'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.

Equity Bottom-Up

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/162/994/original/Tokyo_Stock_Exchange_logo.png?1601590198" class="editor-image img-responsive" data-smartkarma-image-id="162994"></figure>FAILOVER FAILURE - Thursday's unprecedented failure of the Tokyo Stock Exchange's arrowhead trading system developed in co-ordination with <a href="https://www.smartkarma.com/entities/fujitsu-ltd" target="_blank" data-smartkarma-citation="entities:16968:1" rel="noopener">Fujitsu (6702 JP)</a> is highly embarrassing for the newly-minted administration of Prime Minster Suga who has placed particular emphasis on improving Japan's digital capabilities. Trading will resume this morning as normal at 9 am Japan Time.PASSING THE BUCK - In the DETAIL section below, we shall provide a summary of the explanations that were offered by the senior management of <a href="https://www.smartkarma.com/entities/japan-exchange-group-inc" target="_blank" data-smartkarma-citation="entities:11266:1" rel="noopener">Japan Exchange Group (8697 JP)</a> (JPX) at a 98 minute-long press conference that was held last night. JPX places the 'blame' for this incident squarely on Fujitsu. However, as JPX admitted, Fujitsu is 'just a vendor' and responsibility for the smooth function of the exchange's systems is the responsibility of JPX. We would also note that this is not the first time that the exchange's protocols have failed to failover and that the arrowhead system was upgraded as recently as November 5 2019. At that time the JPX press release stated:-<blockquote>The new version of “arrowhead” uses the existing system as a base for an upgraded technology that offers users the familiar, high speed, high-reliability experience, while delivering even greater convenience. The trading system and transaction services have been improved in order to respond to changes in the business environment and better meet the needs of users, providing stronger overall market functionality.</blockquote><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/162/995/original/File%202020-10-01%2016%2020%2047.jpeg?1601591437" class="editor-image img-responsive" data-smartkarma-image-id="162995"></figure><div class="content-caption">Source: Nikkei</div>

FAILOVER FAILURE - Thursday's unprecedented failure of the Tokyo Stock Exchange's arrowhead trading system developed in co-ordination with Fujitsu (6702 JP) is highly embarrassing for the newly-minted administration of Prime Minster Suga who has placed particular emphasis on improving Japan's digital capabilities. Trading will resume this morning as normal at 9 am Japan Time.PASSING THE BUCK - In the DETAIL section below, we shall provide a summary of the explanations that were offered by the senior management of Japan Exchange Group (8697 JP) (JPX) at a 98 minute-long press conference that was held last night. JPX places the 'blame' for this incident squarely on Fujitsu. However, as JPX admitted, Fujitsu is 'just a vendor' and responsibility for the smooth function of the exchange's systems is the responsibility of JPX. We would also note that this is not the first time that the exchange's protocols have failed to failover and that the arrowhead system was upgraded as recently as November 5 2019. At that time the JPX press release stated:-The new version of “arrowhead” uses the existing system as a base for an upgraded technology that offers users the familiar, high speed, high-reliability experience, while delivering even greater convenience. The trading system and transaction services have been improved in order to respond to changes in the business environment and better meet the needs of users, providing stronger overall market functionality.Source: Nikkei

🇯🇵 JAPAN • Fujitsu Fails to Failover > JPX Tries to Pass the Buck

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Event-Driven

NTT (Nippon Telegraph & Telephone) / Event-Driven

NTT (Nippon Telegraph & Telephone) (9432 JP)

The explanation supporting NTT’s buyout of Docomo (in Japanese but translated below) is interesting and we believe it supports our initial thoughts on this development. What we didn’t expect was a ¥3,900 tender price.

The explanation supporting NTT’s buyout of Docomo (in Japanese but translated below) is interesting and we believe it supports our initial thoughts on this development. What we didn’t expect was a ¥3,900 tender price.

NTT – NTT Is Going Big and Our Suspicions Are Aroused Further

Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

<ul>
<li>On June 25, NEC (Japan's leading producer of telecom equipment) and NTT (9432 JP) (Japan's largest telecom network operator) announced plans for joint R&amp;D and global marketing of 5G and other products incorporating leading edge optical and wireless technologies.</li>
<li>To cement the alliance and support the R&amp;D and marketing, NTT has agreed to invest ¥64.5 billion to acquire a 4.8% stake in NEC. </li>
<li>Japan's Ministry of Economy, Trade and Industry (METI) plans to provide ¥70 billion to NEC, Fujitsu and other Japanese companies to develop 5G equipment and networks.</li>
<li>Also, faced with growing Conservative Party opposition to Huawei, Prime Minister Boris Johnson’s UK government is reportedly talking with NEC and considering Samsung Electronics (005930 KS) as alternative suppliers of 5G telecom equipment. NEC and Samsung announced a partnership to develop 5G and IT solutions in October 2018.</li>
<li>Coming on top of extensive restructuring, these developments support our forecast of continued growth in NEC's operating profit through FY Mar-23 and improve the company's longer term prospects.</li>
</ul>


On June 25, NEC (Japan's leading producer of telecom equipment) and NTT (9432 JP) (Japan's largest telecom network operator) announced plans for joint R&amp;D and global marketing of 5G and other products incorporating leading edge optical and wireless technologies.
To cement the alliance and support the R&amp;D and marketing, NTT has agreed to invest ¥64.5 billion to acquire a 4.8% stake in NEC. 
Japan's Ministry of Economy, Trade and Industry (METI) plans to provide ¥70 billion to NEC, Fujitsu and other Japanese companies to develop 5G equipment and networks.
Also, faced with growing Conservative Party opposition to Huawei, Prime Minister Boris Johnson’s UK government is reportedly talking with NEC and considering Samsung Electronics (005930 KS) as alternative suppliers of 5G telecom equipment. NEC and Samsung announced a partnership to develop 5G and IT solutions in October 2018.
Coming on top of extensive restructuring, these developments support our forecast of continued growth in NEC's operating profit through FY Mar-23 and improve the company's longer term prospects.


NEC (6701 JP): Tie-Up with NTT Raises 5G Profile

Telco/Internet specialist

Kirk Boodry

Redex Research

NTT (Nippon Telegraph & Telephone) / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/nippon-telegraph-telephone-corporation" target="_blank" data-smartkarma-citation="entities:623:1" rel="noopener">NTT (Nippon Telegraph &amp; Telephone) (9432 JP)</a> will invest c. ¥67bn for a 5% stake in telecom equipment maker NEC whilst the two companies will work together on the development of 5G network equipment going forward. There are opportunities in the global space as 5G proliferates even as leading vendor Huawei struggles politically.  NTT has enough cash that it can afford to make this investment and still have plenty of resources for share buybacks. For NEC, this is the second meaningful 5G alliance this month and working with both NTT and Rakuten gives it cover as disruption comes to the telecom equipment market.

NTT (Nippon Telegraph &amp; Telephone) (9432 JP) will invest c. ¥67bn for a 5% stake in telecom equipment maker NEC whilst the two companies will work together on the development of 5G network equipment going forward. There are opportunities in the global space as 5G proliferates even as leading vendor Huawei struggles politically.  NTT has enough cash that it can afford to make this investment and still have plenty of resources for share buybacks. For NEC, this is the second meaningful 5G alliance this month and working with both NTT and Rakuten gives it cover as disruption comes to the telecom equipment market.

NTT Invests in NEC, Belle of the 5G Ball?

<ul>
<li>NEC has revised its sales and profit guidance for FY Mar-20. Operating profit is now estimated to have risen by 2.2x on a 6% increase in sales.</li>
<li>The primary reason for this was strong domestic investment in computing and communications technology driven by teleworking in response to COVID-19.</li>
<li>Audited results are scheduled to be announced on May 12.</li>
</ul>


NEC has revised its sales and profit guidance for FY Mar-20. Operating profit is now estimated to have risen by 2.2x on a 6% increase in sales.
The primary reason for this was strong domestic investment in computing and communications technology driven by teleworking in response to COVID-19.
Audited results are scheduled to be announced on May 12.


NEC (6701 JP): Teleworking Drives Upward Revision to FY Mar-20 Guidance

Japan

NEC Corporation manufactures and markets computers, telecommunication equipment, electronic devices, semiconductors, and software.  The Company's products include printers, modems, cellular phones, plasma display panels (PDP), network systems, memory, integrated circuits (IC), thin film transistor-liquid crystal display (TFT-LCD), and printed circuit boards (PCB). NEC operates worldwide.

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NEC Corp (6701 JP)

🇯🇵 JAPAN • Fujitsu Fails to Failover > JPX Tries to Pass the Buck

FAILOVER FAILURE - Thu

Campbell Gunn

NTT – NTT Is Going Big and Our Suspicions Are Aroused Further

The explanation supporting NTT’s buyout of Docomo (in Japanese but translated below) is interesting and we believe it supports our initial thoughts...

Mio Kato

NEC (6701 JP): Tie-Up with NTT Raises 5G Profile

On June 25, NEC (Japan's leading producer of telecom equipment) and NTT (9432 JP) (Japan's largest telecom network operator) announced plans for...

Scott Foster

NTT Invests in NEC, Belle of the 5G Ball?

NTT (Nippon Telegraph & Telephone) (9432 JP) will invest c. ¥67bn for a 5% stake in telecom equipment maker NEC whilst the two companies will...

Kirk Boodry

NEC (6701 JP): Teleworking Drives Upward Revision to FY Mar-20 Guidance

NEC has revised its sales and profit guidance for FY Mar-20. Operating profit is now estimated to have risen by 2.2x on a 6% increase in...

Scott Foster

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