Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>There are 39 adds/34 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.</li>
<li>Based on the adds, deletes and capping changes, we estimate one way turnover of 6.7% and a round-trip trade of JPY 946bn (US$6.4bn).</li>
<li>The adds have outperformed the deletes over the last year and there has been a move higher in the last few days too.</li>
</ul>


There are 39 adds/34 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.
Based on the adds, deletes and capping changes, we estimate one way turnover of 6.7% and a round-trip trade of JPY 946bn (US$6.4bn).
The adds have outperformed the deletes over the last year and there has been a move higher in the last few days too.


JPX Nikkei 400 Index Rebalance: US$6.4bn Round-Trip Trade Coming Up

Japanese Turnaround Situations, Short-Ideas, Azabu Research

Michael Allen

Japanese Turnaround Situations, Short-Ideas

Azabu Research

Azabu Research is a publishing and consulting firm focused on distressed equities in the Japanese market. We specialize in turnaround strategies, corporate combinations, divestitures, and restructuring.

Publisher of the Tokyo Turnaround Letter, which conducts the most thorough research possible of publicly available information, including forensic tests for fraudulent overstatement of assets and understatement of liabilities, as well as rigorous market and industry analysis to assess the underlying strengths of the company’s products or services, the appropriateness of the company’s turnaround strategy, and the skill of its current management team. The average length of a report exceeds 25 pages of text and tables, excluding any disclosures or executive summaries.

We have more than 30 years of experience in applying this process to distressed equities in Japan. Additionally, subscribers have free access to detailed, yet easily navigated earnings models for the target company as well as the top five comparable companies, and unlimited access to the analyst for follow-up questions.

Azabu Research also conducts be-spoke research on a project basis, and provides consulting services to companies looking to restructure, divest, make acquisitions, go public, or improve investor sentiment toward their stock.

Independent Research and Consulting Firm

Equity Bottom-Up

<ul>
<li>Taiyo Yuden underperformed its peers in electronic components by 29% over the past year, but its change in operating profit margin should outperform peers by 68% in the current year.</li>
<li>Exposure to the U.S. is less than 7% of direct sales, but probably 25% including indirect exposure. Still, based on supply/demand analysis, we think Yuden is probably tariff proof.  </li>
<li>While rivals have prioritized high-margin device modules to offset component sales declines, Yuden doubled down on its core capacitor and inductor strengths and appears to be coming out ahead.</li>
</ul>


Taiyo Yuden underperformed its peers in electronic components by 29% over the past year, but its change in operating profit margin should outperform peers by 68% in the current year.
Exposure to the U.S. is less than 7% of direct sales, but probably 25% including indirect exposure. Still, based on supply/demand analysis, we think Yuden is probably tariff proof.  
While rivals have prioritized high-margin device modules to offset component sales declines, Yuden doubled down on its core capacitor and inductor strengths and appears to be coming out ahead.


Taiyo Yuden (6976):  A Slightly Different Path to Massively Higher Margins

<ul>
<li>More than 40 potential turnaround stocks will report Q3 results in the coming weeks. </li>
<li>The average spread between the lowest and highest street estimate for the stocks on our target list is a gaping 45%. This doesn't mean what most people think it means.</li>
<li>Rohm, Taiyo Yuden, Yamato, Hamamatsu, JFE, Tsuruha look nice, but we pass on Shiseido and Mazda.</li>
</ul>


More than 40 potential turnaround stocks will report Q3 results in the coming weeks. 
The average spread between the lowest and highest street estimate for the stocks on our target list is a gaping 45%. This doesn't mean what most people think it means.
Rohm, Taiyo Yuden, Yamato, Hamamatsu, JFE, Tsuruha look nice, but we pass on Shiseido and Mazda.


Unloved Japan Roundup: Don't Panic Ahead of Q3 Results Rush

<ul>
<li>Solar power will be cheaper than fossil fuels and EVs will be cheaper than ICE vehicles, but you can't make either without the parts that Rohme excels in. </li>
<li>Tesla is up 201% on speculation about its FSD, but Taiyo Yuden, which makes critical parts in FSD systems is down systems, is down 43%.</li>
<li>Kose is down 49%, largely on China woes, but China is no longer big enough to be a problem, and Japan and other regions growth should start to take over. </li>
</ul>


Solar power will be cheaper than fossil fuels and EVs will be cheaper than ICE vehicles, but you can't make either without the parts that Rohme excels in. 
Tesla is up 201% on speculation about its FSD, but Taiyo Yuden, which makes critical parts in FSD systems is down systems, is down 43%.
Kose is down 49%, largely on China woes, but China is no longer big enough to be a problem, and Japan and other regions growth should start to take over. 


Unloved Japan Roundup-Rohm, Taiyo Yuden, Kose

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Kazuo Inamori (稲盛和夫), founder of <a href="https://www.smartkarma.com/entities/kyocera-corp" target="_blank" data-smartkarma-citation="entities:753:1" rel="noopener">Kyocera Corp (6971 JP)</a> and <a href="https://www.smartkarma.com/entities/kddi-corp" target="_blank" data-smartkarma-citation="entities:639:1" rel="noopener">KDDI Corp (9433 JP)</a> precursor company DDI (Dai Ni Den Den), and former chairman of JAL overseeing restructuring, has passed.</li>
<li>In his own name, he owns 10.212mm shares of Kyocera, and likely other assets. Inheritance tax would be due 10 months from now. </li>
<li>Kyocera is not blowing out the lights compared to peers, but it is relatively inexpensive to its history and peers. If the shares are sold, Kyocera can buy them.</li>
</ul>


Kazuo Inamori (稲盛和夫), founder of Kyocera Corp (6971 JP) and KDDI Corp (9433 JP) precursor company DDI (Dai Ni Den Den), and former chairman of JAL overseeing restructuring, has passed.
In his own name, he owns 10.212mm shares of Kyocera, and likely other assets. Inheritance tax would be due 10 months from now. 
Kyocera is not blowing out the lights compared to peers, but it is relatively inexpensive to its history and peers. If the shares are sold, Kyocera can buy them.


Kyocera (6971 JP) Founder Kazuo Inamori Passes - Implications for Holdings

Japan

Taiyo Yuden Co., Ltd. manufactures and markets electronic components such as, ceramic capacitors, inductors, hybrid integrated circuits (IC), and ferrite. The Company's products include power supplies, inverters, optical disks, filters, coils, and thermistors.

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Taiyo Yuden (6976 JP)

JPX Nikkei 400 Index Rebalance: US$6.4bn Round-Trip Trade Coming Up

There are 39 adds/34 deletes for the JPX Nikkei 400 Index resulting in a one-way turnover of 6.7% and a round-trip trade of JPY 946bn (US$6.4bn)....

Brian Freitas

Taiyo Yuden (6976): A Slightly Different Path to Massively Higher Margins

Taiyo Yuden's focus on core strengths is paying off with a projected 68% increase in operating profit this year. Low U.S. exposure makes it likely...

Michael Allen

Unloved Japan Roundup: Don't Panic Ahead of Q3 Results Rush

Over 40 potential turnaround stocks set to report Q3 results with a 45% spread in estimates, some companies like Rohm and JFE look promising while...

Michael Allen

Unloved Japan Roundup-Rohm, Taiyo Yuden, Kose

The top 5 performing large-cap stocks in Japan returned 241% on average so far in 2024, but these stocks were all on their knees a short while ago....

Michael Allen

Kyocera (6971 JP) Founder Kazuo Inamori Passes - Implications for Holdings

Kyocera founder and KDDI "co-founder" Kazuo Inamori has passed away. He has a ¥80bn stake in Kyocera, and Kyocera owns 15% of KDDI. But overhang is...

Travis Lundy

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52-week Range

Market Cap (USDm)

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JPX Nikkei 400 Index Rebalance: US$6.4bn Round-Trip Trade Coming Up

There are 39 adds/34 deletes for the JPX Nikkei 400 Index resulting in a one-way turnover of 6.7% and a round-trip trade of JPY 946bn (US$6.4bn)....

Brian Freitas

Taiyo Yuden (6976): A Slightly Different Path to Massively Higher Margins

​Taiyo Yuden's focus on core strengths is paying off with a projected 68% increase in operating profit this year. Low U.S. exposure makes it likely...

Michael Allen

Unloved Japan Roundup: Don't Panic Ahead of Q3 Results Rush

​Over 40 potential turnaround stocks set to report Q3 results with a 45% spread in estimates, some companies like Rohm and JFE look promising while...

Michael Allen

Unloved Japan Roundup-Rohm, Taiyo Yuden, Kose

The top 5 performing large-cap stocks in Japan returned 241% on average so far in 2024, but these stocks were all on their knees a short while ago....

Michael Allen

Kyocera (6971 JP) Founder Kazuo Inamori Passes - Implications for Holdings

Kyocera founder and KDDI "co-founder" Kazuo Inamori has passed away. He has a ¥80bn stake in Kyocera, and Kyocera owns 15% of KDDI. But overhang is...

Travis Lundy

Taiyo Yuden's focus on core strengths is paying off with a projected 68% increase in operating profit this year. Low U.S. exposure makes it likely...

Over 40 potential turnaround stocks set to report Q3 results with a 45% spread in estimates, some companies like Rohm and JFE look promising while...