Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>We expected the market to react positively to the Q3 beat. There are clouds on the order horizon, but that is well-known</li>
<li>A big management shuffle was also announced. We think the new CEO and CFO will follow the same LT Vision, but need to do more to meet rising capital costs</li>
<li>Our core bullish thesis rests on growth in Industrial Automation.  As expectations for interest rate hikes fade, we think investors will start to price in a 2023/4 order recovery</li>
</ul>


We expected the market to react positively to the Q3 beat. There are clouds on the order horizon, but that is well-known
A big management shuffle was also announced. We think the new CEO and CFO will follow the same LT Vision, but need to do more to meet rising capital costs
Our core bullish thesis rests on growth in Industrial Automation.  As expectations for interest rate hikes fade, we think investors will start to price in a 2023/4 order recovery


Omron (6645) | Q3 Beat, New Management Team

Thematic (Sector/Industry)

<ul>
<li>OVERSEAS. SPX -1.2% ahead of Fed; Tech pulls back after torrid MTD; Eyes on Fed as Consensus converges on 25bp hike; More earnings ahead as FAANG(you get it) this week</li>
<li>JAPAN. NKY Futs  vs CASh -0.1%; USDJPY 130.44. ; Calls for more Activists?! Foreign Tourist Spend normalizes; KEPCO Nuclear plant powers down; Notable Earnings beats:  OLC, Omron; NEC; Misses: Canon </li>
<li>DAILY NUGGETS. Suzuki embraces carbon neutrality in a different form - yes a very different form...see below !</li>
</ul>


OVERSEAS. SPX -1.2% ahead of Fed; Tech pulls back after torrid MTD; Eyes on Fed as Consensus converges on 25bp hike; More earnings ahead as FAANG(you get it) this week
JAPAN. NKY Futs  vs CASh -0.1%; USDJPY 130.44. ; Calls for more Activists?! Foreign Tourist Spend normalizes; KEPCO Nuclear plant powers down; Notable Earnings beats:  OLC, Omron; NEC; Misses: Canon 
DAILY NUGGETS. Suzuki embraces carbon neutrality in a different form - yes a very different form...see below !


Good Morning Japan |RETREAT ! SPX Fails at 4100 (Again) Ahead of Fed; Calls for More Activists in JP

<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

<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

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)

Omron (6645) | Q3 Beat, New Management Team

Our core bullish thesis rests on growth in Industrial Automation. As expectations for interest rate hikes fade, we think investors will start to...

Mark Chadwick

Good Morning Japan |RETREAT ! SPX Fails at 4100 (Again) Ahead of Fed; Calls for More Activists in JP

JAPAN. NKY Futs vs CASh -0.1%; USDJPY 130.44. ; Calls for more Activists?! Foreign Tourist Spend normalizes; KEPCO Nuclear plant powers down;...

Mark Chadwick

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

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