'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. 

Thematic (Sector/Industry)

APATHY STRIKES AGAIN<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/064/686/original/2018-09-23_17-11-57.png?1537690346" class="editor-image img-responsive" data-smartkarma-image-id="64686"></figure><div class="content-caption">Source: Japan Analytics</div>THE APATHY INDICATOR - Our Fortnightly Update for 26th August highlighted the lack of market activity after the end of the results announcements over the previous six weeks. In recent years, similar periods of apathy had coincided with market turning points, usually to the upside. After an initial rally the following week, our 'apathy indicator' added another three signals before the market subsequently bottomed out on 7th September. Since then, Total Market Value has risen by 6.7%, TOPIX has had its best week in almost two years, both the 50 and 200-day moving averages were surpassed and, on Friday, the Value Traded Ratio had its fifth-best day of the year. Its 'party-time' here indeed.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/064/690/original/2018-09-23_17-44-03.png?1537692262" class="editor-image img-responsive" data-smartkarma-image-id="64690"></figure><div class="content-caption">Source: Japan Analytics</div>BREAKOUT - Much fanfare was also made over the fact that the <a href="https://www.smartkarma.com/entities/22909" target="_blank" data-smartkarma-citation="entities:22909:1">Nikkei 225 (NKY INDEX)</a> reached a 26-year high and broke out of nine-month and 22-year trading ranges. Although such positive news is always welcome for us Japan-only 'diehards', both TOPIX and TOPIX-US$ reached new 26-year highs in January, only to later fade away for the next seven months. New highs for both these indices are required to confirm that the December 1989 high is indeed again the target.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/064/701/original/2018-09-05_19-59-32.png?1537698981" class="editor-image img-responsive" data-smartkarma-image-id="64701"></figure><div class="content-caption">Source: Japan Analytics</div>GAIJIN WRONGFOOTED - As <a href="https://www.smartkarma.com/profiles/25" target="_blank" data-smartkarma-citation="accounts:25">Travis Lundy</a> noted on 2nd September - <a href="https://www.smartkarma.com/insights/japan-flow-redux-foreign-investor-flows-still-matter-and-they-are-still-cyclical" target="_blank" data-smartkarma-citation="insights:23654">Foreign Investor Flows (Still) Matter, and They Are (Still) Cyclical</a>, foreign investor flows have recently been at 'the lower end of the cycle' and foreign investors tend to be pro-cyclical price-takers chasing returns on a net exposure basis driven by the relative performance of the US$TOPIX/S&amp;P 500 ratio. As we also noted in <a href="https://www.smartkarma.com/insights/japan-seasonality-sell-in-july-and-say-goodbye-please-come-back-on-culture-day" target="_blank" data-smartkarma-citation="insights:23682">Japan: Seasonality</a>, historically September is the second-worst performing month in the Japanese market calendar with October being the fourth-worst. Add some concerns over trade and auto tariffs to the mix and a portfolio underweighting of Japan at the start of this quarter was not going to alarm any trustees. Given all of the above and with a holiday this Monday, some sharp short-covering was also in evidence towards to end of last week in anticipation of more leisurely-timed long-only fund flows to come.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/064/704/original/2018-09-23_20-08-06.png?1537700901" class="editor-image img-responsive" data-smartkarma-image-id="64704"></figure><div class="content-caption">Source: Japan Analytics</div>CHEAP + UPSIDE TO FORECASTS - The last two weeks have taken the total market cap (ex REITs) to back above ¥700t, however, the trailing-twelve-month (TTM) PER is still below 15x. In aggregate the current forecasts for current year's Net Income are nearly ¥2t behind the TTM data, leaving scope for some market-boosting upward revisions in November as the (mostly interim) results are announced. Assuming upward revisions bring forecasts in line with our estimate the November TTM aggregate Net Income of ¥50t, the market PE at the January peak capitalisation would still be below 15x.  CAVEATS - Curbing the enthusiasm in the last paragraph are some macro caveats. Industrial production has slowed to nearly zero in recent months, and higher wage income is being mostly channelled into increased savings. For the first time in the post-WWII era, both profit's share and labour's share of GDP exceed 12%. Both cannot continue to rise in tandem indefinitely, and we would expect the former to turn down before the latter. <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/064/705/original/2018-09-23_20-19-16.png?1537701582" class="editor-image img-responsive" data-smartkarma-image-id="64705"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/064/707/original/2018-09-23_20-34-21.png?1537702506" class="editor-image img-responsive" data-smartkarma-image-id="64707"></figure><div class="content-caption">Source: Japan Analytics</div>OUTLOOK - After a hectic four-day week and another shortened week to come, a pause would be welcome. The 5-day Relative Strength Index at 91 is at its highest level since 8th November 2017 and is in the first percentile of occurrences over the last three years. The 25-day Toraku advance-decline indicator is also nearing '120'. Although this is far from perfect as an indicator, recent peaks and troughs have coincided with Toraku outliers. Two weeks ago, we suggested the market would rise and Yen would fall 'into the month end absent any adverse developments on the trade front'. With newly-re-elected PM Abe in New York this week, we expect another quiet week for the continuing (now sector-specific) Japan-US trade negotiations. Further Yen weakness would limit any short-term profit-taking, and there are still enough global portfolios underweight Japan to buy the coming dip and support rolling our forecast forward until month-end.SECTOR RECOMMENDATIONS - Our sector recommendations have fared less well over the last two weeks. Our most-preferred marginally out-performed our least-preferred with the gains in Energy and Telecoms offsetting 'losses' from underweights in Utilities, Machinery, Real Estate and Autos and overweights in Information Technology and Other Commercial Products. COMPANIES - Our results, revisions and stock performance reviews below contain short comments on <a href="https://www.smartkarma.com/entities/11720" target="_blank" data-smartkarma-citation="entities:11720:1">Kikkoman (2801 JP)</a>, <a href="https://www.smartkarma.com/entities/4102" target="_blank" data-smartkarma-citation="entities:4102:1">Nissan Chemical (4021 JP)</a> and <a href="https://www.smartkarma.com/entities/1496" target="_blank" data-smartkarma-citation="entities:1496:1">Showa Denko (4004 JP)</a>.

APATHY STRIKES AGAINSource: Japan AnalyticsTHE APATHY INDICATOR - Our Fortnightly Update for 26th August highlighted the lack of market activity after the end of the results announcements over the previous six weeks. In recent years, similar periods of apathy had coincided with market turning points, usually to the upside. After an initial rally the following week, our 'apathy indicator' added another three signals before the market subsequently bottomed out on 7th September. Since then, Total Market Value has risen by 6.7%, TOPIX has had its best week in almost two years, both the 50 and 200-day moving averages were surpassed and, on Friday, the Value Traded Ratio had its fifth-best day of the year. Its 'party-time' here indeed.Source: Japan AnalyticsBREAKOUT - Much fanfare was also made over the fact that the Nikkei 225 (NKY INDEX) reached a 26-year high and broke out of nine-month and 22-year trading ranges. Although such positive news is always welcome for us Japan-only 'diehards', both TOPIX and TOPIX-US$ reached new 26-year highs in January, only to later fade away for the next seven months. New highs for both these indices are required to confirm that the December 1989 high is indeed again the target.Source: Japan AnalyticsGAIJIN WRONGFOOTED - As Travis Lundy noted on 2nd September - Foreign Investor Flows (Still) Matter, and They Are (Still) Cyclical, foreign investor flows have recently been at 'the lower end of the cycle' and foreign investors tend to be pro-cyclical price-takers chasing returns on a net exposure basis driven by the relative performance of the US$TOPIX/S&amp;P 500 ratio. As we also noted in Japan: Seasonality, historically September is the second-worst performing month in the Japanese market calendar with October being the fourth-worst. Add some concerns over trade and auto tariffs to the mix and a portfolio underweighting of Japan at the start of this quarter was not going to alarm any trustees. Given all of the above and with a holiday this Monday, some sharp short-covering was also in evidence towards to end of last week in anticipation of more leisurely-timed long-only fund flows to come.Source: Japan AnalyticsCHEAP + UPSIDE TO FORECASTS - The last two weeks have taken the total market cap (ex REITs) to back above ¥700t, however, the trailing-twelve-month (TTM) PER is still below 15x. In aggregate the current forecasts for current year's Net Income are nearly ¥2t behind the TTM data, leaving scope for some market-boosting upward revisions in November as the (mostly interim) results are announced. Assuming upward revisions bring forecasts in line with our estimate the November TTM aggregate Net Income of ¥50t, the market PE at the January peak capitalisation would still be below 15x.  CAVEATS - Curbing the enthusiasm in the last paragraph are some macro caveats. Industrial production has slowed to nearly zero in recent months, and higher wage income is being mostly channelled into increased savings. For the first time in the post-WWII era, both profit's share and labour's share of GDP exceed 12%. Both cannot continue to rise in tandem indefinitely, and we would expect the former to turn down before the latter. Source: Japan AnalyticsOUTLOOK - After a hectic four-day week and another shortened week to come, a pause would be welcome. The 5-day Relative Strength Index at 91 is at its highest level since 8th November 2017 and is in the first percentile of occurrences over the last three years. The 25-day Toraku advance-decline indicator is also nearing '120'. Although this is far from perfect as an indicator, recent peaks and troughs have coincided with Toraku outliers. Two weeks ago, we suggested the market would rise and Yen would fall 'into the month end absent any adverse developments on the trade front'. With newly-re-elected PM Abe in New York this week, we expect another quiet week for the continuing (now sector-specific) Japan-US trade negotiations. Further Yen weakness would limit any short-term profit-taking, and there are still enough global portfolios underweight Japan to buy the coming dip and support rolling our forecast forward until month-end.SECTOR RECOMMENDATIONS - Our sector recommendations have fared less well over the last two weeks. Our most-preferred marginally out-performed our least-preferred with the gains in Energy and Telecoms offsetting 'losses' from underweights in Utilities, Machinery, Real Estate and Autos and overweights in Information Technology and Other Commercial Products. COMPANIES - Our results, revisions and stock performance reviews below contain short comments on Kikkoman (2801 JP), Nissan Chemical (4021 JP) and Showa Denko (4004 JP).

Doing bespoke work since 2002....., Custom Products Group

Patrick Hansen

Doing bespoke work since 2002.....

Custom Products Group

Custom Products was started 14 years ago at Lehman Brothers by current co-founder Patrick Hansen, CFA. After 3 years at Lehman, Patrick moved the team to Macquarie Securities where Simon Rigney (co-founder) joined. 3 years ago we took Custom Products independent. 

Our core strength can be summed up three words. 1- Customization - we have very little off the shelf products and most work is done on a one on one bespoke basis. 2- Speed - We pride ourselves in our ability to get requests back to the client very quickly. 3- Confidentiality - We do not redistribute. There is no grace period where we wait a week and then mass blast. Any request stops with that client.

7 names revised full-year company guidance over the last month. <a href="https://www.smartkarma.com/entities/12877" target="_blank" data-smartkarma-citation="entities:12877:1">Benesse Holdings Inc (9783 JP)</a> dropped its Sales and Operating Profit forecast but significantly increased its Net Income guidance. Despite the increase in Net Income guidance Benesse is down 10% over the month. The largest name by mkt-cap that made the list is <a href="https://www.smartkarma.com/entities/5439" target="_blank" data-smartkarma-citation="entities:5439:1">Subaru Corp (7270 JP)</a>. Subaru only lowered its Net Income guidance and kept Sales and Operating Profit guidance the unchanged. The market did not react much to Subaru's…

7 names revised full-year company guidance over the last month. Benesse Holdings Inc (9783 JP) dropped its Sales and Operating Profit forecast but significantly increased its Net Income guidance. Despite the increase in Net Income guidance Benesse is down 10% over the month. The largest name by mkt-cap that made the list is Subaru Corp (7270 JP). Subaru only lowered its Net Income guidance and kept Sales and Operating Profit guidance the unchanged. The market did not react much to Subaru's…

Companies that Revised Full-Year Guidance in the Last Month....

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 Feb 20th. The aggregated net margin trading position is USD24,230m.</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, Hitachi, Mitsubishi UFJ Financial, Advantest, Mizuho Financial, Mitsubishi Heavy Industries, Fujikura, Keyence, Fast Retailing, Kandenko.</li>
</ul>


We analyzed the changes in margin trading positions of JPX stocks as of Feb 20th. The aggregated net margin trading position is USD24,230m.
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, Hitachi, Mitsubishi UFJ Financial, Advantest, Mizuho Financial, Mitsubishi Heavy Industries, Fujikura, Keyence, Fast Retailing, Kandenko.


JPX Margin Trading Weekly (Feb 20th): Kioxia, Hitachi, Mitsubishi UFJ Financial, Advantest

<ul>
<li>We analyzed the changes in margin trading positions of JPX stocks as of Feb 6th. The aggregated net margin trading position is USD23,298m.</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 Nintendo, Shin-Etsu Chemical, Lasertec, Kioxia, NEC, Advantest, SoftBank, Fujikura, Sumitomo Mitsui Financial, Recruit, Nintendo, Shin-Etsu Chemical, Lasertec, Kioxia, Nec, Advantest.</li>
</ul>


We analyzed the changes in margin trading positions of JPX stocks as of Feb 6th. The aggregated net margin trading position is USD23,298m.
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 Nintendo, Shin-Etsu Chemical, Lasertec, Kioxia, NEC, Advantest, SoftBank, Fujikura, Sumitomo Mitsui Financial, Recruit, Nintendo, Shin-Etsu Chemical, Lasertec, Kioxia, Nec, Advantest.


JPX Margin Trading Weekly (Feb 6th): Nintendo, Shin-Etsu Chemical, Lasertec, Kioxia, NEC, Advantest

<ul>
<li>We analyzed the changes in margin trading positions of JPX stocks as of Jan 30th. The aggregated net margin trading position is USD24,095m.</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, Advantest, Lasertec, Fujikura, Disco, Tokyo Electron, Mitsubishi UFJ Financial, Nichirei, SoftBank, Mitsubishi Heavy Industries, Kioxia, Advantest, Lasertec, Fujikura, Disco, Tokyo Electron.</li>
</ul>


We analyzed the changes in margin trading positions of JPX stocks as of Jan 30th. The aggregated net margin trading position is USD24,095m.
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, Advantest, Lasertec, Fujikura, Disco, Tokyo Electron, Mitsubishi UFJ Financial, Nichirei, SoftBank, Mitsubishi Heavy Industries, Kioxia, Advantest, Lasertec, Fujikura, Disco, Tokyo Electron.


JPX Margin Trading Weekly (Jan 30th): Kioxia, Advantest, Lasertec, Fujikura, Disco, Tokyo Electron

Japan

NISHIMATSUYA CHAIN Co., Ltd., a specialty retailer, sells mainly clothes for infants and children, and also women and men.  The Company also sells maternity clothes and new born baby goods.

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Nishimatsuya Chain (7545 JP)

Japan Fortnightly Update: Celebration

APATHY STRIKES AGAINTHE APATHY INDICATOR - Our Fortnightly Update for 26th August highlighted the lack of market activity after the end of the...

Campbell Gunn

Companies that Revised Full-Year Guidance in the Last Month....

7 names revised full-year company guidance over the last month. Benesse Holdings Inc (9783 JP) dropped its Sales and Operating Profit forecast but...

Custom Products Group

JPX Margin Trading Weekly (Feb 20th): Kioxia, Hitachi, Mitsubishi UFJ Financial, Advantest

We analyzed JPX margin trading positions report for the past week and highlighted Kioxia (285A JP), Hitachi (6501 JP), Mitsubishi UFJ Financial...

Ke Yan, CFA, FRM

JPX Margin Trading Weekly (Feb 6th): Nintendo, Shin-Etsu Chemical, Lasertec, Kioxia, NEC, Advantest

We analyzed JPX margin trading positions report for the past week and highlighted Nintendo (7974 JP), Shin-Etsu Chemical (4063 JP), Lasertec (6920...

Ke Yan, CFA, FRM

JPX Margin Trading Weekly (Jan 30th): Kioxia, Advantest, Lasertec, Fujikura, Disco, Tokyo Electron

We analyzed JPX margin trading positions report for the past week and highlighted Kioxia (285A JP), Advantest (6857 JP), Lasertec (6920 JP),...

Ke Yan, CFA, FRM

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)