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>Daifuku’s 4QFY22 was strong with revenue of ¥143bn (+3.8% vs. consensus) and OP of ¥17.3bn (+8.2% vs. consensus). </li>
<li>Guidance was relatively strong at the top line, 1.1% above but margin assumptions were far too conservative resulting in a 4.1% miss vs. consensus. </li>
<li>One may think that creates upside potential but guidance for 2H to grow vs. 1H is optimistic and valuations are too stretched to withstand a deceleration in earnings momentum.</li>
</ul>


Daifuku’s 4QFY22 was strong with revenue of ¥143bn (+3.8% vs. consensus) and OP of ¥17.3bn (+8.2% vs. consensus). 
Guidance was relatively strong at the top line, 1.1% above but margin assumptions were far too conservative resulting in a 4.1% miss vs. consensus. 
One may think that creates upside potential but guidance for 2H to grow vs. 1H is optimistic and valuations are too stretched to withstand a deceleration in earnings momentum.


Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>If <a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP Group (BHP AU)</a> announces an off-market buyback, there will be demand to replace the shares bought back, re-based higher.</li>
<li>
<a href="https://www.smartkarma.com/entities/bank-of-east-asia-ltd" target="_blank" data-smartkarma-citation="entities:341:1" rel="noopener">Bank of East Asia (23 HK)</a>is trading cheap as Elliott throws in the towel.</li>
<li>The <a href="https://www.smartkarma.com/entities/sydney-airport" target="_blank" data-smartkarma-citation="entities:19063:1" rel="noopener">Sydney Airport (SYD AU)</a> selldown could be larger than people expect, and it is a decent chance to put on the arb trade. </li>
</ul>


If BHP Group (BHP AU) announces an off-market buyback, there will be demand to replace the shares bought back, re-based higher.

Bank of East Asia (23 HK)is trading cheap as Elliott throws in the towel.
The Sydney Airport (SYD AU) selldown could be larger than people expect, and it is a decent chance to put on the arb trade. 


Last Week in Event SPACE: BHP, Bank Of East Asia, Sydney Airport, Boral

<ul>
<li>There are currently 46 - mostly firm - transactions currently being discussed and analysed on Smartkarma.</li>
<li>Three new deals were discussed this week: <a href="https://www.smartkarma.com/entities/charter-hall-group" target="_blank" data-smartkarma-citation="entities:5593:1" rel="noopener">Charter Hall (CHC AU)</a> for <a href="https://www.smartkarma.com/entities/irongate-group" target="_blank" data-smartkarma-citation="entities:30897:1" rel="noopener">Irongate (IAP AU)</a>; <a href="https://www.smartkarma.com/entities/daifuku-co-ltd" target="_blank" data-smartkarma-citation="entities:10408:1" rel="noopener">Daifuku (6383 JP)</a> for <a href="https://www.smartkarma.com/entities/contec-co-ltd" target="_blank" data-smartkarma-citation="entities:16711:1" rel="noopener">Contec Co (6639 JP)</a>; Hinode for <a href="https://www.smartkarma.com/entities/at-group-co-ltd" target="_blank" data-smartkarma-citation="entities:4391:1" rel="noopener">At Group Co (8293 JP)</a>.
</li>
<li>Keys updates took place for: <a href="https://www.smartkarma.com/entities/virtus-health-ltd" target="_blank" data-smartkarma-citation="entities:14776:1" rel="noopener">Virtus Health (VRT AU)</a>, <a href="https://www.smartkarma.com/entities/icar-asia-ltd" target="_blank" data-smartkarma-citation="entities:17682:1" rel="noopener">iCar Asia (ICQ AU)</a>, <a href="https://www.smartkarma.com/entities/aventus-group" target="_blank" data-smartkarma-citation="entities:25897:1" rel="noopener">Aventus Group (AVN AU)</a>,<a href="https://www.smartkarma.com/entities/sydney-airport" target="_blank" data-smartkarma-citation="entities:19063:1" rel="noopener">Sydney Airport (SYD AU)</a>, and <a href="https://www.smartkarma.com/entities/china-logistics-property-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:22799:1" rel="noopener">China Logistics Property Holdings (1589 HK)</a> 
</li>
</ul>


There are currently 46 - mostly firm - transactions currently being discussed and analysed on Smartkarma.
Three new deals were discussed this week: Charter Hall (CHC AU) for Irongate (IAP AU); Daifuku (6383 JP) for Contec Co (6639 JP); Hinode for At Group Co (8293 JP).

Keys updates took place for: Virtus Health (VRT AU), iCar Asia (ICQ AU), Aventus Group (AVN AU),Sydney Airport (SYD AU), and China Logistics Property Holdings (1589 HK) 



Asia-Pac Weekly Risk Arb Summary: Irongate, Virtus, ICar Asia, Aventus, Sydney Airport, CLPH

<ul>
<li>Daifuku 3QFY21 results were mostly in-line with revenue beating by 1.4% while OP beat by 0.7%. </li>
<li>¥174.1bn in orders were positive however and the company revised up FY order guidance from ¥565bn to ¥575bn. </li>
<li>Nevertheless, multiples are correcting from extremely elevated levels suggesting even growth next year may not be enough to support the stock here.</li>
</ul>


Daifuku 3QFY21 results were mostly in-line with revenue beating by 1.4% while OP beat by 0.7%. 
¥174.1bn in orders were positive however and the company revised up FY order guidance from ¥565bn to ¥575bn. 
Nevertheless, multiples are correcting from extremely elevated levels suggesting even growth next year may not be enough to support the stock here.


Daifuku – Not a Big Enough Beat to Arrest the Correction

Travis Lundy

<ul>
<li>
<a href="https://www.smartkarma.com/entities/daifuku-co-ltd" target="_blank" data-smartkarma-citation="entities:10408:1" rel="noopener">Daifuku Co Ltd (6383 JP)</a> today (4 Feb) announced it would take out TSE-2 industrial computing/IoT subsidiary <a href="https://www.smartkarma.com/entities/contec-co-ltd" target="_blank" data-smartkarma-citation="entities:16711:1" rel="noopener">Contec Co Ltd (6639 JP)</a> in a tender offer at 55% premium.</li>
<li>That looks nice, and should have been expected at some point. But it is only half-generous.</li>
<li>The shareholder structure tells you how this is likely to end up.</li>
</ul>



Daifuku Co Ltd (6383 JP) today (4 Feb) announced it would take out TSE-2 industrial computing/IoT subsidiary Contec Co Ltd (6639 JP) in a tender offer at 55% premium.
That looks nice, and should have been expected at some point. But it is only half-generous.
The shareholder structure tells you how this is likely to end up.


Daifuku (6383) To Take Out Minorities in Subsidiary Contec (6639)

Japan

DAIFUKU CO., LTD. designs, manufactures, and sells material handling equipment such as automated storage systems, conveyors, and automatic sorters.  The Company's products are used for automation in manufacturing and distribution businesses.

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Daifuku Co Ltd (6383 JP)

Daifuku – Just Too Pricey

Daifuku offers slightly more stable earnings prospects than FA peers but valuations look to have more than priced that in leaving little margin for...

Mio Kato

Last Week in Event SPACE: BHP, Bank Of East Asia, Sydney Airport, Boral

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Asia-Pac Weekly Risk Arb Summary: Irongate, Virtus, ICar Asia, Aventus, Sydney Airport, CLPH

This insight provides a summary of gross/annualised spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and...

David Blennerhassett

Daifuku – Not a Big Enough Beat to Arrest the Correction

Daifuku 3QFY21 results were mostly in-line but ¥174.1bn in orders were positive. Nevertheless, multiples are correcting suggesting even growth next...

Mio Kato

Daifuku (6383) To Take Out Minorities in Subsidiary Contec (6639)

Daifuku is taking out listed sub Contec in a TOB. This is not a surprise and shouldn't be a surprise to anyone. It is a small cap, illiquid, and...

Travis Lundy

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