Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nisshin-seifun-group-inc" target="_blank" data-smartkarma-citation="entities:640:1" rel="noopener">Nisshin Seifun Group</a>, <a href="https://www.smartkarma.com/entities/oji-holdings-corp" target="_blank" data-smartkarma-citation="entities:11348:1" rel="noopener">Oji Holdings</a>, <a href="https://www.smartkarma.com/entities/nippon-shinyaku-co-ltd" target="_blank" data-smartkarma-citation="entities:6634:1" rel="noopener">Nippon Shinyaku</a>, <a href="https://www.smartkarma.com/entities/cyberagent-inc" target="_blank" data-smartkarma-citation="entities:8197:1" rel="noopener">CyberAgent Inc</a>, <a href="https://www.smartkarma.com/entities/ngk-insulators-ltd" target="_blank" data-smartkarma-citation="entities:12580:1" rel="noopener">NGK Insulators</a>, <a href="https://www.smartkarma.com/entities/lixil-group-corp" target="_blank" data-smartkarma-citation="entities:454:1" rel="noopener">Lixil Group</a> and <a href="https://www.smartkarma.com/entities/sharp-corp" target="_blank" data-smartkarma-citation="entities:391:1" rel="noopener">Sharp Corp</a> have all underperformed the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> over the last 3-4 months.</li>
<li>The underperformance could lead to adjustments in global passive portfolios and liquidity events on some of the stocks.</li>
<li>Short interest has started to increase and there could be more pre-positioning yet to come over the next few weeks.</li>
</ul>



Nisshin Seifun Group, Oji Holdings, Nippon Shinyaku, CyberAgent Inc, NGK Insulators, Lixil Group and Sharp Corp have all underperformed the Nikkei 225 (NKY INDEX) over the last 3-4 months.
The underperformance could lead to adjustments in global passive portfolios and liquidity events on some of the stocks.
Short interest has started to increase and there could be more pre-positioning yet to come over the next few weeks.


Japan - Increase in Shorts on Some Interesting Stocks

Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nippon-shinyaku-co-ltd" target="_blank" data-smartkarma-citation="entities:6634:1" rel="noopener">Nippon Shinyaku (4516 JP)</a>'s FY24 revenue guidance is 3% below mid-term target, while operating and net profits guidance are 20% and 17% below the target, respectively.  </li>
<li>Revenue growth of Viltepso is expected to decelerate to 28% in FY24 from 85% in FY23, dragged by the U.S. sales, which contributes 74% of Viltepso revenue.</li>
<li>Rival <a href="https://www.smartkarma.com/entities/sarepta-therapeutics-inc" target="_blank" data-smartkarma-citation="entities:17729:1" rel="noopener">Sarepta Therapeutics (SRPT US)</a> is expected to receive FDA approval for its next DMD gene therapy drug this month, leading to a new competition for Viltepso.</li>
</ul>



Nippon Shinyaku (4516 JP)'s FY24 revenue guidance is 3% below mid-term target, while operating and net profits guidance are 20% and 17% below the target, respectively.  
Revenue growth of Viltepso is expected to decelerate to 28% in FY24 from 85% in FY23, dragged by the U.S. sales, which contributes 74% of Viltepso revenue.
Rival Sarepta Therapeutics (SRPT US) is expected to receive FDA approval for its next DMD gene therapy drug this month, leading to a new competition for Viltepso.


Nippon Shinyaku (4516 JP): FY24 Guidance Falls Short of Mid-Term Target; DMD Drug Growth Slows Down

<ul>
<li>
<a href="https://www.smartkarma.com/entities/chugai-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:4489:1" rel="noopener">Chugai Pharmaceutical (4519 JP)</a> recorded double and triple-digit revenue growth from Hemlibra in domestic and export markets, respectively during 9M2022. Growth momentum is expected to continue.</li>
<li>Both Actembra and Ronapreve have limited revenue potential from COVID-related indications. Ronapreve reported revenue of ¥60.8 billion in 1Q22 in domestic market, with no reported revenue in two subsequent quarters.</li>
<li>Actemra will face biosimilar competition. This month China has approved first Actembra biosimilar, while a couple of others are under review of the FDA.  </li>
</ul>



Chugai Pharmaceutical (4519 JP) recorded double and triple-digit revenue growth from Hemlibra in domestic and export markets, respectively during 9M2022. Growth momentum is expected to continue.
Both Actembra and Ronapreve have limited revenue potential from COVID-related indications. Ronapreve reported revenue of ¥60.8 billion in 1Q22 in domestic market, with no reported revenue in two subsequent quarters.
Actemra will face biosimilar competition. This month China has approved first Actembra biosimilar, while a couple of others are under review of the FDA.  


Chugai Pharmaceutical (4519 JP): Hemlibra Is the Only Saviour; Competition Bites Mainstay Drugs

Hisamitsu Pharmaceutical Co / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/hisamitsu-pharmaceutical-co" target="_blank" data-smartkarma-citation="entities:17008:1" rel="noopener">Hisamitsu Pharmaceutical Co (4530 JP)</a> has announced solid Q3FY23 results, with double-digit revenue growth and triple-digit operating and net profit growth, mainly driven by the OTC business of the company.</li>
<li>With the resumption of sporting/outdoor events globally and increasing unwillingness to use opioid for pain relief especially in the U.S., Salonpas is expected to continue its growth trajectory.</li>
<li>Hisamitsu has reiterated FY23 guidance. However, considering the current progress rate of all the parameters versus guidance, we think actual performance of Hisamitsu will exceed guidance.</li>
</ul>



Hisamitsu Pharmaceutical Co (4530 JP) has announced solid Q3FY23 results, with double-digit revenue growth and triple-digit operating and net profit growth, mainly driven by the OTC business of the company.
With the resumption of sporting/outdoor events globally and increasing unwillingness to use opioid for pain relief especially in the U.S., Salonpas is expected to continue its growth trajectory.
Hisamitsu has reiterated FY23 guidance. However, considering the current progress rate of all the parameters versus guidance, we think actual performance of Hisamitsu will exceed guidance.


Hisamitsu Pharmaceutical (4530 JP): Strong Q3 Result Driven by Salonpas; FY23 Guidance Reiterated

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sawai-group-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:35512:1" rel="noopener">Sawai Group Holdings (4887 JP)</a> is negatively impacted by drug reimbursement pricing in Japan. H1FY23 revenue, operating profit, net profit decreased 1%, 36% y/y, and 29%, y/y, respectively.</li>
<li>Generic pharmaceutical companies are more affected by the drug price revisions than their branded counterparts. In addition, APIs are impacted by increases in the cost of oil and exchange rates.</li>
<li>The sustainability of the U.S. business rebound is still uncertain. We want to watch Sawai from sidelines and wait for full-year FY23 results, FY24 guidance, and NHI pricing decision.</li>
</ul>



Sawai Group Holdings (4887 JP) is negatively impacted by drug reimbursement pricing in Japan. H1FY23 revenue, operating profit, net profit decreased 1%, 36% y/y, and 29%, y/y, respectively.
Generic pharmaceutical companies are more affected by the drug price revisions than their branded counterparts. In addition, APIs are impacted by increases in the cost of oil and exchange rates.
The sustainability of the U.S. business rebound is still uncertain. We want to watch Sawai from sidelines and wait for full-year FY23 results, FY24 guidance, and NHI pricing decision.


Sawai Group Holdings (4887 JP): Continued Price Erosion Is Weakening Earnings Prowess

Japan

Nippon Shinyaku Co., Ltd. manufactures pharmaceutical and health foods products. The Company produces drugs for urinary, nerve, respiratory, and circulatory systems as well as analgesic and anti-inflammatory drugs.  Nippon Shinyaku also develops synthetic anti-bacterial agents.

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Nippon Shinyaku (4516 JP)

Japan - Increase in Shorts on Some Interesting Stocks

There are a bunch of stocks in Japan that have underperformed the NKY over the last few months and that could lead to a liquidity event due to the...

Brian Freitas