces Japan to take more responsibility for its own defense. Hold or buy for the long term.</li>
</ul>


MHI shot up 13% on U.S. election day, but dropped back this morning. A degree of optimism is warranted, but there are negatives as well as positives.
Full year FY-Mar-25 orders guidance has been raised, but the increase came in Energy, not Aircraft, Defense &amp; Space, and total orders are still likely to be down this year.
An increase in defense orders can be expected, however, as Trump forces Japan to take more responsibility for its own defense. Hold or buy for the long term.


SCREEN Holdings Co Ltd.  manufactures and sell semiconductors, FPD devices, commercial printing and printed circuit boards(PCB). The company also provides additional services for its products.

<ul>
<li>FY Mar-25 sales and profit guidance has been raised and new orders are trending up, pointing to continued growth next year. </li>
<li>Supported by investment in AI, foundry and high-bandwidth memory related demand are driving growth for semiconductor production equipment.</li>
<li>Attractively valued at 12x projected earnings with share price bottoming out. Buy for the medium to long term. </li>
</ul>


FY Mar-25 sales and profit guidance has been raised and new orders are trending up, pointing to continued growth next year. 
Supported by investment in AI, foundry and high-bandwidth memory related demand are driving growth for semiconductor production equipment.
Attractively valued at 12x projected earnings with share price bottoming out. Buy for the medium to long term. 


Screen Holdings (7735 JP): Bad News in the Price, Guidance Raised

IBIDEN CO, LTD. develops, produces, and markets ceramics, housing materials, and electronics.  The Company's products include printed circuit boards (PCB), graphite specialties, integrated circuit (IC) packages, ceramic fibers, melamine decorative high-pressure laminates, and pre-cut structural materials.

<ul>
<li>Sales, profits and the share price are bottoming out and good 1Q results make FY Mar-25 guidance look conservative.</li>
<li>Demand for advanced packaging should drive recovery, with the operating margin regaining its previous peak in three or four years.</li>
<li>Management's long-term guidance implies a decline in the projected P/E ratio from 26x to 10X by FY Mar-28, but even 15x would make the shares an attractive investment.</li>
</ul>


Sales, profits and the share price are bottoming out and good 1Q results make FY Mar-25 guidance look conservative.
Demand for advanced packaging should drive recovery, with the operating margin regaining its previous peak in three or four years.
Management's long-term guidance implies a decline in the projected P/E ratio from 26x to 10X by FY Mar-28, but even 15x would make the shares an attractive investment.


Ibiden (4062 JP): Once Again a Long-Term Buy

Kokusai Electric Corporation manufactures and distributes semiconductor manufacturing systems. The Company produces batch processing systems, single wafer processing systems, and other systems. Kokusai Electric also operates advanced thermal process technology development, training, and other businesses.

<ul>
<li>Kokusai has dropped 44% from its July peak, offering a long-term opportunity at reasonably attractive valuations. Management's guidance looks conservative.</li>
<li>KKR has reduced its stake from 43.4% to 23.2%, increasing the float while indicating that it still sees a long-term opportunity. Applied Materials has bought 14.7% of the company.</li>
<li>The completion of a new factory in Japan should double production capacity to meet demand from makers of AI processors, high-bandwidth memory, 3D NAND and power devices.</li>
</ul>


Kokusai has dropped 44% from its July peak, offering a long-term opportunity at reasonably attractive valuations. Management's guidance looks conservative.
KKR has reduced its stake from 43.4% to 23.2%, increasing the float while indicating that it still sees a long-term opportunity. Applied Materials has bought 14.7% of the company.
The completion of a new factory in Japan should double production capacity to meet demand from makers of AI processors, high-bandwidth memory, 3D NAND and power devices.


Kokusai Electric (6525 JP): Sell-Off Presents Buying Opportunity

Securities analyst covering electronics, precision equipment & robotics, engineering, construction, transport and other sectors for more than 25 years in Japan and 3 years in Korea. Permanent resident of Japan.

Scott Foster
Senior Technology Analyst, Japanese Equities
• LightStream Research

Nidec (6594 JP): India & Nvidia Point the Way Forward

New factories in India, water-cooling units for Blackwell equipped servers and other factors to support sales growth and higher margins. 17.5x P/E...

Scott Foster

MHI (7011): Trump 2.0 a Net Positive

Trump's return forces Japan to look out for number one - good for MHI, Japan's top defense contractor. Orders guidance has been raised slightly....

Scott Foster

Screen Holdings (7735 JP): Bad News in the Price, Guidance Raised

First the share price bottomed out, then management raised guidance. Rising orders point to further growth next year, driven by AI, with...

Scott Foster

Ibiden (4062 JP): Once Again a Long-Term Buy

Sales, profits and the share price appear to have bottomed out, while advanced packaging for Ai processors and CPUs should drive long-term...

Scott Foster

Kokusai Electric (6525 JP): Sell-Off Presents Buying Opportunity

The shares are down 44% since July, presenting a buying opportunity in equipment used to make AI processors and other advanced ICs. KKR has reduced...

Scott Foster