Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Zero One

Founded in 2015, Zero One produces independent investment research and provides corporate finance advisory services with a focus on both listed and private technology companies. Founder Vincent Fernando has over 20 years of experience in US and Asia capital markets.

Independent Investment Research

Thematic (Sector/Industry)

<p>As a follow up to our note <a href="https://www.smartkarma.com/insights/evidence-of-global-slowdown-accumulates-as-stores-remain-closed-and-supply-chains-are-crippled" target="_blank" rel="noopener">Evidence of Global Slowdown Accumulates as Stores Remain Closed and Supply Chains Are Crippled</a>, reports that business impacts have increased are starting to take a more regional or even global flavor.</p><p>Despite some factories in China resuming operation on 10th February, <a href="https://www.cnbc.com/2020/02/10/some-factories-in-china-extend-shutdowns-amid-coronavirus-outbreak.html" target="_blank" rel="noopener">several regions have extended shutdowns</a> and labor supply remains restricted due to quarantines. This has caused many factories to delay resuming operations with the few facilities that have resumed operations remaining severely under capacity. We are now seeing a follow-on impact with reports of non-China based factories reporting production halts.</p>

As a follow up to our note Evidence of Global Slowdown Accumulates as Stores Remain Closed and Supply Chains Are Crippled, reports that business impacts have increased are starting to take a more regional or even global flavor.Despite some factories in China resuming operation on 10th February, several regions have extended shutdowns and labor supply remains restricted due to quarantines. This has caused many factories to delay resuming operations with the few facilities that have resumed operations remaining severely under capacity. We are now seeing a follow-on impact with reports of non-China based factories reporting production halts.

Factories Outside of China Now Halting Production as Virus Impact Expands

'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/000/116/176/original/2020-02-04_04-48-54.png?1580759358" class="editor-image img-responsive" data-smartkarma-image-id="116176"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>3RD FEBRUARY ROUNDUP</strong> - The 107 Results and 44 Forecast/Revision announcements yesterday nudged both our Scores lower again as the Total Market Value reached a three-month low. We expect the Results Score to break below 0.58 and the Forecast/Revision Score to turn negative later in the week.</p><hr><p style="text-align: center;"><strong>• ALL-MARKET COMPOSITE •</strong></p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/116/180/original/2020-02-04_05-29-59.png?1580761820" class="editor-image img-responsive" data-smartkarma-image-id="116180"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>ALL-MARKET COMPOSITE</strong> - As of Friday's close. the aggregate forecast for Operating Income is now ¥800 billion below the TTM results, while the Net Income forecast trails by ¥400 billion. The market's forward PE is still an elevated 16.9x based on a Total Market Value (TMV) of ¥666 trillion.  TTM Net income has declined by 18% in the last twelve months, while the TMV has risen by 19%.</p><hr><p style="text-align: center;"><strong>• SECTOR TIMELINE •</strong></p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/116/177/original/2020-02-04_04-59-01.png?1580759983" class="editor-image img-responsive" data-smartkarma-image-id="116177"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>TIMELINE</strong> - The largest on-day move was from <strong>Non-Bank Finance</strong> following <a href="https://www.smartkarma.com/entities/orix-corp" target="_blank" data-smartkarma-citation="entities:9936:1" rel="noopener">Orix (8591 JP)</a>'s return to positive earnings momentum. <a href="https://www.smartkarma.com/entities/shionogi-co-ltd" target="_blank" data-smartkarma-citation="entities:19535:1" rel="noopener">Shionogi (4507 JP)</a>' s downward revision continued the downtrend in the <strong>Healthcare</strong> Sector, while <a href="https://www.smartkarma.com/entities/mitsubishi-electric-corp" target="_blank" data-smartkarma-citation="entities:11171:1" rel="noopener">Mitsubishi Electric (6503 JP)</a> put a 'dent' in the recovery of the <strong>Electrical Equipment</strong> Sector.  The Information Technology Sector is also losing momentum, as shown in <a href="https://www.smartkarma.com/entities/otsuka-corp" target="_blank" data-smartkarma-citation="entities:7327:1" rel="noopener">Otsuka (4768 JP)</a>' full-year results and FY2020 forecasts with revenue expected to decline by 3%.</p>

Source • Japan Analytics3RD FEBRUARY ROUNDUP - The 107 Results and 44 Forecast/Revision announcements yesterday nudged both our Scores lower again as the Total Market Value reached a three-month low. We expect the Results Score to break below 0.58 and the Forecast/Revision Score to turn negative later in the week.• ALL-MARKET COMPOSITE •Source • Japan AnalyticsALL-MARKET COMPOSITE - As of Friday's close. the aggregate forecast for Operating Income is now ¥800 billion below the TTM results, while the Net Income forecast trails by ¥400 billion. The market's forward PE is still an elevated 16.9x based on a Total Market Value (TMV) of ¥666 trillion.  TTM Net income has declined by 18% in the last twelve months, while the TMV has risen by 19%.• SECTOR TIMELINE •Source • Japan AnalyticsTIMELINE - The largest on-day move was from Non-Bank Finance following Orix (8591 JP)'s return to positive earnings momentum. Shionogi (4507 JP)' s downward revision continued the downtrend in the Healthcare Sector, while Mitsubishi Electric (6503 JP) put a 'dent' in the recovery of the Electrical Equipment Sector.  The Information Technology Sector is also losing momentum, as shown in Otsuka (4768 JP)' full-year results and FY2020 forecasts with revenue expected to decline by 3%.

🇯🇵 JAPAN • Results & Revisions Daily Roundup - 3rd February ▲8591 6752 3064 ▼6503 4768 6920

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<p>We continue to see coronavirus concerns as helping correct the excess bullish sentiment across global equity markets in the short-term. Additionally, considering the dearth of breakdowns, we continue to believe this is a bull market until proven otherwise and a “buy the dip” strategy remains warranted. We recap importat technical levels across markets and highlight <span>opportunities within the Services, Technology, Financial Services, and Staples Sectors.</span></p>

We continue to see coronavirus concerns as helping correct the excess bullish sentiment across global equity markets in the short-term. Additionally, considering the dearth of breakdowns, we continue to believe this is a bull market until proven otherwise and a “buy the dip” strategy remains warranted. We recap importat technical levels across markets and highlight opportunities within the Services, Technology, Financial Services, and Staples Sectors.

Global Equity Strategy: Growth Over Value

Equity Analyst, LightStream Research

Aqila Ali

Equity Analyst

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.

<p>The highlights for December are as follows:</p><ul><li>Panasonic:</li></ul><ul><li><ul>
<li>The labour shortage at the Nevada plant is said to be under control. Thus, delays in supply do not seem to be a concern.</li>
<li>A partnership with Tropos should strengthen the software side of Panasonic’s business. Motors. Panasonic’s software platform, OneConnect, to be used in Tropos manufactured EVs designed for use in last-mile applications and emergency.</li>
<li>Efforts by the company to improve its battery business and adopt CASE related technologies (as highlighted in our previous monthlies) are likely to bring in growth only over the medium term. For the upcoming quarter, consensus and our estimates are for a decline in revenue and OP given the unfavourable market conditions and struggle in battery business through last year.</li>
</ul></li></ul><ul>
<li>There will be no further cut in subsidy in China for NEVs. With the subsidy staying intact, demand for NEVs is likely to improve (or at least not decline further) suggesting better market conditions for battery players globally (who invested in China despite the country’s slowdown last year).</li>
<li>CATL was quiet last month, although there was news about the company being a possible buyer of the US luxury car brand-Aston Martin. This seems more likely to be merely a rumour and we feel that CATL does not seem to have strong synergies to do so.</li>
<li>South Korean players had no major battery highlights last month.</li>
<li>CATL’s share price continued to rise last month, followed by Panasonic, both outperforming the market. The Korean players and BYD continued to see relatively weak performance during the month.</li>
</ul><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/114/370/original/image_45031531121579491234217.png?1579491236" class="editor-image img-responsive" data-smartkarma-image-id="114370"></figure><div class="content-remarks"><p><em>Source: CapIQ</em></p></div>

The highlights for December are as follows:Panasonic:
The labour shortage at the Nevada plant is said to be under control. Thus, delays in supply do not seem to be a concern.
A partnership with Tropos should strengthen the software side of Panasonic’s business. Motors. Panasonic’s software platform, OneConnect, to be used in Tropos manufactured EVs designed for use in last-mile applications and emergency.
Efforts by the company to improve its battery business and adopt CASE related technologies (as highlighted in our previous monthlies) are likely to bring in growth only over the medium term. For the upcoming quarter, consensus and our estimates are for a decline in revenue and OP given the unfavourable market conditions and struggle in battery business through last year.

There will be no further cut in subsidy in China for NEVs. With the subsidy staying intact, demand for NEVs is likely to improve (or at least not decline further) suggesting better market conditions for battery players globally (who invested in China despite the country’s slowdown last year).
CATL was quiet last month, although there was news about the company being a possible buyer of the US luxury car brand-Aston Martin. This seems more likely to be merely a rumour and we feel that CATL does not seem to have strong synergies to do so.
South Korean players had no major battery highlights last month.
CATL’s share price continued to rise last month, followed by Panasonic, both outperforming the market. The Korean players and BYD continued to see relatively weak performance during the month.
Source: CapIQ

EV Battery Monthly: No Further Cut in Subsidies for NEVs in China Suggests Better Market Conditions

<p>The highlights for November are as follows:</p><ul><li>
<a href="https://www.smartkarma.com/entities/panasonic-corp" target="_blank" data-smartkarma-citation="entities:222:1" rel="noopener">Panasonic Corp (6752 JP)</a>:</li></ul><ul><li><ul>
<li>Reports hesitance to continue with Tesla’s expansion plans.</li>
<li>The company instead focuses on improving its battery management technology. Our thoughts on the news were covered in detail in “ <a href="https://www.smartkarma.com/insights/says-no-to-tesla-in-china-concentrates-on-improving-battery-quality-is-now-using-ic-chips" target="_blank" data-smartkarma-citation="insights:34849" rel="noopener">Says ‘No’ to Tesla in China; Concentrates on Improving Battery Quality, Is Now Using IC Chips</a>”.</li>
<li>The company sells its semiconductor business, restructuring itself to focus more on its battery business.</li>
</ul></li></ul><ul>
<li>
<a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem Ltd (051910 KS)</a> and  <a href="https://www.smartkarma.com/entities/sk-innovation-co-ltd" target="_blank" data-smartkarma-citation="entities:1268:1" rel="noopener">Sk Innovation (096770 KS)</a> seem to be focusing on building their businesses after their lawsuit feud.  LG Chem partners with GM towards possibly increasing its foothold in the US. SK Innovation enters China, attracting orders for the Mercedes hybrid in China.</li>
<li>
<a href="https://www.smartkarma.com/entities/samsung-sdi-co-ltd" target="_blank" data-smartkarma-citation="entities:503:1" rel="noopener">Samsung Sdi (006400 KS)</a> continues to enhance upstream while attracting long-term orders from BMW.</li>
<li>
<a href="https://www.smartkarma.com/entities/contemporary-amperex-techn-a" target="_blank" data-smartkarma-citation="entities:24404:1" rel="noopener">CATL (A) (300750 CH)</a>, however, attracted a larger share of BMW’s orders.</li>
<li>Overall, competition in the battery market is intensifying, and the players are entering into partnerships and more long-term agreements to keep business going.</li>
<li>CATL improved during the month. Panasonic outperformed the stock market and did better than its rivals. The Korean players and <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK</a>) saw relatively weak performance during the month.</li>
</ul><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/111/173/original/image_47290169921576639308900.png?1576639310" class="editor-image img-responsive"></figure><div class="content-remarks"><p><em>Source:CapIQ</em></p></div>

The highlights for November are as follows:
Panasonic Corp (6752 JP):
Reports hesitance to continue with Tesla’s expansion plans.
The company instead focuses on improving its battery management technology. Our thoughts on the news were covered in detail in “ Says ‘No’ to Tesla in China; Concentrates on Improving Battery Quality, Is Now Using IC Chips”.
The company sells its semiconductor business, restructuring itself to focus more on its battery business.


LG Chem Ltd (051910 KS) and  Sk Innovation (096770 KS) seem to be focusing on building their businesses after their lawsuit feud.  LG Chem partners with GM towards possibly increasing its foothold in the US. SK Innovation enters China, attracting orders for the Mercedes hybrid in China.

Samsung Sdi (006400 KS) continues to enhance upstream while attracting long-term orders from BMW.

CATL (A) (300750 CH), however, attracted a larger share of BMW’s orders.
Overall, competition in the battery market is intensifying, and the players are entering into partnerships and more long-term agreements to keep business going.
CATL improved during the month. Panasonic outperformed the stock market and did better than its rivals. The Korean players and BYD (1211 HK) saw relatively weak performance during the month.
Source:CapIQ

EV Batteries Monthly: Panasonic Says ‘No’ to Tesla, South Korean Players Focus on China and the US

Japan

Panasonic Corporation manufactures electric and electronic products. The Company produces home appliances, car navigation systems, digital devices, computer peripherals, telecommunications, industrial equipment, and electronic parts. Panasonic has associated companies around the world.

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Panasonic Corp (6752 JP)

Factories Outside of China Now Halting Production as Virus Impact Expands

As a follow up to our note Evidence of Global Slowdown Accumulates as Stores Remain Closed and Supply Chains Are Crippled, reports that business...

Vincent Fernando, CFA

🇯🇵 JAPAN • Results & Revisions Daily Roundup - 3rd February ▲8591 6752 3064 ▼6503 4768 6920

3RD FEBRUARY ROUNDUP - The 107 Results and 44 Forecast/Revision announcements yesterday nudged both our Scores lower again as the Total Market...

Campbell Gunn

Global Equity Strategy: Growth Over Value

We continue to see coronavirus concerns as helping correct the excess bullish sentiment across global equity markets in the short-term....

Vermilion Research

EV Battery Monthly: No Further Cut in Subsidies for NEVs in China Suggests Better Market Conditions

The highlights for December are as follows:Panasonic: The labour shortage at the Nevada plant is said to be under control. Thus, delays in supply...

Aqila Ali

EV Batteries Monthly: Panasonic Says ‘No’ to Tesla, South Korean Players Focus on China and the US

The highlights for November are as follows: Panasonic Corp (6752 JP): Reports hesitance to continue with Tesla’s expansion plans. The company...

Aqila Ali

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