Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>FY2023 Success: Daikin achieved record-high sales and profit, driven by FX impacts. Despite challenges like reduced demand, the Air Conditioning business expanded in key markets.</li>
<li>Ambitious Targets: FY3/25 targets include surpassing previous financial records, despite continued sluggish demand.</li>
<li>Cautious Outlook: While optimistic about market share gains, reservations persist, particularly regarding heat pumps. Stock performance remains steady, trading in line with historical averages.</li>
</ul>


FY2023 Success: Daikin achieved record-high sales and profit, driven by FX impacts. Despite challenges like reduced demand, the Air Conditioning business expanded in key markets.
Ambitious Targets: FY3/25 targets include surpassing previous financial records, despite continued sluggish demand.
Cautious Outlook: While optimistic about market share gains, reservations persist, particularly regarding heat pumps. Stock performance remains steady, trading in line with historical averages.


<ul>
<li>We turn bullish on Daikin ahead of Q1 results as we become less concerned about growth risks in China and the US</li>
<li>Peer results suggest that air conditioner demand is stronger than expected due to record high global temperatures</li>
<li>Company management has a good track record of pushing through price hikes and cutting costs. We expect the company to beat guidance this year</li>
</ul>


We turn bullish on Daikin ahead of Q1 results as we become less concerned about growth risks in China and the US
Peer results suggest that air conditioner demand is stronger than expected due to record high global temperatures
Company management has a good track record of pushing through price hikes and cutting costs. We expect the company to beat guidance this year


<ul>
<li>Daikin’s air conditioning business continues to benefit from the secular trends of urbanization, climate change, and rising incomes.  </li>
<li>However, the same logic might not apply to heat pumps, which face far more “structural” issues, warranting a lower valuation.</li>
<li>Overall, we believe that Daikin deserves to trade at its historical multiple of 15x EV/EBIT and see 20% downside from here.</li>
</ul>


Daikin’s air conditioning business continues to benefit from the secular trends of urbanization, climate change, and rising incomes.  
However, the same logic might not apply to heat pumps, which face far more “structural” issues, warranting a lower valuation.
Overall, we believe that Daikin deserves to trade at its historical multiple of 15x EV/EBIT and see 20% downside from here.


Co-Founder & CEO, Newmark Risk

Nicholas Pezolano

Co-Founder & CEO

Option analytics for institutional investors

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Quantitative Analysis

<ul>
<li>Box Spreads have become an increasingly popular strategy utilized in the US markets, so we explore this strategy in Japan.</li>
<li>Opportunities exist for traders to lock in JPY margin rates lower than their brokerage.</li>
<li>A historical analysis of the strategy showcases the favorable opportunities for investors</li>
</ul>


Box Spreads have become an increasingly popular strategy utilized in the US markets, so we explore this strategy in Japan.
Opportunities exist for traders to lock in JPY margin rates lower than their brokerage.
A historical analysis of the strategy showcases the favorable opportunities for investors


Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>This past week saw dramatic moves in Japanese stock markets. TOPIX +3.1% N225 +4.8% - up the 6th week in a row - closing at their highest in 33 years. </li>
<li>Flows were positive the week before, and I expect we'll see next week they were positive this past week. But most striking was the interplay between Nikkei 225 and TOPIX.</li>
<li>If foreign inflows increase, Nikkei is likely to outperform TOPIX both because of its existence and previous use, and its construction. And that means watching one's trades, shorts, and executions.</li>
</ul>


This past week saw dramatic moves in Japanese stock markets. TOPIX +3.1% N225 +4.8% - up the 6th week in a row - closing at their highest in 33 years. 
Flows were positive the week before, and I expect we'll see next week they were positive this past week. But most striking was the interplay between Nikkei 225 and TOPIX.
If foreign inflows increase, Nikkei is likely to outperform TOPIX both because of its existence and previous use, and its construction. And that means watching one's trades, shorts, and executions.


Japan

DAIKIN INDUSTRIES, LTD. manufactures air conditioning equipment for household and commercial use.  The Company also produces fluorine chemical products such as fluorinated hydrocarbon gas and shells and warheads for defense industry.

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Daikin Industries (6367 JP)

Daikin (6367) | Keep Cool

While optimistic about market share gains, reservations persist, particularly regarding heat pumps. Stock performance remains steady, trading in...

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Daikin (6367) | Keep Cool and Carry On

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Last week, Japan's indices hit new 33yr highs. "Japan is back" seems to be a new narrative, and that is creating new inflows. Some of that has...

Travis Lundy

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