Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>We turned bullish on Komatsu a year ago and the stock has since returned over 50%.</li>
<li>Komatsu is trading at 10x EV/EBIT versus an historical average of 11x, with a target price of ¥5,100/share.</li>
<li>Komatsu represents a cheaper way to play the theme of onshoring and long-term mining demand from electrification.</li>
</ul>


We turned bullish on Komatsu a year ago and the stock has since returned over 50%.
Komatsu is trading at 10x EV/EBIT versus an historical average of 11x, with a target price of ¥5,100/share.
Komatsu represents a cheaper way to play the theme of onshoring and long-term mining demand from electrification.


Komatsu (6301) | A Winning Bet on Onshoring and Electrification

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>Last week (Aug. 18) we discussed the 10-year Treasury yield and DXY testing respective resistance (4.3%-4.35% and $103.50-$103.70).</li>
<li>As long as no decisive breakouts in the 10-year yield or DXY, we were buyers on the pullback to $93 on MSCI ACWI (ACWI-US).</li>
<li>Outside of our overweight countries (Japan, India, Taiwan, Greece), defensive Sectors continue to lag. We highlight buys in Technology, Services, Consumer Discretionary, Industrials, Materials/Energy, and Financials.</li>
</ul>


Last week (Aug. 18) we discussed the 10-year Treasury yield and DXY testing respective resistance (4.3%-4.35% and $103.50-$103.70).
As long as no decisive breakouts in the 10-year yield or DXY, we were buyers on the pullback to $93 on MSCI ACWI (ACWI-US).
Outside of our overweight countries (Japan, India, Taiwan, Greece), defensive Sectors continue to lag. We highlight buys in Technology, Services, Consumer Discretionary, Industrials, Materials/Energy, and Financials.


Key Supports Holding Strong; 10-Year Treasury Yield Below Key Resistance; Buys in Non-Defensives

<ul>
<li>We remain bullish on Komatsu despite returning a positive 37% return over the past year. </li>
<li>Q1 results are likely to exceed expectations and guidance is likely to be cautious, due to forex, pricing and cost factors.</li>
<li>Komatsu is still attractively valued compared to its peers and historical averages, and has 20% upside potential.</li>
</ul>


We remain bullish on Komatsu despite returning a positive 37% return over the past year. 
Q1 results are likely to exceed expectations and guidance is likely to be cautious, due to forex, pricing and cost factors.
Komatsu is still attractively valued compared to its peers and historical averages, and has 20% upside potential.


Komatsu (6301) | The Back Test Worked. Now What?

<ul>
<li>Global equities (MSCI ACWI) have marginally broken above the top-end of our anticipated 2023 trading range of $93 on ACWI-US.</li>
<li>In our 4/18/23 Int’l MacroVision we acknowledged that a break above $93 and a reach to $96-$97 was also possible – and so far, this is what has played out.</li>
<li>We will continue to watch the $93 level for a potential false breakout, but as long as the ACWI-US is above $90.50, we cannot be bearish.</li>
</ul>


Global equities (MSCI ACWI) have marginally broken above the top-end of our anticipated 2023 trading range of $93 on ACWI-US.
In our 4/18/23 Int’l MacroVision we acknowledged that a break above $93 and a reach to $96-$97 was also possible – and so far, this is what has played out.
We will continue to watch the $93 level for a potential false breakout, but as long as the ACWI-US is above $90.50, we cannot be bearish.


MSCI EM Improving; Buys in Value & Large-Cap EM; Remain Overweight Japan, India, Taiwan, and Greece

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Event-Driven

<ul>
<li>After the market close on 20 June, Doosan Enerbility announced that it will sell 5 million shares of Doosan Bobcat through a block deal worth about 300 billion won.</li>
<li>The block deal price range is from 54,800 won to 56,200 won, which represents a discount range from 6.18% to 8.51% (versus current price).</li>
<li>We have a negative view of Doosan Bobcat block deal as we expect lower share price of Doosan Bobcat in 2H 2023 due to construction sector downturn in North America.</li>
</ul>


After the market close on 20 June, Doosan Enerbility announced that it will sell 5 million shares of Doosan Bobcat through a block deal worth about 300 billion won.
The block deal price range is from 54,800 won to 56,200 won, which represents a discount range from 6.18% to 8.51% (versus current price).
We have a negative view of Doosan Bobcat block deal as we expect lower share price of Doosan Bobcat in 2H 2023 due to construction sector downturn in North America.


Doosan Bobcat Block Deal Sale: Concerned About North America Construction Sector Downturn

Japan

KOMATSU LTD. manufactures and sells construction and mining machinery, including excavators, bulldozers, and wheel loaders.  The Company, operating on a global scale, also produces forklift trucks and engineering equipment such as press system.

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Komatsu Ltd (6301 JP)

Komatsu (6301) | A Winning Bet on Onshoring and Electrification

Komatsu stock has surged over 50% in a year but remains undervalued, making it an attractive investment for onshoring and mining demand related to...

Mark Chadwick

Key Supports Holding Strong; 10-Year Treasury Yield Below Key Resistance; Buys in Non-Defensives

We remain constructive on global equities as long as $ACWI remains above $93 (1+ year base support). 10-year Treasury yield $TNX holding below 4.3...

Vermilion Research

Komatsu (6301) | The Back Test Worked. Now What?

Komatsu: A strong buy with 20% upside. Q1 results to beat expectations, guidance is too cautious. Valuation still attractive.

Mark Chadwick

MSCI EM Improving; Buys in Value & Large-Cap EM; Remain Overweight Japan, India, Taiwan, and Greece

MSCI EM Improving; Buys in Value & Large-Cap EM $TSM #Samsung $BABA; Remain Overweight Japan, India, Taiwan, and Greece. $ACWI break above $93 and...

Vermilion Research

Doosan Bobcat Block Deal Sale: Concerned About North America Construction Sector Downturn

We have a negative view of Doosan Bobcat block deal as we expect lower share price of Doosan Bobcat in 2H 2023 due to construction sector downturn...

Douglas Kim

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Komatsu (6301) | A Winning Bet on Onshoring and Electrification

​Komatsu stock has surged over 50% in a year but remains undervalued, making it an attractive investment for onshoring and mining demand related to...

Mark Chadwick

Key Supports Holding Strong; 10-Year Treasury Yield Below Key Resistance; Buys in Non-Defensives

We remain constructive on global equities as long as $ACWI remains above $93 (1+ year base support). 10-year Treasury yield $TNX holding below 4.3...

Vermilion Research

Komatsu (6301) | The Back Test Worked. Now What?

Komatsu: A strong buy with 20% upside. Q1 results to beat expectations, guidance is too cautious. Valuation still attractive.

Mark Chadwick

MSCI EM Improving; Buys in Value & Large-Cap EM; Remain Overweight Japan, India, Taiwan, and Greece

MSCI EM Improving; Buys in Value & Large-Cap EM $TSM #Samsung $BABA; Remain Overweight Japan, India, Taiwan, and Greece. $ACWI break above $93 and...

Vermilion Research

Doosan Bobcat Block Deal Sale: Concerned About North America Construction Sector Downturn

We have a negative view of Doosan Bobcat block deal as we expect lower share price of Doosan Bobcat in 2H 2023 due to construction sector downturn...

Douglas Kim

Komatsu stock has surged over 50% in a year but remains undervalued, making it an attractive investment for onshoring and mining demand related to...