'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/000/086/182/original/2019-04-29_12-24-09.png?1556508262" class="editor-image img-responsive" data-smartkarma-image-id="86182"></figure><p>Source: Japan Analytics</p>
</div><p><strong>EARLY DAYS</strong> - In the last seven trading days, 473 Japanese companies have reported quarterly results, 11% of the 3,830 that are currently listed. Of this 76 % have been annual results for the fiscal year ended March 2019.  Also, there have been 328 initial forecasts for the year to March 2020, 227 initial interim forecasts and 228 intra-year revisions. With the long holiday break, there will be an avalanche of announcements from the 7th May onwards. In this Insight, we shall look at the trends apparent in the results so far released.  In the last month, our Market Composite trailing-twelve-month (TTM) data series is unchanged for Operating Income, while Net Income has increased by ¥0.2t. <strong>With 13% of March-year-end companies have issued FY2020 forecasts, aggregate forecast Operating Income is ¥0.7t lower and is in line with TTM Operating Income. Forecast Net Income is ¥0.6 lower and is 4% below TTM Net Income. </strong></p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/086/411/original/2019-04-30_13-26-24.png?1556598396" class="editor-image img-responsive" data-smartkarma-image-id="86411"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/086/412/original/File%202019-04-30%2013%2010%2017.jpeg?1556598417" class="editor-image img-responsive" data-smartkarma-image-id="86412"></figure><div class="content-caption">Source: Japan Analytics, Pictet Asset Management</div><p><strong>MARGIN SLIPPAGE</strong> -<strong> </strong>With revenues remaining relatively robust, margins are declining fast that at any time since 2016. The forecast operating margin is now 42 basis points below the 2018 peak level, while the slippage in net margins is 78 basis points. Although the sample is not the same, to IBES consensus estimates have current downtrend bottoming out in the second half of the year with net margins recovering to 6.6% in 2021. We consider this overly optimistic. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/086/187/original/2019-04-29_12-32-53.png?1556508784" class="editor-image img-responsive" data-smartkarma-image-id="86187"></figure><div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/086/190/original/2019-04-29_12-51-24.png?1556509893" class="editor-image img-responsive" data-smartkarma-image-id="86190"></figure><p>Source: Japan Analytics</p>
</div><p style="text-align: left;"><strong>RESULTS &amp; REVISION SCORES</strong> - Our scoring methodology for results and forecasts/revisions incorporates rates of change and other momentum factors and has historically provided a better fit with changes in aggregate market value. Although the Market Composite Results Score has remained stable in the last week at 2.21, we expect the score to end this results 'season' closer to zero as indicated by the trend in the Forecast/Revision Score. The latter has declined for six quarters in a row and the current quarter will make it seven. <strong>Although our data series only covers the last forty quarters and is perhaps too short for generalisations, it would be unusual for the Forecasts/Revision Score series to have an eighth down quarter in a row. Perhaps the market's robust recovery from the Christmas Day low is anticipating such an outcome. </strong></p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/086/193/original/2019-04-29_13-17-03.png?1556511439" class="editor-image img-responsive" data-smartkarma-image-id="86193"></figure><div class="content-caption">Source: Japan Analytics</div><p><strong>USDJPY NEUTRAL</strong> - In the past, one of the principal drivers of both scores has been changes in the US dollar/Yen exchange rate. The chart above merges both scores to create a cleaner timeline, and key turning points in <a href="https://www.smartkarma.com/entities/22826" target="_blank" data-smartkarma-citation="entities:22826:1">JUSDJPY CURNCY</a> highlighted. With the currency cross trading in a narrow range, there is little support or stimulus in the next six months. However, any sustained weakness in the Yen, such as occurred from September 2016, will be another confirmation that a cycle low has been reached. </p><div class="content-highlight"><p>In the<strong> DETAIL</strong> section below, we update our  Sector Results &amp; Revision Scores and look at the best and worst large-cap company results over the seven trading days.</p></div>


Source: Japan Analytics
EARLY DAYS - In the last seven trading days, 473 Japanese companies have reported quarterly results, 11% of the 3,830 that are currently listed. Of this 76 % have been annual results for the fiscal year ended March 2019.  Also, there have been 328 initial forecasts for the year to March 2020, 227 initial interim forecasts and 228 intra-year revisions. With the long holiday break, there will be an avalanche of announcements from the 7th May onwards. In this Insight, we shall look at the trends apparent in the results so far released.  In the last month, our Market Composite trailing-twelve-month (TTM) data series is unchanged for Operating Income, while Net Income has increased by ¥0.2t. With 13% of March-year-end companies have issued FY2020 forecasts, aggregate forecast Operating Income is ¥0.7t lower and is in line with TTM Operating Income. Forecast Net Income is ¥0.6 lower and is 4% below TTM Net Income. Source: Japan Analytics, Pictet Asset ManagementMARGIN SLIPPAGE - With revenues remaining relatively robust, margins are declining fast that at any time since 2016. The forecast operating margin is now 42 basis points below the 2018 peak level, while the slippage in net margins is 78 basis points. Although the sample is not the same, to IBES consensus estimates have current downtrend bottoming out in the second half of the year with net margins recovering to 6.6% in 2021. We consider this overly optimistic. 
Source: Japan Analytics
RESULTS &amp; REVISION SCORES - Our scoring methodology for results and forecasts/revisions incorporates rates of change and other momentum factors and has historically provided a better fit with changes in aggregate market value. Although the Market Composite Results Score has remained stable in the last week at 2.21, we expect the score to end this results 'season' closer to zero as indicated by the trend in the Forecast/Revision Score. The latter has declined for six quarters in a row and the current quarter will make it seven. Although our data series only covers the last forty quarters and is perhaps too short for generalisations, it would be unusual for the Forecasts/Revision Score series to have an eighth down quarter in a row. Perhaps the market's robust recovery from the Christmas Day low is anticipating such an outcome. Source: Japan AnalyticsUSDJPY NEUTRAL - In the past, one of the principal drivers of both scores has been changes in the US dollar/Yen exchange rate. The chart above merges both scores to create a cleaner timeline, and key turning points in JUSDJPY CURNCY highlighted. With the currency cross trading in a narrow range, there is little support or stimulus in the next six months. However, any sustained weakness in the Yen, such as occurred from September 2016, will be another confirmation that a cycle low has been reached. In the DETAIL section below, we update our  Sector Results &amp; Revision Scores and look at the best and worst large-cap company results over the seven trading days.

🇯🇵 Japan • Spring Results & Revisions Flash - Early Days

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

Equity Bottom-Up

<p>It was always likely to be just a matter of time before the three main players in the Japanese ePayment market, <strong><a href="https://www.smartkarma.com/entities/10928" target="_blank" data-smartkarma-citation="entities:10928:1">SBI Holdings (8473 JP)</a></strong>, <strong><a href="https://www.smartkarma.com/entities/13747" target="_blank" data-smartkarma-citation="entities:13747:1">Digital Garage (4819 JP)</a></strong> and <strong><a href="https://www.smartkarma.com/entities/13631" target="_blank" data-smartkarma-citation="entities:13631:1">GMO Internet (9449 JP)</a></strong>, started to clarify their involvement in Blockchain. GMO Internet outlined their strategy earlier in the year, when they launched the GMO Blockchain Open Source Software Project, a system that allows users to develop programs using blockchain as open source. This move follows on from the establishment in 2016…</p>

It was always likely to be just a matter of time before the three main players in the Japanese ePayment market, SBI Holdings (8473 JP), Digital Garage (4819 JP) and GMO Internet (9449 JP), started to clarify their involvement in Blockchain. GMO Internet outlined their strategy earlier in the year, when they launched the GMO Blockchain Open Source Software Project, a system that allows users to develop programs using blockchain as open source. This move follows on from the establishment in 2016…

Japan Fintech - Digital Garage (4819) Getting in On the Act

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>After the close today, <a href="https://www.smartkarma.com/entities/18815" target="_blank" data-smartkarma-citation="entities:18815:1">Tokai Tokyo Financial Holdings (8616 JP)</a> announced that it would launch a tender offer to purchase at least 23.318mm shares of <a href="https://www.smartkarma.com/entities/4416" target="_blank" data-smartkarma-citation="entities:4416:1">Takagi Securities Co Ltd (8625 JP)</a>, and if that minimum is reached, all further tendered shares.</p><p><a href="https://www.smartkarma.com/entities/742" target="_blank" data-smartkarma-citation="entities:742:1">Nomura Holdings Inc (8604 JP)</a> subsidiary Nomura Land &amp; Building (NLB) which owns 17.07mm shares (28.56%) of Takagi has agreed to tender all of the shares it holds. <a href="https://www.smartkarma.com/entities/18129" target="_blank" data-smartkarma-citation="entities:18129:1">Nomura Research Institute Ltd (4307 JP)</a>, which is an equity method affiliate of Nomura…</p>

After the close today, Tokai Tokyo Financial Holdings (8616 JP) announced that it would launch a tender offer to purchase at least 23.318mm shares of Takagi Securities Co Ltd (8625 JP), and if that minimum is reached, all further tendered shares.Nomura Holdings Inc (8604 JP) subsidiary Nomura Land &amp; Building (NLB) which owns 17.07mm shares (28.56%) of Takagi has agreed to tender all of the shares it holds. Nomura Research Institute Ltd (4307 JP), which is an equity method affiliate of Nomura…

Special Situations, Content Strategist, Smartkarma

Crispin Francis

Special Situations, Content Strategist

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

<p><em>We at Smartkarma Special Situations put out a weekly update on trade ideas we like, key events from the week gone by and what to look out for in the week ahead.</em></p><p>Risk arbitrage trades we have our eyes on are:</p><ul><li><a href="https://www.smartkarma.com/entities/1040" target="_blank" data-smartkarma-citation="entities:1040:1">Lawson (2651 JP)</a> / <a href="https://www.smartkarma.com/entities/20668" target="_blank" data-smartkarma-citation="entities:20668:1">Mitsubishi Corp (8058 JP)</a> </li><li><a href="https://www.smartkarma.com/entities/12090" target="_blank" data-smartkarma-citation="entities:12090:1">SAI Global Ltd (SAI AU)</a> / Baring Asia Private Equity</li><li><a href="https://www.smartkarma.com/entities/20581" target="_blank" data-smartkarma-citation="entities:20581:1">Dan Form Holdings Co Ltd (271 HK)</a> / <a href="https://www.smartkarma.com/entities/13665" target="_blank" data-smartkarma-citation="entities:13665:1">Tian An China Investment (28 HK)</a></li><li><a href="https://www.smartkarma.com/entities/1090" target="_blank" data-smartkarma-citation="entities:1090:1">Vard Holdings Ltd (VARD SP)</a> / Fincantieri</li><li><a href="https://www.smartkarma.com/entities/7590" target="_blank" data-smartkarma-citation="entities:7590:1">ASG Group Ltd (ASZ AU)</a> / <a href="https://www.smartkarma.com/entities/18129" target="_blank" data-smartkarma-citation="entities:18129:1">Nomura Research Institute Lt (4307 JP)</a></li></ul><p><em>Have a great weekend!</em></p>

We at Smartkarma Special Situations put out a weekly update on trade ideas we like, key events from the week gone by and what to look out for in the week ahead.Risk arbitrage trades we have our eyes on are:Lawson (2651 JP) / Mitsubishi Corp (8058 JP) SAI Global Ltd (SAI AU) / Baring Asia Private EquityDan Form Holdings Co Ltd (271 HK) / Tian An China Investment (28 HK)Vard Holdings Ltd (VARD SP) / FincantieriASG Group Ltd (ASZ AU) / Nomura Research Institute Lt (4307 JP)Have a great weekend!

Smartkarma - Special Situations Weekly Update (21 November 2016)

<p>ASG Group (ASX:ASZ, "ASG") and Nomura Research Institute Ltd (TYO:4307, "NRI") have entered into a scheme implementation agreement under which it is proposed that NRI will acquire 100% of the shares in ASG. </p><h2><strong>Offer Details</strong></h2><ul>
<li>Offer: AUD 1.63 in cash; the offer has not been declared final and no dividends</li>
<li>Deal Value: AUD 349m</li>
<li>Deal Structure: Scheme of arrangement</li>
<li>Independent board of ASG<strong> unanimously recommends</strong> that ASG shareholders vote in favor of the Scheme subject to IFA opining that the Scheme is in…</li>
</ul>

ASG Group (ASX:ASZ, "ASG") and Nomura Research Institute Ltd (TYO:4307, "NRI") have entered into a scheme implementation agreement under which it is proposed that NRI will acquire 100% of the shares in ASG. Offer Details
Offer: AUD 1.63 in cash; the offer has not been declared final and no dividends
Deal Value: AUD 349m
Deal Structure: Scheme of arrangement
Independent board of ASG unanimously recommends that ASG shareholders vote in favor of the Scheme subject to IFA opining that the Scheme is in…


ASG Group / NRI - Japanese IT Consultancy Giant to Buy Out ASG Group at AUD 1.63

Japan

Nomura Research Institute, Ltd. provides information technology, research, consulting, and analyzing for business strategy decision-making.  The Company also provides application software for system operation services.

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Nomura Research Institute (4307 JP)

🇯🇵 Japan • Spring Results & Revisions Flash - Early Days

EARLY DAYS - In the last seven trading days, 473 Japanese companies have reported quarterly results, 11% of the 3,830 that are currently listed. Of...

Campbell Gunn

Japan Fintech - Digital Garage (4819) Getting in On the Act

It was always likely to be just a matter of time before the three main players in the Japanese ePayment market, SBI Holdings (8473 JP), Digital...

Pelham Smithers Associates

Tokai Tokyo To Take Takagi in a TOB

After the close today, Tokai Tokyo Financial Holdings (8616 JP) announced that it would launch a tender offer to purchase at least 23.318mm shares...

Travis Lundy

Smartkarma - Special Situations Weekly Update (21 November 2016)

We at Smartkarma Special Situations put out a weekly update on trade ideas we like, key events from the week gone by and what to look out for in...

Crispin Francis

ASG Group / NRI - Japanese IT Consultancy Giant to Buy Out ASG Group at AUD 1.63

ASG Group (ASX:ASZ, "ASG") and Nomura Research Institute Ltd (TYO:4307, "NRI") have entered into a scheme implementation agreement under which it...

Crispin Francis

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