Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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>With the BOJ being forced to step in to hold 10 year rates under 0.25% today the yen is under increasing pressure. </li>
<li>There are naturally a variety of stocks which are likely to benefit from this multi-decade breakout of the yen dollar. </li>
<li>Mazda is one of the best plays here in our view and we lay out the rather simple case below.</li>
</ul>


With the BOJ being forced to step in to hold 10 year rates under 0.25% today the yen is under increasing pressure. 
There are naturally a variety of stocks which are likely to benefit from this multi-decade breakout of the yen dollar. 
Mazda is one of the best plays here in our view and we lay out the rather simple case below.


Mazda – A Buy As The Yen Weakens With The BOJ Trapped

<ul>
<li>We have been consistently saying that the sell side is utterly clueless about Mazda’s profit structure. </li>
<li>The company just missed top line by 13.2% but beat on OP by 26% even excluding a reclassification of some costs to extraordinary losses. </li>
<li>The thesis here is simple – consensus projects a 3% OPM next FY and we believe Mazda will double that.</li>
</ul>


We have been consistently saying that the sell side is utterly clueless about Mazda’s profit structure. 
The company just missed top line by 13.2% but beat on OP by 26% even excluding a reclassification of some costs to extraordinary losses. 
The thesis here is simple – consensus projects a 3% OPM next FY and we believe Mazda will double that.


Event-Driven

<ul>
<li>After initially grinding up slowly but underperforming the Nikkei our suggested skew trade gave up ground during the new year sell off.</li>
<li>It did so slowly, however and was outperforming Nikkei when last we checked despite being down slightly. </li>
<li>Thankfully, a lot of the idiosyncratic volatility hurting the skew trade has reversed now and it is positive and outperforming Nikkei consistently.</li>
</ul>


After initially grinding up slowly but underperforming the Nikkei our suggested skew trade gave up ground during the new year sell off.
It did so slowly, however and was outperforming Nikkei when last we checked despite being down slightly. 
Thankfully, a lot of the idiosyncratic volatility hurting the skew trade has reversed now and it is positive and outperforming Nikkei consistently.


TOPIX-Nikkei Skew Trade Starting to Work Nicely

<ul>
<li>
<a href="https://asia.nikkei.com/Business/Automobiles/Toyota-plans-to-make-record-11m-cars-in-fiscal-year-starting-April" target="_blank" rel="noopener"> The Nikkei is reporting</a> that Toyota has set internal production targets of 11m units for the fiscal year ending March 2023. </li>
<li>That would imply a more than 20% YoY increase in production volumes. </li>
<li>And that in turn is very positive news not just for Toyota but for several other auto-related names.</li>
</ul>



 The Nikkei is reporting that Toyota has set internal production targets of 11m units for the fiscal year ending March 2023. 
That would imply a more than 20% YoY increase in production volumes. 
And that in turn is very positive news not just for Toyota but for several other auto-related names.


Toyota – 11m Unit Production Target Is a Positive Surprise

<ul>
<li>In 2020 and 2021 we had nine conviction calls, four of which returned over 50% within just over a year.</li>
<li>Three more returned close to 40%, one returned 15% and just one was an abject failure returning -39%. </li>
<li>On average, alpha generation was 24.3% and our 2022 names are off to a good start putting up 14.7% in alpha in just over a month and a half.</li>
</ul>


In 2020 and 2021 we had nine conviction calls, four of which returned over 50% within just over a year.
Three more returned close to 40%, one returned 15% and just one was an abject failure returning -39%. 
On average, alpha generation was 24.3% and our 2022 names are off to a good start putting up 14.7% in alpha in just over a month and a half.


A Belated Look Back at Our 2020 and 2021 Conviction Calls and a Look Ahead to 2022

Japan

Mazda Motor Corporation manufactures and sells automobiles, trucks, auto parts, and its accessories.  The Company operates its business worldwide.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Mazda Motor (7261 JP)

Mazda – A Buy As The Yen Weakens With The BOJ Trapped

With the BOJ being forced to step in to hold 10 year rates under 0.25% today the yen is under increasing pressure. Mazda is one of the best plays...

Mio Kato

Mazda – Profitability Is Surging

Mazda just missed top line by 13.2% but beat on underlying OP by 26%. The thesis here is simple – consensus projects a 3% OPM next FY and we...

Mio Kato

TOPIX-Nikkei Skew Trade Starting to Work Nicely

After initially grinding up slowly but underperforming the Nikkei our suggested skew trade gave up ground during the new year sell off. It is now...

Mio Kato

Toyota – 11m Unit Production Target Is a Positive Surprise

Toyota has set internal production targets of 11m units for the FY23 implying a more than 20% YoY increase which is very positive news not just for...

Mio Kato

A Belated Look Back at Our 2020 and 2021 Conviction Calls and a Look Ahead to 2022

We take a look back at our conviction calls from 2020 and 2021 to assess performance and put the strong start to our 2022 names in context.

Mio Kato

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)