Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<ul>
<li>JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.</li>
<li>A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the rankings of the potential ADDs/DELs every month.</li>
<li>Below is a look at potential ADDs/DELs for the JPX-Nikkei 400 index rebal event to come in August 2024 based on trading data as of end-January 2024.</li>
</ul>


JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the rankings of the potential ADDs/DELs every month.
Below is a look at potential ADDs/DELs for the JPX-Nikkei 400 index rebal event to come in August 2024 based on trading data as of end-January 2024.


Quiddity JPX-Nikkei 400 Rebal 2024: End-Jan 2024

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

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.

Thematic (Sector/Industry)

<p style="text-align: center;"><strong>• RESULTS - 7th APRIL •</strong></p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/199/374/original/image_44350750721617829220885.png?1617829221" class="editor-image img-responsive" data-smartkarma-image-id="199374"></figure><p><strong>RESULTS</strong> - All of the larger caps reporting on Wednesday scored negatively, with <a href="https://www.smartkarma.com/entities/bell-system24-holdings-inc" target="_blank" data-smartkarma-citation="entities:27224:1" rel="noopener">Bellsystem24 (6183 JP)</a> faring the worst - the company is also forecasting only single-digit growth in FY22. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/199/375/original/image_88110638531617829511197.png?1617829511" class="editor-image img-responsive" data-smartkarma-image-id="199375"></figure><p style="text-align: center;"><strong>• FORECASTS/REVISIONS - 7th APRIL •</strong></p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/199/376/original/image_19503684441617829618279.png?1617829618" class="editor-image img-responsive" data-smartkarma-image-id="199376"></figure><p><strong>FORECASTS/REVISIONS</strong> - Welcia's FY22 projection of a decline in net income confirms the market's pessimism towards drugstores. <a href="https://www.smartkarma.com/entities/dip-corp" target="_blank" data-smartkarma-citation="entities:6209:1" rel="noopener">DIP (2379 JP)</a> compensated for poor fourth-quarter results and a weak interim forecast with a full-year forecast of record sales and a return to 30% operating margins in the second half.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/199/377/original/image_45189507451617831214172.png?1617831214" class="editor-image img-responsive" data-smartkarma-image-id="199377"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/199/378/original/image_70346033161617831341739.png?1617831342" class="editor-image img-responsive" data-smartkarma-image-id="199378"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/199/379/original/image_97042980771617831451634.png?1617831452" class="editor-image img-responsive" data-smartkarma-image-id="199379"></figure>

• RESULTS - 7th APRIL •RESULTS - All of the larger caps reporting on Wednesday scored negatively, with Bellsystem24 (6183 JP) faring the worst - the company is also forecasting only single-digit growth in FY22. • FORECASTS/REVISIONS - 7th APRIL •FORECASTS/REVISIONS - Welcia's FY22 projection of a decline in net income confirms the market's pessimism towards drugstores. DIP (2379 JP) compensated for poor fourth-quarter results and a weak interim forecast with a full-year forecast of record sales and a return to 30% operating margins in the second half.

🇯🇵 JAPAN • Results & Revisions 04/​​​07 - Bellsystem24, Welcia & DIP

<p style="text-align: center;"><strong>• COVID UPDATE •</strong></p><p style="text-align: left;">Nationwide, there were 5,943 new cases yesterday. This is a new record and an increase of more than 1,000 from Tuesday, the previous record. In Tokyo, there were 1,591 new cases - another daily record. PM Suga has all but stated that a new State of Emergency would begin later today - January 7th. The government appears to want to limit the State of Emergency to approximately one month. Several academics and doctors are increasingly vocal that at least two months is necessary.</p><p>According to Kyodo, the negative economic impact of a one-month State of Emergency in Tokyo and its surrounding prefectures ranges from $39 to $47.5 billion. If a nationwide State of Emergency were enacted, the estimated negative impact would be $135 billion per month or 2.53 percentage points of annual GDP. Unusually for Japan, companies that would be negatively impacted are becoming very vocal in their opposition to new restrictions. Meanwhile, the equity market reached a new five-year high in US dollar terms.</p><p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p><p style="text-align: left;">Wednesday's 'best' and 'worst' pairing among larger-cap stocks is <a href="https://www.smartkarma.com/entities/bell-system24-holdings-inc" target="_blank" data-smartkarma-citation="entities:27224:1" rel="noopener">BellSystem24 (6183 JP)</a> and <a href="https://www.smartkarma.com/entities/arcs-co-ltd" target="_blank" data-smartkarma-citation="entities:7580:1" rel="noopener">Arcs (9948 JP)</a> although the latter is of interest on the long 'side' in a new State of Emergency.</p><section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/181/196/original/2021-01-07_06-46-39.png?1609969610" class="editor-image img-responsive" data-smartkarma-image-id="181196"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/181/197/original/2021-01-07_06-49-24.png?1609969777" class="editor-image img-responsive" data-smartkarma-image-id="181197"></figure></section></section><div style="text-align: center;" class="content-caption">Source for all charts &amp; tables: Japan Analytics</div>

• COVID UPDATE •Nationwide, there were 5,943 new cases yesterday. This is a new record and an increase of more than 1,000 from Tuesday, the previous record. In Tokyo, there were 1,591 new cases - another daily record. PM Suga has all but stated that a new State of Emergency would begin later today - January 7th. The government appears to want to limit the State of Emergency to approximately one month. Several academics and doctors are increasingly vocal that at least two months is necessary.According to Kyodo, the negative economic impact of a one-month State of Emergency in Tokyo and its surrounding prefectures ranges from $39 to $47.5 billion. If a nationwide State of Emergency were enacted, the estimated negative impact would be $135 billion per month or 2.53 percentage points of annual GDP. Unusually for Japan, companies that would be negatively impacted are becoming very vocal in their opposition to new restrictions. Meanwhile, the equity market reached a new five-year high in US dollar terms.• BEST &amp; WORST •Wednesday's 'best' and 'worst' pairing among larger-cap stocks is BellSystem24 (6183 JP) and Arcs (9948 JP) although the latter is of interest on the long 'side' in a new State of Emergency.Source for all charts &amp; tables: Japan Analytics

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​01/​06 - Bellsystem24 & ARCS

<div>
<p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p>
<p>The best and worst pair from yesterday's announcements is call centre <a href="https://www.smartkarma.com/entities/bell-system24-holdings-inc" target="_blank" data-smartkarma-citation="entities:27224:1" rel="noopener">Bell System24 (6183 JP)</a> and the very Overbought <a href="https://www.smartkarma.com/entities/jcr-pharmaceuticals-co-ltd" target="_blank" data-smartkarma-citation="entities:20126:1" rel="noopener">JCR Pharmaceuticals (4552 JP)</a>.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/163/985/original/2020-10-08_05-56-30.png?1602104205" class="editor-image img-responsive" data-smartkarma-image-id="163985"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/163/986/original/2020-10-08_05-55-56.png?1602104228" class="editor-image img-responsive" data-smartkarma-image-id="163986"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div>
<strong>AEON GROUP</strong> - Wednesday was 'Aeonday' as the majority of group companies reported, and a majority are still showing trailing losses. Parent Aeon's revenues were stable but trailing operating income is still declining at a double-digit rate, something the market is content to 'look through'. At 2.33 Aeon's Relative Price Score is close to a fifteen-year high; its PBR is twice that of <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I (3382 JP)</a> whose Residual Core Return is six times Aeon's. We would trade the 'pair'.</div><div></div><div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/163/987/original/2020-10-08_06-17-52.png?1602105492" class="editor-image img-responsive" data-smartkarma-image-id="163987"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/163/988/original/2020-10-08_06-22-24.png?1602105757" class="editor-image img-responsive" data-smartkarma-image-id="163988"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/163/989/original/2020-10-08_06-25-33.png?1602105947" class="editor-image img-responsive" data-smartkarma-image-id="163989"></figure><p></p>
</div><div>
<hr>
<p style="text-align: center;"><strong>DAILY STATS</strong></p>
</div><hr><div><p style="text-align: center;"><strong>21 Quarterly Results</strong></p></div><div><ul style="list-style-type: disc;">
<li><p><strong>Results Score:</strong> 62% Positive / 10% Neutral / 28% Negative</p></li>
<li><p><strong>Average Results Score Change:</strong> +1.5 points</p></li>
<li><p><strong>Average % Change in Revenue:</strong> +8.2% Quarter YoY / +9.1% Rolling TTM YoY </p></li>
<li><p><strong>Average Operating Profit Margin Change:</strong> -3.0ppt</p></li>
<li><p><strong>Percentage Making Quarterly Losses:</strong> 33%</p></li>
</ul></div><hr><div><p style="text-align: center;"><strong>15 Annual • 3 Interim Forecasts/Revisions</strong></p></div><div><ul style="list-style-type: disc;">
<li><p><strong>Annual Forecast/Revision Score:</strong> 47% Positive / 6% Neutral / 47% Negative</p></li>
<li><p><strong>Interim Forecast/Revision Score Change:</strong> 0% Positive / 0% Neutral / 100% Negative</p></li>
<li><p><strong>Average Forecast/Revision Score Change:</strong> -6.8 point</p></li>
</ul></div>


• BEST &amp; WORST •
The best and worst pair from yesterday's announcements is call centre Bell System24 (6183 JP) and the very Overbought JCR Pharmaceuticals (4552 JP).
Source for all charts &amp; tables: Japan Analytics
AEON GROUP - Wednesday was 'Aeonday' as the majority of group companies reported, and a majority are still showing trailing losses. Parent Aeon's revenues were stable but trailing operating income is still declining at a double-digit rate, something the market is content to 'look through'. At 2.33 Aeon's Relative Price Score is close to a fifteen-year high; its PBR is twice that of Seven &amp; I (3382 JP) whose Residual Core Return is six times Aeon's. We would trade the 'pair'.



DAILY STATS
21 Quarterly Results
Results Score: 62% Positive / 10% Neutral / 28% Negative
Average Results Score Change: +1.5 points
Average % Change in Revenue: +8.2% Quarter YoY / +9.1% Rolling TTM YoY 
Average Operating Profit Margin Change: -3.0ppt
Percentage Making Quarterly Losses: 33%
15 Annual • 3 Interim Forecasts/Revisions
Annual Forecast/Revision Score: 47% Positive / 6% Neutral / 47% Negative
Interim Forecast/Revision Score Change: 0% Positive / 0% Neutral / 100% Negative
Average Forecast/Revision Score Change: -6.8 point


🇯🇵 JAPAN • Results & Revisions - 10/​​​​​​​​07 Aeon Group, BS24, Welcia, JCR Pharma

<div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/144/983/original/2020-07-09_06-09-15.png?1594242712" class="editor-image img-responsive" data-smartkarma-image-id="144983"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/144/988/original/2020-07-09_06-49-18.png?1594244977" class="editor-image img-responsive" data-smartkarma-image-id="144988"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/144/984/original/2020-07-09_06-12-06.png?1594242743" class="editor-image img-responsive" data-smartkarma-image-id="144984"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/144/986/original/2020-07-09_06-11-29.png?1594242800" class="editor-image img-responsive" data-smartkarma-image-id="144986"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/144/987/original/2020-07-08_07-13-50.png?1594243049" class="editor-image img-responsive" data-smartkarma-image-id="144987"></figure><div class="content-caption">Source • Japan Analytics</div>
<p><strong><a href="https://www.smartkarma.com/entities/aeon-co-ltd" target="_blank" data-smartkarma-citation="entities:3:1" rel="noopener">Aeon (8267 JP)</a></strong>-  Despite the strong performance from the group's grocery and drugstore chains, the Aeon group reported its first-ever quarterly operating loss on a 2% decline in sales. Aeon's full-year forecast for operating income of ¥100 billion suggests a further 42% erosion from the TTM results. Partly driven by an improving trend in residual income generation, the company's shares have risen by 35% over the last twelve months, outperforming the market and the Retail Sector by 36% and 26%, respectively. We consider the shares overvalued and recommend profit-taking. In the long-term, a rationalisation of the minorities - one of the largest for any listed Japanese company - is required here.</p>
<p style="text-align: center;"><strong>DAILY STATS</strong></p>
</div><hr><div><p style="text-align: center;"><strong>29 Quarterly Results</strong></p></div><div><ul>
<li>
<strong>Results Score:</strong> 9 Positive / 0 Neutral / 29 Negative</li>
<li>
<strong>Average Results Score Change: </strong>-3.4</li>
<li>
<strong>Average % Change in Revenue: </strong>-9.8% Quarter YoY / +0.8% Rolling TTM YoY</li>
<li>
<strong>Average Operating Profit Margin Change:</strong> -1.4ppt</li>
</ul></div><hr><div><p style="text-align: center;"><br><strong>13 Annual • 11 Interim Forecasts/Revisions</strong></p></div><div><ul>
<li>
<strong>Annual Forecast/Revision Score: </strong>5 Positive / 2 Neutral / 6 Negative</li>
<li>
<strong>Interim Forecast/Revision Score Change:</strong> 2 Positive / 1 Neutral / 8 Negative</li>
<li>Average Forecast/Revision Score Change: -5.5</li>
</ul></div>


Source • Japan Analytics
Aeon (8267 JP)-  Despite the strong performance from the group's grocery and drugstore chains, the Aeon group reported its first-ever quarterly operating loss on a 2% decline in sales. Aeon's full-year forecast for operating income of ¥100 billion suggests a further 42% erosion from the TTM results. Partly driven by an improving trend in residual income generation, the company's shares have risen by 35% over the last twelve months, outperforming the market and the Retail Sector by 36% and 26%, respectively. We consider the shares overvalued and recommend profit-taking. In the long-term, a rationalisation of the minorities - one of the largest for any listed Japanese company - is required here.
DAILY STATS
29 Quarterly Results

Results Score: 9 Positive / 0 Neutral / 29 Negative

Average Results Score Change: -3.4

Average % Change in Revenue: -9.8% Quarter YoY / +0.8% Rolling TTM YoY

Average Operating Profit Margin Change: -1.4ppt
 13 Annual • 11 Interim Forecasts/Revisions

Annual Forecast/Revision Score: 5 Positive / 2 Neutral / 6 Negative

Interim Forecast/Revision Score Change: 2 Positive / 1 Neutral / 8 Negative
Average Forecast/Revision Score Change: -5.5


🇯🇵 JAPAN • Results & Revisions 8th July - Aeon Group - Sum < Parts

Japan

BELLSYSTEM24 HOLDINGS, INC. provides CRM (Customer Relationship Management) related solutions including call center outsourcing services, technology, and consulting services. The company also provides clinical trial support services through its group companies.

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Bell System24 Holdings Inc (6183 JP)

Quiddity JPX-Nikkei 400 Rebal 2024: End-Jan 2024

Four weeks ago, I suggested going SHORT DELs MED vs the JPX-Nikkei 400 index and since then the SHORTs have underperformed the index by ~3%. I...

Janaghan Jeyakumar, CFA

🇯🇵 JAPAN • Results & Revisions 04/07 - Bellsystem24, Welcia & DIP

RESULTS - All of the larger caps reporting on Wednesday scored negatively, with Bellsystem24 (6183 JP) faring the worst - the company is also...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 01/06 - Bellsystem24 & ARCS

• COVID UPDATE • Nationwide, there were 5,943 new cases yesterday. This is a new record and an increase of more than 1,000 from Tuesday, the...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions - 10/07 Aeon Group, BS24, Welcia, JCR Pharma

• BEST & WORST • The best and worst pair from sday's announcements is consumer electronics retailer Bic Camera (3048 JP) and Japan's largest...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 8th July - Aeon Group - Sum < Parts

Aeon (8267 JP)- Despite the strong performance from the group's grocery and drugstore chains, the Aeon group reported its first-ever quarterly...

Campbell Gunn

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Quiddity JPX-Nikkei 400 Rebal 2024: End-Jan 2024

Four weeks ago, I suggested going SHORT DELs MED vs the JPX-Nikkei 400 index and since then the SHORTs have underperformed the index by ~3%. I...

Janaghan Jeyakumar, CFA

🇯🇵 JAPAN • Results & Revisions 04/​​​07 - Bellsystem24, Welcia & DIP

RESULTS - All of the larger caps reporting on Wednesday scored negatively, with Bellsystem24 (6183 JP) faring the worst - the company is also...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​01/​06 - Bellsystem24 & ARCS

• COVID UPDATE • Nationwide, there were 5,943 new cases yesterday. This is a new record and an increase of more than 1,000 from Tuesday, the...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions - 10/​​​​​​​​07 Aeon Group, BS24, Welcia, JCR Pharma

• BEST & WORST • The best and worst pair from sday's announcements is consumer electronics retailer Bic Camera (3048 JP) and Japan's largest...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 8th July - Aeon Group - Sum < Parts

Aeon (8267 JP)- Despite the strong performance from the group's grocery and drugstore chains, the Aeon group reported its first-ever quarterly...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 04/07 - Bellsystem24, Welcia & DIP

🇯🇵 JAPAN • Results & Revisions 01/06 - Bellsystem24 & ARCS

🇯🇵 JAPAN • Results & Revisions - 10/07 Aeon Group, BS24, Welcia, JCR Pharma