Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>We were too early to turn bearish on Asics. Recent stock price performance has been strong</li>
<li>Although rising inventories have yet to impact on margins, they are a potential red flag</li>
<li>The stock is not cheap at 29x PE. The long-term financial model suggests limited upside from here</li>
</ul>


We were too early to turn bearish on Asics. Recent stock price performance has been strong
Although rising inventories have yet to impact on margins, they are a potential red flag
The stock is not cheap at 29x PE. The long-term financial model suggests limited upside from here


Asics (7936) | It's a Marathon, Not a Sprint

Thematic (Sector/Industry)

<ul>
<li>After a bullish week for Japanese equities last week, this week was a bit blah. The average return for our watchlist was -0.3%, with 57 of 120 registering a gain</li>
<li>Over the past one month, the yen has gained 10-big figures against the dollar and the NKY has gained 3%</li>
<li>Japanese inflation at 40-year high; Kishida meets Xi; Visitors to Japan tops 500k in October; &amp; corporate tax may be hiked to fund defense spending</li>
</ul>


After a bullish week for Japanese equities last week, this week was a bit blah. The average return for our watchlist was -0.3%, with 57 of 120 registering a gain
Over the past one month, the yen has gained 10-big figures against the dollar and the NKY has gained 3%
Japanese inflation at 40-year high; Kishida meets Xi; Visitors to Japan tops 500k in October; &amp; corporate tax may be hiked to fund defense spending


<ul>
<li>NIKE reported Q1 results post close on Thursday sending the shares down 9% after hours and hitting the stock price of Asics on Friday (-10.7%).  </li>
<li>ASICS is unlikely to face ALL of the same problems that impacted NIKE, but investors should be aware of the rising inventory risk</li>
<li>ASICS is less risky given less exposure to apparel. Even so, we remain bearish for now</li>
</ul>


NIKE reported Q1 results post close on Thursday sending the shares down 9% after hours and hitting the stock price of Asics on Friday (-10.7%).  
ASICS is unlikely to face ALL of the same problems that impacted NIKE, but investors should be aware of the rising inventory risk
ASICS is less risky given less exposure to apparel. Even so, we remain bearish for now


<ul>
<li>The stock price has rallied 40% since our last note. We are happy to take profit here, hence we label this insight as Bearish </li>
<li>The results and full year guidance hike were positive but largely currency assisted  </li>
<li>We expect that a focus on China and Direct will drive margin expansion in the medium term</li>
</ul>


The stock price has rallied 40% since our last note. We are happy to take profit here, hence we label this insight as Bearish 
The results and full year guidance hike were positive but largely currency assisted  
We expect that a focus on China and Direct will drive margin expansion in the medium term


Asics (7936) | Strong Performance Meets Reasonable Valuation

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

<ul>
<li>This is now the third Int'l Compass/third week in a row where we are discussing an increasing number of country indexes experiencing bullish 3.5-9-month downtrend reversals.</li>
<li>Importantly, all of the previously mentioned indexes are holding above their breakout levels (i.e., there has yet to be any failed breakouts).</li>
<li>Now, the U.S. dollar (DXY) is starting to show early signs of topping. We continue to believe that global equities are going through a bottoming process.</li>
</ul>


This is now the third Int'l Compass/third week in a row where we are discussing an increasing number of country indexes experiencing bullish 3.5-9-month downtrend reversals.
Importantly, all of the previously mentioned indexes are holding above their breakout levels (i.e., there has yet to be any failed breakouts).
Now, the U.S. dollar (DXY) is starting to show early signs of topping. We continue to believe that global equities are going through a bottoming process.


U.S. Dollar Topping?; Bullish Reversals Continue; Ideas in Growth/Cyclicals, Financials

Japan

ASICS CORPORATION manufactures general sporting goods and equipment.  The Company's products, such as athletic shoes and sportswear, are distributed in the United States, Europe, Australia, and Asia.

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ASICS Corp (7936 JP)

Asics (7936) | It's a Marathon, Not a Sprint

We were too early to turn bearish on Asics. Q4 numbers were good. However, we note that rising inventories are a risk and we see limited upside...

Mark Chadwick

Japan Weekly | Asics, Matsukiyo, Nexon

We highlight the stocks in our Universe that have had a good or bad week. Japanese stocks paused this week after a strong performance a week ago.

Mark Chadwick

Asics (7936) | Nike Air Pockets

Following the weak quarter from NIKE and the poor outlook, we remain Bearish on ASICS. We see potential for a disappointing quarter in China and a...

Mark Chadwick

Asics (7936) | Strong Performance Meets Reasonable Valuation

After the stock has gained 40% from the recent low, we are taking profits. Q2 earnings were good, but assisted by the weak yen.

Mark Chadwick

U.S. Dollar Topping?; Bullish Reversals Continue; Ideas in Growth/Cyclicals, Financials

This is now the third week in a row where we are discussing an increasing number of country indexes with bullish 3.5-9-month downtrend reversals,...

Vermilion Research

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