Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>Consumption is on the rebound as pandemic restrictions are lifted. Inflation has been higher than the 2% goal, but still not entrenched according to the BoJ. </li>
<li>JGB yields drifted lower despite higher consumer inflation. Lower producer prices may hint that supply issues are normalizing. Stocks are on fire</li>
<li>Bulls adding to Japanese semiconductor equipment names. Global backdrop of AI but Japan also benefits as a "safe haven" destination for new capital investments</li>
</ul>


Consumption is on the rebound as pandemic restrictions are lifted. Inflation has been higher than the 2% goal, but still not entrenched according to the BoJ. 
JGB yields drifted lower despite higher consumer inflation. Lower producer prices may hint that supply issues are normalizing. Stocks are on fire
Bulls adding to Japanese semiconductor equipment names. Global backdrop of AI but Japan also benefits as a "safe haven" destination for new capital investments


Japan Weekly | Nikkei +4.8% to 31 Year High, Advantest, Recruit, Makita

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

<ul>
<li>FY Mar-24 guidance - sales down 14%, operating profit down 37% - is not extreme compared with previous cycles. </li>
<li>History shows that downturns at Advantest can last for two or even three years, not just one. Weak economic conditions add to this possibility.</li>
<li>The share price has rebounded from the recent sell-off, but optimism is unwarranted. Historical valuation ranges suggest potential downside of 20% or more.</li>
</ul>


FY Mar-24 guidance - sales down 14%, operating profit down 37% - is not extreme compared with previous cycles. 
History shows that downturns at Advantest can last for two or even three years, not just one. Weak economic conditions add to this possibility.
The share price has rebounded from the recent sell-off, but optimism is unwarranted. Historical valuation ranges suggest potential downside of 20% or more.


Advantest (6857 JP): 20% Potential Downside

<ul>
<li>OVERSEAS. SPX  up +0.8%WoW but slipped -0.2% Friday as Hawkish Waller came out amid weak US March Retail Sales data;  Musk jump's into Generative AI; Boeing Production Woes</li>
<li>JAPAN.NKY Futs flat vs Cash USDJPY 133.8; Security Concerns ahead of by-elections as PM Kishida smoke Bombed;  Panasonic to build 3rd US batt plant; JT ramps up heated stick products</li>
<li>NUGGET. Elon Musk's aggressive push into Generative AI to rival/beat ChatGPT; A boon for NDVIDIA and by extension, Japan's Advantest(6857)</li>
</ul>


OVERSEAS. SPX  up +0.8%WoW but slipped -0.2% Friday as Hawkish Waller came out amid weak US March Retail Sales data;  Musk jump's into Generative AI; Boeing Production Woes
JAPAN.NKY Futs flat vs Cash USDJPY 133.8; Security Concerns ahead of by-elections as PM Kishida smoke Bombed;  Panasonic to build 3rd US batt plant; JT ramps up heated stick products
NUGGET. Elon Musk's aggressive push into Generative AI to rival/beat ChatGPT; A boon for NDVIDIA and by extension, Japan's Advantest(6857)


Good Morning Japan| Recession Fears Spook Equities;NUGGET- Musk Jumps in AI Race, Boon for Advantest

Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

TSMC (Taiwan Semiconductor Manufacturing) - ADR / Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) - ADR

<ul>
<li>Samsung announced that it would reduce memory chip production in light of crashing profits, this is after the company had previously said it would not reduce production. Memory names rallied.</li>
<li>Hon Hai announced a $820m investment plan for EV manufacturing in southern Taiwan.</li>
<li>Japan's semiconductor manufacturing equipment export restrictions targeting China will take effect starting in July.</li>
</ul>


Samsung announced that it would reduce memory chip production in light of crashing profits, this is after the company had previously said it would not reduce production. Memory names rallied.
Hon Hai announced a $820m investment plan for EV manufacturing in southern Taiwan.
Japan's semiconductor manufacturing equipment export restrictions targeting China will take effect starting in July.


Taiwan Tech Weekly: Samsung Finally Announces Chip Production Cuts; Hon Hai's New EV Factory

<ul>
<li>OVERSEAS. Credit Suisse Rattles Markets; Spurs Equity sell off in flight to Safety trade;   UST 2Yr Yld back below 4%;  Crude Extend losses amid Banks sector worries;</li>
<li>JAPAN. NKY Futs -2.6% vs Cash;  USDJPY 133.4.  NKY Futs surprisingly weak given JP untouched by turmoil; Govt considers Cash transfers to poor households; Inbound recovery Continues</li>
<li>NUGGET.  As Japan Hosts "Defense and Security Equipment International (DSEI) JAPAN"  trade show this week,  it will highlight opportunities for local defense contractors overseas.</li>
</ul>


OVERSEAS. Credit Suisse Rattles Markets; Spurs Equity sell off in flight to Safety trade;   UST 2Yr Yld back below 4%;  Crude Extend losses amid Banks sector worries;
JAPAN. NKY Futs -2.6% vs Cash;  USDJPY 133.4.  NKY Futs surprisingly weak given JP untouched by turmoil; Govt considers Cash transfers to poor households; Inbound recovery Continues
NUGGET.  As Japan Hosts "Defense and Security Equipment International (DSEI) JAPAN"  trade show this week,  it will highlight opportunities for local defense contractors overseas.


Good Morning Japan |Now Its Credit Suisse-Markets Rattled; NUGGET: Fuel for Japan's Defense Stocks

Japan

ADVANTEST CORPORATION produces semiconductor testing devices and electronic measuring instruments.  The Company's products include large-scale integration (LSI) test systems, memory test systems, dynamic test handlers, network analyzers, electronic meters, optical testing devices, and signal sources.

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Advantest Corp (6857 JP)

Japan Weekly | Nikkei +4.8% to 31 Year High, Advantest, Recruit, Makita

The Nikkei 225 rose 4.8% and the Topix gained 3.1% on the week on signs of progress with the US debt ceiling, corporate updates, and foreign...

Mark Chadwick

Advantest (6857 JP): 20% Potential Downside

FY Mar-24 guidance might look conservative, but it is not extreme by historical standards. Downturns at Advantest usually last for more than one...

Scott Foster

Good Morning Japan| Recession Fears Spook Equities;NUGGET- Musk Jumps in AI Race, Boon for Advantest

Expect a broadly quiet start in Japan. Panasonic plans to establish its third US battery plant;. JT increasing its focus on heated stick products;...

Mark Chadwick

Taiwan Tech Weekly: Samsung Finally Announces Chip Production Cuts; Hon Hai's New EV Factory

Samsung reversed its production capacity strategy after suffering losses. Also, Japan's semiconductor manufacturing equipment export restrictions...

Vincent Fernando, CFA

Good Morning Japan |Now Its Credit Suisse-Markets Rattled; NUGGET: Fuel for Japan's Defense Stocks

NKY Futs surprisingly weak given JP untouched by turmoil; Govt considers Cash transfers to poor households; Inbound recovery Continues. NUGGET:...

Mark Chadwick

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