Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.</li>
<li>A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.</li>
<li>Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-May 2022.</li>
</ul>


JPX-Nikkei 400 is composed of common stocks listed on the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. We look at the potential forward inclusions and removals every month.
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-May 2022.


JPX-Nikkei 400 Rebalance 2022: Leaderboard End-May 2022

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nikon-corp" target="_blank" data-smartkarma-citation="entities:7117:1" rel="noopener">Nikon Corp (7731 JP)</a> today announced a Very Large Buyback. This is the third buyback it has announced since spring 2019. The first was short. The next two big.</li>
<li>The company also announced a new <a href="https://www.nikon.com/about/ir/management/midtermbusiness/pdf/2022/0407e_all.pdf" target="_blank" rel="noopener">Medium-Term Management Plan for FY2022-2025</a> today in which they reiterated their existing Shareholder Return Policy of 40+% payout of stable dividends and opportunistic buybacks. </li>
<li>It's a decent div, and the buyback is for 6-7% of shares out, but it could do better. The company is hugely cash- and securities holdings-rich. It should do better.</li>
</ul>



Nikon Corp (7731 JP) today announced a Very Large Buyback. This is the third buyback it has announced since spring 2019. The first was short. The next two big.
The company also announced a new Medium-Term Management Plan for FY2022-2025 today in which they reiterated their existing Shareholder Return Policy of 40+% payout of stable dividends and opportunistic buybacks. 
It's a decent div, and the buyback is for 6-7% of shares out, but it could do better. The company is hugely cash- and securities holdings-rich. It should do better.


BIG Nikon (7731) Buyback - OK But Should Do Better

<ul>
<li>JPX-Nikkei 400 is composed of common stocks listed in the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.</li>
<li>A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year.</li>
<li>Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-December 2021.</li>
</ul>


JPX-Nikkei 400 is composed of common stocks listed in the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents.
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year.
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-December 2021.


JPX-Nikkei 400 Rebalance 2022: Leaderboard End-Dec 2021

<ul>
<li>JPX-Nikkei 400 is composed of common stocks listed in the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents. </li>
<li>A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. </li>
<li>Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-November 2021.</li>
</ul>


JPX-Nikkei 400 is composed of common stocks listed in the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents. 
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. 
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-November 2021.


JPX-Nikkei 400 Rebalance 2022: Leaderboard End-Nov 2021

Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

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

JEOL hit a new record high of ¥6,770 on June 23 - up 2.3x from its 52-week low and up 72% since March - and has since dropped back only 4%. At ¥6,500 (Friday, July 2 closing price), the shares are selling at 49x management's EPS guidance for FY Mar-22. That, in comparison with the company's historical valuation ranges, is more than enough.Sales and profits were down last fiscal year, but new orders were up and the order backlog increased by 25% to a record 55% of sales. This fiscal year, management expects new orders to rise by 6.0%, helping support a 14.5% increase in sales and a 59% increase in operating profit in FY Mar-22. In our view, this has been discounted.What perhaps has not been discounted is a potential shortfall in sales and profits due to the semiconductor shortage, the severity of the pandemic in India, and a new tax exemption system in China, the guidelines for which have not yet been announced.Assuming these problems are overcome and the economy continues to recover, there is potential for sales and profit growth to continue for the next 2-3 years. Growth should be led by e-beam photomask writers and other equipment for the semiconductor industry, but all divisions have growth potential.On our estimates, this would bring the projected P/E ratio for FY Mar-24 down to 38x. This, in our estimation, is still too high.

JEOL hit a new record high of ¥6,770 on June 23 - up 2.3x from its 52-week low and up 72% since March - and has since dropped back only 4%. At ¥6,500 (Friday, July 2 closing price), the shares are selling at 49x management's EPS guidance for FY Mar-22. That, in comparison with the company's historical valuation ranges, is more than enough.Sales and profits were down last fiscal year, but new orders were up and the order backlog increased by 25% to a record 55% of sales. This fiscal year, management expects new orders to rise by 6.0%, helping support a 14.5% increase in sales and a 59% increase in operating profit in FY Mar-22. In our view, this has been discounted.What perhaps has not been discounted is a potential shortfall in sales and profits due to the semiconductor shortage, the severity of the pandemic in India, and a new tax exemption system in China, the guidelines for which have not yet been announced.Assuming these problems are overcome and the economy continues to recover, there is potential for sales and profit growth to continue for the next 2-3 years. Growth should be led by e-beam photomask writers and other equipment for the semiconductor industry, but all divisions have growth potential.On our estimates, this would bring the projected P/E ratio for FY Mar-24 down to 38x. This, in our estimation, is still too high.

JEOL (6951 JP): Growth Prospects in the Price

Japan

JEOL Ltd. manufactures electron optics instruments and analytical instruments including electron microscope, X-ray diffractometer and spectrometer and thermographs.  The Company also makes semiconductor manufacturing equipment, medical equipment and industrial equipment.

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Jeol Ltd (6951 JP)

JPX-Nikkei 400 Rebalance 2022: Leaderboard End-May 2022

A look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-May 2022.

Janaghan Jeyakumar, CFA

BIG Nikon (7731) Buyback - OK But Should Do Better

Nikon (7731) today announced a 9.8% buyback. Given prices, it is more like 6-7%, but that is a similar portion of Eligible ADV for a year. But the...

Travis Lundy

JPX-Nikkei 400 Rebalance 2022: Leaderboard End-Dec 2021

A look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-December 2021.

Janaghan Jeyakumar, CFA

JPX-Nikkei 400 Rebalance 2022: Leaderboard End-Nov 2021

A discussion on potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-November...

Janaghan Jeyakumar, CFA

JEOL (6951 JP): Growth Prospects in the Price

A large backlog and improving order flow should support growth this year, but at 49x EPS guidance, this is in the price. And there are risks to...

Scott Foster

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