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>Aisin’s 3Q revenue of ¥1,004bn (+13.1% QoQ, -4.3% YoY) and OP of ¥54bn (5.4% OPM) reassured investors and the stock closed 4% higher. </li>
<li>Revenue was 1.7% higher than consensus estimates while OP was 4.9% lower but Aisin maintained guidance. </li>
<li>The real story is the production ramp from here however and risk-reward for Aisin remains phenomenally skewed.</li>
</ul>


Aisin’s 3Q revenue of ¥1,004bn (+13.1% QoQ, -4.3% YoY) and OP of ¥54bn (5.4% OPM) reassured investors and the stock closed 4% higher. 
Revenue was 1.7% higher than consensus estimates while OP was 4.9% lower but Aisin maintained guidance. 
The real story is the production ramp from here however and risk-reward for Aisin remains phenomenally skewed.


Aisin – Toyota Production Plan Indicates Further Upside

Aisin announced its 2QFY22 results on Friday (29th October) and the company recorded revenue of ¥887bn (-9.2% QoQ, -1.5% YoY) and OP of ¥25bn (OPM of 2.9% compared to 4.6% and 6.1% respectively in 2QFY21 and 1QFY22). Like with Denso, Aisin maintained guidance despite relatively weak production volumes and margins. Unlike Denso, Aisin’s valuation multiples look depressed.

Aisin announced its 2QFY22 results on Friday (29th October) and the company recorded revenue of ¥887bn (-9.2% QoQ, -1.5% YoY) and OP of ¥25bn (OPM of 2.9% compared to 4.6% and 6.1% respectively in 2QFY21 and 1QFY22). Like with Denso, Aisin maintained guidance despite relatively weak production volumes and margins. Unlike Denso, Aisin’s valuation multiples look depressed.

Aisin – Underlying Improvements Materially Underappreciated

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Toyota Group autoparts maker <a href="https://www.smartkarma.com/entities/aisin-seiki-co-ltd" target="_blank" data-smartkarma-citation="entities:11809:1" rel="noopener">Aisin Seiki (7259 JP)</a> today <a href="https://www.aisin.com/en/news/2023/005984.html" target="_blank" rel="noopener">announced</a> a new <a href="https://www.aisin.com/en/investors/settlement/uploads/Mid%20Long-term%20IR_presentation_en.pdf" target="_blank" rel="noopener">Medium-Term Plan</a>. They plan to shift their business away from "entrusted" business, towards BEV, Brakes, and "Safe/Comfort Entry"</li>
<li>They aim to grow revenues 25% from 2021 to 2025 and an additional 10-20% by 2030. </li>
<li>They also aim to improve investment and capital efficiency, and that's where we can look at the interesting possibilities.</li>
</ul>


Toyota Group autoparts maker Aisin Seiki (7259 JP) today announced a new Medium-Term Plan. They plan to shift their business away from "entrusted" business, towards BEV, Brakes, and "Safe/Comfort Entry"
They aim to grow revenues 25% from 2021 to 2025 and an additional 10-20% by 2030. 
They also aim to improve investment and capital efficiency, and that's where we can look at the interesting possibilities.


The New Aisin (7259) MTP - Selling Crossholdings, Eventually

Japan Specialist

Mark Chadwick

<ul>
<li>Aisin’s stock price rose by +8% today after the company held its MTP strategy briefing</li>
<li>Aisin to restructure its business portfolio and focus on new growth areas for EV’s - eAxle, battery frames, and braking technologies</li>
<li>Aisin aims to generate ¥400b from balance sheet reform - asset sales, inventory management and sale of cross-shareholding.</li>
</ul>


Aisin’s stock price rose by +8% today after the company held its MTP strategy briefing
Aisin to restructure its business portfolio and focus on new growth areas for EV’s - eAxle, battery frames, and braking technologies
Aisin aims to generate ¥400b from balance sheet reform - asset sales, inventory management and sale of cross-shareholding.


Event-Driven

<ul>
<li>We knew this was coming. We did not know HOW it was coming. The news today has to be seen as a bit of a disappointment.</li>
<li>Why is it a disappointment? <a href="https://www.smartkarma.com/entities/toyota-industries-corp" target="_blank" data-smartkarma-citation="entities:4500:1" rel="noopener">Toyota Industries (6201 JP)</a> is not buying back a big chunk, and there is no offering to oblige new investors to take a look.</li>
<li>This is long, slow, leakage on a company which is not overwhelmingly cheap, where it requires good governance to get out well, and even then...</li>
</ul>


We knew this was coming. We did not know HOW it was coming. The news today has to be seen as a bit of a disappointment.
Why is it a disappointment? Toyota Industries (6201 JP) is not buying back a big chunk, and there is no offering to oblige new investors to take a look.
This is long, slow, leakage on a company which is not overwhelmingly cheap, where it requires good governance to get out well, and even then...


Denso's Big Multi-Year Toyota Industries (6201) Selldown

Japan

Aisin Corporation manufactures and distributes motor vehicle parts. The Company produces drive train, transmissions, clutches, disc brakes, anti-skid brake system, suspensions, oil pumps, power windows, power door locks, and more. Aisin operates sales and production subsidiaries worldwide.

Aisin (7259 JP)

Aisin – Toyota Production Plan Indicates Further Upside

Even a small OP miss (-4.9%) and maintaining guidance allowed Aisin stock to close 4% higher and the real story is the production ramp from here,...

Mio Kato

Aisin – Underlying Improvements Materially Underappreciated

Like with Denso, Aisin maintained guidance despite relatively weak production volumes and margins. Unlike Denso, Aisin’s valuation multiples look...

Mio Kato

The New Aisin (7259) MTP - Selling Crossholdings, Eventually

Aisin presented its revised MTP today, including ¥400bn of b/s restructuring, including cross-holding sales, over the next 2.5yrs. They expect OPMs...

Travis Lundy

Aisin (7259) | MTP Gains Traction

Aisin's stock soars as the company plans to restructure and prioritize EV-related growth areas, aiming to generate ¥400b through balance sheet...

Mark Chadwick

Denso's Big Multi-Year Toyota Industries (6201) Selldown

Toyota Inds got sold on news of Denso's selldown. It's 6-7% of ADV for 2.5yrs so reasonable to expect heaviness. But while forward EPS ratios...

Travis Lundy

Aisin – Toyota Production Plan Indicates Further Upside

Even a small OP miss (-4.9%) and maintaining guidance allowed Aisin stock to close 4% higher and the real story is the production ramp from here,...

Mio Kato

Aisin – Underlying Improvements Materially Underappreciated

Like with Denso, Aisin maintained guidance despite relatively weak production volumes and margins. Unlike Denso, Aisin’s valuation multiples look...

Mio Kato

The New Aisin (7259) MTP - Selling Crossholdings, Eventually

Aisin presented its revised MTP today, including ¥400bn of b/s restructuring, including cross-holding sales, over the next 2.5yrs. They expect OPMs...

Travis Lundy

Aisin (7259) | MTP Gains Traction

​Aisin's stock soars as the company plans to restructure and prioritize EV-related growth areas, aiming to generate ¥400b through balance sheet...

Mark Chadwick

Denso's Big Multi-Year Toyota Industries (6201) Selldown

Toyota Inds got sold on news of Denso's selldown. It's 6-7% of ADV for 2.5yrs so reasonable to expect heaviness. But while forward EPS ratios...

Travis Lundy

Aisin's stock soars as the company plans to restructure and prioritize EV-related growth areas, aiming to generate ¥400b through balance sheet...