'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

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/068/507/original/2018-11-02_10-20-29.png?1541121653" class="editor-image img-responsive" data-smartkarma-image-id="68507"></figure>Source: Japan Analytics
NB: companies are colour-coded by sector
</div>28 YEARS OF NON-FINANCIAL MARKET LEADERSHIP - To offer some light relief from the current market, we have compiled a graphic illustrating the evolution in the ranking of the leading non-financial Japanese companies by market capitalisation measured at the end of each of the last 28 years.METHODOLOGY - Our comments follow in the detail below, but first a few notes:-<ul>
<li>In the interests of clarity (/sanity?), financials have been omitted. Twelve of the Top 20-ranked companies in 1990 were financials. However, only <a href="https://www.smartkarma.com/entities/742" target="_blank" data-smartkarma-citation="entities:742:1">Nomura (8604 JP)</a>, <a href="https://www.smartkarma.com/entities/6483" target="_blank" data-smartkarma-citation="entities:6483:1">Aozora (8304 JP)</a> and <a href="https://www.smartkarma.com/entities/16897" target="_blank" data-smartkarma-citation="entities:16897:1">Shinsei (8303 JP)</a> have survived in their original corporate structure and have the same ticker code. Our chart would have otherwise have included the now-merged IBJ, Fuji Bank, Dai-Ichi Kangyo Bank, Mitsubishi Bank, Sakura Bank, Sumitomo Bank, Tokai Bank, Sanwa Bank and Mitsubishi Trust Bank.  Excluded from the present-day Top 20 are <a href="https://www.smartkarma.com/entities/218" target="_blank" data-smartkarma-citation="entities:218:1">Mitsubishi UFJ (8306 JP)</a>, <a href="https://www.smartkarma.com/entities/217" target="_blank" data-smartkarma-citation="entities:217:1">Sumitomo Mitsui Financial (8316 JP)</a>, <a href="https://www.smartkarma.com/entities/838" target="_blank" data-smartkarma-citation="entities:838:1">Japan Post Bank (7182 JP)</a>, <a href="https://www.smartkarma.com/entities/359" target="_blank" data-smartkarma-citation="entities:359:1">Japan Post Holdings (6178 JP)</a> and <a href="https://www.smartkarma.com/entities/219" target="_blank" data-smartkarma-citation="entities:219:1">Mizuho Financial (8411 JP)</a> from the present day.</li>
<li>Only companies that were in the Top 20 in 1990 or 2018, as well as those companies that have been in the Top 10 for at least three of the last 28 years, have been included. </li>
<li>Two companies from 1990's Top 20 - Seibu Railway and Japan Airlines - have since been delisted. Although they have relisted as <a href="https://www.smartkarma.com/entities/458" target="_blank" data-smartkarma-citation="entities:458:1">Seibu Holdings (9024 JP)</a> and <a href="https://www.smartkarma.com/entities/1184" target="_blank" data-smartkarma-citation="entities:1184:1">Japan Airlines (9201 JP)</a>, they are no longer highly-ranked.</li>
<li>Seven current Top 20 companies - (<a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">Softbank (9984 JP)</a>, <a href="https://www.smartkarma.com/entities/1089" target="_blank" data-smartkarma-citation="entities:1089:1">NTT Docomo (9437 JP)</a>, <a href="https://www.smartkarma.com/entities/639" target="_blank" data-smartkarma-citation="entities:639:1">KDDI (9433 JP)</a>, <a href="https://www.smartkarma.com/entities/13498" target="_blank" data-smartkarma-citation="entities:13498:1">Japan Tobacco (2914 JP)</a>, <a href="https://www.smartkarma.com/entities/13520" target="_blank" data-smartkarma-citation="entities:13520:1">Central Japan Railway (9022 JP)</a>, <a href="https://www.smartkarma.com/entities/751" target="_blank" data-smartkarma-citation="entities:751:1">Fast Retailing (9983 JP)</a> and <a href="https://www.smartkarma.com/entities/15070" target="_blank" data-smartkarma-citation="entities:15070:1">Recruit (6098 JP)</a>)  - have listed during the last 28 years. </li>
</ul>THE 2050 RANKING?- Which of the current market leaders will still be in the Top 20 in 2050 in their current guise? For those still around to read this in 32 year's time, we would wager on just three - <a href="https://www.smartkarma.com/entities/3077" target="_blank" data-smartkarma-citation="entities:3077:1">Keyence (6861 JP)</a>, <a href="https://www.smartkarma.com/entities/73" target="_blank" data-smartkarma-citation="entities:73:1">Toyota Motor (7203 JP)</a> and <a href="https://www.smartkarma.com/entities/563" target="_blank" data-smartkarma-citation="entities:563:1">Sony (6758 JP)</a>.


Source: Japan Analytics
NB: companies are colour-coded by sector
28 YEARS OF NON-FINANCIAL MARKET LEADERSHIP - To offer some light relief from the current market, we have compiled a graphic illustrating the evolution in the ranking of the leading non-financial Japanese companies by market capitalisation measured at the end of each of the last 28 years.METHODOLOGY - Our comments follow in the detail below, but first a few notes:-
In the interests of clarity (/sanity?), financials have been omitted. Twelve of the Top 20-ranked companies in 1990 were financials. However, only Nomura (8604 JP), Aozora (8304 JP) and Shinsei (8303 JP) have survived in their original corporate structure and have the same ticker code. Our chart would have otherwise have included the now-merged IBJ, Fuji Bank, Dai-Ichi Kangyo Bank, Mitsubishi Bank, Sakura Bank, Sumitomo Bank, Tokai Bank, Sanwa Bank and Mitsubishi Trust Bank.  Excluded from the present-day Top 20 are Mitsubishi UFJ (8306 JP), Sumitomo Mitsui Financial (8316 JP), Japan Post Bank (7182 JP), Japan Post Holdings (6178 JP) and Mizuho Financial (8411 JP) from the present day.
Only companies that were in the Top 20 in 1990 or 2018, as well as those companies that have been in the Top 10 for at least three of the last 28 years, have been included. 
Two companies from 1990's Top 20 - Seibu Railway and Japan Airlines - have since been delisted. Although they have relisted as Seibu Holdings (9024 JP) and Japan Airlines (9201 JP), they are no longer highly-ranked.
Seven current Top 20 companies - (Softbank (9984 JP), NTT Docomo (9437 JP), KDDI (9433 JP), Japan Tobacco (2914 JP), Central Japan Railway (9022 JP), Fast Retailing (9983 JP) and Recruit (6098 JP))  - have listed during the last 28 years. 
THE 2050 RANKING?- Which of the current market leaders will still be in the Top 20 in 2050 in their current guise? For those still around to read this in 32 year's time, we would wager on just three - Keyence (6861 JP), Toyota Motor (7203 JP) and Sony (6758 JP). 

Japan: The Evolution Of (Non-Financial) Market Leadership

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

<a href="https://www.smartkarma.com/entities/5415" target="_blank" data-smartkarma-citation="entities:5415:1">Nintendo Co Ltd (7974 JP)</a>'s collaborative efforts with <a href="https://www.smartkarma.com/entities/8197" target="_blank" data-smartkarma-citation="entities:8197:1">Cyberagent Inc (4751 JP)</a>'s Cygames launched its first offspring on 27 Sep as Dragalia Lost debuted quietly across most of the Western hemisphere but quickly racked up top ten rankings in a variety of East Asian markets. In Japan the game has maintained a top ten ranking by gross in both the gaming and overall categories over the last week on both Google Play and the Apple App Store.
It is currently within or close to the top ten rankings in Hong Kong, Macau and Taiwan as well, while its ranking in the US is a modest but respectable 34th overall and 4th among RPGs on Google Play (81st and 9th respectively on the app store). 
This is a good start for a title that was mostly aimed at the Japanese market and a healthy beginning for the collaboration between Cygames and Nintendo. What's more pertinent however, is the "gatcha" expertise Nintendo could accumulate by working with Cygames to apply to the rest of its IP where its results to date have been a mixed bag.

Nintendo Co Ltd (7974 JP)'s collaborative efforts with Cyberagent Inc (4751 JP)'s Cygames launched its first offspring on 27 Sep as Dragalia Lost debuted quietly across most of the Western hemisphere but quickly racked up top ten rankings in a variety of East Asian markets. In Japan the game has maintained a top ten ranking by gross in both the gaming and overall categories over the last week on both Google Play and the Apple App Store.
It is currently within or close to the top ten rankings in Hong Kong, Macau and Taiwan as well, while its ranking in the US is a modest but respectable 34th overall and 4th among RPGs on Google Play (81st and 9th respectively on the app store). 
This is a good start for a title that was mostly aimed at the Japanese market and a healthy beginning for the collaboration between Cygames and Nintendo. What's more pertinent however, is the "gatcha" expertise Nintendo could accumulate by working with Cygames to apply to the rest of its IP where its results to date have been a mixed bag.

Nintendo: Draglia Lost's Reasonable Success a Stepping Stone Towards Mario Kart Tour

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

TSE Tokyo Price Index TOPIX / Technical Analysis

The current pullback within Japan’s TOPIX and Nikkei 225 indexes is offering an opportunity to add exposure to attractive constituents. Consumer electronics manufacturers are particularly attractive. Today we direct your attention to four stocks with the best setups in the group: Sony (6758-JP), Nintendo (7974-JP), FUJIFILM (4901-JP), and Zenrin (9474-JP). Add exposure.

The current pullback within Japan’s TOPIX and Nikkei 225 indexes is offering an opportunity to add exposure to attractive constituents. Consumer electronics manufacturers are particularly attractive. Today we direct your attention to four stocks with the best setups in the group: Sony (6758-JP), Nintendo (7974-JP), FUJIFILM (4901-JP), and Zenrin (9474-JP). Add exposure.

Amid the Turmoil, Buy Opportunities in Japan: Sony, Nintendo, FUJIFILM, Zenrin

Japan TMT Analyst

Pelham Smithers

Market Intel on Asian Tech with a Japan focus

Pelham Smithers Associates

Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods. 

Research is provided by the following:
Pelham Smithers: Macro, consumer electronics, telecoms & pharma
Joel Scheiman: Electronics materials / components
Julie Boote: Autos
Will Nestuk: Capital goods, machinery & transportation equipment parts
Thao Nguyen: eCommerce, internet content, marketing & advertising

Friday saw the release of the latest Assassin's Creed outing: Assassin's Creed: Odyssey. Normally, this would be of interest to fans of the franchise and not much more. However, in Japan, the game is available on Switch via a streamed service. This is only the second time a PS4-era game has been available for streaming on Switch - the other was Resident Evil 7 - but the first time from launch. As well as ending the idea that Switch can't play PS4-level games as it is not powerful enough, it shows the threat streaming can be to the console gaming industry. The company that has to be most worried by this is Sony.

Friday saw the release of the latest Assassin's Creed outing: Assassin's Creed: Odyssey. Normally, this would be of interest to fans of the franchise and not much more. However, in Japan, the game is available on Switch via a streamed service. This is only the second time a PS4-era game has been available for streaming on Switch - the other was Resident Evil 7 - but the first time from launch. As well as ending the idea that Switch can't play PS4-level games as it is not powerful enough, it shows the threat streaming can be to the console gaming industry. The company that has to be most worried by this is Sony.

Founder and Strategist, Entext Economics & Strategy

Sean Maher

Founder and Strategist

Entext Economics & Strategy

Entext provides institutional investors with distinctive, actionable asset allocation and thematic research, which typically challenges the market consensus. Our clients range from credit, equity and multi-asset hedge and pension funds to family offices and sovereign funds. 
 
We focus on identifying key inflection points in macro data and relative asset performance amid the 'groupthink'  and confirmation bias that characterizes most investment bank analysis.

Macro Driven Investment Insight

Thematic (Sector/Industry)

<div class="content-remarks">
<blockquote>
 ‘It’s necessary for developers to learn to get along with [subscription services] ...When seeking a partner for this, it’s important to find someone who understands the value of your software. Then customers will feel the value in your apps and software and develop a habit of paying money for them. I can’t say that our fixed-cost model has really been a success. But we’re going to continue pushing it forward until it becomes entrenched. By focusing on bringing games to the widest range of people possible, we can continue boosting our mobile game business...’ 
</blockquote>
Shigeru Miyamoto, Nintendo’s legendary ‘Super Mario’ game designer, speaking recently
<blockquote>
’Having been a long-term bull over several years (particularly on Tencent), I turned tactically bearish on Asian tech late last year, and the US traded China internet stock index has fallen to a new YTD low…Tencent is down 25% from its peak in January ahead of quarterly earnings likely to show slowing growth in gaming. Player Unknown’s Battlegrounds (PUBG), in which players have to survive on a virtual island has been cannibalising other legacy titles on both time and money spend (like Fortnite globally). Total game revenues will probably rise just 2-3% y/y in Q2...’  
</blockquote>
Weekly Insight, August 2nd 2018
<blockquote>
‘The Overwatch League’s inaugural season this year featured 12 teams, and the finals in July attracted sold-out crowds of more than 20,000 spectators to the Barclays Center in Brooklyn, while matches were broadcast on ESPN. Since then, Blizzard has announced expansion franchises in Atlanta, Washington, Paris, Toronto and Vancouver, British Columbia, as well as the Chinese cities of Guangzhou, Chengdu and Hangzhou. The league hopes to ultimately add eight more. By building local franchises for Overwatch, Blizzard offered a structure that could appeal to professional sports executives able to provide valuable cachet.’ 
</blockquote>
<a href="https://www.nytimes.com/2018/09/14/business/overwatch-league-blizzard-cities.html" target="_blank">NYT article this week on surging US interest in esports</a>
 
</div>



 ‘It’s necessary for developers to learn to get along with [subscription services] ...When seeking a partner for this, it’s important to find someone who understands the value of your software. Then customers will feel the value in your apps and software and develop a habit of paying money for them. I can’t say that our fixed-cost model has really been a success. But we’re going to continue pushing it forward until it becomes entrenched. By focusing on bringing games to the widest range of people possible, we can continue boosting our mobile game business...’ 

Shigeru Miyamoto, Nintendo’s legendary ‘Super Mario’ game designer, speaking recently

’Having been a long-term bull over several years (particularly on Tencent), I turned tactically bearish on Asian tech late last year, and the US traded China internet stock index has fallen to a new YTD low…Tencent is down 25% from its peak in January ahead of quarterly earnings likely to show slowing growth in gaming. Player Unknown’s Battlegrounds (PUBG), in which players have to survive on a virtual island has been cannibalising other legacy titles on both time and money spend (like Fortnite globally). Total game revenues will probably rise just 2-3% y/y in Q2...’  

Weekly Insight, August 2nd 2018

‘The Overwatch League’s inaugural season this year featured 12 teams, and the finals in July attracted sold-out crowds of more than 20,000 spectators to the Barclays Center in Brooklyn, while matches were broadcast on ESPN. Since then, Blizzard has announced expansion franchises in Atlanta, Washington, Paris, Toronto and Vancouver, British Columbia, as well as the Chinese cities of Guangzhou, Chengdu and Hangzhou. The league hopes to ultimately add eight more. By building local franchises for Overwatch, Blizzard offered a structure that could appeal to professional sports executives able to provide valuable cachet.’ 

NYT article this week on surging US interest in esports
 


Social Gaming and Esports Upside for Tencent…

Japan

Nintendo Co., Ltd. develops, manufactures, and sells household leisure equipment. The Company produces home use video game hardware and software products. Nintendo markets its products throughout Japan.

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Nintendo (NTDOY US)

Japan: The Evolution Of (Non-Financial) Market Leadership

28 YEARS OF NON-FINANCIAL MARKET LEADERSHIP - To offer some light relief from the current market, we have compiled a graphic illustrating the...

Campbell Gunn

Nintendo: Draglia Lost's Reasonable Success a Stepping Stone Towards Mario Kart Tour

Nintendo Co Ltd (7974 JP)'s collaborative efforts with Cyberagent Inc (4751 JP)'s Cygames launched its first offspring on 27 Sep as Dragalia Lost...

Mio Kato

Amid the Turmoil, Buy Opportunities in Japan: Sony, Nintendo, FUJIFILM, Zenrin

The current pullback within Japan’s TOPIX and Nikkei 225 indexes is offering an opportunity to add exposure to attractive constituents. Consumer...

Vermilion Research

Sony and the Battle for the Living Room

Friday saw the release of the latest Assassin's Creed outing: Assassin's Creed: Odyssey. Normally, this would be of interest to fans of the...

Pelham Smithers Associates

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52-week Range

Market Cap (USDm)

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Japan: The Evolution Of (Non-Financial) Market Leadership

28 YEARS OF NON-FINANCIAL MARKET LEADERSHIP - To offer some light relief from the current market, we have compiled a graphic illustrating the...

Campbell Gunn

Nintendo: Draglia Lost's Reasonable Success a Stepping Stone Towards Mario Kart Tour

Nintendo Co Ltd (7974 JP)'s collaborative efforts with Cyberagent Inc (4751 JP)'s Cygames launched its first offspring on 27 Sep as Dragalia Lost...

Mio Kato

Amid the Turmoil, Buy Opportunities in Japan: Sony, Nintendo, FUJIFILM, Zenrin

The current pullback within Japan’s TOPIX and Nikkei 225 indexes is offering an opportunity to add exposure to attractive constituents. Consumer...

Vermilion Research

Sony and the Battle for the Living Room

Friday saw the release of the latest Assassin's Creed outing: Assassin's Creed: Odyssey. Normally, this would be of interest to fans of the...

Pelham Smithers Associates

Social Gaming and Esports Upside for Tencent…

‘It’s necessary for developers to learn to get along with [subscription services] ...When seeking a partner for this, it’s important to find...

Sean Maher