Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyzed the changes in margin trading positions of JPX stocks as of Jul 3rd. The aggregated net margin trading position is USD31,784m.</li>
<li>We tabulate league tables for top/bottom net long/short of margin trading by value, net margin buy as multiple of ADT.</li>
<li>We highlight net margin buy/sell changes in Kioxia, Skylark, McDonald's, Taiyo Yuden, Advantest, Nintendo, Japan Tobacco, Pan Pacific International, Tokyo Electron, Monogatari.</li>
</ul>


We analyzed the changes in margin trading positions of JPX stocks as of Jul 3rd. The aggregated net margin trading position is USD31,784m.
We tabulate league tables for top/bottom net long/short of margin trading by value, net margin buy as multiple of ADT.
We highlight net margin buy/sell changes in Kioxia, Skylark, McDonald's, Taiyo Yuden, Advantest, Nintendo, Japan Tobacco, Pan Pacific International, Tokyo Electron, Monogatari.


JPX Margin Trading Weekly (Jul 3rd): Kioxia, Skylark, McDonald's, Taiyo Yuden, Advantest, Nintendo

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.

Thematic (Sector/Industry)

<h2>Summary and Conclusion</h2>
What's Original?
This insight is an in-depth look into the Asian wind energy industry, covering the value chain and related companies at each key stage of the value chain. Our research includes the following:
Industry Background: This includes an in-depth analysis on the wind energy sector with an overview of wind energy, including the growth of global installed capacity wind energy and analysis of the Asian wind energy market.
We examine both global onshore and offshore wind energy and differences in installation costs, annual investments, levelised cost of electricity (LCoE) and the declining trend in installation costs.
The potential capacity level of offshore wind energy is higher than onshore, though installation costs, O&amp;M and transportation costs are currently higher for offshore which is clearly reflected in the LCoE of the two categories.
When comparing total global wind capacity against the Asian market alone, over the last decade the Asian market’s growth rate was higher than the global rate and 51% of global new capacity additions were made in the Asian region.
The majority of Asian new capacity installed in Asian market was in APAC and China remained the world’s largest onshore market accounting for 37% of total onshore installations in 2019 while in the offshore market China accounted for a slightly more modest 23% of installations, trailing the UK and Germany.
The total installed capacity of onshore wind is expected to grow at a CAGR of 9.2% and to reach 1,787 GW globally in 2030 and then 5,044 GW by 2050. Furthermore, Asia (mostly China) should continue to dominate the onshore wind power industry, with more than 50% of global installations by 2050. Offshore wind energy in Asia should grow at a CAGR of 28% during 2018-30 and reach 613 GW while the Asian onshore market is expected to grow at a 13% CAGR and reach 2,646 GW. We examine the leading Asian countries (India, Japan and China) in the sector and their growth potential.
We believe that, over the next decade, the Asian market will outperform in wind energy growth compared to Europe and the US. Further, the trend towards offshore wind energy development in the Asian region will start to gather steam. The growth will be still mainly driven by China, India and Japan, however, apart from those countries South Korea, Taiwan and Vietnam also demonstrate some potential to develop wind energy.
Value Chain Analysis: We detail the value chain for wind energy highlighting the critical stages of the value chain (raw material supply, design and development services, component supply, wind turbine manufacturers, construction &amp; installation services and wind farm developers) and the leading players in those stages.
Wind Farm Owners - By the end of 2019, the top 15 wind farm owner-operators held over 1/3 of the total 650 GW of onshore and offshore assets globally.  Chinese utilities continue to dominate the top 15 ranking of wind asset owners as China is the leader in the market. We believe that this situation will continue as wind energy installation in China is expected to grow at higher rate than other leading countries in the world.
Original Equipment Manufacturing - OEMs usually manufacture some of the critical components such as the nacelle in-house, and blades and towers are produced either by the OEM or fabricated to the OEM's specifications by a supplier. The tower, gearbox, shafts, bearings, blades, generator, power converter and control systems accounted more than 80% of total costs.
Although most Asian suppliers have historically relied on turbine technologies licensed from Europe to enter the wind industry, the Asia Pacific has now become the world’s largest wind turbine manufacturing hub after a decade of development. In 2019, some 33 wind turbine manufacturers installed an estimated 22,893 wind turbines globally with a combined capacity of 63,076 MW. Of the 33 suppliers, 20 are from APAC.
Further, we have noticed that Chinese and Indian players have maintained their leading market position in the Asian region while international players like Siemens Gamesa and GE were able to obtain market share in the region.
Rotors - Turbine rotor diameters have been getting larger as a result of greater pressure for turbine OEMs to reduce the LCOE by launching new turbines with larger rotors that allow for better capacity factors and an improvement in AEP (Annual Energy Production). China is the key driver behind the trend of larger wind turbine rotors as out of the 6,691 units of 2.0 MW wind turbines installed globally in 2018, nearly 80% are located in China, of which more than half the turbines installed are equipped with rotors that are 120m or larger. We see the trend of building larger and light weight rotors continuing, especially with Asian market started to develop more offshore wind projects.
Blades - Blade core material balsa shortages have prompted turbine OEMs and blade manufacturers to switch to PET and hybrid designs with Balsa and PET. Wood Mackenzie forecasts the share of PET to increase from 20% in 2018 to more than 55% by 2023.
Gearboxes - GWEC predicted that annual global wind gearbox demand is likely to reach 56.4 GW in 2019 and then peak in 2020 at 59.1GW driven by the installation rush in China and the US. Regionally, around 40-48% of total demand is likely to be produced in South East Asia between 2019-2023. Furthermore, around 75 GW of gearbox manufacturing capacity is available globally, thus GWEC does not expect any major bottleneck. Around 70% of the global market share is represented by three main players, Winergy, NGC and ZF. Winergy and NGC have maintained similar levels of wind turbine gear box market share over a decade while ZF was increase its market share by acquiring other leading companies around the globe.
Towers - The tower has low technical requirements compared to other components and is thus usually sourced locally. A considerable percentage of Asian tower manufacturers ship their wind towers to North American and European countries, as production costs are lower in Asian countries and they are able to offer towers at competitive prices. Some players like Suzlon have invented lower cost hybrid tower structures which can be built at much lower cost than traditional designs.
Services &amp; Support Opportunities – Broadly speaking, the services opportunities can be categorised into: Project development Geotechnical services Logistics support for wind farm Construction opportunities Operations and maintenance. These service providing companies generate higher margins compared to OEMs and wind turbine manufactures and as with solar power, we see a trend for OEM and component manufactures to expand services segments by introducing new technological innovation.

Summary and Conclusion
What's Original?
This insight is an in-depth look into the Asian wind energy industry, covering the value chain and related companies at each key stage of the value chain. Our research includes the following:
Industry Background: This includes an in-depth analysis on the wind energy sector with an overview of wind energy, including the growth of global installed capacity wind energy and analysis of the Asian wind energy market.
We examine both global onshore and offshore wind energy and differences in installation costs, annual investments, levelised cost of electricity (LCoE) and the declining trend in installation costs.
The potential capacity level of offshore wind energy is higher than onshore, though installation costs, O&amp;M and transportation costs are currently higher for offshore which is clearly reflected in the LCoE of the two categories.
When comparing total global wind capacity against the Asian market alone, over the last decade the Asian market’s growth rate was higher than the global rate and 51% of global new capacity additions were made in the Asian region.
The majority of Asian new capacity installed in Asian market was in APAC and China remained the world’s largest onshore market accounting for 37% of total onshore installations in 2019 while in the offshore market China accounted for a slightly more modest 23% of installations, trailing the UK and Germany.
The total installed capacity of onshore wind is expected to grow at a CAGR of 9.2% and to reach 1,787 GW globally in 2030 and then 5,044 GW by 2050. Furthermore, Asia (mostly China) should continue to dominate the onshore wind power industry, with more than 50% of global installations by 2050. Offshore wind energy in Asia should grow at a CAGR of 28% during 2018-30 and reach 613 GW while the Asian onshore market is expected to grow at a 13% CAGR and reach 2,646 GW. We examine the leading Asian countries (India, Japan and China) in the sector and their growth potential.
We believe that, over the next decade, the Asian market will outperform in wind energy growth compared to Europe and the US. Further, the trend towards offshore wind energy development in the Asian region will start to gather steam. The growth will be still mainly driven by China, India and Japan, however, apart from those countries South Korea, Taiwan and Vietnam also demonstrate some potential to develop wind energy.
Value Chain Analysis: We detail the value chain for wind energy highlighting the critical stages of the value chain (raw material supply, design and development services, component supply, wind turbine manufacturers, construction &amp; installation services and wind farm developers) and the leading players in those stages.
Wind Farm Owners - By the end of 2019, the top 15 wind farm owner-operators held over 1/3 of the total 650 GW of onshore and offshore assets globally.  Chinese utilities continue to dominate the top 15 ranking of wind asset owners as China is the leader in the market. We believe that this situation will continue as wind energy installation in China is expected to grow at higher rate than other leading countries in the world.
Original Equipment Manufacturing - OEMs usually manufacture some of the critical components such as the nacelle in-house, and blades and towers are produced either by the OEM or fabricated to the OEM's specifications by a supplier. The tower, gearbox, shafts, bearings, blades, generator, power converter and control systems accounted more than 80% of total costs.
Although most Asian suppliers have historically relied on turbine technologies licensed from Europe to enter the wind industry, the Asia Pacific has now become the world’s largest wind turbine manufacturing hub after a decade of development. In 2019, some 33 wind turbine manufacturers installed an estimated 22,893 wind turbines globally with a combined capacity of 63,076 MW. Of the 33 suppliers, 20 are from APAC.
Further, we have noticed that Chinese and Indian players have maintained their leading market position in the Asian region while international players like Siemens Gamesa and GE were able to obtain market share in the region.
Rotors - Turbine rotor diameters have been getting larger as a result of greater pressure for turbine OEMs to reduce the LCOE by launching new turbines with larger rotors that allow for better capacity factors and an improvement in AEP (Annual Energy Production). China is the key driver behind the trend of larger wind turbine rotors as out of the 6,691 units of 2.0 MW wind turbines installed globally in 2018, nearly 80% are located in China, of which more than half the turbines installed are equipped with rotors that are 120m or larger. We see the trend of building larger and light weight rotors continuing, especially with Asian market started to develop more offshore wind projects.
Blades - Blade core material balsa shortages have prompted turbine OEMs and blade manufacturers to switch to PET and hybrid designs with Balsa and PET. Wood Mackenzie forecasts the share of PET to increase from 20% in 2018 to more than 55% by 2023.
Gearboxes - GWEC predicted that annual global wind gearbox demand is likely to reach 56.4 GW in 2019 and then peak in 2020 at 59.1GW driven by the installation rush in China and the US. Regionally, around 40-48% of total demand is likely to be produced in South East Asia between 2019-2023. Furthermore, around 75 GW of gearbox manufacturing capacity is available globally, thus GWEC does not expect any major bottleneck. Around 70% of the global market share is represented by three main players, Winergy, NGC and ZF. Winergy and NGC have maintained similar levels of wind turbine gear box market share over a decade while ZF was increase its market share by acquiring other leading companies around the globe.
Towers - The tower has low technical requirements compared to other components and is thus usually sourced locally. A considerable percentage of Asian tower manufacturers ship their wind towers to North American and European countries, as production costs are lower in Asian countries and they are able to offer towers at competitive prices. Some players like Suzlon have invented lower cost hybrid tower structures which can be built at much lower cost than traditional designs.
Services &amp; Support Opportunities – Broadly speaking, the services opportunities can be categorised into: Project development Geotechnical services Logistics support for wind farm Construction opportunities Operations and maintenance. These service providing companies generate higher margins compared to OEMs and wind turbine manufactures and as with solar power, we see a trend for OEM and component manufactures to expand services segments by introducing new technological innovation.

Asian Wind Energy: Efficiency and Cost Reduction in Focus as Players Eye a Post FiT Future

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Capital Markets

Kawasaki Heavy Industries / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/kawasaki-heavy-industries" target="_blank" data-smartkarma-citation="entities:8790:1" rel="noopener">Kawasaki Heavy Industries (7012 JP)</a> has just announced their capital raising intentions. ¥93.7bn (estimated) of shares (37.35mm shares), and ¥100bn of 2031/2033 convertible bonds.</li>
<li>The Reuters article presaging this seemed to say this would be aimed at International Investors (i.e. an ABO). The extraordinary filing to EDINET suggests an Open Offering to the same.</li>
<li>A bookbuilding between 14-16 July, but only for international investors. No greenshoe. Weird. 2.8x ADV, 4.5% of shares out, 10% of Max Real World Float. Should be easy. But weird.</li>
</ul>



Kawasaki Heavy Industries (7012 JP) has just announced their capital raising intentions. ¥93.7bn (estimated) of shares (37.35mm shares), and ¥100bn of 2031/2033 convertible bonds.
The Reuters article presaging this seemed to say this would be aimed at International Investors (i.e. an ABO). The extraordinary filing to EDINET suggests an Open Offering to the same.
A bookbuilding between 14-16 July, but only for international investors. No greenshoe. Weird. 2.8x ADV, 4.5% of shares out, 10% of Max Real World Float. Should be easy. But weird.


[Japan Offering] Kawasaki Heavy Offering Details Out

<ul>
<li>Today Reuters carried an article suggesting <a href="https://www.smartkarma.com/entities/kawasaki-heavy-industries" target="_blank" data-smartkarma-citation="entities:8790:1" rel="noopener">Kawasaki Heavy Industries (7012 JP)</a> would soon announce a ¥200bn capital raise - combo equity and convertible bond offering - in an ABO. </li>
<li>¥200bn would be a 23% increase in equity but about 6-7% dilution in realtime (equity+CB delta). ¥100bn of each would be 3x ADV, 4.8% of Shs Out, 10.7% of MRWF.</li>
<li>The shares fell 8% today, putting them 13% off the recent high as a ratio against MitHeavy+IHI. The shares aren't cheap, but this looks to be "easy."</li>
</ul>


Today Reuters carried an article suggesting Kawasaki Heavy Industries (7012 JP) would soon announce a ¥200bn capital raise - combo equity and convertible bond offering - in an ABO. 
¥200bn would be a 23% increase in equity but about 6-7% dilution in realtime (equity+CB delta). ¥100bn of each would be 3x ADV, 4.8% of Shs Out, 10.7% of MRWF.
The shares fell 8% today, putting them 13% off the recent high as a ratio against MitHeavy+IHI. The shares aren't cheap, but this looks to be "easy."


[Japan Offering] Kawasaki Heavy (7012 JP) Looking at an Offering

<ul>
<li>We analyzed the changes in margin trading positions of JPX stocks as of Jun 26th. The aggregated net margin trading position is USD32,057m.</li>
<li>We tabulate league tables for top/bottom net long/short of margin trading by value, net margin buy as multiple of ADT.</li>
<li>We highlight net margin buy/sell changes in Kioxia, SoftBank, Tokyo Electron, Fujikura, McDonald's, Skylark, Disco, Taiyo Yuden, Lasertec, Japan Tobacco.</li>
</ul>


We analyzed the changes in margin trading positions of JPX stocks as of Jun 26th. The aggregated net margin trading position is USD32,057m.
We tabulate league tables for top/bottom net long/short of margin trading by value, net margin buy as multiple of ADT.
We highlight net margin buy/sell changes in Kioxia, SoftBank, Tokyo Electron, Fujikura, McDonald's, Skylark, Disco, Taiyo Yuden, Lasertec, Japan Tobacco.


JPX Margin Trading Weekly (Jun 26th): Kioxia, SoftBank, Tokyo Electron, Fujikura, McDonald's, Disco

Japan

Mitsubishi Heavy Industries, Ltd. is a comprehensive heavy machinery maker. The Company manufactures machinery, ships, turbines and engines, prime movers, aircrafts, and machine parts for military and commercial use.  Mitsubishi Heavy Industries also researches and develops nuclear power plants.

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Mitsubishi Heavy Industries (7011 JP)

JPX Margin Trading Weekly (Jul 3rd): Kioxia, Skylark, McDonald's, Taiyo Yuden, Advantest, Nintendo

We analyzed JPX margin trading positions report for the past week and highlighted Kioxia (285A JP), Skylark (3197 JP), McDonald's (2702 JP), Taiyo...

Ke Yan, CFA, FRM

Asian Wind Energy: Efficiency and Cost Reduction in Focus as Players Eye a Post FiT Future

This Smartkarma Original is an in-depth look into the Asian wind energy industry, covering the value chain and related companies at each key stage...

Mio Kato

[Japan Offering] Kawasaki Heavy Offering Details Out

The Kawasaki Heavy offering details come out as expected. The shares may benefit from anti-momentum bias as momentum is getting shellacked, but...

Travis Lundy

[Japan Offering] Kawasaki Heavy (7012 JP) Looking at an Offering

Kawasaki Heavy may raise ¥200bn to invest in capex towards gas turbines and aircraft engines. Those are hot spaces with strong margins in the few...

Travis Lundy

JPX Margin Trading Weekly (Jun 26th): Kioxia, SoftBank, Tokyo Electron, Fujikura, McDonald's, Disco

We analyzed JPX margin trading positions report for the past week and highlighted Kioxia, SoftBank, Tokyo Electron, Fujikura, McDonald's, Skylark,...

Ke Yan, CFA, FRM

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