'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

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.

Thematic (Sector/Industry)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/131/100/original/File%202020-05-04%207%2017%2056.jpeg?1588544362" class="editor-image img-responsive" data-smartkarma-image-id="131100"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/131/101/original/File%202020-05-04%207%2017%2024.jpeg?1588544387" class="editor-image img-responsive" data-smartkarma-image-id="131101"></figure><div class="content-caption">Source<a href="http://www.ourworldindata.org" target="_blank" rel="noopener"> • ourworldindata.org</a>
</div>NO QUARTER - Since the declaration of a nationwide state of emergency less than three weeks ago, Japan has seen a modest decline in the number of daily confirmed new cases of COVID-19, however, the number of attributed deaths continues to trend upwards. As we have been suggesting, Prime Minister Abe will, therefore, announce an extension of the restrictions until the end of May. Some measures will be eased outside the eighteen most-affected prefectures, but travel across prefectural borders will be discouraged.  For many businesses in Japan, the current quarter will see no revenues and the overly-strict and bureaucratic compensation schemes will be insufficient and delayed. In the last few days, several suicides among restaurant owners have been reported. A second supplementary budget will be required before July to avoid a permanent loss of economic and social capital. <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/131/152/original/File%202020-05-03%208%2038%2020.jpeg?1588566632" class="editor-image img-responsive" data-smartkarma-image-id="131152"></figure><div class="content-caption">Source • ourworldindata.org</div>NO WAY OUT? - For Japan to exit its state of emergency by the end of May will require an ability to trace cases beyond just several 'clusters'. Although the previous fax-based procedures have been streamlined, Japan is the testing 'outlier' amongst the developed world. If Japan does not improve its testing capability over the next four weeks, further extensions may become necessary.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/131/102/original/2020-05-03_09-16-26.png?1588546147" class="editor-image img-responsive" data-smartkarma-image-id="131102"></figure><div class="content-caption">Source • Japan Analytics</div>EARLY DAYS - With just 411 or 13% of the March/June/September/December cohort of companies having announced results, the declines in trailing-twelve-month (TTM) profits are modest. Forecast revisions are a sign of what is to come after the Golden Week holidays end this Thursday. The 'gap' between TTM results and forecasts is the widest since 2009. Forecast Operating Income is now 18% below the 2019 peak, while the same differential for Net Income is 31%. The changes in operating and net margins are -153bps and -188bps, respectively. The market aggregate multiple of 17.1x is close to a two-year high but is still half the pre-Abenomics decade average. We expect the COVID-19 trough TTM Net Income to be approximately ¥12.5 trillion, similar to the ¥13.4 trillion average aggregate Net Income for 2002-12. Using the average annual multiple for that period of 34x suggests a total market value 'low' of ¥425 trillion, 25% below Friday's close.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/131/105/original/2020-05-04_08-41-08.png?1588549288" class="editor-image img-responsive" data-smartkarma-image-id="131105"></figure><div class="content-caption">Source • Japan Analytics</div>SECTOR RESULTS &amp; REVISION SCORE TIMELINE - The leading and lagging Sectors as measured by Our Results &amp; Revision Score have some striking similarities and differences from 2008/9.  During the COVID crisis, the Internet Content &amp; Services Sector is performing as well in 2008/9. The Sector will soon 'overtake' the Information Technology Sector, which will suffer from corporate spending cutback, as is also try for Commercial Services. Metals, Machinery, and Electrical Equipment, are repeating their GFC declines. Technology Hardware will play 'catch up' on the downside in the second 'wave'. Perhaps the most-directly-affected Sector has yet to see any significant decline, primarily because many companies have given up forecasting and their Score is mostly backwards-looking. As COVID-19 is a social and not, as yet, a financial crisis, the Consumer Services and Transportation &amp; Logistics Sectors have replaced the Banks and Non-Bank Finance Sectors on the downside on this occasion. The extent to which the latter two are impacted remains to be seen.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/131/138/original/2020-05-04_11-15-00.png?1588558519" class="editor-image img-responsive" data-smartkarma-image-id="131138"></figure><div class="content-caption">Source • Japan Analytics</div>In the DETAIL below, we shall review the results, revisions and initial forecast announcements made on Friday by larger-cap companies.  On a relatively quiet day ahead of three consecutive public holidays, the positive/neutral/negative balance of the 33 results announcements was 13:1:19. The net change in Score was -31. For the 40 revisions/initial forecasts, the split was 11:2:27  and the average Score was -7. Of the nineteen companies declaring full-year results, ten made interim or annual forecasts for the current year. <a href="https://www.smartkarma.com/entities/tokyu-recreation-co-ltd" target="_blank" data-smartkarma-citation="entities:20602:1" rel="noopener">Tokyu Recreation (9631 JP)</a> and <a href="https://www.smartkarma.com/entities/space-co-ltd" target="_blank" data-smartkarma-citation="entities:10550:1" rel="noopener">Space (9622 JP)</a> withdrew their forecasts for the current year.

Source • ourworldindata.org
NO QUARTER - Since the declaration of a nationwide state of emergency less than three weeks ago, Japan has seen a modest decline in the number of daily confirmed new cases of COVID-19, however, the number of attributed deaths continues to trend upwards. As we have been suggesting, Prime Minister Abe will, therefore, announce an extension of the restrictions until the end of May. Some measures will be eased outside the eighteen most-affected prefectures, but travel across prefectural borders will be discouraged.  For many businesses in Japan, the current quarter will see no revenues and the overly-strict and bureaucratic compensation schemes will be insufficient and delayed. In the last few days, several suicides among restaurant owners have been reported. A second supplementary budget will be required before July to avoid a permanent loss of economic and social capital. Source • ourworldindata.orgNO WAY OUT? - For Japan to exit its state of emergency by the end of May will require an ability to trace cases beyond just several 'clusters'. Although the previous fax-based procedures have been streamlined, Japan is the testing 'outlier' amongst the developed world. If Japan does not improve its testing capability over the next four weeks, further extensions may become necessary.Source • Japan AnalyticsEARLY DAYS - With just 411 or 13% of the March/June/September/December cohort of companies having announced results, the declines in trailing-twelve-month (TTM) profits are modest. Forecast revisions are a sign of what is to come after the Golden Week holidays end this Thursday. The 'gap' between TTM results and forecasts is the widest since 2009. Forecast Operating Income is now 18% below the 2019 peak, while the same differential for Net Income is 31%. The changes in operating and net margins are -153bps and -188bps, respectively. The market aggregate multiple of 17.1x is close to a two-year high but is still half the pre-Abenomics decade average. We expect the COVID-19 trough TTM Net Income to be approximately ¥12.5 trillion, similar to the ¥13.4 trillion average aggregate Net Income for 2002-12. Using the average annual multiple for that period of 34x suggests a total market value 'low' of ¥425 trillion, 25% below Friday's close.Source • Japan AnalyticsSECTOR RESULTS &amp; REVISION SCORE TIMELINE - The leading and lagging Sectors as measured by Our Results &amp; Revision Score have some striking similarities and differences from 2008/9.  During the COVID crisis, the Internet Content &amp; Services Sector is performing as well in 2008/9. The Sector will soon 'overtake' the Information Technology Sector, which will suffer from corporate spending cutback, as is also try for Commercial Services. Metals, Machinery, and Electrical Equipment, are repeating their GFC declines. Technology Hardware will play 'catch up' on the downside in the second 'wave'. Perhaps the most-directly-affected Sector has yet to see any significant decline, primarily because many companies have given up forecasting and their Score is mostly backwards-looking. As COVID-19 is a social and not, as yet, a financial crisis, the Consumer Services and Transportation &amp; Logistics Sectors have replaced the Banks and Non-Bank Finance Sectors on the downside on this occasion. The extent to which the latter two are impacted remains to be seen.Source • Japan AnalyticsIn the DETAIL below, we shall review the results, revisions and initial forecast announcements made on Friday by larger-cap companies.  On a relatively quiet day ahead of three consecutive public holidays, the positive/neutral/negative balance of the 33 results announcements was 13:1:19. The net change in Score was -31. For the 40 revisions/initial forecasts, the split was 11:2:27  and the average Score was -7. Of the nineteen companies declaring full-year results, ten made interim or annual forecasts for the current year. Tokyu Recreation (9631 JP) and Space (9622 JP) withdrew their forecasts for the current year. 

🇯🇵 JAPAN MARKET UPDATE 4th May - No Quarter

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Doing bespoke work since 2002.....

Custom Products Group

Custom Products was started 14 years ago at Lehman Brothers by current co-founder Patrick Hansen, CFA. After 3 years at Lehman, Patrick moved the team to Macquarie Securities where Simon Rigney (co-founder) joined. 3 years ago we took Custom Products independent. 

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At the beginning of the fiscal year, Japanese companies issue full-year guidance. Most of them will then revise those number when they announce 2Q results in the fall. Their hope is that they get close enough to the up and coming actual results so that they do not have to change anything again before the year closes. We have screened for companies that have significantly changed their full-year guidance.

At the beginning of the fiscal year, Japanese companies issue full-year guidance. Most of them will then revise those number when they announce 2Q results in the fall. Their hope is that they get close enough to the up and coming actual results so that they do not have to change anything again before the year closes. We have screened for companies that have significantly changed their full-year guidance. 

2Q Earnings Is the Time for Full-Year Guidance Revisions. See Who Changed Their Numbers the Most....

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. 

GOOD RESULTS/WEAK MARKET - It may just be because the ‘Obon’ holidays start next week, but the Japanese equity market has greeted the seventh straight quarter of improved earnings results with a ‘raspberry’. Almost all of the previous two week's gains have been unwound; the 50-day moving average has been breached on the downside and volumes have continued to grind lower. The Market Composite trailing-twelve-month (TTM) PE is now just 14.2x and the lowest level of the soon-to-be-extended ‘era’ of…

GOOD RESULTS/WEAK MARKET - It may just be because the ‘Obon’ holidays start next week, but the Japanese equity market has greeted the seventh straight quarter of improved earnings results with a ‘raspberry’. Almost all of the previous two week's gains have been unwound; the 50-day moving average has been breached on the downside and volumes have continued to grind lower. The Market Composite trailing-twelve-month (TTM) PE is now just 14.2x and the lowest level of the soon-to-be-extended ‘era’ of…

Japan Fortnightly Update: Market PE at ‘Abe-Era’ Low

DOUBLE-DIGIT YOY GROWTH BUT RISING COSTS A CONCERN- 27% of Japanese listed companies reported earnings results last week. In aggregate, the group saw year-on-year trailing-twelve-month (TTM) growth in revenue and operating income of 10.7% and 19.0%, respectively.  The quarter-on-quarter growth rates are, however, showing a declining trend. TTM quarter-on-quarter revenue growth for this group has slowed from 3.4% in the quarter but last to 2.2% and operating income growth has declined from 8.0%…

DOUBLE-DIGIT YOY GROWTH BUT RISING COSTS A CONCERN- 27% of Japanese listed companies reported earnings results last week. In aggregate, the group saw year-on-year trailing-twelve-month (TTM) growth in revenue and operating income of 10.7% and 19.0%, respectively.  The quarter-on-quarter growth rates are, however, showing a declining trend. TTM quarter-on-quarter revenue growth for this group has slowed from 3.4% in the quarter but last to 2.2% and operating income growth has declined from 8.0%…

Japan: Results & Revisions Update - Slowing Momentum Confirmed

DOMESTIC  DEFENSIVE SECTORS ▲ GLOBAL CYCLICAL SECTORS ▼ -  The Q1 trend shift away from global cyclical sectors accelerated in the second quarter and all of these sectors saw declines in weight over the last three months.SECTOR RECOMMENDATIONS - Our most preferred sectors are currently Healthcare, Energy, Other Commercial Products, Utilities and Information Technology and least preferred sectors are Multi-Industry, Metals, Chemicals, Autos, Machinery, Banks and Consumer Services.MARKET OUTLOOK MIXED - With manufacturing sectors comprising 60% of the market and with many domestic sectors now fully-valued, it is hard to see the market making much headway over the rest of the summer.

DOMESTIC  DEFENSIVE SECTORS ▲ GLOBAL CYCLICAL SECTORS ▼ -  The Q1 trend shift away from global cyclical sectors accelerated in the second quarter and all of these sectors saw declines in weight over the last three months.SECTOR RECOMMENDATIONS - Our most preferred sectors are currently Healthcare, Energy, Other Commercial Products, Utilities and Information Technology and least preferred sectors are Multi-Industry, Metals, Chemicals, Autos, Machinery, Banks and Consumer Services.MARKET OUTLOOK MIXED - With manufacturing sectors comprising 60% of the market and with many domestic sectors now fully-valued, it is hard to see the market making much headway over the rest of the summer.

Japan : Q2 Sector & Company Performance Review

Japan

LIXIL Group Corporation produces aluminum housing materials such as doors, windows,curtain walls, and screens.  The Company also sells interior materials and a variety of housing equipment.

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Lixil Group (5938 JP)

🇯🇵 JAPAN MARKET UPDATE 4th May - No Quarter

NO QUARTER - Since the declaration of a nationwide state of emergency less than three weeks ago, Japan has seen a modest decline in the number of...

Campbell Gunn

2Q Earnings Is the Time for Full-Year Guidance Revisions. See Who Changed Their Numbers the Most....

At the beginning of the fiscal year, Japanese companies issue full-year guidance. Most of them will then revise those number when they announce 2Q...

Custom Products Group

Japan Fortnightly Update: Market PE at ‘Abe-Era’ Low

GOOD RESULTS/WEAK MARKET - It may just be because the ‘Obon’ holidays start next week, but the Japanese equity market has greeted the seventh...

Campbell Gunn

Japan: Results & Revisions Update - Slowing Momentum Confirmed

DOUBLE-DIGIT YOY GROWTH BUT RISING COSTS A CONCERN- 27% of Japanese listed companies reported earnings results last week. In aggregate, the group...

Campbell Gunn

Japan : Q2 Sector & Company Performance Review

DOMESTIC DEFENSIVE SECTORS ▲ GLOBAL CYCLICAL SECTORS ▼ - The Q1 trend shift away from global cyclical sectors accelerated in the second quarter...

Campbell Gunn

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