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

Thematic (Sector/Industry)

<ul>
<li>The median stock in our Dogs of Topix basket outperformed the median stock in the Topix 400 by 4% through Sept 2024.</li>
<li>This is below the average of 7% achieved by such stocks over the past 9 years, but it was a much tougher stretch than it looked. </li>
<li>Do we need to re-think? Much can be learned comparing the outperformers, whose median return was +34%, compared to the underperformers, which declined 23%.</li>
</ul>


The median stock in our Dogs of Topix basket outperformed the median stock in the Topix 400 by 4% through Sept 2024.
This is below the average of 7% achieved by such stocks over the past 9 years, but it was a much tougher stretch than it looked. 
Do we need to re-think? Much can be learned comparing the outperformers, whose median return was +34%, compared to the underperformers, which declined 23%.


Have the Rules for Bottom Fishing Changed?

Equity Bottom-Up

<ul>
<li>NextAge's stock price dropped nearly 8% on December 5, when the Topix was up, with no apparent news on either the company's website or any local media.</li>
<li>The next day, the Nikkei reported that the Financial Services Agency had raided the company's office after confirming that insurance schemes had been deployed to defraud customers. </li>
<li>This sounds like an old story being leaked by rivals, so we called the company and confirmed: This is most likely old news. </li>
</ul>


NextAge's stock price dropped nearly 8% on December 5, when the Topix was up, with no apparent news on either the company's website or any local media.
The next day, the Nikkei reported that the Financial Services Agency had raided the company's office after confirming that insurance schemes had been deployed to defraud customers. 
This sounds like an old story being leaked by rivals, so we called the company and confirmed: This is most likely old news. 


Japan Specialist

Mark Chadwick

<ul>
<li>OVERSEAS. SPX eakes out gains despite weak ISM Manufacutring in light trading ahead of July 4th Independence Day Holiday; TESLA +6.9% on big 2Q delivery numbers </li>
<li>JAPAN. NKY Futs -0.4% vs Cash; JPYUSD 144.7; Strong BOJ Tankan print drives NKY to new highs;  JP land prices continue to rise; Support for JP foundry goals from IBM</li>
<li>NUGGET.  Japan's passing of the GX Promotion Law enables the issuance of ¥20 trillion in bonds and promotes ¥150 trillion of decarbonization investment over the next decade. Investment opportunities abound!</li>
</ul>


OVERSEAS. SPX eakes out gains despite weak ISM Manufacutring in light trading ahead of July 4th Independence Day Holiday; TESLA +6.9% on big 2Q delivery numbers 
JAPAN. NKY Futs -0.4% vs Cash; JPYUSD 144.7; Strong BOJ Tankan print drives NKY to new highs;  JP land prices continue to rise; Support for JP foundry goals from IBM
NUGGET.  Japan's passing of the GX Promotion Law enables the issuance of ¥20 trillion in bonds and promotes ¥150 trillion of decarbonization investment over the next decade. Investment opportunities abound!


Ohayo Japan| SPX Gains Despite Weak Factory PMI; NUGGET: Japan's GX Promotion Law - Opportunity !

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

iShares MSCI ACWI ex US ETF / Technical Analysis

<ul>
<li>Many major indexes have broken below critical supports, including MSCI ACWI (ACWI-US), EURO STOXX 50, STOXX Europe 600, and the DAX.</li>
<li>Odds suggest a bearish downside continuation, and a bearish outlook is appropriate as long as the YTD downtrend remains intact on the ACWI-US, MSCI ACWI ex-US (ACWX-US), and EAFE (EFA-US).</li>
<li>There is bounce potential given these broad global indexes are testing their respective downtrend channel supports, but the fact remains that they <em>are</em> in downtrends, a major problem longer-term.</li>
</ul>


Many major indexes have broken below critical supports, including MSCI ACWI (ACWI-US), EURO STOXX 50, STOXX Europe 600, and the DAX.
Odds suggest a bearish downside continuation, and a bearish outlook is appropriate as long as the YTD downtrend remains intact on the ACWI-US, MSCI ACWI ex-US (ACWX-US), and EAFE (EFA-US).
There is bounce potential given these broad global indexes are testing their respective downtrend channel supports, but the fact remains that they are in downtrends, a major problem longer-term.


MSCI ACWI Ex-US, EAFE Testing Downtrend Channel Supports -- Bounce Potential

'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.

<p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p><p style="text-align: left;">As Japan re-enters its muted, month-long and region-specific version of 'lockdown', our best and worst larger-cap pairing for Thursday is the second-hand car dealer <a href="https://www.smartkarma.com/entities/nextage-co-ltd" target="_blank" data-smartkarma-citation="entities:10326:1" rel="noopener">Nextage (3186 JP)</a> and GM retailer <a href="https://www.smartkarma.com/entities/izumi-co-ltd" target="_blank" data-smartkarma-citation="entities:13173:1" rel="noopener">Izumi (8273 JP)</a>. We expect the 'lockdown' to be extended in both area and time later in January, capping the upside to fourth-quarter earnings for many listed companies. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/181/378/original/2021-01-08_05-51-53.png?1610052724" class="editor-image img-responsive" data-smartkarma-image-id="181378"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/181/379/original/2021-01-08_05-52-46.png?1610052777" class="editor-image img-responsive" data-smartkarma-image-id="181379"></figure></section><div style="text-align: center;" class="content-caption">Source for all charts &amp; tables: Japan Analytics</div>

• BEST &amp; WORST •As Japan re-enters its muted, month-long and region-specific version of 'lockdown', our best and worst larger-cap pairing for Thursday is the second-hand car dealer Nextage (3186 JP) and GM retailer Izumi (8273 JP). We expect the 'lockdown' to be extended in both area and time later in January, capping the upside to fourth-quarter earnings for many listed companies. Source for all charts &amp; tables: Japan Analytics

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​01/​​07 - Izumi, Shift, NEXTAGE

Japan

NEXTAGE Co., Ltd. operates a used automobile business. Its main line of business is retail of used domestic cars but it also sells imported cars and SUV/vans. In addition, the company also operates an automobile maintenace business.

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Nextage Co Ltd (3186 JP)

Have the Rules for Bottom Fishing Changed?

Increased passive investing and a rising interest rate environment have made the bottom-fishing game more treacherous, but the rules are still the...

Michael Allen

NextAge (3186): Here We Go Again?

NextAge's stock price dropped 8% with no apparent news, but later the Nikkei reported that the Financial Services Agency raided their office for...

Michael Allen

Ohayo Japan| SPX Gains Despite Weak Factory PMI; NUGGET: Japan's GX Promotion Law - Opportunity !

SPX gains ahead of 4th July holidays; NKY Futs -0.4% vs Cash; JPYUSD 144.7; Strong BOJ Tankan print drives NKY to new highs; JP land prices...

Mark Chadwick

MSCI ACWI Ex-US, EAFE Testing Downtrend Channel Supports -- Bounce Potential

Bounce potential given $ACWX $EFA testing downtrend channel supports, but it would likely be a short-term trading opportunity due to the fact that...

Vermilion Research

🇯🇵 JAPAN • Results & Revisions 01/07 - Izumi, Shift, NEXTAGE

As Japan re-enters its muted, month-long and region-specific version of 'lockdown', our best and worst larger-cap pairing for Thursday is Nextage...

Campbell Gunn

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Have the Rules for Bottom Fishing Changed?

Increased passive investing and a rising interest rate environment have made the bottom-fishing game more treacherous, but the rules are still the...

Michael Allen

NextAge (3186): Here We Go Again?

​NextAge's stock price dropped 8% with no apparent news, but later the Nikkei reported that the Financial Services Agency raided their office for...

Michael Allen

Ohayo Japan| SPX Gains Despite Weak Factory PMI; NUGGET: Japan's GX Promotion Law - Opportunity !

SPX gains ahead of 4th July holidays; NKY Futs -0.4% vs Cash; JPYUSD 144.7; Strong BOJ Tankan print drives NKY to new highs; JP land prices...

Mark Chadwick

MSCI ACWI Ex-US, EAFE Testing Downtrend Channel Supports -- Bounce Potential

Bounce potential given $ACWX $EFA testing downtrend channel supports, but it would likely be a short-term trading opportunity due to the fact that...

Vermilion Research

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​01/​​07 - Izumi, Shift, NEXTAGE

As Japan re-enters its muted, month-long and region-specific version of 'lockdown', our best and worst larger-cap pairing for Thursday is Nextage...

Campbell Gunn

NextAge's stock price dropped 8% with no apparent news, but later the Nikkei reported that the Financial Services Agency raided their office for...

🇯🇵 JAPAN • Results & Revisions 01/07 - Izumi, Shift, NEXTAGE