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

<ul>
<li>Contract with Australia to supply sonar, communications and navigation equipment for Mogami frigates points to long-term growth for NEC's defense business.</li>
<li>Three frigates to be built for the Australian Navy by MHI in Nagasaki, followed by eight more to be built in Australia. NEC likely to supply all of them.</li>
<li>Shares rebounding from their February low, but still more than 25% below their 52-week high. Selling at 23 times EPS guidance as of April 21.</li>
</ul>


Contract with Australia to supply sonar, communications and navigation equipment for Mogami frigates points to long-term growth for NEC's defense business.
Three frigates to be built for the Australian Navy by MHI in Nagasaki, followed by eight more to be built in Australia. NEC likely to supply all of them.
Shares rebounding from their February low, but still more than 25% below their 52-week high. Selling at 23 times EPS guidance as of April 21.


NEC (6701 JP): Key Supplier for Mogami Frigates

Japanese Equity Specialist, Ortus Advisors

Andrew Jackson

Japanese Equity Specialist

Ortus Advisors

Kawasaki Heavy Industries / Equity Bottom-Up

<ul>
<li>Expect continued buying in defense related, as well as banks and life insurance, renewable energy, rails, and medical IT plays with Shigeru Ishiba at the helm. </li>
<li>The Market will be quick to rotate out of names which spiked into Friday's close on expectation for a Sanae Takaichi win in the LDP election.  </li>
<li>Ishiba has been a vocal critic of Abenomics, and his potential policies aimed at higher taxes for investment incomes and capital gains are set to weigh on the Japanese market. </li>
</ul>


Expect continued buying in defense related, as well as banks and life insurance, renewable energy, rails, and medical IT plays with Shigeru Ishiba at the helm. 
The Market will be quick to rotate out of names which spiked into Friday's close on expectation for a Sanae Takaichi win in the LDP election.  
Ishiba has been a vocal critic of Abenomics, and his potential policies aimed at higher taxes for investment incomes and capital gains are set to weigh on the Japanese market. 


Best Outright and Pair Trades for an Ishiba-Led LDP

Japanese Turnaround Situations, Short-Ideas, Azabu Research

Michael Allen

Japanese Turnaround Situations, Short-Ideas

Azabu Research

Azabu Research is a publishing and consulting firm focused on distressed equities in the Japanese market. We specialize in turnaround strategies, corporate combinations, divestitures, and restructuring.

Publisher of the Tokyo Turnaround Letter, which conducts the most thorough research possible of publicly available information, including forensic tests for fraudulent overstatement of assets and understatement of liabilities, as well as rigorous market and industry analysis to assess the underlying strengths of the company’s products or services, the appropriateness of the company’s turnaround strategy, and the skill of its current management team. The average length of a report exceeds 25 pages of text and tables, excluding any disclosures or executive summaries.

We have more than 30 years of experience in applying this process to distressed equities in Japan. Additionally, subscribers have free access to detailed, yet easily navigated earnings models for the target company as well as the top five comparable companies, and unlimited access to the analyst for follow-up questions.

Azabu Research also conducts be-spoke research on a project basis, and provides consulting services to companies looking to restructure, divest, make acquisitions, go public, or improve investor sentiment toward their stock.

Independent Research and Consulting Firm

<ul>
<li>A massive shortage of IT professionals combined with Shift's overwhelming dominance of the labor market should drive 20% annual revenue growth through 2030. </li>
<li>But Shift missed consensus profitability estimates 3 consecutive quarters, and the share price is down 67% in 12 months, compared to an 18% rise in the median peer. </li>
<li>In our view, a recovery in profitability is already underway, and shares are at least 45% undervalued</li>
</ul>


A massive shortage of IT professionals combined with Shift's overwhelming dominance of the labor market should drive 20% annual revenue growth through 2030. 
But Shift missed consensus profitability estimates 3 consecutive quarters, and the share price is down 67% in 12 months, compared to an 18% rise in the median peer. 
In our view, a recovery in profitability is already underway, and shares are at least 45% undervalued


Shift (3697): Profitability Rebound Underway

Asia L/S Equity PM/Macro/Thematic Idea Generation

Rikki Malik

<ul>
<li>We follow up our original piece after the release of full-year results and the annual IR day.</li>
<li>Some decent outperformance from the stock despite AI disruption fears.</li>
<li>Stock is cheap if the medium-term plan is achieved with Q1 results, the first scorecard.</li>
</ul>


We follow up our original piece after the release of full-year results and the annual IR day.
Some decent outperformance from the stock despite AI disruption fears.
Stock is cheap if the medium-term plan is achieved with Q1 results, the first scorecard.


NEC (6701.T) – Thesis Playing Out, Market Not Fully Convinced

Thematic (Sector/Industry)

<ul>
<li>Tech laggards bought in the US showing many in the market scrambling to catch the upside after the rapid snapback from last weeks drop.</li>
<li>Server related strength after Cisco numbers may see sentiment for Nidec finally improving with its cooling modules business emerging as an earnings driver.</li>
<li>Strong numbers for Coherent confirm the positive trends for its optical transceiver business which points to continued upside for AI data center plays</li>
</ul>


Tech laggards bought in the US showing many in the market scrambling to catch the upside after the rapid snapback from last weeks drop.
Server related strength after Cisco numbers may see sentiment for Nidec finally improving with its cooling modules business emerging as an earnings driver.
Strong numbers for Coherent confirm the positive trends for its optical transceiver business which points to continued upside for AI data center plays


Japan Morning Connection: Sanken Electric, Nidec, Asahi Intecc

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)

NEC (6701 JP): Key Supplier for Mogami Frigates

Contract to supply sonar, communications and navigation equipment for Mogami frigates ordered by Australia a long-term positive. Aerospace &...

Scott Foster

Best Outright and Pair Trades for an Ishiba-Led LDP

How to position in Japanese equities after the surprise win by Shigeru Ishiba over Sanae Takaichi in Friday's LDP election.

Andrew Jackson

Shift (3697): Profitability Rebound Underway

Japan's massive shortage of IT professionals and Shift's dominance of the IT labor market should sustain 20% annual sales growth. Profit could grow...

Michael Allen

NEC (6701.T) – Thesis Playing Out, Market Not Fully Convinced

+6% after Q1results. revenue +14.5% to ¥819.8bn; non-GAAP OP +¥34.7bn to ¥74.7bn. FY OP guidance raised ¥10bn to ¥430bn (revenue +¥40bn to...

Rikki Malik

Japan Morning Connection: Sanken Electric, Nidec, Asahi Intecc

US tech laggards are now catching up after a rapid rebound, server-related strength boosts Nidec's sentiment, and Coherent's strong numbers...

Andrew Jackson

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

NEC (6701 JP): Key Supplier for Mogami Frigates

Contract to supply sonar, communications and navigation equipment for Mogami frigates ordered by Australia a long-term positive. Aerospace &...

Scott Foster

Best Outright and Pair Trades for an Ishiba-Led LDP

How to position in Japanese equities after the surprise win by Shigeru Ishiba over Sanae Takaichi in Friday's LDP election.

Andrew Jackson

Shift (3697): Profitability Rebound Underway

Japan's massive shortage of IT professionals and Shift's dominance of the IT labor market should sustain 20% annual sales growth. Profit could grow...

Michael Allen

NEC (6701.T) – Thesis Playing Out, Market Not Fully Convinced

+6% after Q1results. revenue +14.5% to ¥819.8bn; non-GAAP OP +¥34.7bn to ¥74.7bn. FY OP guidance raised ¥10bn to ¥430bn (revenue +¥40bn to...

Rikki Malik

Japan Morning Connection: Sanken Electric, Nidec, Asahi Intecc

​US tech laggards are now catching up after a rapid rebound, server-related strength boosts Nidec's sentiment, and Coherent's strong numbers...

Andrew Jackson

US tech laggards are now catching up after a rapid rebound, server-related strength boosts Nidec's sentiment, and Coherent's strong numbers...