Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>OVERSEAS. SPX -1.1% as Fed Hawks rhetoric ratches up; All 11 Sectors -ve as Beta Sold; ALPHABET-7.7% AI fails to impress; Disney +8% after-hours with earnings beat/job cuts. </li>
<li>JAPAN.  NKY Futs -0.8% vs Cash; USDJPY 131.41; Japan looking to ease restrictions for China Inbound;  EARNINGS: Pan Pac/SMM Strong vs weak Subaru which -ve production cut; Toyota out today. </li>
<li>DAILY NUGGETS. EPIC fail from Alphabet's "BARD". Aren't these events supposed to  be choreographed ????</li>
</ul>


OVERSEAS. SPX -1.1% as Fed Hawks rhetoric ratches up; All 11 Sectors -ve as Beta Sold; ALPHABET-7.7% AI fails to impress; Disney +8% after-hours with earnings beat/job cuts. 
JAPAN.  NKY Futs -0.8% vs Cash; USDJPY 131.41; Japan looking to ease restrictions for China Inbound;  EARNINGS: Pan Pac/SMM Strong vs weak Subaru which -ve production cut; Toyota out today. 
DAILY NUGGETS. EPIC fail from Alphabet's "BARD". Aren't these events supposed to  be choreographed ????


Good Morning Japan |Hawks Re-Emerge + Epic "BARD" Fail Sinks Google; Pan Pac Beat/Subaru Miss

Global Automotive Stocks/EV Focus/Event Driven, SC Capital

SC Capital

Global Automotive Stocks/EV Focus/Event Driven

Over 22 years covering Japanese equities on both the sell side and the buy side. 

Bottom-up Japan Equities Research

Equity Bottom-Up

<ul>
<li>Toyota's Q2 EPS undershot estimates by 28%. FY3/23 guidance was kept flat, but given a more favorable assumption for forex tailwinds, Toyota effectively lowered FY3/23 EPS by 7%.  </li>
<li>Management partially admitted to parts of recent media reports that Toyota was overhauling its EV strategy.  Targets of 3.5m BEVs by 2030 are unchanged, but the ramp may be slower.</li>
<li>Toyota's 2H FY3/23 hurdles are low and its auto division's operating profits appear to be bottoming. Stock may still be a laggard, but we're bullish on a 12-month basis. </li>
</ul>


Toyota's Q2 EPS undershot estimates by 28%. FY3/23 guidance was kept flat, but given a more favorable assumption for forex tailwinds, Toyota effectively lowered FY3/23 EPS by 7%.  
Management partially admitted to parts of recent media reports that Toyota was overhauling its EV strategy.  Targets of 3.5m BEVs by 2030 are unchanged, but the ramp may be slower.
Toyota's 2H FY3/23 hurdles are low and its auto division's operating profits appear to be bottoming. Stock may still be a laggard, but we're bullish on a 12-month basis. 


Toyota's Q2 Is a Huge Miss; EV Strategy in Flux

<ul>
<li>Topix down 4.2% on persistent concerns about surging inflation, rising interest rates and a highly uncertain global economic outlook</li>
<li>The Nikkei index shed 7.7% in September, its biggest monthly decline since March 2020.</li>
<li>Disappointing commentary from NIKE, APPLE and automakers not helping sentiment</li>
</ul>


Topix down 4.2% on persistent concerns about surging inflation, rising interest rates and a highly uncertain global economic outlook
The Nikkei index shed 7.7% in September, its biggest monthly decline since March 2020.
Disappointing commentary from NIKE, APPLE and automakers not helping sentiment


Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>We are seeing signs that suggest this pullback may have run its course, as several global market indexes and Sectors appear to be making a higher low near logical support.</li>
<li>This includes the S&amp;P 500, Russell 2000, MSCI ACWI (local currency), TOPIX/TOPIX Small/Nikkei 225, MSCI ACWI Technology (IXN-US), Consumer Discretionary (RXI-US), Financials (IXG-US), Industrials and (EXI-US) -- add exposure.</li>
<li>While our overall outlook remains neutral, we continue to see a plethora of attractive buying opportunities in the new leaders.</li>
</ul>


We are seeing signs that suggest this pullback may have run its course, as several global market indexes and Sectors appear to be making a higher low near logical support.
This includes the S&amp;P 500, Russell 2000, MSCI ACWI (local currency), TOPIX/TOPIX Small/Nikkei 225, MSCI ACWI Technology (IXN-US), Consumer Discretionary (RXI-US), Financials (IXG-US), Industrials and (EXI-US) -- add exposure.
While our overall outlook remains neutral, we continue to see a plethora of attractive buying opportunities in the new leaders.


Pullback Complete?; Commodities Heading Lower; Buying Growth/Cyclicals & A Few Utilities

<ul>
<li>Subaru's profitability is set to improve dramatically, driven by a weaker yen</li>
<li>After two painful years, production is starting to normalise post Covid</li>
<li>At 1xPBR, we think Subaru is significantly undervalued and see at least 30% upside</li>
</ul>


Subaru's profitability is set to improve dramatically, driven by a weaker yen
After two painful years, production is starting to normalise post Covid
At 1xPBR, we think Subaru is significantly undervalued and see at least 30% upside


Subaru (7270 JP) | Production Problems in the Rear View Mirror

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)

Good Morning Japan |Hawks Re-Emerge + Epic "BARD" Fail Sinks Google; Pan Pac Beat/Subaru Miss

Fed Hawks rhetoric ratches up; ALHABET-7.7% AI fails to impress; . Japan looking to ease restrictions for China Inbound; JAPAN EARNINGS: Pan Pac...

Mark Chadwick

Toyota's Q2 Is a Huge Miss; EV Strategy in Flux

Toyota saw a huge miss in Q2 and admits they're revamping their EV plans. This may seem negative, but it's a huge positive ahead of a recovering...

SC Capital

Japan Weekly | Mazda, Mit Motors, Subaru

Not a great week for investors in Japanese equities. The market remains under pressure on global macro concerns in addition to poor commentary from...

Mark Chadwick

Pullback Complete?; Commodities Heading Lower; Buying Growth/Cyclicals & A Few Utilities

Signs suggest this pullback may have run its course, as several global market indexes & Sectors appear to be making a higher low near logical...

Vermilion Research

Subaru (7270 JP) | Production Problems in the Rear View Mirror

We see 3 key reasons to be bullish: 1) profits recovery on weak yen. 2) production normalization; and 3) at 1x PBR, we think Subaru is undervalued...

Mark Chadwick

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