Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyzed the changes in margin trading positions of JPX stocks as of Jun 12th. The aggregated net margin trading position is USD29,582m.</li>
<li>We tabulate league tables for top/bottom net long/short of margin trading by value, net margin buy as multiple of ADT.</li>
<li>We highlight net margin buy/sell changes in Kioxia, Disco, Advantest, Lasertec, Skylark, Murata Manufacturing, Iida, JX Advanced Metals, Hitachi, McDonald's.</li>
</ul>


We analyzed the changes in margin trading positions of JPX stocks as of Jun 12th. The aggregated net margin trading position is USD29,582m.
We tabulate league tables for top/bottom net long/short of margin trading by value, net margin buy as multiple of ADT.
We highlight net margin buy/sell changes in Kioxia, Disco, Advantest, Lasertec, Skylark, Murata Manufacturing, Iida, JX Advanced Metals, Hitachi, McDonald's.


JPX Margin Trading Weekly (Jun 12th): Kioxia, Disco, Advantest, Lasertec, Skylark, Iida, Hitachi

Mark Artherton, CFA

Inteqres

Thematic (Sector/Industry)

Several countries are pushing for more M&amp;A in Asian banking as a way to ameliorate risks (India) or to possibly compete more regionally (Malaysia), with even some rumours resurfacing of further activity in Australia. We have reviewed all major banking transactions in the Asia Pacific region over the past 10 years which involved consolidation and we summarise our findings below.Summary findingsWe find that most banks lose market share after a merger when we consider total assets.  This is usually due to depositors moving to reduce concentration risk and loan rationalisation by the merged entity. Overlapping banks allow for more synergies and there tends to be better performance, especially if management is able to achieve the synergistic gains quickly.  Mergers aimed more at revenue synergies or entering new markets appear to have lukewarm benefits.A long drawn out merger process with unambitious long term synergistic benefits are penalised by markets.  Delays can be cultural, labour union led, government led or legal.Clearly the lead in any transaction tends to impose their will on the combined entity.  We find that performance suggests that investors are better owing targets rather than acquirers.

Several countries are pushing for more M&amp;A in Asian banking as a way to ameliorate risks (India) or to possibly compete more regionally (Malaysia), with even some rumours resurfacing of further activity in Australia. We have reviewed all major banking transactions in the Asia Pacific region over the past 10 years which involved consolidation and we summarise our findings below.Summary findingsWe find that most banks lose market share after a merger when we consider total assets.  This is usually due to depositors moving to reduce concentration risk and loan rationalisation by the merged entity. Overlapping banks allow for more synergies and there tends to be better performance, especially if management is able to achieve the synergistic gains quickly.  Mergers aimed more at revenue synergies or entering new markets appear to have lukewarm benefits.A long drawn out merger process with unambitious long term synergistic benefits are penalised by markets.  Delays can be cultural, labour union led, government led or legal.Clearly the lead in any transaction tends to impose their will on the combined entity.  We find that performance suggests that investors are better owing targets rather than acquirers.

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.

In our Smartkarma Originals Insight on Ride Hailing last year, we articulated our view as being sceptical of the ability of pure ride hailers to generate noticeably different margins from regular taxi companies. However, we highlighted Grab and Go-Jek as having interesting business models due to their attempts to develop digital finance businesses. With the Nikkei reporting that MUFG will shortly invest as much as ¥80bn in Grab to tap its digital and data expertise we are increasingly confident in our call that the path to profitability for Grab and Go-Jek looks a lot less uncertain than for many of their global peers.

In our Smartkarma Originals Insight on Ride Hailing last year, we articulated our view as being sceptical of the ability of pure ride hailers to generate noticeably different margins from regular taxi companies. However, we highlighted Grab and Go-Jek as having interesting business models due to their attempts to develop digital finance businesses. With the Nikkei reporting that MUFG will shortly invest as much as ¥80bn in Grab to tap its digital and data expertise we are increasingly confident in our call that the path to profitability for Grab and Go-Jek looks a lot less uncertain than for many of their global peers.

MUFG GRABbing at the Chance to Serve ASEAN’s Unbanked

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/116/367/original/2020-02-05_03-43-39.png?1580847984" class="editor-image img-responsive" data-smartkarma-image-id="116367"></figure><div class="content-caption">Source • Japan Analytics</div>4TH FEBRUARY ROUNDUP - As expected the 121 Results and 41 Forecast/Revision announcements yesterday took our Results Score 16bps lower to a new three-year low, although the Score is still positive. The Forecast/REvision Score added 13bps helped by <a href="https://www.smartkarma.com/entities/takeda-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:11747:1" rel="noopener">Takeda Pharmaceutical (4502 JP)</a> and <a href="https://www.smartkarma.com/entities/kao-corp" target="_blank" data-smartkarma-citation="entities:12933:1" rel="noopener">Kao (4452 JP)</a> although the latter's forecast is optimistic as we discuss in the DETAIL below.<hr>• SECTOR TIMELINE •<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/116/368/original/2020-02-05_03-47-58.png?1580848469" class="editor-image img-responsive" data-smartkarma-image-id="116368"></figure><div class="content-caption">Source • Japan Analytics</div>SECTOR TIMELINE - <a href="https://www.smartkarma.com/entities/hoya-corp" target="_blank" data-smartkarma-citation="entities:8990:1" rel="noopener">Hoya (7741 JP)</a>'s results were the largest factor in the decline in the Other Commerical Products Sector. <a href="https://www.smartkarma.com/entities/takeda-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:11747:1" rel="noopener">Takeda Pharmaceutical (4502 JP)</a> helped Healthcare tick up, while <a href="https://www.smartkarma.com/entities/mitsubishi-ufj-financial-gro" target="_blank" data-smartkarma-citation="entities:218:1" rel="noopener">Mitsubishi UFJ Financial (MUFG) (8306 JP)</a> fuelled the strong recovery in the Banks Sector.  <a href="https://www.smartkarma.com/entities/systena-corp" target="_blank" data-smartkarma-citation="entities:20438:1" rel="noopener">Systena (2317 JP)</a> and <a href="https://www.smartkarma.com/entities/ntt-data-corp" target="_blank" data-smartkarma-citation="entities:11232:1" rel="noopener">NTT Data (9613 JP)</a> added to the erosion of the Information Technology Sector's lead, although partially offset by <a href="https://www.smartkarma.com/entities/itochu-techno-solutions-corp" target="_blank" data-smartkarma-citation="entities:2431:1" rel="noopener">Itochu Techno Solutions (4739 JP)</a>.  <a href="https://www.smartkarma.com/entities/mitsui-co-ltd" target="_blank" data-smartkarma-citation="entities:20799:1" rel="noopener">Mitsui (8031 JP)</a> 21% yoy decline in Q3 Net Income continued to downtrend in the Wholesale Sector's Score.

Source • Japan Analytics4TH FEBRUARY ROUNDUP - As expected the 121 Results and 41 Forecast/Revision announcements yesterday took our Results Score 16bps lower to a new three-year low, although the Score is still positive. The Forecast/REvision Score added 13bps helped by Takeda Pharmaceutical (4502 JP) and Kao (4452 JP) although the latter's forecast is optimistic as we discuss in the DETAIL below.• SECTOR TIMELINE •Source • Japan AnalyticsSECTOR TIMELINE - Hoya (7741 JP)'s results were the largest factor in the decline in the Other Commerical Products Sector. Takeda Pharmaceutical (4502 JP) helped Healthcare tick up, while Mitsubishi UFJ Financial (MUFG) (8306 JP) fuelled the strong recovery in the Banks Sector.  Systena (2317 JP) and NTT Data (9613 JP) added to the erosion of the Information Technology Sector's lead, although partially offset by Itochu Techno Solutions (4739 JP).  Mitsui (8031 JP) 21% yoy decline in Q3 Net Income continued to downtrend in the Wholesale Sector's Score.   

🇯🇵 JAPAN • Results & Revisions Daily Roundup - 4th February ▲2371 4502 4739 ▼7741 4452 2317

Senior Bank Analyst - Japanese Banks, Windamee Research

J. Brian Waterhouse

Senior Bank Analyst - Japanese Banks

Windamee Research

Japanese Banks

As we await the imminent release of 3Q FY3/2020 results for the banks for the 9 months to end-December 2019, we look back at the banks’ recent ‘track record’ against the broader Topix index for guidance on likely future performance.  We find little to change our fundamentally negative view of the sector.  Japanese bank stocks have underperformed the broader Topix index virtually unabated since the beginning of CY2017.  We expect this trend to continue over the next one to two years.
The fundamental outlook for Japan’s banks remains challenging, both at home and overseas.  Even the mighty megabanks are finding it harder to fully offset dwindling domestic revenues with profits from overseas operations.  Investment risks are rising, margins remain under downward pressure generally, many regional banks remain underwater on their core domestic businesses and credit costs are rising across the board for all banks.  This is likely to severely limit upside potential in Japanese bank share prices as the year progresses.
In the absence of fresh incentives to support share prices and mindful of the underwhelming outlook for FY3/2021, the sector is no better than a trade between now and the end of March 2020.  For the rest of CY2020 and for the longer term, our advice to would-be investors in Japanese bank stocks remains “Caveat Emptor!”  (May the Buyer Beware) .

As we await the imminent release of 3Q FY3/2020 results for the banks for the 9 months to end-December 2019, we look back at the banks’ recent ‘track record’ against the broader Topix index for guidance on likely future performance.  We find little to change our fundamentally negative view of the sector.  Japanese bank stocks have underperformed the broader Topix index virtually unabated since the beginning of CY2017.  We expect this trend to continue over the next one to two years.
The fundamental outlook for Japan’s banks remains challenging, both at home and overseas.  Even the mighty megabanks are finding it harder to fully offset dwindling domestic revenues with profits from overseas operations.  Investment risks are rising, margins remain under downward pressure generally, many regional banks remain underwater on their core domestic businesses and credit costs are rising across the board for all banks.  This is likely to severely limit upside potential in Japanese bank share prices as the year progresses.
In the absence of fresh incentives to support share prices and mindful of the underwhelming outlook for FY3/2021, the sector is no better than a trade between now and the end of March 2020.  For the rest of CY2020 and for the longer term, our advice to would-be investors in Japanese bank stocks remains “Caveat Emptor!”  (May the Buyer Beware) .

Japan

Mitsubishi UFJ Financial Group, Inc. (MUFG) is a holding company established through the merger of Mitsubishi Tokyo Financial Group and UFJ Holdings. As a financial group, the Company provides a variety of financial and investment services including commercial banking, trust banking, international finance, and assets management services.

Mitsubishi UFJ Financial (MUFG) (8306 JP)

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Mitsubishi UFJ Financial (MUFG) (8306 JP)

JPX Margin Trading Weekly (Jun 12th): Kioxia, Disco, Advantest, Lasertec, Skylark, Iida, Hitachi

We analyzed JPX margin trading positions report for the past week and highlighted Kioxia, Disco, Advantest, Lasertec, Skylark, Murata...

Ke Yan, CFA, FRM

Bank M&A in Asia – a Decade in Review

Several countries are pushing for more M&A in Asian banking as a way to ameliorate risks (India) or to possibly compete more regionally...

Mark Artherton, CFA

MUFG GRABbing at the Chance to Serve ASEAN’s Unbanked

In our Smartkarma Originals Insight on Ride Hailing last year, we articulated our view as being sceptical of the ability of pure ride hailers to...

Mio Kato

🇯🇵 JAPAN • Results & Revisions Daily Roundup - 4th February ▲2371 4502 4739 ▼7741 4452 2317

4TH FEBRUARY ROUNDUP - As expected the 121 Results and 41 Forecast/Revision announcements yesterday took our Results Score 16bps lower to a new...

Campbell Gunn

Japanese Banks: A Backward Glance

As we await the imminent release of 3Q FY3/2020 results for the banks for the 9 months to end-December 2019, we look back at the banks’ recent...

J. Brian Waterhouse

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52-week Range

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