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>Recent events in Ukraine should be highly favourable for Chiyoda as they raise the potential for LNG capex. </li>
<li>US to Europe deliveries could involve significant liquefaction capacity build-out at good pricing points and even hydrogen could be in the mix. </li>
<li>If orders come through and rising profit drives the share price up that could also lead to positive capital structure changes.</li>
</ul>


Recent events in Ukraine should be highly favourable for Chiyoda as they raise the potential for LNG capex. 
US to Europe deliveries could involve significant liquefaction capacity build-out at good pricing points and even hydrogen could be in the mix. 
If orders come through and rising profit drives the share price up that could also lead to positive capital structure changes.


Chiyoda – Breaking Out of Downtrend and Setup For a Pref Buyback

We have covered Chiyoda’s SPERA hydrogen technology since 2017 and have been fascinated by the technology’s potential to make existing oil and gas infrastructure usable in a hydrogen transition. Now in partnership with ENEOS and the Queensland University of Technology, Chiyoda appears to have made significant further strides in reducing costs and investment burdens in the hydrogen supply chain.

We have covered Chiyoda’s SPERA hydrogen technology since 2017 and have been fascinated by the technology’s potential to make existing oil and gas infrastructure usable in a hydrogen transition. Now in partnership with ENEOS and the Queensland University of Technology, Chiyoda appears to have made significant further strides in reducing costs and investment burdens in the hydrogen supply chain.

Chiyoda – This Just Removed a Big Hydrogen Bottleneck

Thematic (Sector/Industry)

There are signs of movement in Japan in order to try and hit its 2050 carbon neutrality goal. The clearest sign was the recent restart of an old nuclear reactor and nuclear power is likely to be a key contributor towards this goal, however, in addition to solar, onshore and offshore wind and geothermal, on a timeline that long, hydrogen may actually be the key play here.

There are signs of movement in Japan in order to try and hit its 2050 carbon neutrality goal. The clearest sign was the recent restart of an old nuclear reactor and nuclear power is likely to be a key contributor towards this goal, however, in addition to solar, onshore and offshore wind and geothermal, on a timeline that long, hydrogen may actually be the key play here.

<ul>
<li>Chiyoda results were slightly weak driven by a poor gross margin in the fourth quarter but revenue guidance was punchy at ¥500bn vs. consensus at ¥354bn. </li>
<li>We had flagged previously that Chiyoda would be moving to the favourable portion of the construction s-curve shortly and that appears to be coming through. </li>
<li>That drove OP guidance of ¥20bn which is far above consensus at ¥14bn and could eventually help Chiyoda reduce potential dilution.</li>
</ul>


Chiyoda results were slightly weak driven by a poor gross margin in the fourth quarter but revenue guidance was punchy at ¥500bn vs. consensus at ¥354bn. 
We had flagged previously that Chiyoda would be moving to the favourable portion of the construction s-curve shortly and that appears to be coming through. 
That drove OP guidance of ¥20bn which is far above consensus at ¥14bn and could eventually help Chiyoda reduce potential dilution.


Equity Analyst, Event-driven, Quiddity Advisors

Janaghan Jeyakumar, CFA

Equity Analyst, Event-driven

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>JPX-Nikkei 400 is composed of common stocks listed in the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.</li>
<li>A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year.</li>
<li>Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-February 2022.</li>
</ul>


JPX-Nikkei 400 is composed of common stocks listed in the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year.
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-February 2022.


JPX-Nikkei 400 Rebalance 2022: Leaderboard End-Feb 2022

Japan

CHIYODA CORPORATION constructs, inspects, and maintains industrial plants around the world.  Those plants include oil refinery, petrochemical, food, and pharmaceutical plants.  The Company also provides comprehensive engineering services for such as energy saving, factory automation (FA), and environmental preservation for water treatment and soil purification.

Chiyoda Corp (6366 JP)

Chiyoda – Breaking Out of Downtrend and Setup For a Pref Buyback

As Chiyoda stocks breaks out of its downtrend on strong volume we ponder European LNG demand, hydrogen technology and buybacks of pref shares.

Mio Kato

Chiyoda – This Just Removed a Big Hydrogen Bottleneck

In partnership with ENEOS and the Queensland University of Technology, Chiyoda appears to have made significant further strides in reducing costs...

Mio Kato

Japan Hydrogen Plays

As interest continues to build in Japan's hydrogen economy plans it is still difficult to identify attractive thematic plays on the idea... except...

Mio Kato

Chiyoda – Just Getting Started

Chiyoda guidance was extremely strong and well above consensus but could still prove conservative while valuations remain depressed even ignoring...

Mio Kato

JPX-Nikkei 400 Rebalance 2022: Leaderboard End-Feb 2022

A look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-February 2022.

Janaghan Jeyakumar, CFA