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.

Event-Driven

With the BOJ announcing yesterday that it would double the upper limit of its ETF purchases to ¥12trn a year and its previous policy shift to favour TOPIX-based ETFs over Nikkei-based ETFs it made sense for TOPIX to outperform Nikkei today. However, we found the degree of outperformance to be slightly surprising as TOPIX rose 2.60% while the Nikkei barely squeaked out a +0.06% gain. Below, we examine some individual names within the two indices to try and identify pairs which could generate alpha based on this theme.

With the BOJ announcing yesterday that it would double the upper limit of its ETF purchases to ¥12trn a year and its previous policy shift to favour TOPIX-based ETFs over Nikkei-based ETFs it made sense for TOPIX to outperform Nikkei today. However, we found the degree of outperformance to be slightly surprising as TOPIX rose 2.60% while the Nikkei barely squeaked out a +0.06% gain. Below, we examine some individual names within the two indices to try and identify pairs which could generate alpha based on this theme.

Equity Bottom-Up

In spite of the overall risk-off environment we remain broadly positive on Japanese gaming names. The shift to digital downloads remains a tailwind and with higher margins we believe that the companies should broadly benefit. We believe any impact from consumers being more home-bound is likely to be marginal but positive. We would highlight Capcom in particular as one to watch in the sector due to the potential for some big titles to be released next year.

In spite of the overall risk-off environment we remain broadly positive on Japanese gaming names. The shift to digital downloads remains a tailwind and with higher margins we believe that the companies should broadly benefit. We believe any impact from consumers being more home-bound is likely to be marginal but positive. We would highlight Capcom in particular as one to watch in the sector due to the potential for some big titles to be released next year.

Capcom – 4 Key Titles Next Year Could Drive Guidance Above Consensus

Capcom released strong results yesterday with margins in particular impressing as OPM for the Digital Contents segment hitting 47%, just below the peak of 55% reached in 1Q of this year. We spoke to the company to try and determine how sustainable this could be. Our thoughts below.

Capcom released strong results yesterday with margins in particular impressing as OPM for the Digital Contents segment hitting 47%, just below the peak of 55% reached in 1Q of this year. We spoke to the company to try and determine how sustainable this could be. Our thoughts below.

Capcom – Underlying Profitability Improvement Drives Breakout to All Time Highs

We look ahead through 2020 at the variety of catalysts that lie ahead for Capcom and its major tiles. In particular, today’s launch of Monster Hunger: Iceborne on PC, Street Fighter V’s esports push at the Tokyo Olympics and hopes for the remake of Resident Evil 3.

We look ahead through 2020 at the variety of catalysts that lie ahead for Capcom and its major tiles. In particular, today’s launch of Monster Hunger: Iceborne on PC, Street Fighter V’s esports push at the Tokyo Olympics and hopes for the remake of Resident Evil 3.

Capcom – Catalysts for Earnings Stability

We visited the Nintendo Tokyo Store based in the Parco Department Store in Shibuya today to get an idea of exactly how popular the store is given various media reports of long lines and wait times just to enter the store. Details and pictures below.

We visited the Nintendo Tokyo Store based in the Parco Department Store in Shibuya today to get an idea of exactly how popular the store is given various media reports of long lines and wait times just to enter the store. Details and pictures below.

Nintendo – A Visit to the Nintendo Tokyo Store in Shibuya

Japan

CAPCOM CO., LTD. develops consumer video game software.  The Company also develops, manufactures, markets, and leases arcade game machines.  Capcom also operates amusement facilities.

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Capcom Co Ltd (9697 JP)

The Topix Vs. Nikkei Skew

With the BOJ announcing yesterday that it would double the upper limit of its ETF purchases to ¥12trn a year and its previous policy shift to...

Mio Kato

Capcom – 4 Key Titles Next Year Could Drive Guidance Above Consensus

In spite of the overall risk-off environment we remain broadly positive on Japanese gaming names. The shift to digital downloads remains a tailwind...

Mio Kato

Capcom – Underlying Profitability Improvement Drives Breakout to All Time Highs

Capcom released strong results yesterday with margins in particular impressing as OPM for the Digital Contents segment hitting 47%, just below the...

Mio Kato

Capcom – Catalysts for Earnings Stability

We look ahead through 2020 at the variety of catalysts that lie ahead for Capcom and its major tiles. In particular, today’s launch of Monster...

Mio Kato

Nintendo – A Visit to the Nintendo Tokyo Store in Shibuya

We visited the Nintendo Tokyo Store based in the Parco Department Store in Shibuya today to get an idea of exactly how popular the store is given...

Mio Kato

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