Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

On Wednesday, partway through the day, it was discovered that the website of a relatively obscure Japanese "business and politics" monthly magazine which works off a kind of "membership system" called Sentaku (選択) carried an article about <a href="https://www.smartkarma.com/entities/fujitsu-ltd" target="_blank" data-smartkarma-citation="entities:16968:1" rel="noopener">Fujitsu Ltd (6702 JP)</a> and its listed subs. <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/109/006/original/Screenshot%202019-12-04%20at%204.48.26%20PM.png?1575449375" class="editor-image img-responsive" data-smartkarma-image-id="109006"></figure>I have not read the article - no access - but the headline suggests...<blockquote>Fujitsu too is studying the elimination of parent-subsidiary dual listings, a process which could start at earliest within this fiscal year. </blockquote>That sent Fujitsu's listed subs higher on the day.<ul>
<li>Battery and components maker, <a href="https://www.smartkarma.com/entities/fdk-corp" target="_blank" data-smartkarma-citation="entities:18857:1" rel="noopener">Fdk Corp (6955 JP)</a>, of which Fujitsu owns 58.8% went limit up before coming off and ending up 11.8% on the day. </li>
<li>
<a href="https://www.smartkarma.com/entities/fujitsu-general-ltd" target="_blank" data-smartkarma-citation="entities:2025:1" rel="noopener">Fujitsu General (6755 JP)</a>, air-conditioner and electronic equipment maker of which  Fujitsu owns 42.2% of shares out. That stock was up 17.5% intraday but closed +7.0%.</li>
<li>
<a href="https://www.smartkarma.com/entities/shinko-electric-industries" target="_blank" data-smartkarma-citation="entities:15066:1" rel="noopener">Shinko Electric Industries (6967 JP)</a>, which makes packaging and substrates for the back end of the semiconductor industry is 50.00% owned by Fujitsu, was up 24.3% intraday but closed up 16.4% by day end.</li>
<li>
<a href="https://www.smartkarma.com/entities/fujitsu-frontech-ltd" target="_blank" data-smartkarma-citation="entities:17089:1" rel="noopener">Fujitsu Frontech (6945 JP)</a>, which makes the machinery inside ATMs and also provides ATM solutions, sensors (RFID and fingerprint), etc is a small-cap which is 53.2% owned by Fujitsu. This stock traded a lot of volume, and was up 27% - limit up - at the end of the day.</li>
</ul>The language of the headline and other articles which reported on the stock price moves suggest that the "speculation" is that Fujitsu will follow in the footsteps of <a href="https://www.smartkarma.com/entities/hitachi-ltd" target="_blank" data-smartkarma-citation="entities:7797:1" rel="noopener">Hitachi Ltd (6501 JP)</a> which has not so secretly put up some of its listed subs such as <a href="https://www.smartkarma.com/entities/hitachi-chemical-co-ltd" target="_blank" data-smartkarma-citation="entities:14457:1" rel="noopener">Hitachi Chemical (4217 JP)</a> and <a href="https://www.smartkarma.com/entities/hitachi-high-technologies-co" target="_blank" data-smartkarma-citation="entities:7046:1" rel="noopener">Hitachi High Technologies Co (8036 JP)</a> for sale, and Toshiba which launched Tender Offers for three out of its four listed subs <a href="https://www.smartkarma.com/entities/toshiba-plant-systems-services-corporation" target="_blank" data-smartkarma-citation="entities:15976:1" rel="noopener">Toshiba Plant Systems &amp; Services (1983 JP)</a>, <a href="https://www.smartkarma.com/entities/nishishiba-electric-co-ltd" target="_blank" data-smartkarma-citation="entities:6193:1" rel="noopener">Nishishiba Electric (6591 JP)</a>, and <a href="https://www.smartkarma.com/entities/nuflare-technology-inc" target="_blank" data-smartkarma-citation="entities:9635:1" rel="noopener">Nuflare Technology (6256 JP)</a>, leaving out <a href="https://www.smartkarma.com/entities/toshiba-tec-corp" target="_blank" data-smartkarma-citation="entities:17697:1" rel="noopener">Toshiba Tec (6588 JP)</a>) last month.However, what we have for now is a headline of an article in a magazine known more for its after-the-fact political-business relationship reporting than M&amp;A reporting. What is surprising to me is that we have, for the moment, no "official" comment at the TSE from any of the five companies. Nikkei QUICK asked Fujitsu for their comment on the Sentaku story, and the comment was 「現時点で具体的な話は何も決まっていない」or "At the moment, nothing concrete has been decided." Every major Japanese media story specifically used the words "speculative buying."

On Wednesday, partway through the day, it was discovered that the website of a relatively obscure Japanese "business and politics" monthly magazine which works off a kind of "membership system" called Sentaku (選択) carried an article about Fujitsu Ltd (6702 JP) and its listed subs. I have not read the article - no access - but the headline suggests...Fujitsu too is studying the elimination of parent-subsidiary dual listings, a process which could start at earliest within this fiscal year. That sent Fujitsu's listed subs higher on the day.
Battery and components maker, Fdk Corp (6955 JP), of which Fujitsu owns 58.8% went limit up before coming off and ending up 11.8% on the day. 

Fujitsu General (6755 JP), air-conditioner and electronic equipment maker of which  Fujitsu owns 42.2% of shares out. That stock was up 17.5% intraday but closed +7.0%.

Shinko Electric Industries (6967 JP), which makes packaging and substrates for the back end of the semiconductor industry is 50.00% owned by Fujitsu, was up 24.3% intraday but closed up 16.4% by day end.

Fujitsu Frontech (6945 JP), which makes the machinery inside ATMs and also provides ATM solutions, sensors (RFID and fingerprint), etc is a small-cap which is 53.2% owned by Fujitsu. This stock traded a lot of volume, and was up 27% - limit up - at the end of the day.
The language of the headline and other articles which reported on the stock price moves suggest that the "speculation" is that Fujitsu will follow in the footsteps of Hitachi Ltd (6501 JP) which has not so secretly put up some of its listed subs such as Hitachi Chemical (4217 JP) and Hitachi High Technologies Co (8036 JP) for sale, and Toshiba which launched Tender Offers for three out of its four listed subs Toshiba Plant Systems &amp; Services (1983 JP), Nishishiba Electric (6591 JP), and Nuflare Technology (6256 JP), leaving out Toshiba Tec (6588 JP)) last month.However, what we have for now is a headline of an article in a magazine known more for its after-the-fact political-business relationship reporting than M&amp;A reporting. What is surprising to me is that we have, for the moment, no "official" comment at the TSE from any of the five companies. Nikkei QUICK asked Fujitsu for their comment on the Sentaku story, and the comment was 「現時点で具体的な話は何も決まっていない」or "At the moment, nothing concrete has been decided." Every major Japanese media story specifically used the words "speculative buying."

Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Since June 7, when Japan's Nikkei newspaper reported that Hitachi Ltd. (6501 JP) is thinking about making Hitachi High-Technologies (8036 JP) a wholly-owned subsidiary and then reorganizing its various businesses to fit its new strategic plan, the shares of Hitachi Ltd. have risen by 5%. Hitachi Ltd. currently owns 51.6% of Hitachi High-Technologies, which makes semiconductor production equipment, medical equipment, electron microscopes and other analytical instruments, and distributes industrial &amp; IT systems and industrial materials &amp; components.Both companies issued press releases denying that they they had disclosed this information but, as noted by David Rubenstein in <a href="https://www.smartkarma.com/insights/hitachi-s-hidden-gem-out-of-the-bag" target="_blank" data-smartkarma-citation="insights:30275">Hitachi's Hidden Gem Out Of The Bag</a>, "the Nikkei usually bases its speculation on factual sources." A spin-off of Hitachi High-Technologies' semiconductor equipment business would be consistent with the sale of Hitachi Kokusai's semiconductor equipment business to KKR in 2017, while medical equipment, microscopes and other analytical instruments would probably fit with Hitachi Ltd.'s health care and other businesses. The distribution businesses could also be folded into the parent company's existing operations.As we noted in <a href="https://www.smartkarma.com/insights/hitachi-ltd-6501-jp-new-mid-term-plan" target="_blank" data-smartkarma-citation="insights:29427">Hitachi Ltd. (6501 JP): New Mid-Term Plan</a>, Hitachi High-Technologies and three other listed subsidiaries - Hitachi Construction Machinery (6305 JP - 50.2% owned), Hitachi Metals (5486 JP - 52.7% owned) and Hitachi Chemical (4217 JP - 51.2% owned) - are now classified as independent segments in the parent company's consolidated accounts, suggesting that they are candidates for restructuring. In late April, the Japanese press reported that Hitachi Ltd. is planning to sell Hitachi Chemical.At ¥4,000 (Wednesday, June 12, close), Hitachi Ltd. shares are now selling at 9x management's EPS guidance for FY Mar-20, which compares with a 6-year P/E range of 6x - 24x. Assuming no major write-downs and a normal tax rate, the achievement of management's mid-term targets could bring the P/E down to 7x. In our view, Hitachi's restructuring efforts are not sufficiently appreciated and, from a long-term perspective, its shares are under-valued.

Since June 7, when Japan's Nikkei newspaper reported that Hitachi Ltd. (6501 JP) is thinking about making Hitachi High-Technologies (8036 JP) a wholly-owned subsidiary and then reorganizing its various businesses to fit its new strategic plan, the shares of Hitachi Ltd. have risen by 5%. Hitachi Ltd. currently owns 51.6% of Hitachi High-Technologies, which makes semiconductor production equipment, medical equipment, electron microscopes and other analytical instruments, and distributes industrial &amp; IT systems and industrial materials &amp; components.Both companies issued press releases denying that they they had disclosed this information but, as noted by David Rubenstein in Hitachi's Hidden Gem Out Of The Bag, "the Nikkei usually bases its speculation on factual sources." A spin-off of Hitachi High-Technologies' semiconductor equipment business would be consistent with the sale of Hitachi Kokusai's semiconductor equipment business to KKR in 2017, while medical equipment, microscopes and other analytical instruments would probably fit with Hitachi Ltd.'s health care and other businesses. The distribution businesses could also be folded into the parent company's existing operations.As we noted in Hitachi Ltd. (6501 JP): New Mid-Term Plan, Hitachi High-Technologies and three other listed subsidiaries - Hitachi Construction Machinery (6305 JP - 50.2% owned), Hitachi Metals (5486 JP - 52.7% owned) and Hitachi Chemical (4217 JP - 51.2% owned) - are now classified as independent segments in the parent company's consolidated accounts, suggesting that they are candidates for restructuring. In late April, the Japanese press reported that Hitachi Ltd. is planning to sell Hitachi Chemical.At ¥4,000 (Wednesday, June 12, close), Hitachi Ltd. shares are now selling at 9x management's EPS guidance for FY Mar-20, which compares with a 6-year P/E range of 6x - 24x. Assuming no major write-downs and a normal tax rate, the achievement of management's mid-term targets could bring the P/E down to 7x. In our view, Hitachi's restructuring efforts are not sufficiently appreciated and, from a long-term perspective, its shares are under-valued.

Hitachi Ltd. (6501 JP): Share Price Up on Restructuring News

Japan Equity Analyst, all sectors

David Rubenstein

The Nikkei newspaper reported early this morning that Hitachi (6501) will consider buying the remaining shares of Hitachi High-Tech (HHT, 8036). Hitachi currently owns 52% of HHT.  Obviously, this is officially speculation and Hitachi denies taking any concrete action, but the Nikkei usually bases its speculation on factual sources. The Nikkei article used the usual language: "It was learned that Hitachi has begun considering making Hitachi High Tech a wholly-owned subsidiary". Needless to say, the stock is currently limit up today, and other Hitachi listed subsidiaries are strong. The article mentions that a TOB for HHT would carry a Y400bn premium to the remaining 48% of the shares, which is approximately 27% upside to the closing price of Y4,750 from yesterday. The 27% upside implies a Y6,010 price versus the Y5,450 limit up price for today. Other Hitachi names in play are Hitachi Metals (5486 +3.5%), Hitachi Construction Machinery (6305 +3.1%), Hitachi Capital (8586 +2.0%), and Hitachi Chemical (4217 +0.4%).We have described the underappreciated intrinsic value of HHT in previous reports on this platform. Please refer to our previous reports including "Hitachi's Hidden Gem" from October 2018.The Nikkei mentions that the semiconductor business of HHT could be on the block as a spin-off candidate (after an alleged TOB) as it has little synergistic value with the parent's IoT ambitions. The R&amp;D cost for next generation semiconductors is also a constant burden for HHT's semiconductor division. Conversely, the article said that Hitachi values the medical side of HHT highly, and aims to combine it with the parent's health care business and raise operating profit margins from 9% to over 11% by 2021. These two points on the core medical and SPE businesses at HHT make complete sense to us and are in-line with previous rhetoric from the company. In recent months, Hitachi has been more active in pushing forward its reorganization effort. In March, Hitachi was reported to be considering selling Hitachi Chemical (4217), which sent Hitachi Chemical's stock into a frenzy. With the HHT takeover seemingly out of the bag, the next M&amp;A target would perhaps shift to the likes of Hitachi Metals or Hitachi Construction Machinery. Today's stock price movements in those two names suggest that we may hear more announcements soon.

The Nikkei newspaper reported early this morning that Hitachi (6501) will consider buying the remaining shares of Hitachi High-Tech (HHT, 8036). Hitachi currently owns 52% of HHT.  Obviously, this is officially speculation and Hitachi denies taking any concrete action, but the Nikkei usually bases its speculation on factual sources. The Nikkei article used the usual language: "It was learned that Hitachi has begun considering making Hitachi High Tech a wholly-owned subsidiary". Needless to say, the stock is currently limit up today, and other Hitachi listed subsidiaries are strong. The article mentions that a TOB for HHT would carry a Y400bn premium to the remaining 48% of the shares, which is approximately 27% upside to the closing price of Y4,750 from yesterday. The 27% upside implies a Y6,010 price versus the Y5,450 limit up price for today. Other Hitachi names in play are Hitachi Metals (5486 +3.5%), Hitachi Construction Machinery (6305 +3.1%), Hitachi Capital (8586 +2.0%), and Hitachi Chemical (4217 +0.4%).We have described the underappreciated intrinsic value of HHT in previous reports on this platform. Please refer to our previous reports including "Hitachi's Hidden Gem" from October 2018.The Nikkei mentions that the semiconductor business of HHT could be on the block as a spin-off candidate (after an alleged TOB) as it has little synergistic value with the parent's IoT ambitions. The R&amp;D cost for next generation semiconductors is also a constant burden for HHT's semiconductor division. Conversely, the article said that Hitachi values the medical side of HHT highly, and aims to combine it with the parent's health care business and raise operating profit margins from 9% to over 11% by 2021. These two points on the core medical and SPE businesses at HHT make complete sense to us and are in-line with previous rhetoric from the company. In recent months, Hitachi has been more active in pushing forward its reorganization effort. In March, Hitachi was reported to be considering selling Hitachi Chemical (4217), which sent Hitachi Chemical's stock into a frenzy. With the HHT takeover seemingly out of the bag, the next M&amp;A target would perhaps shift to the likes of Hitachi Metals or Hitachi Construction Machinery. Today's stock price movements in those two names suggest that we may hear more announcements soon. 

Management's efforts to rationalize the consolidated operations of Hitachi Ltd. have generally been effective: gross profit has risen while total assets have declined, operating profit is up and exceeds Japan Analytics' estimate of annual required return (6% on net operating assets), and the company's estimated no-growth valuation is well above its current market capitalization. So why has Hitachi's share price lagged?Answers may be found in the company's recent performance and its new 2021 Mid-term Management Plan, in the slow and very long-term nature of its restructuring plan, and in the uncertain outlook for the global economic environment upon which its future growth depends. Instead of reaching new highs as management hopes, profits may peak out due to trade friction, general economic weakness, and the company's exposure to China and the auto industry, each of which accounts for about 11% of consolidated sales.Management's plans are sensible and include both significant changes to the business portfolio and substantial investments in new technologies, but compared with what is going on in the wider world of Big Data, the Internet of Things, Artificial Intelligence and robotics, they do not strike us as unusually innovative. And there is the risk inherent in large-scale M&amp;A (see <a href="https://www.smartkarma.com/insights/hitachi-6501-jp-a-bold-but-risky-acquisition-of-abb-s-power-grids" target="_blank" data-smartkarma-citation="insights:26792">Hitachi (6501 JP): A Bold but Risky Acquisition of ABB’s Power Grids</a> by Arun George).That having been said, following the write-off of the Horizon nuclear power project last fiscal year, management is guiding for a near-doubling of net profit in FY Mar-20 and is targeting an additional 30% profit growth in the following two years. That, in our estimation, is an ambitious but not unrealistic target.At ¥3,622 (Friday, May 24, closing price), Hitachi is selling at 8x management's EPS guidance for FY Mar-20, which is near the bottom of its 6-year P/E range (5.9x - 24.1x). Assuming no major write-downs and a normal tax rate, the achievement of management's mid-term targets could bring the P/E down to 6x. Our conclusion is that Hitachi's restructuring efforts are not sufficiently appreciated and that, from a long-term perspective, its shares are under-valued.

Management's efforts to rationalize the consolidated operations of Hitachi Ltd. have generally been effective: gross profit has risen while total assets have declined, operating profit is up and exceeds Japan Analytics' estimate of annual required return (6% on net operating assets), and the company's estimated no-growth valuation is well above its current market capitalization. So why has Hitachi's share price lagged?Answers may be found in the company's recent performance and its new 2021 Mid-term Management Plan, in the slow and very long-term nature of its restructuring plan, and in the uncertain outlook for the global economic environment upon which its future growth depends. Instead of reaching new highs as management hopes, profits may peak out due to trade friction, general economic weakness, and the company's exposure to China and the auto industry, each of which accounts for about 11% of consolidated sales.Management's plans are sensible and include both significant changes to the business portfolio and substantial investments in new technologies, but compared with what is going on in the wider world of Big Data, the Internet of Things, Artificial Intelligence and robotics, they do not strike us as unusually innovative. And there is the risk inherent in large-scale M&amp;A (see Hitachi (6501 JP): A Bold but Risky Acquisition of ABB’s Power Grids by Arun George).That having been said, following the write-off of the Horizon nuclear power project last fiscal year, management is guiding for a near-doubling of net profit in FY Mar-20 and is targeting an additional 30% profit growth in the following two years. That, in our estimation, is an ambitious but not unrealistic target.At ¥3,622 (Friday, May 24, closing price), Hitachi is selling at 8x management's EPS guidance for FY Mar-20, which is near the bottom of its 6-year P/E range (5.9x - 24.1x). Assuming no major write-downs and a normal tax rate, the achievement of management's mid-term targets could bring the P/E down to 6x. Our conclusion is that Hitachi's restructuring efforts are not sufficiently appreciated and that, from a long-term perspective, its shares are under-valued.

Hitachi Ltd. (6501 JP): New Mid-Term Plan

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Quantitative Analysis

- MARKET COMPOSITE -<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/082/944/original/2019-03-24_06-29-24.png?1553376576" class="editor-image img-responsive" data-smartkarma-image-id="82944"></figure><div class="content-caption">Source: Japan Analytics</div>FIVE-MONTH HIGH - This bear market rally is now ending. The market composite rose by 15% from the Christmas Day low, peaking on 26th February at ¥659t. The market-value-based percentage above moving averages reached a five-month on Friday. However, the three-month change in that percentage is suggesting that a new bear phase will now commence.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/082/945/original/2019-03-24_06-37-53.png?1553377087" class="editor-image img-responsive" data-smartkarma-image-id="82945"></figure><div class="content-caption">Source: Japan Analytics</div>SELL SIGNAL - The three-month change in the market-value-based percentage above moving averages reached 38 on Friday. Although this indicator is not always reliable as a long-term indicator, it has been helpful over shorter periods and has called the most recent peak in October and December's trough.  We now expect at least a decline in the market composite to below ¥600t and, if economic conditions continue to weaken, a re-test of the December low. <hr>- SECTORS - <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/082/947/original/2019-03-24_07-15-15.png?1553379324" class="editor-image img-responsive" data-smartkarma-image-id="82947"></figure><div style="text-align: left;" class="content-caption">
NB: The 'sparklines' show the three-year trend in the weighted percentage above moving average relative to the Market Composite and the 'STDev' column is a measure of the variability of that relative measure. The table also provides averages for the breaks above and breaks below and the positive and negative crossovers.</div>SECTOR BREAKDOWN - The top six sectors remain mostly domestic and defensive. REITs,Restaurants, Healthcare, Transportation, and Utilities continue from our previous review with Other Commercial Products replacing Information Technology. Equally predictable is the bottom half-dozen - Banks, Non-Bank Finance, Autos, Retail, and Metals remain from two weeks ago, with Energy replacing Construction. With the Yen having broken the ¥110 level against the US dollar on Friday, we would expect the Autos, Machinery, Electrical Equipment, Technology Hardware, and Chemicals sectors to weaken further as indicated by their Negative Crossover percentages. <hr>- COMPANIES -COMPANY MOVING AVERAGE OUTLIERS - As with the Market Composite and Sectors, the Moving Average Outlier indicator uses a weighted sum of each company's share price relative to its 5-day, 20-day, 60-day, 120-day and 240-day moving averages. 'Extreme' values are weighted sums greater than 100% and less than -100%. We would caution that this indicator is best used for timing shorter-term reversals and, in many cases, higher highs and lower lows will be seen. <div class="content-highlight">
In the DETAIL section below, we highlight the current top and bottom twenty-five large capitalisation outliers, as well as those companies that have seen the most significant positive and negative changes in their outlier percentage in the last two weeks and provide short comments on companies of particular note.
Our most extreme positive outlier two weeks ago, <a href="https://www.smartkarma.com/entities/2709" target="_blank" data-smartkarma-citation="entities:2709:1">AnGes (4563 JP)</a> is still the most extreme large cap positive outlier and gained a further 8% over the fortnight. We recommend taking short-term profits.
In the same sector <a href="https://www.smartkarma.com/entities/21001" target="_blank" data-smartkarma-citation="entities:21001:1">Eisai (4523 JP)</a> is the most extreme negative outlier after falling by 16.6% on Friday on the discontinuation of the clinical phase 3 trials of Biogen's Alzheimer's treatment Aducanumab as the primary endpoint is unlikely to be reached. Now at an eight-month Relative Price Score low, a short-term recovery to above ¥8,000 is likely.

</div><div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/082/959/original/2019-03-24_08-46-23.png?1553385811" class="editor-image img-responsive" data-smartkarma-image-id="82959"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/082/963/original/2019-03-24_10-37-51.png?1553391481" class="editor-image img-responsive" data-smartkarma-image-id="82963"></figure>Source: Japan Analytics
</div>

- MARKET COMPOSITE -Source: Japan AnalyticsFIVE-MONTH HIGH - This bear market rally is now ending. The market composite rose by 15% from the Christmas Day low, peaking on 26th February at ¥659t. The market-value-based percentage above moving averages reached a five-month on Friday. However, the three-month change in that percentage is suggesting that a new bear phase will now commence.Source: Japan AnalyticsSELL SIGNAL - The three-month change in the market-value-based percentage above moving averages reached 38 on Friday. Although this indicator is not always reliable as a long-term indicator, it has been helpful over shorter periods and has called the most recent peak in October and December's trough.  We now expect at least a decline in the market composite to below ¥600t and, if economic conditions continue to weaken, a re-test of the December low. - SECTORS - 
NB: The 'sparklines' show the three-year trend in the weighted percentage above moving average relative to the Market Composite and the 'STDev' column is a measure of the variability of that relative measure. The table also provides averages for the breaks above and breaks below and the positive and negative crossovers.SECTOR BREAKDOWN - The top six sectors remain mostly domestic and defensive. REITs,Restaurants, Healthcare, Transportation, and Utilities continue from our previous review with Other Commercial Products replacing Information Technology. Equally predictable is the bottom half-dozen - Banks, Non-Bank Finance, Autos, Retail, and Metals remain from two weeks ago, with Energy replacing Construction. With the Yen having broken the ¥110 level against the US dollar on Friday, we would expect the Autos, Machinery, Electrical Equipment, Technology Hardware, and Chemicals sectors to weaken further as indicated by their Negative Crossover percentages. - COMPANIES -COMPANY MOVING AVERAGE OUTLIERS - As with the Market Composite and Sectors, the Moving Average Outlier indicator uses a weighted sum of each company's share price relative to its 5-day, 20-day, 60-day, 120-day and 240-day moving averages. 'Extreme' values are weighted sums greater than 100% and less than -100%. We would caution that this indicator is best used for timing shorter-term reversals and, in many cases, higher highs and lower lows will be seen. 
In the DETAIL section below, we highlight the current top and bottom twenty-five large capitalisation outliers, as well as those companies that have seen the most significant positive and negative changes in their outlier percentage in the last two weeks and provide short comments on companies of particular note.
Our most extreme positive outlier two weeks ago, AnGes (4563 JP) is still the most extreme large cap positive outlier and gained a further 8% over the fortnight. We recommend taking short-term profits.
In the same sector Eisai (4523 JP) is the most extreme negative outlier after falling by 16.6% on Friday on the discontinuation of the clinical phase 3 trials of Biogen's Alzheimer's treatment Aducanumab as the primary endpoint is unlikely to be reached. Now at an eight-month Relative Price Score low, a short-term recovery to above ¥8,000 is likely.


Source: Japan Analytics


🇯🇵 Japan: Moving Average Outliers - Market Sell Signal Generated + 6920, 8036, 6758, 2326, 3064

Japan

Hitachi High-Tech Corporation is a trading company handling a variety of products such as computers and peripherals, scientific instruments and systems, electronic devices, and industrial machinery and materials.  The Company, a subsidiary of Hitachi, operates worldwide.

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Hitachi High-Tech (8036 JP)

Fujitsu Subsidiary Selldowns or Buy-Ins?

On Wednesday, partway through the day, it was discovered that the website of a relatively obscure Japanese "business and politics" monthly magazine...

Travis Lundy

Hitachi's Hidden Gem Out Of The Bag

The Nikkei newspaper reported early this morning that Hitachi (6501) will consider buying the remaining shares of Hitachi High-Tech (HHT, 8036)....

David Rubenstein

Hitachi Ltd. (6501 JP): New Mid-Term Plan

Management's efforts to rationalize the consolidated operations of Hitachi Ltd. have generally been effective: gross profit has risen while total...

Scott Foster

🇯🇵 Japan: Moving Average Outliers - Market Sell Signal Generated + 6920, 8036, 6758, 2326, 3064

- MARKET COMPOSITE -FIVE-MONTH HIGH - This bear market rally is now ending. The market composite rose by 15% from the Christmas Day low, peaking on...

Campbell Gunn

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Fujitsu Subsidiary Selldowns or Buy-Ins?

On Wednesday, partway through the day, it was discovered that the website of a relatively obscure Japanese "business and politics" monthly magazine...

Travis Lundy

Hitachi Ltd. (6501 JP): Share Price Up on Restructuring News

Since June 7, when Japan's Nikkei newspaper reported that Hitachi Ltd. (6501 JP) is thinking about making Hitachi High-Technologies (8036 JP) a...

Scott Foster

Hitachi's Hidden Gem Out Of The Bag

The Nikkei newspaper reported early this morning that Hitachi (6501) will consider buying the remaining shares of Hitachi High-Tech (HHT, 8036)....

David Rubenstein

Hitachi Ltd. (6501 JP): New Mid-Term Plan

Management's efforts to rationalize the consolidated operations of Hitachi Ltd. have generally been effective: gross profit has risen while total...

Scott Foster

🇯🇵 Japan: Moving Average Outliers - Market Sell Signal Generated + 6920, 8036, 6758, 2326, 3064

- MARKET COMPOSITE -FIVE-MONTH HIGH - This bear market rally is now ending. The market composite rose by 15% from the Christmas Day low, peaking on...

Campbell Gunn