'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

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. 

Quantitative Analysis

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/078/341/original/2019-02-10_05-07-57.png?1549742898" class="editor-image img-responsive" data-smartkarma-image-id="78341"></figure><div class="content-caption">Source: Japan Analytics</div><p><strong>BOTTOM LINE BREAKDOWN</strong> - 1,277 earnings results and/or revisions announcements were released last week in Japan covering 36% of listed market capitalisation. The good news is that aggregate trailing-twelve-month (TTM) Operating Income only declined by ¥300b. Less welcome is the ¥1.7t decline in TTM Net Income to which <a href="https://www.smartkarma.com/entities/73" target="_blank" data-smartkarma-citation="entities:73:1">Toyota Motor (7203 JP)</a>, <a href="https://www.smartkarma.com/entities/154" target="_blank" data-smartkarma-citation="entities:154:1">Honda Motor (7267 JP)</a>, <a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">Softbank Group (9984 JP)</a>, <a href="https://www.smartkarma.com/entities/7797" target="_blank" data-smartkarma-citation="entities:7797:1">Hitachi (6501 JP)</a> were the most significant contributors, each declining by more than ¥200b. Three 'financials', <a href="https://www.smartkarma.com/entities/742" target="_blank" data-smartkarma-citation="entities:742:1">Nomura Holdings (8604 JP)</a>, <a href="https://www.smartkarma.com/entities/219" target="_blank" data-smartkarma-citation="entities:219:1">Mizuho Financial Group (8411 JP)</a>, and <a href="https://www.smartkarma.com/entities/6267" target="_blank" data-smartkarma-citation="entities:6267:1">Suruga Bank (8358 JP)</a> subtracted ¥400b between them. Only <a href="https://www.smartkarma.com/entities/563" target="_blank" data-smartkarma-citation="entities:563:1">Sony (6758 JP)</a> and <a href="https://www.smartkarma.com/entities/637" target="_blank" data-smartkarma-citation="entities:637:1">Toshiba (6502 JP)</a> added more than ¥100b for the quarter. <strong>The substantial 'gap' between forecast and TTM Net Income has been reduced to just ¥600b, again confirming the reliability of corporate forecasting in Japan. The All-Market PER is now 13.5 times but will likely rise as aggregate Net Income falls further in the next two weeks.</strong></p><div class="content-highlight"><p><strong>In the DETAIL section below, we review this year's results of all listed companies in aggregate, update our All-Market and Sector Results &amp; Revision Scores and look at the twenty-five best and worst large-cap company results over the last week, with short comments on <a href="https://www.smartkarma.com/entities/13176" target="_blank" data-smartkarma-citation="entities:13176:1">Nabtesco Corp (6268 JP)</a>, <a href="https://www.smartkarma.com/entities/8467" target="_blank" data-smartkarma-citation="entities:8467:1">Workman (7564 JP)</a>, <a href="https://www.smartkarma.com/entities/20823" target="_blank" data-smartkarma-citation="entities:20823:1">Nakanishi (7716 JP)</a>, and <a href="https://www.smartkarma.com/entities/747" target="_blank" data-smartkarma-citation="entities:747:1">DeNA (2432 JP)</a></strong></p></div>

Source: Japan AnalyticsBOTTOM LINE BREAKDOWN - 1,277 earnings results and/or revisions announcements were released last week in Japan covering 36% of listed market capitalisation. The good news is that aggregate trailing-twelve-month (TTM) Operating Income only declined by ¥300b. Less welcome is the ¥1.7t decline in TTM Net Income to which Toyota Motor (7203 JP), Honda Motor (7267 JP), Softbank Group (9984 JP), Hitachi (6501 JP) were the most significant contributors, each declining by more than ¥200b. Three 'financials', Nomura Holdings (8604 JP), Mizuho Financial Group (8411 JP), and Suruga Bank (8358 JP) subtracted ¥400b between them. Only Sony (6758 JP) and Toshiba (6502 JP) added more than ¥100b for the quarter. The substantial 'gap' between forecast and TTM Net Income has been reduced to just ¥600b, again confirming the reliability of corporate forecasting in Japan. The All-Market PER is now 13.5 times but will likely rise as aggregate Net Income falls further in the next two weeks.In the DETAIL section below, we review this year's results of all listed companies in aggregate, update our All-Market and Sector Results &amp; Revision Scores and look at the twenty-five best and worst large-cap company results over the last week, with short comments on Nabtesco Corp (6268 JP), Workman (7564 JP), Nakanishi (7716 JP), and DeNA (2432 JP)

Japan: Results & Revisions Second Cut - Bottom Line Breakdown

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)

<p>As the world says goodbye to Rethink Robotics' Baxter and Sawyer, we would caution against drawing the wrong inferences from the failure of this pioneer of the cobotics movement.</p><p>Ultimately, while Rethink Robotics had a great idea, we believe poor execution and product fit - particularly for more demanding industrial customers were what doomed the company, rather than a weak market where, by all accounts, growth continues to steam along. While market expectations have rightly corrected.</p>

As the world says goodbye to Rethink Robotics' Baxter and Sawyer, we would caution against drawing the wrong inferences from the failure of this pioneer of the cobotics movement.Ultimately, while Rethink Robotics had a great idea, we believe poor execution and product fit - particularly for more demanding industrial customers were what doomed the company, rather than a weak market where, by all accounts, growth continues to steam along. While market expectations have rightly corrected.

Shuttering of Rethink Robotics Just a Bump in the Road for Cobots

Equity Bottom-Up

<p>We had been positive on the factory automation robotics names for most of last year, favouring <a href="https://www.smartkarma.com/entities/2458" target="_blank" data-smartkarma-citation="entities:2458:1">Yaskawa Electric Corp (6506 JP)</a>, <a href="https://www.smartkarma.com/entities/13176" target="_blank" data-smartkarma-citation="entities:13176:1">Nabtesco Corp (6268 JP)</a> and <a href="https://www.smartkarma.com/entities/10238" target="_blank" data-smartkarma-citation="entities:10238:1">Harmonic Drive Systems Inc (6324 JP)</a>, but taking a negative view on <a href="https://www.smartkarma.com/entities/752" target="_blank" data-smartkarma-citation="entities:752:1">Fanuc Corp (6954 JP)</a>. This proved the right call on a relative basis with Yaskawa outperforming Fanuc by 71% from Jan till Oct 2017 when we finally suggested stepping away from the sector. This was despite a 22% rise in Fanuc itself. Since that call in Oct, Fanuc is down 9%…</p>

We had been positive on the factory automation robotics names for most of last year, favouring Yaskawa Electric Corp (6506 JP), Nabtesco Corp (6268 JP) and Harmonic Drive Systems Inc (6324 JP), but taking a negative view on Fanuc Corp (6954 JP). This proved the right call on a relative basis with Yaskawa outperforming Fanuc by 71% from Jan till Oct 2017 when we finally suggested stepping away from the sector. This was despite a 22% rise in Fanuc itself. Since that call in Oct, Fanuc is down 9%…

LightStream Factory Automation View: Still Early in the Downcycle

Doing bespoke work since 2002....., Custom Products Group

Patrick Hansen

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. 

Our core strength can be summed up three words. 1- Customization - we have very little off the shelf products and most work is done on a one on one bespoke basis. 2- Speed - We pride ourselves in our ability to get requests back to the client very quickly. 3- Confidentiality - We do not redistribute. There is no grace period where we wait a week and then mass blast. Any request stops with that client.

<p>We updated the Hated by the Street screen and added another criteria. Hated by the Street but was recently upgraded by at least 1 analyst. Large-cap names that are currently hated by the Street but were upgraded in the last month were <a href="https://www.smartkarma.com/entities/72" target="_blank" data-smartkarma-citation="entities:72:1">Nissan Motor Co Ltd (7201 JP)</a>, <a href="https://www.smartkarma.com/entities/16977" target="_blank" data-smartkarma-citation="entities:16977:1">Kirin Holdings Co Ltd (2503 JP)</a> and <a href="https://www.smartkarma.com/entities/21001" target="_blank" data-smartkarma-citation="entities:21001:1">Eisai Co Ltd (4523 JP)</a>. Nissan Motors has a 5% dividend yield so do not really know why it is hated. </p><h2>Screen Criteria</h2><ol>
<li>% of BUY recommendations to Total is less than 30%</li>
<li>At least 1 upgrade in the last…</li>
</ol>

We updated the Hated by the Street screen and added another criteria. Hated by the Street but was recently upgraded by at least 1 analyst. Large-cap names that are currently hated by the Street but were upgraded in the last month were Nissan Motor Co Ltd (7201 JP), Kirin Holdings Co Ltd (2503 JP) and Eisai Co Ltd (4523 JP). Nissan Motors has a 5% dividend yield so do not really know why it is hated. Screen Criteria
% of BUY recommendations to Total is less than 30%
At least 1 upgrade in the last…


Hated by the Street but Recently Upgraded. Nissan Motors Made the List....

<p><a href="https://www.smartkarma.com/entities/752" target="_blank" data-smartkarma-citation="entities:752:1">Fanuc Corp (6954 JP)</a> shocked markets last Thursday by forecasting a 34% drop in OP, together with somewhat underwhelming results. Consensus forecasts prior to the announcement were calling for roughly 9% OP growth vs. the company's results, so this clearly took everyone by surprise. Even we were quite surprised by the extent of the forecast decline even though we have been warning of the potential of a cyclical top since the middle of last year. The stock initially opened down 13.5% on Friday…</p>

Fanuc Corp (6954 JP) shocked markets last Thursday by forecasting a 34% drop in OP, together with somewhat underwhelming results. Consensus forecasts prior to the announcement were calling for roughly 9% OP growth vs. the company's results, so this clearly took everyone by surprise. Even we were quite surprised by the extent of the forecast decline even though we have been warning of the potential of a cyclical top since the middle of last year. The stock initially opened down 13.5% on Friday…

Factory Automation Earnings: Is the Fanuc Shock for Real?

Japan

Nabtesco Corporation manufactures Aircraft and Hydraulic products, Precision equipment, and transportation equipment. The Company's products include landing gear system for aircrafts, railroad vehicle brake system, and precision reduction gears for industrial robots.

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Nabtesco (6268 JP)

Japan: Results & Revisions Second Cut - Bottom Line Breakdown

BOTTOM LINE BREAKDOWN - 1,277 earnings results and/or revisions announcements were released last week in Japan covering 36% of listed market...

Campbell Gunn

Shuttering of Rethink Robotics Just a Bump in the Road for Cobots

As the world says goodbye to Rethink Robotics' Baxter and Sawyer, we would caution against drawing the wrong inferences from the failure of this...

Mio Kato

LightStream Factory Automation View: Still Early in the Downcycle

We had been positive on the factory automation robotics names for most of last year, favouring Yaskawa Electric Corp (6506 JP), Nabtesco Corp (6268...

Mio Kato

Hated by the Street but Recently Upgraded. Nissan Motors Made the List....

We updated the Hated by the Street screen and added another criteria. Hated by the Street but was recently upgraded by at least 1 analyst....

Custom Products Group

Factory Automation Earnings: Is the Fanuc Shock for Real?

Fanuc Corp (6954 JP) shocked markets last Thursday by forecasting a 34% drop in OP, together with somewhat underwhelming results. Consensus...

Mio Kato

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