Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>OVERSEAS.  SPX positive on day, +2.5%WoW; SOX +5.4%WoW;  PCE Inflation sets stage for benign Fed; INTEL, KLC puts damper on tech party; TELSA delivers again; AMEX not seeing consumer weakness; </li>
<li>JAPAN. NKY Futs vs Cash +0.1%; USDJPY 129.88; Tokyo Dec CPI highest since 1981; GS sees highest base pay hike in decades.;  Fanuc 3Q beats on Robots; Sagawa hikes prices</li>
<li>DAILY. NUGGETS. Stealth Immigration - Foreigner workers in Japan hit all time high 1.82 million/2.7% of labour force. Clear policy on Immigration needed to help secure Japan's  future. </li>
</ul>


OVERSEAS.  SPX positive on day, +2.5%WoW; SOX +5.4%WoW;  PCE Inflation sets stage for benign Fed; INTEL, KLC puts damper on tech party; TELSA delivers again; AMEX not seeing consumer weakness; 
JAPAN. NKY Futs vs Cash +0.1%; USDJPY 129.88; Tokyo Dec CPI highest since 1981; GS sees highest base pay hike in decades.;  Fanuc 3Q beats on Robots; Sagawa hikes prices
DAILY. NUGGETS. Stealth Immigration - Foreigner workers in Japan hit all time high 1.82 million/2.7% of labour force. Clear policy on Immigration needed to help secure Japan's  future. 


Good Morning Japan |SPX Break Out In Sight ! ; PCE Inflation Delivers; Fed +25bps ? ; Awful INTEL

Equity Bottom-Up

<ul>
<li>Omron is a structural growth stock that has fallen by 39% YTD reflecting near term risks to growth and margins</li>
<li>We believe that Omron is a major beneficiary of continued investment in automation and the shift to Industry 4.0</li>
<li>We analyse Omron’s core value drivers – revenue, margins, risk and reinvestment – and see 35% upside</li>
</ul>


Omron is a structural growth stock that has fallen by 39% YTD reflecting near term risks to growth and margins
We believe that Omron is a major beneficiary of continued investment in automation and the shift to Industry 4.0
We analyse Omron’s core value drivers – revenue, margins, risk and reinvestment – and see 35% upside


Omron (6645) | Key Beneficiary of Industry 4.0

<ul>
<li>After leading the market higher in 2021, growth stocks have significantly underperformed over the past 12 months. </li>
<li>Valuations may not yet have reached rock bottom levels and all these 3 stocks still trade at a premium to our universe of 14x PE</li>
<li>These 3 stocks all have strong long-terms structural drivers that make buying on the dip attractive for patient investors</li>
</ul>


After leading the market higher in 2021, growth stocks have significantly underperformed over the past 12 months. 
Valuations may not yet have reached rock bottom levels and all these 3 stocks still trade at a premium to our universe of 14x PE
These 3 stocks all have strong long-terms structural drivers that make buying on the dip attractive for patient investors


Japan Weekly | 3 Growth Stocks to Buy on the Dip

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/bank-of-kyoto" target="_blank" data-smartkarma-citation="entities:5248:1" rel="noopener">Bank of Kyoto (8369 JP)</a> is currently at a 51% discount to the After Tax Value of its Equity Portfolio assuming its banking ops are priced at a RegionalBankAveragePBR.</li>
<li>That is, believe it or not, relatively narrow, and given the nature of the risks making it a range trade, it makes short-term timing probably a sell. </li>
<li>There is, helpfully, 6 days of ADV to sell in the TOPIX FFW adjustment on 28 October, and all five of the top holdings are also net sells (0.5-1.1 days).</li>
</ul>



Bank of Kyoto (8369 JP) is currently at a 51% discount to the After Tax Value of its Equity Portfolio assuming its banking ops are priced at a RegionalBankAveragePBR.
That is, believe it or not, relatively narrow, and given the nature of the risks making it a range trade, it makes short-term timing probably a sell. 
There is, helpfully, 6 days of ADV to sell in the TOPIX FFW adjustment on 28 October, and all five of the top holdings are also net sells (0.5-1.1 days).


Bank of Kyoto (8369 JP) Holdco Maybe Rich-Ish - Watch for TOPIX Rebal SELL Flow

<ul>
<li>Three interviews and comments by Senior Toshiba Boardmembers (chairperson and head of Special Committee) and the CEO prep the ground for a full company deal, or no deal.</li>
<li>If no deal, there's downside to the 5yr average Toshiba/Peers ratio. If you see 50% deal probability, at mid ¥6000s or better, IRRs are OK. But there is jump risk.</li>
<li>I don't see the activists just deciding to bail en masse if no deal. I think they take it further, which means I think the Board wants a deal.</li>
</ul>


Three interviews and comments by Senior Toshiba Boardmembers (chairperson and head of Special Committee) and the CEO prep the ground for a full company deal, or no deal.
If no deal, there's downside to the 5yr average Toshiba/Peers ratio. If you see 50% deal probability, at mid ¥6000s or better, IRRs are OK. But there is jump risk.
I don't see the activists just deciding to bail en masse if no deal. I think they take it further, which means I think the Board wants a deal.


Toshiba (6502 JP) Getting Closer to Crunch Time So Ongoing News "Leaks" Likely

Japan

OMRON Corporation manufactures electronic components, equipment and systems used for factory automation. The Company provides products and services in a variety of fields including industrial automation, electronic components, automotive electronics, social systems such as ticket gate machines and traffic control, and healthcare.

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Omron Corp (6645 JP)

Good Morning Japan |SPX Break Out In Sight ! ; PCE Inflation Delivers; Fed +25bps ? ; Awful INTEL

NKY Futs vs Cash +0.1%; Tokyo Dec CPI highest since 1981; GS sees highest base pay hike in decades.; Fanuc 3Q beats on Robots; Sagawa hikes...

Mark Chadwick

Omron (6645) | Key Beneficiary of Industry 4.0

We believe that Omron is a major beneficiary of continued investment in automation and the shift to Industry 4.0. We see around 35% upside for the...

Mark Chadwick

Japan Weekly | 3 Growth Stocks to Buy on the Dip

No major movers to highlight over the past week as investors pay more attention to the World Cup. We highlight 3 growth stocks that have...

Mark Chadwick

Bank of Kyoto (8369 JP) Holdco Maybe Rich-Ish - Watch for TOPIX Rebal SELL Flow

Bank of Kyoto has upped its payout ratio. That has helped the discount narrow but near-term flows, possible relatively soft H1 accounts, and the...

Travis Lundy

Toshiba (6502 JP) Getting Closer to Crunch Time So Ongoing News "Leaks" Likely

Bidders are approaching 2nd Round deadlines, and news/comments are starting to seep out. Expect more. I expect a decision at/after H1 results. If...

Travis Lundy

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