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.

Event-Driven

<ul>
<li>At the beginning of the month, we suggested that setting up trades based on TOPIX outperforming Nikkei looked interesting. </li>
<li>This skew trade has a slight inherent short bias as Nikkei is more growth skewed but it has nevertheless generated a positive return. </li>
<li>That is despite Nikkei rising 3.8% since we published our initial note.</li>
</ul>


At the beginning of the month, we suggested that setting up trades based on TOPIX outperforming Nikkei looked interesting. 
This skew trade has a slight inherent short bias as Nikkei is more growth skewed but it has nevertheless generated a positive return. 
That is despite Nikkei rising 3.8% since we published our initial note.


Checking in on the Topix-Nikkei Skew Trade

<ul>
<li>Early last year as COVID was breaking and the BOJ doubled its ETF purchases shifting to TOPIX ETFs from Nikkei ETFs we brought up this trade. </li>
<li>With a long weekend adding to the mix conditions were abnormal but our suggested trades generated 10-12% pure alpha within four trading days. </li>
<li>This trade is starting to look interesting to us again though returns are likely to be less explosive but more persistent this time.</li>
</ul>


Early last year as COVID was breaking and the BOJ doubled its ETF purchases shifting to TOPIX ETFs from Nikkei ETFs we brought up this trade. 
With a long weekend adding to the mix conditions were abnormal but our suggested trades generated 10-12% pure alpha within four trading days. 
This trade is starting to look interesting to us again though returns are likely to be less explosive but more persistent this time.


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

iShares MSCI ACWI ETF / Technical Analysis

<ul>
<li>Market dynamics remain healthy and we are continuing to see signs that suggest global equities are entering a new broad-based bull market.</li>
<li>Led by strength from the US, the MSCI ACWI index (ACWI-US) recently broke out to new highs above the key $105.40 resistance level, a bullish sign for global equities.</li>
<li>Global sovereign yields have moved lower in recent weeks. We expect rates to find support near current levels, creating an opportunity to add to value Sectors.</li>
</ul>


Market dynamics remain healthy and we are continuing to see signs that suggest global equities are entering a new broad-based bull market.
Led by strength from the US, the MSCI ACWI index (ACWI-US) recently broke out to new highs above the key $105.40 resistance level, a bullish sign for global equities.
Global sovereign yields have moved lower in recent weeks. We expect rates to find support near current levels, creating an opportunity to add to value Sectors.


MSCI ACWI Breaking To New Highs; Buying Financials, Consumer Discretionary, Industrials, Materials

Equity Bottom-Up

Mitsubishi Motors 2QFY22 results were strong with revenues of ¥459bn (+6.2% QoQ, +32.8% YoY) and operating profit of ¥14.6bn (3.2% OPM compared to the 2.5% OPM of 1QFY22). Guidance was revised up to ¥60bn, just below our ¥65bn call from last quarter.

Mitsubishi Motors 2QFY22 results were strong with revenues of ¥459bn (+6.2% QoQ, +32.8% YoY) and operating profit of ¥14.6bn (3.2% OPM compared to the 2.5% OPM of 1QFY22). Guidance was revised up to ¥60bn, just below our ¥65bn call from last quarter.

Mitsubishi Motor reported 1QFY22 results on 27th July which saw revenues of ¥432bn (-14% QoQ, +88% YoY) and OP of ¥10.6bn (OPM of 2.5% compared to the OPM of -1.7% in 4QFY21).The reported revenue was 4.1% higher than consensus estimates while OP beat consensus estimates for a loss of ¥6.9bn. This is the first datapoint for Japanese automotive earnings this quarter and points to our call for broad beats across the industry being correct.Guidance was revised up from ¥30bn in OP to ¥40bn but remains conservative.<table class="table table-striped"><tbody>
<tr>
<td style="width: 40.92%;">In ¥bn</td>
<td style="width: 19.92%;">Revenue </td>
<td style="width: 22.06%;">OP</td>
<td style="width: 17.08%;">OPM</td>
</tr>
<tr>
<td style="width: 40.92%;">Results - 1QFY22</td>
<td style="width: 19.92%;">               432</td>
<td style="width: 22.06%;">                10.6</td>
<td style="width: 17.08%;">2.5%</td>
</tr>
<tr>
<td style="width: 40.92%;">Consensus - 1QFY22</td>
<td style="width: 19.92%;">415</td>
<td style="width: 22.06%;">              -6.9</td>
<td style="width: 17.08%;">-1.7%</td>
</tr>
<tr>
<td style="width: 40.92%;">Surprise</td>
<td style="width: 19.92%;">4.1%</td>
<td style="width: 22.06%;">NM</td>
<td style="width: 17.08%;">4.1% points</td>
</tr>
<tr>
<td style="width: 40.92%;"> </td>
<td style="width: 19.92%;"> </td>
<td style="width: 22.06%;"> </td>
<td style="width: 17.08%;"> </td>
</tr>
<tr>
<td style="width: 40.92%;">Guidance - FY22</td>
<td style="width: 19.92%;">           2,080</td>
<td style="width: 22.06%;">                    40</td>
<td style="width: 17.08%;">1.9%</td>
</tr>
<tr>
<td style="width: 40.92%;">Consensus - FY22</td>
<td style="width: 19.92%;">           1,889</td>
<td style="width: 22.06%;">2.5</td>
<td style="width: 17.08%;">0.1%</td>
</tr>
<tr>
<td style="width: 40.92%;">Difference</td>
<td style="width: 19.92%;">10.1%</td>
<td style="width: 22.06%;">1516.4%</td>
<td style="width: 17.08%;">1.8% points</td>
</tr>
</tbody></table><div style="text-align: left;" class="content-caption">Source: Company disclosures, CapIQ</div>

Mitsubishi Motor reported 1QFY22 results on 27th July which saw revenues of ¥432bn (-14% QoQ, +88% YoY) and OP of ¥10.6bn (OPM of 2.5% compared to the OPM of -1.7% in 4QFY21).The reported revenue was 4.1% higher than consensus estimates while OP beat consensus estimates for a loss of ¥6.9bn. This is the first datapoint for Japanese automotive earnings this quarter and points to our call for broad beats across the industry being correct.Guidance was revised up from ¥30bn in OP to ¥40bn but remains conservative.

In ¥bn
Revenue 
OP
OPM


Results - 1QFY22
               432
                10.6
2.5%


Consensus - 1QFY22
415
              -6.9
-1.7%


Surprise
4.1%
NM
4.1% points


 
 
 
 


Guidance - FY22
           2,080
                    40
1.9%


Consensus - FY22
           1,889
2.5
0.1%


Difference
10.1%
1516.4%
1.8% points

Source: Company disclosures, CapIQ

Mitsubishi Motors – Kicking Off 1QFY22 Auto Earnings in Style

Japan

MITSUBISHI MOTORS CORPORATION develops and manufactures passenger cars and its related parts.  The Company has production facilities in Japan, the US, and Thailand.  Mitsubishi Motors Corp provides vehicle-related financing and leasing service through its subsidiary.

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

Mitsubishi Motors (7211 JP)

Checking in on the Topix-Nikkei Skew Trade

Our TOPIX-Nikkei skew trade has a slight inherent short bias as Nikkei is more growth skewed but it has nevertheless generated a positive return...

Mio Kato

Revisiting the Topix-Nikkei Skew Trade

Early last year we suggested trading this skew which would have generated 10-12% pure alpha within four trading days. This trade is starting to...

Mio Kato

MSCI ACWI Breaking To New Highs; Buying Financials, Consumer Discretionary, Industrials, Materials

Global sovereign yields have moved lower in recent weeks. We expect rates to find support near current levels, and recommend adding exposure to...

Vermilion Research

Mitsubishi Motors – Recovery Continues

Mitsubishi Motors 2QFY22 results were strong and guidance was revised up to ¥60bn, just below our ¥65bn call from last quarter.

Mio Kato

Mitsubishi Motors – Kicking Off 1QFY22 Auto Earnings in Style

Mitsubishi Motors posted a significant beat at 1Q signalling that auto sector earnings are likely to be extremely strong as we have been saying.

Mio Kato

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)