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.

Equity Bottom-Up

Mitsubishi Motor reported 1QFY22 results on 27th July which saw revenues of ¥432bn (-14% QoQ, +88% YoY) and OP of ¥10.6bn (OPM of 2.5% compared to the OPM of -1.7% in 4QFY21).The reported revenue was 4.1% higher than consensus estimates while OP beat consensus estimates for a loss of ¥6.9bn. This is the first datapoint for Japanese automotive earnings this quarter and points to our call for broad beats across the industry being correct.Guidance was revised up from ¥30bn in OP to ¥40bn but remains conservative.<table class="table table-striped"><tbody>
<tr>
<td style="width: 40.92%;">In ¥bn</td>
<td style="width: 19.92%;">Revenue </td>
<td style="width: 22.06%;">OP</td>
<td style="width: 17.08%;">OPM</td>
</tr>
<tr>
<td style="width: 40.92%;">Results - 1QFY22</td>
<td style="width: 19.92%;">               432</td>
<td style="width: 22.06%;">                10.6</td>
<td style="width: 17.08%;">2.5%</td>
</tr>
<tr>
<td style="width: 40.92%;">Consensus - 1QFY22</td>
<td style="width: 19.92%;">415</td>
<td style="width: 22.06%;">              -6.9</td>
<td style="width: 17.08%;">-1.7%</td>
</tr>
<tr>
<td style="width: 40.92%;">Surprise</td>
<td style="width: 19.92%;">4.1%</td>
<td style="width: 22.06%;">NM</td>
<td style="width: 17.08%;">4.1% points</td>
</tr>
<tr>
<td style="width: 40.92%;"> </td>
<td style="width: 19.92%;"> </td>
<td style="width: 22.06%;"> </td>
<td style="width: 17.08%;"> </td>
</tr>
<tr>
<td style="width: 40.92%;">Guidance - FY22</td>
<td style="width: 19.92%;">           2,080</td>
<td style="width: 22.06%;">                    40</td>
<td style="width: 17.08%;">1.9%</td>
</tr>
<tr>
<td style="width: 40.92%;">Consensus - FY22</td>
<td style="width: 19.92%;">           1,889</td>
<td style="width: 22.06%;">2.5</td>
<td style="width: 17.08%;">0.1%</td>
</tr>
<tr>
<td style="width: 40.92%;">Difference</td>
<td style="width: 19.92%;">10.1%</td>
<td style="width: 22.06%;">1516.4%</td>
<td style="width: 17.08%;">1.8% points</td>
</tr>
</tbody></table><div style="text-align: left;" class="content-caption">Source: Company disclosures, CapIQ</div>

Mitsubishi Motor reported 1QFY22 results on 27th July which saw revenues of ¥432bn (-14% QoQ, +88% YoY) and OP of ¥10.6bn (OPM of 2.5% compared to the OPM of -1.7% in 4QFY21).The reported revenue was 4.1% higher than consensus estimates while OP beat consensus estimates for a loss of ¥6.9bn. This is the first datapoint for Japanese automotive earnings this quarter and points to our call for broad beats across the industry being correct.Guidance was revised up from ¥30bn in OP to ¥40bn but remains conservative.

In ¥bn
Revenue 
OP
OPM


Results - 1QFY22
               432
                10.6
2.5%


Consensus - 1QFY22
415
              -6.9
-1.7%


Surprise
4.1%
NM
4.1% points


 
 
 
 


Guidance - FY22
           2,080
                    40
1.9%


Consensus - FY22
           1,889
2.5
0.1%


Difference
10.1%
1516.4%
1.8% points

Source: Company disclosures, CapIQ

Mitsubishi Motors – Kicking Off 1QFY22 Auto Earnings in Style

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Renesas Electronics / Equity Capital Markets

Renesas, along with INCJ, aims to raise around US$3.4bn via selling a mix of primary and secondary shares.The current deal would be of somewhat similar size as two of the past deals that we have covered for Renesas:<ul>
<li dir="ltr" aria-level="1">US$2.8bn bn in 2017 <a href="https://www.smartkarma.com/insights/renesas-electronics-placement-additional-thoughts-on-valuation-flotation-and-ownership" target="_blank" rel="noopener">Renesas Electronics Placement: Additional Thoughts on Valuation, Flotation, and Ownership</a></li>
<li dir="ltr" aria-level="1">US$2.4bn in 2018 <a href="https://www.smartkarma.com/insights/renesas-placement-tighter-effective-discount-and-placement-overhangs-but-statistic-supports-a-bid" target="_blank" rel="noopener">Renesas Placement: Tighter Effective Discount and Placement Overhangs but Statistic Supports a Bid</a></li>
</ul>In this insight, we'll run the deal through our ECM framework and talk about deal dynamics.

Renesas, along with INCJ, aims to raise around US$3.4bn via selling a mix of primary and secondary shares.The current deal would be of somewhat similar size as two of the past deals that we have covered for Renesas:
US$2.8bn bn in 2017 Renesas Electronics Placement: Additional Thoughts on Valuation, Flotation, and Ownership
US$2.4bn in 2018 Renesas Placement: Tighter Effective Discount and Placement Overhangs but Statistic Supports a Bid
In this insight, we'll run the deal through our ECM framework and talk about deal dynamics.

Renesas Placement - Very Well Flagged, past Deals Have Done Well but Large Size Warrants Correction

Mitsubishi Motor reported its 4QFY21 results on 11th May which saw revenues of ¥503bn (+33% QoQ, -17% YoY) and an operating loss of ¥8.6bn (OPM of -1.7% compared to the OPM of +1.7% in 4QFY20).The reported revenue was 3.2% higher than consensus estimates while operating loss was relatively similar to the consensus estimates of ¥8.5bn.<table class="table table-striped"><tbody>
<tr>
<td style="width: 26.32%;">In ¥bn</td>
<td style="width: 26.28%;">Revenue </td>
<td style="width: 27.02%;">OP</td>
<td style="width: 20.38%;">OPM</td>
</tr>
<tr>
<td style="width: 26.32%;">Actual Results - 4QFY21</td>
<td style="width: 26.28%;">503</td>
<td style="width: 27.02%;">-8.6</td>
<td style="width: 20.38%;">-1.7%</td>
</tr>
<tr>
<td style="width: 26.32%;">Consensus - 4QFY21</td>
<td style="width: 26.28%;">487</td>
<td style="width: 27.02%;">-8.5</td>
<td style="width: 20.38%;">-1.7%</td>
</tr>
<tr>
<td style="width: 26.32%;">Surprise</td>
<td style="width: 26.28%;">3.2%</td>
<td style="width: 27.02%;">1.5%</td>
<td style="width: 20.38%;">0.0%</td>
</tr>
<tr>
<td style="width: 26.32%;"> </td>
<td style="width: 26.28%;"> </td>
<td style="width: 27.02%;"> </td>
<td style="width: 20.38%;"> </td>
</tr>
<tr>
<td style="width: 26.32%;">Actual - FY21</td>
<td style="width: 26.28%;">1,456</td>
<td style="width: 27.02%;">-95</td>
<td style="width: 20.38%;">-6.5%</td>
</tr>
<tr>
<td style="width: 26.32%;">Guidance - FY21</td>
<td style="width: 26.28%;">1,460</td>
<td style="width: 27.02%;">-100</td>
<td style="width: 20.38%;">-6.8%</td>
</tr>
<tr>
<td style="width: 26.32%;">Surprise</td>
<td style="width: 26.28%;">-0.3%</td>
<td style="width: 27.02%;">-4.7%</td>
<td style="width: 20.38%;">0.3%</td>
</tr>
</tbody></table><div style="text-align: left;" class="content-caption">Source: Company disclosures, CapIQ</div>

Mitsubishi Motor reported its 4QFY21 results on 11th May which saw revenues of ¥503bn (+33% QoQ, -17% YoY) and an operating loss of ¥8.6bn (OPM of -1.7% compared to the OPM of +1.7% in 4QFY20).The reported revenue was 3.2% higher than consensus estimates while operating loss was relatively similar to the consensus estimates of ¥8.5bn.

In ¥bn
Revenue 
OP
OPM


Actual Results - 4QFY21
503
-8.6
-1.7%


Consensus - 4QFY21
487
-8.5
-1.7%


Surprise
3.2%
1.5%
0.0%


 
 
 
 


Actual - FY21
1,456
-95
-6.5%


Guidance - FY21
1,460
-100
-6.8%


Surprise
-0.3%
-4.7%
0.3%

Source: Company disclosures, CapIQ

Mitsubishi Motors – A Hail Mary in ASEAN

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Private Capital Markets

<a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek</a> and <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia</a> have finally announced that they will merge to form GoTo Group, in what will be Indonesia's largest-ever business deal to date. The new GoTo Group will also seek a dual listing both in Jakarta and the US but it is yet unclear what shape the listing will take at this stage. 
This will create an Indonesia-focused digital powerhouse with exposure to Ride-Hailing, Food Delivery, Digital Payments, Digital Finance, and e-commerce, making it a formidable player in Indonesia's booming digital economy.
The merged entity will present a challenge, not just to <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> and its Shopee platform but more pertinently for <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab,</a> which is in the process of seeking a listing in the US through the largest SPAC listing to date.
<div>
One key area of overlap between <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek</a> and <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia</a> is on digital payments, where GoPay and OVO compete head-on. Given that Tokopedia holds a 36.1% stake in OVO, it is unclear what comes next although it is likely Tokopedia will look to migrate its customers to GoPay and sell its stake in OVO.
<a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek </a>has already stepped up its move into the digital banking space through the recent increase in its stake in <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> to 22% but it also has strong backers for GoPay in the shape of <a href="https://www.smartkarma.com/entities/facebook-inc-a" target="_blank" data-smartkarma-citation="entities:665:1" rel="noopener">Facebook Inc A (FB US)</a> and <a href="https://www.smartkarma.com/entities/paypal-holdings-inc" target="_blank" data-smartkarma-citation="entities:4747:1" rel="noopener">Paypal Holdings (PYPL US).</a>
</div>
<div>
The combined entity will be a huge enabler for MSMEs from food providers to small businesses and as a result, will likely get significant support from the Indonesian government. 
</div>
<div>
There will be significant synergies between the two companies in areas such as deliveries, payments, and financial services, with an ever-increasing use-case for GoPay.
<a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener"></a>The combined size of the two companies would be around US$18bn under the latest valuations but it is suggested that it could command a valuation of US$40bn with a US listing, although it is not yet sure what shape or form that listing will take although its looks likely it will be a dual listing by the end of this year.
</div>
<div>
A straight IPO rather than a SPAC listing would be the most straightforward and the preferred option, even if it takes a bit longer to execute. The merged entity will be a more formidable adversary for other digital players and especially <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP)</a> but also for Shopee (<a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US))</a>,  <a href="https://www.smartkarma.com/entities/lazada-group" target="_blank" data-smartkarma-citation="entities:26148:1" rel="noopener">Lazada Group (LAZADA SP)</a>, and Bukalapak.
</div>

Gojek and Tokopedia have finally announced that they will merge to form GoTo Group, in what will be Indonesia's largest-ever business deal to date. The new GoTo Group will also seek a dual listing both in Jakarta and the US but it is yet unclear what shape the listing will take at this stage. 
This will create an Indonesia-focused digital powerhouse with exposure to Ride-Hailing, Food Delivery, Digital Payments, Digital Finance, and e-commerce, making it a formidable player in Indonesia's booming digital economy.
The merged entity will present a challenge, not just to Sea Ltd (SE US) and its Shopee platform but more pertinently for Grab, which is in the process of seeking a listing in the US through the largest SPAC listing to date.

One key area of overlap between Gojek and Tokopedia is on digital payments, where GoPay and OVO compete head-on. Given that Tokopedia holds a 36.1% stake in OVO, it is unclear what comes next although it is likely Tokopedia will look to migrate its customers to GoPay and sell its stake in OVO.
Gojek has already stepped up its move into the digital banking space through the recent increase in its stake in Bank Jago (ARTO IJ) to 22% but it also has strong backers for GoPay in the shape of Facebook Inc A (FB US) and Paypal Holdings (PYPL US).


The combined entity will be a huge enabler for MSMEs from food providers to small businesses and as a result, will likely get significant support from the Indonesian government. 


There will be significant synergies between the two companies in areas such as deliveries, payments, and financial services, with an ever-increasing use-case for GoPay.
The combined size of the two companies would be around US$18bn under the latest valuations but it is suggested that it could command a valuation of US$40bn with a US listing, although it is not yet sure what shape or form that listing will take although its looks likely it will be a dual listing by the end of this year.


A straight IPO rather than a SPAC listing would be the most straightforward and the preferred option, even if it takes a bit longer to execute. The merged entity will be a more formidable adversary for other digital players and especially Grab (0967655D SP) but also for Shopee (Sea Ltd (SE US)),  Lazada Group (LAZADA SP), and Bukalapak.


There has been a lot of newsprint lately regarding Apple seeking partners to tie-up with to produce EVs. Bloomberg reports discussion with at least six automakers including Hyundai and Japanese manufacturers, though timelines for launch are still far out at about five years. Bloomberg’s latest report suggests that <a href="https://www.bloomberg.com/news/articles/2021-02-05/apple-talks-with-hyundai-kia-on-electric-car-paused-recently" target="_blank" rel="noopener">talks with Hyundai have been paused</a> so the question is whether one of the Japanese automakers might step in instead.

There has been a lot of newsprint lately regarding Apple seeking partners to tie-up with to produce EVs. Bloomberg reports discussion with at least six automakers including Hyundai and Japanese manufacturers, though timelines for launch are still far out at about five years. Bloomberg’s latest report suggests that talks with Hyundai have been paused so the question is whether one of the Japanese automakers might step in instead.

Does an Apple Tie-Up Make Sense for J-Autos?

Japan

MITSUBISHI MOTORS CORPORATION develops and manufactures passenger cars and its related parts.  The Company has production facilities in Japan, the US, and Thailand.  Mitsubishi Motors Corp provides vehicle-related financing and leasing service through its subsidiary.

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Mitsubishi Motors (7211 JP)

Mitsubishi Motors – Kicking Off 1QFY22 Auto Earnings in Style

Mitsubishi Motors posted a significant beat at 1Q signalling that auto sector earnings are likely to be extremely strong as we have been saying.

Mio Kato

Renesas Placement - Very Well Flagged, past Deals Have Done Well but Large Size Warrants Correction

Renesas, along with INCJ, aims to raise around US$3.4bn via selling a mix of primary and secondary shares. The current deal would be of somewhat...

Sumeet Singh

Mitsubishi Motors – A Hail Mary in ASEAN

Mitsubishi Motor results have recovered but the company continues to make losses, and plans for a strong rebound to profitability next year hinge...

Mio Kato

GoTo - Enter the Green Dragon

The confirmation of the merger between Gojek and Tokopedia creates an Indonesian digital powerhouse under GoTo Group, which will seek a dual...

Angus Mackintosh

Does an Apple Tie-Up Make Sense for J-Autos?

In the search for potential suitors for Apple's entry into the EV space we examine the likelihood of the major Japanese auto manufacturers...

Mio Kato

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