'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.

Thematic (Sector/Industry)

<p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p><p style="text-align: left;">As we move towards the beginning of the disclosure season for the March/June/September/ December cohort of companies, several companies are revising their forecasts upwards. We also had five early-bird micro-cap Q3 reports. Our best and worst pairing from yesterday's announcements is <a href="https://www.smartkarma.com/entities/capcom-co-ltd" target="_blank" data-smartkarma-citation="entities:1459:1" rel="noopener">Capcom (9697 JP)</a> and <a href="https://www.smartkarma.com/entities/biofermin-pharmaceutical-co" target="_blank" data-smartkarma-citation="entities:20533:1" rel="noopener">Biofermin Pharmaceutical (4517 JP)</a>.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/912/original/2021-01-22_05-48-25.png?1611262158" class="editor-image img-responsive" data-smartkarma-image-id="183912"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/913/original/2021-01-22_05-49-43.png?1611262202" class="editor-image img-responsive" data-smartkarma-image-id="183913"></figure></section><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div>

• BEST &amp; WORST •As we move towards the beginning of the disclosure season for the March/June/September/ December cohort of companies, several companies are revising their forecasts upwards. We also had five early-bird micro-cap Q3 reports. Our best and worst pairing from yesterday's announcements is Capcom (9697 JP) and Biofermin Pharmaceutical (4517 JP).Source for all charts &amp; tables: Japan Analytics

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​01/​​​​​​​21 Capcom, Infomart, ISI-D

Senior Bank Analyst - Japanese Banks, Windamee Research

J. Brian Waterhouse

Senior Bank Analyst - Japanese Banks

Windamee Research

Japanese Banks

<p>Stock markets around the world have been reaching record levels, thanks to the unprecedented amounts of money being pumped into the financial markets by the advanced nations’ central banks in a bid to offset the economic damage caused by COVID-19.  In Japan, too, the Topix Index finished 2020 at 1804.68, just off its high-point for the year and up a very modest 4.8% YoY after plummeting around 500 points in March.</p>
<p>For investors in Japanese bank stocks, however, it was another year of pain: the Topix Bank Index closed 2020 down 21.7% YoY.  Moreover, just 5 bank stocks out of the total of 92 showed positive gains YoY.  All 7 major Japanese banks showed YoY declines: the ‘best-performer’ was down 21.1% YoY, with the average major bank YoY decline exceeding 25%.  By the end of 2020, 13 Japanese bank stocks had lost over one-third of their value, although they had been considerably lower earlier in the year.</p>
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/180/838/original/8300-WR-JBanks-2020-0104+TPNBNKvsTPX+in+2020.jpg?1609734252" class="editor-image img-responsive" data-smartkarma-image-id="180838"></figure>
<p></p>
</section>
<p>2021 commences with bank lending at near record-high levels after a record surge in lending, a mountain of cash on deposit that the banks are struggling to deploy profitably, exceptionally low loan to deposit (LDR) ratios, margins under pressure, profits under pressure and, for many banks, dividends under pressure as well.  None of this is likely to boost investor confidence in Japanese bank stocks.</p>
<p>Business models need to be reinvented to properly incorporate the new digital era, branches amalgamated or closed, and staff reduced.  This will take time and be costly.</p>
<p>Meanwhile, two banks have already suggested that they will likely make consolidated net losses in FY3/3021, with others perhaps to follow as we approach the end of the fiscal year in March.</p>
<p>2021 will also see a handful of regional bank mergers; indeed, this has already started with the first on 1 January 2021, creating the Daishi Hokuetsu Bank (part of the <a href="https://www.smartkarma.com/entities/daishi-hokuetsu-financial-group" target="_blank" data-smartkarma-citation="entities:27533:1" rel="noopener">Daishi Hokuetsu Financial Group (7327 JP)</a> ).  While these will be welcomed by the Suga Administration, which is actively encouraging a reduction in the number of regional banks, especially in the more rural parts of the country, there is no guarantee that the surviving entities will be any more profitable or efficient than their predecessors.</p>
<p>Then there is the coronavirus pandemic, which continues to cause social lockdowns, economic disruption, and financial uncertainty aside from its devastating impact on the health and wellbeing of humankind.  All of this still needs to be properly discounted in Japanese bank share prices.  We anticipate further share price weakness in many Japanese banks in 2021.</p>
<p>“<em>Caveat Emptor!”</em> (May the Buyer Beware) remains our advice to would-be investors in Japanese bank stocks for 2021 and beyond.</p>

Stock markets around the world have been reaching record levels, thanks to the unprecedented amounts of money being pumped into the financial markets by the advanced nations’ central banks in a bid to offset the economic damage caused by COVID-19.  In Japan, too, the Topix Index finished 2020 at 1804.68, just off its high-point for the year and up a very modest 4.8% YoY after plummeting around 500 points in March.
For investors in Japanese bank stocks, however, it was another year of pain: the Topix Bank Index closed 2020 down 21.7% YoY.  Moreover, just 5 bank stocks out of the total of 92 showed positive gains YoY.  All 7 major Japanese banks showed YoY declines: the ‘best-performer’ was down 21.1% YoY, with the average major bank YoY decline exceeding 25%.  By the end of 2020, 13 Japanese bank stocks had lost over one-third of their value, although they had been considerably lower earlier in the year.




2021 commences with bank lending at near record-high levels after a record surge in lending, a mountain of cash on deposit that the banks are struggling to deploy profitably, exceptionally low loan to deposit (LDR) ratios, margins under pressure, profits under pressure and, for many banks, dividends under pressure as well.  None of this is likely to boost investor confidence in Japanese bank stocks.
Business models need to be reinvented to properly incorporate the new digital era, branches amalgamated or closed, and staff reduced.  This will take time and be costly.
Meanwhile, two banks have already suggested that they will likely make consolidated net losses in FY3/3021, with others perhaps to follow as we approach the end of the fiscal year in March.
2021 will also see a handful of regional bank mergers; indeed, this has already started with the first on 1 January 2021, creating the Daishi Hokuetsu Bank (part of the Daishi Hokuetsu Financial Group (7327 JP) ).  While these will be welcomed by the Suga Administration, which is actively encouraging a reduction in the number of regional banks, especially in the more rural parts of the country, there is no guarantee that the surviving entities will be any more profitable or efficient than their predecessors.
Then there is the coronavirus pandemic, which continues to cause social lockdowns, economic disruption, and financial uncertainty aside from its devastating impact on the health and wellbeing of humankind.  All of this still needs to be properly discounted in Japanese bank share prices.  We anticipate further share price weakness in many Japanese banks in 2021.
“Caveat Emptor!” (May the Buyer Beware) remains our advice to would-be investors in Japanese bank stocks for 2021 and beyond.

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyzed the changes in margin trading positions of JPX stocks as of Jun 26th. The aggregated net margin trading position is USD32,057m.</li>
<li>We tabulate league tables for top/bottom net long/short of margin trading by value, net margin buy as multiple of ADT.</li>
<li>We highlight net margin buy/sell changes in Kioxia, SoftBank, Tokyo Electron, Fujikura, McDonald's, Skylark, Disco, Taiyo Yuden, Lasertec, Japan Tobacco.</li>
</ul>


We analyzed the changes in margin trading positions of JPX stocks as of Jun 26th. The aggregated net margin trading position is USD32,057m.
We tabulate league tables for top/bottom net long/short of margin trading by value, net margin buy as multiple of ADT.
We highlight net margin buy/sell changes in Kioxia, SoftBank, Tokyo Electron, Fujikura, McDonald's, Skylark, Disco, Taiyo Yuden, Lasertec, Japan Tobacco.


JPX Margin Trading Weekly (Jun 26th): Kioxia, SoftBank, Tokyo Electron, Fujikura, McDonald's, Disco

<div><p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p></div><p>Thursday's best and worst pairing is herbal medicine specialist <a href="https://www.smartkarma.com/entities/tsumura-co" target="_blank" data-smartkarma-citation="entities:8042:1" rel="noopener">Tsumura (4540 JP)</a> and our'Suga Short' recommendation <a href="https://www.smartkarma.com/entities/mitsui-fudosan-co-ltd" target="_blank" data-smartkarma-citation="entities:565:1" rel="noopener">Mitsui Fudosan (8801 JP)</a>. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/169/602/original/2020-11-04_06-51-11.png?1604607954" class="editor-image img-responsive" data-smartkarma-image-id="169602"></figure><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/169/603/original/2020-11-06_05-26-57.png?1604608032" class="editor-image img-responsive" data-smartkarma-image-id="169603"></figure></section><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div></section><hr><p style="text-align: center;"><strong>DAILY STATS</strong></p><hr><p style="text-align: center;"><strong>198 Quarterly Results</strong></p><ul style="list-style-type: disc;">
<li><p><strong>Results Score:</strong> 43% Positive / 10% Neutral / 47% Negative</p></li>
<li><p><strong>Average Results Score Change:</strong> -0.7 points</p></li>
<li><p><strong>Average % Change in Revenue:</strong> -9.0% Quarter YoY / -7.0% Rolling TTM YoY </p></li>
<li><p>A<strong>verage Operating Profit Margin Change:</strong> -1.9ppt</p></li>
<li><p><strong>Percentage Making Quarterly Losses:</strong> 22%</p></li>
</ul><hr><p style="text-align: center;"><strong>109 Annual • 29 Interim Forecasts/Revisions</strong></p><ul style="list-style-type: disc;">
<li><p><strong>Annual Forecast/Revision Score:</strong> 46% Positive / 5% Neutral / 49% Negative</p></li>
<li><p><strong>Interim Forecast/Revision Score Change:</strong> 38% Positive / 7% Neutral / 55% Negative</p></li>
<li><p>Aver<strong>age Forecast/Revision Score Change:</strong> -1.8 points</p></li>
</ul>

• BEST &amp; WORST •Thursday's best and worst pairing is herbal medicine specialist Tsumura (4540 JP) and our'Suga Short' recommendation Mitsui Fudosan (8801 JP). Source for all charts &amp; tables: Japan AnalyticsDAILY STATS198 Quarterly Results
Results Score: 43% Positive / 10% Neutral / 47% Negative
Average Results Score Change: -0.7 points
Average % Change in Revenue: -9.0% Quarter YoY / -7.0% Rolling TTM YoY 
Average Operating Profit Margin Change: -1.9ppt
Percentage Making Quarterly Losses: 22%
109 Annual • 29 Interim Forecasts/Revisions
Annual Forecast/Revision Score: 46% Positive / 5% Neutral / 49% Negative
Interim Forecast/Revision Score Change: 38% Positive / 7% Neutral / 55% Negative
Average Forecast/Revision Score Change: -1.8 points


🇯🇵 JAPAN • Results & Revisions 11/​​​​​​​​​​​​​​​​​​​​​​​05 Tsumura, Sysmex, Terumo, Nintendo, MRE

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

<ul>
<li>Activist Murakami Group bought a bunch of <a href="https://www.smartkarma.com/entities/dena-co-ltd" target="_blank" data-smartkarma-citation="entities:747:1" rel="noopener">DeNA (2432 JP)</a> last fall when it was cheap. Then they sold. Then they bought more. Now they have gone back below 5%. </li>
<li>DeNA sold a <a href="https://www.smartkarma.com/entities/nintendo-co-ltd" target="_blank" data-smartkarma-citation="entities:5415:1" rel="noopener">Nintendo (7974 JP)</a> stake after that stock price fell, and in Feb26 announced a HUGE 1-year buyback. They'll probably finish this month, buying back 17% in 3+mos.</li>
<li>In the meantime, they have sold another asset. They're still cash-rich. And very cheap at an Adjusted Adjusted Adjusted EV/EBITDA of 2.2x. But they're really, really out of favour.</li>
</ul>


Activist Murakami Group bought a bunch of DeNA (2432 JP) last fall when it was cheap. Then they sold. Then they bought more. Now they have gone back below 5%. 
DeNA sold a Nintendo (7974 JP) stake after that stock price fell, and in Feb26 announced a HUGE 1-year buyback. They'll probably finish this month, buying back 17% in 3+mos.
In the meantime, they have sold another asset. They're still cash-rich. And very cheap at an Adjusted Adjusted Adjusted EV/EBITDA of 2.2x. But they're really, really out of favour.


[Japan Event] DeNA (2432 JP) - Big Buyback Accretion Means Really Cheap (Unlevered) Bundle of Assets

Japan

Nintendo Co., Ltd. globally develops, manufactures and sells home-use video game hardware and software in home entertainment business.  The company also produces home-game products including cards.

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Nintendo (7974 JP)

🇯🇵 JAPAN • Results & Revisions 01/21 Capcom, Infomart, ISI-D

As we move towards the beginning of the disclosure season for the March/June/September/ December cohort of companies, several companies are...

Campbell Gunn

Japanese Banks: Ever Lower

For investors in Japanese bank stocks, 2020 was another year of pain. The sector fell almost 22% YoY; only 5 bank stocks out of 92 registered YoY...

J. Brian Waterhouse

JPX Margin Trading Weekly (Jun 26th): Kioxia, SoftBank, Tokyo Electron, Fujikura, McDonald's, Disco

We analyzed JPX margin trading positions report for the past week and highlighted Kioxia, SoftBank, Tokyo Electron, Fujikura, McDonald's, Skylark,...

Ke Yan, CFA, FRM

🇯🇵 JAPAN • Results & Revisions 11/05 Tsumura, Sysmex, Terumo, Nintendo, MRE

• BEST & WORST • Thursday's best and worst pairing is herbal medicine specialist Tsumura (4540 JP) and our'Suga Short' recommendation Mitsui...

Campbell Gunn

[Japan Event] DeNA (2432 JP) - Big Buyback Accretion Means Really Cheap (Unlevered) Bundle of Assets

DeNA is an interesting assortment of somewhat mundane businesses with a big pile of cash and securities. A buyback diminished that, but an asset...

Travis Lundy

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🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​01/​​​​​​​21 Capcom, Infomart, ISI-D

As we move towards the beginning of the disclosure season for the March/June/September/ December cohort of companies, several companies are...

Campbell Gunn

Japanese Banks: Ever Lower

For investors in Japanese bank stocks, 2020 was another year of pain. The sector fell almost 22% YoY; only 5 bank stocks out of 92 registered YoY...

J. Brian Waterhouse

JPX Margin Trading Weekly (Jun 26th): Kioxia, SoftBank, Tokyo Electron, Fujikura, McDonald's, Disco

We analyzed JPX margin trading positions report for the past week and highlighted Kioxia, SoftBank, Tokyo Electron, Fujikura, McDonald's, Skylark,...

Ke Yan, CFA, FRM

🇯🇵 JAPAN • Results & Revisions 11/​​​​​​​​​​​​​​​​​​​​​​​05 Tsumura, Sysmex, Terumo, Nintendo, MRE

• BEST & WORST • Thursday's best and worst pairing is herbal medicine specialist Tsumura (4540 JP) and our'Suga Short' recommendation Mitsui...

Campbell Gunn

[Japan Event] DeNA (2432 JP) - Big Buyback Accretion Means Really Cheap (Unlevered) Bundle of Assets

DeNA is an interesting assortment of somewhat mundane businesses with a big pile of cash and securities. A buyback diminished that, but an asset...

Travis Lundy

🇯🇵 JAPAN • Results & Revisions 01/21 Capcom, Infomart, ISI-D

🇯🇵 JAPAN • Results & Revisions 11/05 Tsumura, Sysmex, Terumo, Nintendo, MRE