Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

NTT (Nippon Telegraph & Telephone) / Event-Driven

<ul>
<li>2022 Version of <strong>JAPAN PASSIVE: Who Owns What?</strong> where we break down the major (and minor) passive tracking indices and which category of investor owns how much of each. </li>
<li>Even if you do not "play" index changes, understanding impact is important. <a href="https://www.smartkarma.com/entities/japan-exchange-group-inc" target="_blank" data-smartkarma-citation="entities:11266:1" rel="noopener">Japan Exchange Group (8697 JP)</a> entered Nikkei 225 in July 2020 after rising 30%. That was the top.</li>
<li>Understanding the nature of the ownership and flows is crucial to understanding how to trade certain stocks. </li>
</ul>


2022 Version of JAPAN PASSIVE: Who Owns What? where we break down the major (and minor) passive tracking indices and which category of investor owns how much of each. 
Even if you do not "play" index changes, understanding impact is important. Japan Exchange Group (8697 JP) entered Nikkei 225 in July 2020 after rising 30%. That was the top.
Understanding the nature of the ownership and flows is crucial to understanding how to trade certain stocks. 


Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>Fanuc's share price is geared into the machine tool cycle. Unfortunately the cycle is rolling over</li>
<li>Fanuc is also facing extreme margin pressure from rising parts and logistics costs</li>
<li>We expect the share price to trade down 20% from here and bottom at around 2x book value</li>
</ul>


Fanuc's share price is geared into the machine tool cycle. Unfortunately the cycle is rolling over
Fanuc is also facing extreme margin pressure from rising parts and logistics costs
We expect the share price to trade down 20% from here and bottom at around 2x book value


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.

<ul>
<li>Despite a dead cat bounce in Robomachine coming through as we suggested Fanuc’s 4Q OP missed consensus estimates by 14%. </li>
<li>Guidance was strong however with revenue guidance of ¥825.5bn materially above consensus’ ¥797.7bn. </li>
<li>This continues a pattern of weak results and strong guidance in the FA sector going into a tightening cycle which is concerning.</li>
</ul>


Despite a dead cat bounce in Robomachine coming through as we suggested Fanuc’s 4Q OP missed consensus estimates by 14%. 
Guidance was strong however with revenue guidance of ¥825.5bn materially above consensus’ ¥797.7bn. 
This continues a pattern of weak results and strong guidance in the FA sector going into a tightening cycle which is concerning.


Fanuc – Frothy Current Conditions Set Up Big Potential Disappointment

<ul>
<li>Machine tool orders are losing momentum given the geopolitical risks and shortage of materials</li>
<li>Margins are also order pressure given soaring materials and transportation costs</li>
<li>FY3/23 OP guidance misses consensus, but it is not conservative. We expect the share price to head lower</li>
</ul>


Machine tool orders are losing momentum given the geopolitical risks and shortage of materials
Margins are also order pressure given soaring materials and transportation costs
FY3/23 OP guidance misses consensus, but it is not conservative. We expect the share price to head lower


Fanuc (6954 JP) | Orders Slide as Automation Slows

Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

<ul>
<li>Investing in factory automation, power semiconductors and electric vehicle motors on a long-term view while interest rates rise and the economy weakens.</li>
<li>Difficult operating environment now: Factory automation turning down; automotive hit by high materials costs and the semiconductor shortage.</li>
<li>Share price down 25% from its 52-week high. Selling at 14x FY Mar-22 EPS guidance after a downward revision, which compares with a 9x - 20x 5-year P/E range.</li>
</ul>


Investing in factory automation, power semiconductors and electric vehicle motors on a long-term view while interest rates rise and the economy weakens.
Difficult operating environment now: Factory automation turning down; automotive hit by high materials costs and the semiconductor shortage.
Share price down 25% from its 52-week high. Selling at 14x FY Mar-22 EPS guidance after a downward revision, which compares with a 9x - 20x 5-year P/E range.


Mitsubishi Electric (6503 JP): Buy on Weakness for the Long Term

Japan

FANUC CORPORATION manufactures factory automation (FA) systems and equipments, and robots. The Company's products include computerized numerically-controlled (CNC) equipment, servo motors, laser systems, industrial robots, wire-cut electric discharge machines, and CNC drill.  Fanuc participates in a joint venture with General Electric in the FA field.

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Fanuc Corp (6954 JP)

JAPAN PASSIVE: Who Owns What 2022?

JAPAN PASSIVE: Who Owns What 2022 Version. This is a mark to market of the passive tracking data from domestic and international investors in...

Travis Lundy

Fanuc (6954 JP) | Beware of the Cycle

We remain bearish on Fanuc for two key reasons: (1) its fortunes are tied to the machine tool order cycle and (2) margin pressure due to rising...

Mark Chadwick

Fanuc – Frothy Current Conditions Set Up Big Potential Disappointment

Fanuc continues a pattern of weak results and strong guidance in the FA sector going into a tightening cycle which is concerning and we expect...

Mio Kato

Fanuc (6954 JP) | Orders Slide as Automation Slows

Machine tool orders are losing momentum given the geopolitical risks and shortage of materials. We expect conditions to remain weak for several...

Mark Chadwick

Mitsubishi Electric (6503 JP): Buy on Weakness for the Long Term

Investing in long-term growth in factory automation, power devices and EVs, current environment difficult. Share price down 25% from last peak,...

Scott Foster

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