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

Mitsubishi Heavy Industries / Equity Bottom-Up

<ul>
<li>MHI is selling at 9.9x EPS guidance and 0.7x book value, with a dividend yield of 3.0%. We see potential upside of at least 25% beyond the New Years bounce.</li>
<li>The shares have underperformed for several years due to serious managerial errors. But the mess is being cleaned up and new growth opportunities have emerged.</li>
<li>Risks include limited margins in the energy and aerospace &amp; defense sectors and the possibility of renewed investment in the failed regional jet aircraft project.</li>
</ul>


MHI is selling at 9.9x EPS guidance and 0.7x book value, with a dividend yield of 3.0%. We see potential upside of at least 25% beyond the New Years bounce.
The shares have underperformed for several years due to serious managerial errors. But the mess is being cleaned up and new growth opportunities have emerged.
Risks include limited margins in the energy and aerospace &amp; defense sectors and the possibility of renewed investment in the failed regional jet aircraft project.


MHI (7011 JP): Opportunity or Value Trap?

India Equity Analyst - Fundamental & Thematic, Beat the Street

Sudarshan Bhandari

India Equity Analyst - Fundamental & Thematic

Beat the Street

Beat The Street was founded by Nimish Maheshwari and Sudarshan Bhandari, both of whom are Chartered Accountants by Profession, known for their expert analysis in the fields of Business, Sectoral analysis, and Corporate governance.

With a strong social media presence of 45,000+ Subscribers across various platforms, they are considered trusted voices in the industry. Their insights and analysis have been featured in some of India’s most prominent publications, including the Economic Times, Dalal Street Investment Journal, The Morning Context, and The Ken.

Their analysis on Bankrupt & Insolvent companies has been instrumental in saving investors from significant losses. They have a keen eye for identifying red flags and has identified exclusive redflags earlier in Vedanta, Nykaa, Dhani Services, Adani and many more.

Read Business Not Stock Prices

Thematic (Sector/Industry)

<ul>
<li>Global gas turbine orders more than doubled in 2025 to 100.3 GW across 846 units, the highest in two decades, driven by AI data center load growth, coal retirement cycles.</li>
<li>Three OEMs control over 75% of supply. Backlogs now stretch to 2030, delivery lead times exceed 5-7 years in some frame sizes.</li>
<li>Alternatives like SMRs and long-duration storage remain structurally years away. Understanding who controls the turbine supply chain, and at what price, is the defining energy question of this decade.</li>
</ul>


Global gas turbine orders more than doubled in 2025 to 100.3 GW across 846 units, the highest in two decades, driven by AI data center load growth, coal retirement cycles.
Three OEMs control over 75% of supply. Backlogs now stretch to 2030, delivery lead times exceed 5-7 years in some frame sizes.
Alternatives like SMRs and long-duration storage remain structurally years away. Understanding who controls the turbine supply chain, and at what price, is the defining energy question of this decade.


Gas Turbines: The Unexpected Infrastructure Play of the AI Era

Telco/Internet specialist

Kirk Boodry

Redex Research

Sky Perfect JSAT operates Japan’s only direct-to-home (DTH) video service and is Asia’s largest satellite operator. As a well-known consumer-facing service, the former is better known and has often driven sentiment but the key to unlock value may be in the latter as the space industry expands. An increase in space industry investment brings new opportunities but also heightened competition from low-earth satellite fleets albeit at less intensity than its global peers. On balance, we think the changes are positive and we initiate coverage at Buy with a ¥640 FY21-end target price.

Sky Perfect JSAT operates Japan’s only direct-to-home (DTH) video service and is Asia’s largest satellite operator. As a well-known consumer-facing service, the former is better known and has often driven sentiment but the key to unlock value may be in the latter as the space industry expands. An increase in space industry investment brings new opportunities but also heightened competition from low-earth satellite fleets albeit at less intensity than its global peers. On balance, we think the changes are positive and we initiate coverage at Buy with a ¥640 FY21-end target price.

Sky Perfect JSAT - Upside Potential in Space Business (Initiation of Coverage)

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<a href="https://www.smartkarma.com/entities/hitachi-ltd" target="_blank" data-smartkarma-citation="entities:7797:1" rel="noopener">Hitachi Ltd (6501 JP)</a> has, for over a decade, been restructuring itself - selling subsidiaries here and buying them in there. There are two remaining after the recent sale of <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>, de-consolidation of <a href="https://www.smartkarma.com/entities/hitachi-capital-corp" target="_blank" data-smartkarma-citation="entities:14410:1" rel="noopener">Hitachi Capital (8586 JP)</a>, and buy-in of <a href="https://www.smartkarma.com/entities/hitachi-high-tech-corporation" target="_blank" data-smartkarma-citation="entities:7046:1" rel="noopener">Hitachi High-Tech (8036 JP)</a>. The earnings call in May occasioned another presentation - that of the update on <a href="http://www.hitachi.com/New/cnews/month/2020/05/200529a.html" target="_blank" rel="noopener">Progress of the Mid-Term Management Plan</a> (with a webcast and a <a href="http://www.hitachi.com/New/cnews/month/2020/05/200529a/f_200529apre.pdf" target="_blank" rel="noopener">presentation deck</a>), where the CEO responded to a question thusly:<div><blockquote>
QUESTION:  Next question is regarding the, against the backdrop of COVID-19, is this going to have an impact on the reorganisation of the listed subsidiaries?
ANSWER BY CEO HIGASHIHARA:  Regarding the listed subsidiary answer. Hitachi Construction Machinery and Hitachi Metals remain. And what we are telling the top management is that, in the time frame of fiscal year 2021 to 2024, we have to make sure these companies are able to compete globally. They are now evaluating this. It is not just a matter of COVID-19. Mid- to long-term growth strategy will be emphasised so the reorganisation strategy for the listed subsidiaries will not be impacted by COVID-19.
</blockquote></div><div>
FY 2021 to FY 2024 is a three year window starting next April, with FY2021 ending in March 2022 and FY2024 ending in March 2025.
<div>
That was May 29, less than five months ago and the situation was discussed in <a href="https://www.smartkarma.com/insights/hitachi-s-capital-case-liquidating-land-policy-holdings-what-about-the-subs" target="_blank" data-smartkarma-citation="insights:39920" rel="noopener">Hitachi's Capital Case - Liquidating Land &amp; Policy Holdings? What About the Subs?</a>.
Friday saw an article out of the Nikkei suggesting Hitachi might sell half its stake in <a href="https://www.smartkarma.com/entities/hitachi-construction-machinery" target="_blank" data-smartkarma-citation="entities:19433:1" rel="noopener">Hitachi Construction Machinery (6305 JP)</a> ("HCM") to a third party, at a discount, and that it might start a sale process on <a href="https://www.smartkarma.com/entities/hitachi-metals-ltd" target="_blank" data-smartkarma-citation="entities:8561:1" rel="noopener">Hitachi Metals (5486 JP)</a> "this month."
</div>
<div>
It strikes me as unlikely Hitachi would themselves be throwing in the towel 5 months later before the start of the time frame in which top management of the two subsidiaries are supposed to be able to compete globally. All of this is likely getting done with the will and direction of the subsidiaries themselves. This strikes me as some kind of agreement with management of HCM that they would not be averse to receiving expert help from outside while remaining listed. 
This changes things.
Hitachi becomes a different animal. It becomes a non-stub trade (parent vs significant value of listed short-able subs) for the first time in a very long time. And the optics change quite a bit.
</div>
</div>

Hitachi Ltd (6501 JP) has, for over a decade, been restructuring itself - selling subsidiaries here and buying them in there. There are two remaining after the recent sale of Hitachi Chemical (4217 JP), de-consolidation of Hitachi Capital (8586 JP), and buy-in of Hitachi High-Tech (8036 JP). The earnings call in May occasioned another presentation - that of the update on Progress of the Mid-Term Management Plan (with a webcast and a presentation deck), where the CEO responded to a question thusly:
QUESTION:  Next question is regarding the, against the backdrop of COVID-19, is this going to have an impact on the reorganisation of the listed subsidiaries?
ANSWER BY CEO HIGASHIHARA:  Regarding the listed subsidiary answer. Hitachi Construction Machinery and Hitachi Metals remain. And what we are telling the top management is that, in the time frame of fiscal year 2021 to 2024, we have to make sure these companies are able to compete globally. They are now evaluating this. It is not just a matter of COVID-19. Mid- to long-term growth strategy will be emphasised so the reorganisation strategy for the listed subsidiaries will not be impacted by COVID-19.

FY 2021 to FY 2024 is a three year window starting next April, with FY2021 ending in March 2022 and FY2024 ending in March 2025.

That was May 29, less than five months ago and the situation was discussed in Hitachi's Capital Case - Liquidating Land &amp; Policy Holdings? What About the Subs?.
Friday saw an article out of the Nikkei suggesting Hitachi might sell half its stake in Hitachi Construction Machinery (6305 JP) ("HCM") to a third party, at a discount, and that it might start a sale process on Hitachi Metals (5486 JP) "this month."


It strikes me as unlikely Hitachi would themselves be throwing in the towel 5 months later before the start of the time frame in which top management of the two subsidiaries are supposed to be able to compete globally. All of this is likely getting done with the will and direction of the subsidiaries themselves. This strikes me as some kind of agreement with management of HCM that they would not be averse to receiving expert help from outside while remaining listed. 
This changes things.
Hitachi becomes a different animal. It becomes a non-stub trade (parent vs significant value of listed short-able subs) for the first time in a very long time. And the optics change quite a bit.



'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/158/135/original/File%202020-09-10%209%2036%2022.jpeg?1599698266" class="editor-image img-responsive" data-smartkarma-image-id="158135"></figure><div style="text-align: center;" class="content-caption">Source: Daikin</div>GLOBAL LEADER - Daikin is one of Japan's few global enterprises, and the company is rightly proud of its status as the 'world's No.1 air-conditioning company'. Based on the company's FY21 forecast, Japan represents only 23% of sales - over US$6 billion of revenues are to sourced from the Americas, one of the largest exposures of any non-auto company to that region. Daikin has benefited from its sole focus on A/C and a lack, as yet, of a viable Chinese competitor.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/158/140/original/2020-09-10_10-15-46.png?1599700558" class="editor-image img-responsive" data-smartkarma-image-id="158140"></figure>In the DETAIL section below,  we shall review Daikin's financial performance, returns and valuation. We shall not attempt to forecast the prospects for the A/C industry or assess Daikin's competitive position. Nevertheless, we expect A/C market growth to continue to exceed GDP growth and for Daikin to continue to gain market share globally, including through acquisitions. We expect the company to use the ¥183 billion increase in net debt in the last quarter to expand its global presence further.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/158/139/original/2020-09-10_10-15-08.png?1599700517" class="editor-image img-responsive" data-smartkarma-image-id="158139"></figure>PERFECTION - By bidding up Daikin's shares by 50% in the last six months, the market has looked far beyond COVID-19 and has anticipated much of the company's incremental medium-term growth. At a current EV/Peak OP of 20.3 times, Daikin has only been as expensive by this metric in 1996 and 2000.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/158/162/original/2020-09-10_10-34-13.png?1599701664" class="editor-image img-responsive" data-smartkarma-image-id="158162"></figure>

Source: DaikinGLOBAL LEADER - Daikin is one of Japan's few global enterprises, and the company is rightly proud of its status as the 'world's No.1 air-conditioning company'. Based on the company's FY21 forecast, Japan represents only 23% of sales - over US$6 billion of revenues are to sourced from the Americas, one of the largest exposures of any non-auto company to that region. Daikin has benefited from its sole focus on A/C and a lack, as yet, of a viable Chinese competitor.In the DETAIL section below,  we shall review Daikin's financial performance, returns and valuation. We shall not attempt to forecast the prospects for the A/C industry or assess Daikin's competitive position. Nevertheless, we expect A/C market growth to continue to exceed GDP growth and for Daikin to continue to gain market share globally, including through acquisitions. We expect the company to use the ¥183 billion increase in net debt in the last quarter to expand its global presence further.PERFECTION - By bidding up Daikin's shares by 50% in the last six months, the market has looked far beyond COVID-19 and has anticipated much of the company's incremental medium-term growth. At a current EV/Peak OP of 20.3 times, Daikin has only been as expensive by this metric in 1996 and 2000.

🇯🇵 JAPAN • Daikin (6367 JP) - Perfect Pricing

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)

MHI (7011 JP): Opportunity or Value Trap?

A New Year bounce indicates interest in the combination of low valuation, restructuring and new opportunities at MHI. The risk is that inherently...

Scott Foster

Gas Turbines: The Unexpected Infrastructure Play of the AI Era

Global gas turbine orders surged in 2025 to 100.3 GW, driven by AI data center growth and coal retirements. Three OEMs dominate supply, with...

Sudarshan Bhandari

Sky Perfect JSAT - Upside Potential in Space Business (Initiation of Coverage)

Sky Perfect JSAT is better known for its direct broadcast satellite (DBS) video business but the space business represents more value and has been...

Kirk Boodry

The Right Trade May Be Hitachi

Hitachi is getting to the end of its Core vs Non-Core restructuring campaign. Two remaining subs have newsflow, and earnings announcements shortly....

Travis Lundy

🇯🇵 JAPAN • Daikin (6367 JP) - Perfect Pricing

GLOBAL LEADER - Daikin is one of Japan's few g

Campbell Gunn

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MHI (7011 JP): Opportunity or Value Trap?

A New Year bounce indicates interest in the combination of low valuation, restructuring and new opportunities at MHI. The risk is that inherently...

Scott Foster

Gas Turbines: The Unexpected Infrastructure Play of the AI Era

​Global gas turbine orders surged in 2025 to 100.3 GW, driven by AI data center growth and coal retirements. Three OEMs dominate supply, with...

Sudarshan Bhandari

Sky Perfect JSAT - Upside Potential in Space Business (Initiation of Coverage)

Sky Perfect JSAT is better known for its direct broadcast satellite (DBS) video business but the space business represents more value and has been...

Kirk Boodry

The Right Trade May Be Hitachi

Hitachi is getting to the end of its Core vs Non-Core restructuring campaign. Two remaining subs have newsflow, and earnings announcements shortly....

Travis Lundy

🇯🇵 JAPAN • Daikin (6367 JP) - Perfect Pricing

GLOBAL LEADER - Daikin is one of Japan's few g

Campbell Gunn

Global gas turbine orders surged in 2025 to 100.3 GW, driven by AI data center growth and coal retirements. Three OEMs dominate supply, with...