'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Quantitative Analysis

- MARKET COMPOSITE -
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/076/724/original/2019-01-26_17-35-03.png?1548496734" class="editor-image img-responsive" data-smartkarma-image-id="76724"></figure>
<div class="content-caption">Source: Japan Analytics</div>
SLOW &amp; STEADY RECOVERY - From December 25th's lows of 8% by number and 11% by value, the percentages of Japanese stocks above the weighted sum of moving averages have continued to recover to now 19% by number and 26% by value. Total Market Value has now risen by 11.2% from the Christmas Day low and is overdue a 'breather'.
<hr>
- SECTORS -
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/076/725/original/2019-01-26_17-29-21.png?1548497304" class="editor-image img-responsive" data-smartkarma-image-id="76725"></figure>
<div class="content-caption">
LEGEND: The 'sparklines' show the three-year trend in the weighted percentage above moving average relative to the Market Composite and the 'STDev' column is a measure of the variability of that relative measure. The table also provides averages for the breaks above and breaks below and the positive and negative crossovers.</div>
SECTOR BREAKDOWN - The top six sectors measured by their percentage above the weighted average of 5-240 Days remain domestic and defensive. REITs, Information Technology, Media, Healthcare and Utilities continue from our previous review with Restaurants replacing Transportation. Equally predictable is the bottom half-dozen - Banks, Autos, Metals, Building Materials, and Chemicals remain from two weeks ago, with Construction replacing Autos. 
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- COMPANIES -
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/076/763/original/2019-01-27_15-07-37.png?1548569281" class="editor-image img-responsive" data-smartkarma-image-id="76763"></figure>
<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/076/775/original/2019-01-27_16-34-40.png?1548574490" class="editor-image img-responsive" data-smartkarma-image-id="76775"></figure>
Source: Japan Analytics
</div>
COMPANY MOVING AVERAGE OUTLIERS - As with the Market Composite and Sectors, the Moving Average Outlier indicator uses a weighted sum of each company's share price relative to its 5-day, 20-day, 60-day, 120-day and 240-day moving averages. 'Extreme' values are weighted sums greater than 100% and less than -100%. We would caution that this indicator is best used for timing shorter-term reversals and, in many cases, higher highs and lower lows will be seen. 
In the DETAIL section below, we highlight the current top and bottom twenty-five larger capitalisation outliers, as well as those companies that have seen the most significant positive and negative changes in their outlier percentage in the last two weeks and provide short comments on companies of particular note. <a href="https://www.smartkarma.com/entities/26722" target="_blank" data-smartkarma-citation="entities:26722:1">UUUM (3990 JP)</a> is currently the most 'extreme' positive outlier, and <a href="https://www.smartkarma.com/entities/20895" target="_blank" data-smartkarma-citation="entities:20895:1">Welcia (3141 JP)</a> the most 'extreme' negative outlier

- MARKET COMPOSITE -

Source: Japan Analytics
SLOW &amp; STEADY RECOVERY - From December 25th's lows of 8% by number and 11% by value, the percentages of Japanese stocks above the weighted sum of moving averages have continued to recover to now 19% by number and 26% by value. Total Market Value has now risen by 11.2% from the Christmas Day low and is overdue a 'breather'.

- SECTORS -


LEGEND: The 'sparklines' show the three-year trend in the weighted percentage above moving average relative to the Market Composite and the 'STDev' column is a measure of the variability of that relative measure. The table also provides averages for the breaks above and breaks below and the positive and negative crossovers.
SECTOR BREAKDOWN - The top six sectors measured by their percentage above the weighted average of 5-240 Days remain domestic and defensive. REITs, Information Technology, Media, Healthcare and Utilities continue from our previous review with Restaurants replacing Transportation. Equally predictable is the bottom half-dozen - Banks, Autos, Metals, Building Materials, and Chemicals remain from two weeks ago, with Construction replacing Autos. 

- COMPANIES -



Source: Japan Analytics

COMPANY MOVING AVERAGE OUTLIERS - As with the Market Composite and Sectors, the Moving Average Outlier indicator uses a weighted sum of each company's share price relative to its 5-day, 20-day, 60-day, 120-day and 240-day moving averages. 'Extreme' values are weighted sums greater than 100% and less than -100%. We would caution that this indicator is best used for timing shorter-term reversals and, in many cases, higher highs and lower lows will be seen. 
In the DETAIL section below, we highlight the current top and bottom twenty-five larger capitalisation outliers, as well as those companies that have seen the most significant positive and negative changes in their outlier percentage in the last two weeks and provide short comments on companies of particular note. UUUM (3990 JP) is currently the most 'extreme' positive outlier, and Welcia (3141 JP) the most 'extreme' negative outlier

Japan: Moving Average Outliers - Tech[nical] Rebound

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

<a href="https://www.smartkarma.com/entities/8280" target="_blank" data-smartkarma-citation="entities:8280:1">Japan Display (6740 JP)</a> had bottomed in the middle of the year and been rising (+60% from the mid year low till 30 Aug) on the back of building anticipation for the new LCD iPhone (now named the iPhone XR). Since then however, the stock is down 24% despite peers generally being flat or down slightly (down 10% for <a href="https://www.smartkarma.com/entities/7145" target="_blank" data-smartkarma-citation="entities:7145:1">Lg Display (034220 KS)</a> for example).While initial numbers for the iPhone XS and XS Max have been weak we feel the sell off in JDI creates an opportunity to pick the stock up:<ul>
<li>iPhone XR sales may surprise positively in relation to the XS and XS Max due to a significantly lower price point.</li>
<li>If the iPhone XS and XS Max continue to struggle and the XR sells well it could prompt a shift in thinking by <a href="https://www.smartkarma.com/entities/666" target="_blank" data-smartkarma-citation="entities:666:1">Apple Inc (AAPL US)</a> away from its recent luxury level pricing and this could open up further opportunities for JDI.</li>
<li>Consensus FY03/19 OP estimates have risen from a low of -4.6bn in last Dec to JPY18.8bn putting the stock on a very reasonable 11x PE. We feel consensus is still too low.</li>
</ul>

Japan Display (6740 JP) had bottomed in the middle of the year and been rising (+60% from the mid year low till 30 Aug) on the back of building anticipation for the new LCD iPhone (now named the iPhone XR). Since then however, the stock is down 24% despite peers generally being flat or down slightly (down 10% for Lg Display (034220 KS) for example).While initial numbers for the iPhone XS and XS Max have been weak we feel the sell off in JDI creates an opportunity to pick the stock up:
iPhone XR sales may surprise positively in relation to the XS and XS Max due to a significantly lower price point.
If the iPhone XS and XS Max continue to struggle and the XR sells well it could prompt a shift in thinking by Apple Inc (AAPL US) away from its recent luxury level pricing and this could open up further opportunities for JDI.
Consensus FY03/19 OP estimates have risen from a low of -4.6bn in last Dec to JPY18.8bn putting the stock on a very reasonable 11x PE. We feel consensus is still too low.


Japan Display: Weak Sales of IPhone XS/XS Max Position XR Play JDI as Key Buy Into Year End

Equity Analyst, LightStream Research

Chacko Jacob

Equity Analyst

<div class="content-highlight">While <a href="https://www.smartkarma.com/entities/18379" target="_blank" data-smartkarma-citation="entities:18379:1">Start Today Co Ltd (3092 JP)</a> has been covered extensively by my colleague <a href="https://www.smartkarma.com/profiles/713" target="_blank" data-smartkarma-citation="accounts:713">Mio Kato, CFA</a> (click <a href="https://www.smartkarma.com/entities/start-today-co-ltd/insights" target="_blank">here</a>), in this report we will focus on the company’s three-year plan and its strategy to increase transaction value at CAGR of 38% between FY17-20.</div><h2>Insufficient ECommerce Presence in Mass-Market Fashion Retail Offers Growth Potential</h2>Adhering to the strict garbage disposal and recycling rules in place in Japan, cardboard boxes are flattened and neatly arranged outside homes every Monday morning…

While Start Today Co Ltd (3092 JP) has been covered extensively by my colleague Mio Kato, CFA (click here), in this report we will focus on the company’s three-year plan and its strategy to increase transaction value at CAGR of 38% between FY17-20.Insufficient ECommerce Presence in Mass-Market Fashion Retail Offers Growth PotentialAdhering to the strict garbage disposal and recycling rules in place in Japan, cardboard boxes are flattened and neatly arranged outside homes every Monday morning…

Start Today (3092 JP): Calling the Bluff on Forecasted Growth

<div class="content-highlight">While we think BIC Camera is better suited to tap growth compared to its compatriots in the electronic retail sector, the near-50% rise in its stock price over the last year has made it expensive relative to its peers. We do not think the company's forecasted growth for the fiscal period justifies its expensive valuation. Also, the company needs to push the sales of its private brands and attract more tourists to expand margins and buoy revenue in the future. </div><h2>Company Background</h2><a href="https://www.smartkarma.com/entities/11328" target="_blank" data-smartkarma-citation="entities:11328:1">Bic Camera Inc</a>…

While we think BIC Camera is better suited to tap growth compared to its compatriots in the electronic retail sector, the near-50% rise in its stock price over the last year has made it expensive relative to its peers. We do not think the company's forecasted growth for the fiscal period justifies its expensive valuation. Also, the company needs to push the sales of its private brands and attract more tourists to expand margins and buoy revenue in the future. Company BackgroundBic Camera Inc…

BIC Camera Scores on Store Locations; Now It Needs To Draw More Tourists To Buoy Revenue Growth

Pan Pacific International Holdings / Equity Bottom-Up

Pan Pacific International Holdings (7532 JP)

<a href="https://www.smartkarma.com/entities/13475" target="_blank" data-smartkarma-citation="entities:13475:1">Don Quijote Holdings Co Ltd (7532 JP)</a> announced their 3Q results yesterday, posting YoY revenue growth of 18.8% while OP growth remained flat. For the 9MFY18, revenue was up 13.4% YoY at JPY 703bn and OP 7.9% at JPY 40b. While the company has attributed its strong revenue growth to improving macro conditions in the domestic market, it also implied that aggressive marketing strategies had weighed down on margins. Donki's stock price was down 8% at the time of writing this report. We think this is…

Don Quijote Holdings Co Ltd (7532 JP) announced their 3Q results yesterday, posting YoY revenue growth of 18.8% while OP growth remained flat. For the 9MFY18, revenue was up 13.4% YoY at JPY 703bn and OP 7.9% at JPY 40b. While the company has attributed its strong revenue growth to improving macro conditions in the domestic market, it also implied that aggressive marketing strategies had weighed down on margins. Donki's stock price was down 8% at the time of writing this report. We think this is…

Tourism and New Stores Drive Donki's Revenue in 3Q

Japan

BIC CAMERA INC. operates electronic retail stores throughout Japan focusing on the Tokyo metropolitan area.  The Company sells audio and video equipments, electrical home appliances and telecommunication equipments.  Bic Camera also runs an Internet shopping site.

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Bic Camera Inc (3048 JP)

Japan: Moving Average Outliers - Tech[nical] Rebound

- MARKET COMPOSITE - SLOW & STEADY RECOVERY - From December 25th's lows of 8% by number and 11% by value, the percentages of Japanese stocks...

Campbell Gunn

Japan Display: Weak Sales of IPhone XS/XS Max Position XR Play JDI as Key Buy Into Year End

Japan Display (6740 JP) had bottomed in the middle of the year and been rising (+60% from the mid year low till 30 Aug) on the back of building...

Mio Kato

Start Today (3092 JP): Calling the Bluff on Forecasted Growth

While Start Today Co Ltd (3092 JP) has been covered extensively by my colleague Mio Kato, CFA (click here), in this report we will focus on the...

Chacko Jacob

BIC Camera Scores on Store Locations; Now It Needs To Draw More Tourists To Buoy Revenue Growth

While we think BIC Camera is better suited to tap growth compared to its compatriots in the electronic retail sector, the near-50% rise in its...

Chacko Jacob

Tourism and New Stores Drive Donki's Revenue in 3Q

Don Quijote Holdings Co Ltd (7532 JP) announced their 3Q results yesterday, posting YoY revenue growth of 18.8% while OP growth remained flat. For...

Chacko Jacob

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