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>Subaru’s 3QFY22 missed consensus with revenue of ¥666bn (-5.8% QoQ, -22.3% YoY) and OP of ¥42.0bn (6.3% OPM) both looking weak. </li>
<li>The reported revenue and OP were 11.2% and 2.8% lower than consensus estimates respectively. </li>
<li>The company revised OP guidance to ¥100bn from 2Q’s ¥150bn which itself was lowered from ¥200bn but this should be the last of the bad news.</li>
</ul>


Subaru’s 3QFY22 missed consensus with revenue of ¥666bn (-5.8% QoQ, -22.3% YoY) and OP of ¥42.0bn (6.3% OPM) both looking weak. 
The reported revenue and OP were 11.2% and 2.8% lower than consensus estimates respectively. 
The company revised OP guidance to ¥100bn from 2Q’s ¥150bn which itself was lowered from ¥200bn but this should be the last of the bad news.


Subaru – Improvement in Margins Despite Revenue Decline

<ul>
<li>In keeping with its penchant for developing every type of technology imaginable, Toyota has been working on not just fuel cells but also hydrogen engines.</li>
<li>Now it is partnering with Mazda, Subaru, Yamaha and KHI to further expand on this concept and add synthetic carbon neutral fuels to the mix.</li>
<li>These efforts could potentially provide alternative zero carbon transition paths and are worth understanding.</li>
</ul>


In keeping with its penchant for developing every type of technology imaginable, Toyota has been working on not just fuel cells but also hydrogen engines.
Now it is partnering with Mazda, Subaru, Yamaha and KHI to further expand on this concept and add synthetic carbon neutral fuels to the mix.
These efforts could potentially provide alternative zero carbon transition paths and are worth understanding.


Toyota – Revving Up the Hydrogen Engine

Subaru’s 2Q results of ¥706bn in revenue (+11.2% QoQ, -7.2% YoY) and OP of ¥24.9bn (OPM of 3.5% vs. 6.1% and 4.6% respectively in 2QFY21 and 1QFY22) were slightly disappointing. Nevertheless, the company’s downward revision, while perhaps warranted, was excessive in scale.

Subaru’s 2Q results of ¥706bn in revenue (+11.2% QoQ, -7.2% YoY) and OP of ¥24.9bn (OPM of 3.5% vs. 6.1% and 4.6% respectively in 2QFY21 and 1QFY22) were slightly disappointing. Nevertheless, the company’s downward revision, while perhaps warranted, was excessive in scale.

Subaru Corp reported its 4QFY21 results on 11th May and posted revenue of ¥755bn (-11.8% QoQ, -12.1% YoY) and OP of ¥4.2bn (OPM of 0.6%) which is a 6.5% deterioration in operating margin YoY.The reported revenue was 3.8% lower than consensus estimates while OP was significantly lower than consensus estimates (¥19bn).<table class="table table-striped"><tbody>
<tr>
<td style="width: 43.96%;">In ¥bn</td>
<td style="width: 18.68%;">Revenue </td>
<td style="width: 18.68%;">OP</td>
<td style="width: 18.68%;">OPM</td>
</tr>
<tr>
<td style="width: 43.96%;">Actual Results - 4QFY21</td>
<td style="width: 18.68%;">                    755</td>
<td style="width: 18.68%;">                     4.2</td>
<td style="width: 18.68%;">0.6%</td>
</tr>
<tr>
<td style="width: 43.96%;">Consensus - 4QFY21</td>
<td style="width: 18.68%;">785</td>
<td style="width: 18.68%;">23.2</td>
<td style="width: 18.68%;">2.9%</td>
</tr>
<tr>
<td style="width: 43.96%;">Surprise</td>
<td style="width: 18.68%;">-3.8%</td>
<td style="width: 18.68%;">-81.8%</td>
<td style="width: 18.68%;">-2.4% points</td>
</tr>
<tr>
<td style="width: 43.96%;"> </td>
<td style="width: 18.68%;"> </td>
<td style="width: 18.68%;"> </td>
<td style="width: 18.68%;"> </td>
</tr>
<tr>
<td style="width: 43.96%;">Actual - FY21</td>
<td style="width: 18.68%;">2,830</td>
<td style="width: 18.68%;">102</td>
<td style="width: 18.68%;">3.6%</td>
</tr>
<tr>
<td style="width: 43.96%;">Guidance - FY21</td>
<td style="width: 18.68%;">2,850</td>
<td style="width: 18.68%;">100</td>
<td style="width: 18.68%;">3.5%</td>
</tr>
<tr>
<td style="width: 43.96%;">Surprise</td>
<td style="width: 18.68%;">-0.7%</td>
<td style="width: 18.68%;">2.5%</td>
<td style="width: 18.68%;">0.1% points</td>
</tr>
</tbody></table><div style="text-align: left;" class="content-caption">Source: Company disclosures, CapIQ</div>

Subaru Corp reported its 4QFY21 results on 11th May and posted revenue of ¥755bn (-11.8% QoQ, -12.1% YoY) and OP of ¥4.2bn (OPM of 0.6%) which is a 6.5% deterioration in operating margin YoY.The reported revenue was 3.8% lower than consensus estimates while OP was significantly lower than consensus estimates (¥19bn).

In ¥bn
Revenue 
OP
OPM


Actual Results - 4QFY21
                    755
                     4.2
0.6%


Consensus - 4QFY21
785
23.2
2.9%


Surprise
-3.8%
-81.8%
-2.4% points


 
 
 
 


Actual - FY21
2,830
102
3.6%


Guidance - FY21
2,850
100
3.5%


Surprise
-0.7%
2.5%
0.1% points

Source: Company disclosures, CapIQ

Subaru – Below Book and Ready to Rebound

Semiconductors, Memory and SSDs Specialist, Objective Analysis

Jim Handy

Semiconductors, Memory and SSDs Specialist

Objective Analysis

Objective Analysis offers third-party independent market research and data for the semiconductor industry and investors in the semiconductor industry.

Semiconductors, Memory and SSDs

Thematic (Sector/Industry)

After Japan's earthquake automobile makers had a lot to worry about, since they were already faced with critical semiconductor shortages.  Now unusually bad weather has hit much of the US, and has stopped chip production in three important fabs in Austin, Texas.  This Insight explores the winners and losers in this series of events.

After Japan's earthquake automobile makers had a lot to worry about, since they were already faced with critical semiconductor shortages.  Now unusually bad weather has hit much of the US, and has stopped chip production in three important fabs in Austin, Texas.  This Insight explores the winners and losers in this series of events.

Texas Weather Deals Second Blow to Automotive Chip Supply Chain

Japan

Subaru Corp manufactures passenger cars, buses, motor vehicle parts, and industrial machinery.  The Company also produces aircraft parts and supplies it to defense agency and Boeing Co.  The Company sells its passenger cars under the Subaru brand name.

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Subaru Corp (7270 JP)

Subaru – Improvement in Margins Despite Revenue Decline

Subaru’s 3QFY22 missed consensus with revenue of ¥666bn (-5.8% QoQ, -22.3% YoY) and OP of ¥42.0bn (6.3% OPM) both looking weak. The downward...

Mio Kato

Toyota – Revving Up the Hydrogen Engine

Toyota has been working on not just fuel cells but also hydrogen engines and is now partnering with Mazda, Subaru, Yamaha and KHI to potentially...

Mio Kato

Subaru – Recovery in 2H

Subaru’s 2Q results of ¥706bn in revenue and OP of ¥24.9bn were slightly disappointing. Nevertheless, the company’s downward revision, while...

Mio Kato

Subaru – Below Book and Ready to Rebound

We had been harping on about Subaru being overrated between 2017 and 2019 as the stock price fell on collapsing earnings, but the name is now below...

Mio Kato

Texas Weather Deals Second Blow to Automotive Chip Supply Chain

A chip shortage is preventing the automotive industry from returning to full volume. Meanwhile Japan's earthquake and bad weather in Texas are...

Jim Handy

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