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/752" target="_blank" data-smartkarma-citation="entities:752:1">Fanuc Corp (6954 JP)</a> shocked markets last Thursday by forecasting a 34% drop in OP, together with somewhat underwhelming results. Consensus forecasts prior to the announcement were calling for roughly 9% OP growth vs. the company's results, so this clearly took everyone by surprise. Even we were quite surprised by the extent of the forecast decline even though we have been warning of the potential of a cyclical top since the middle of last year. The stock initially opened down 13.5% on Friday…

Fanuc Corp (6954 JP) shocked markets last Thursday by forecasting a 34% drop in OP, together with somewhat underwhelming results. Consensus forecasts prior to the announcement were calling for roughly 9% OP growth vs. the company's results, so this clearly took everyone by surprise. Even we were quite surprised by the extent of the forecast decline even though we have been warning of the potential of a cyclical top since the middle of last year. The stock initially opened down 13.5% on Friday…

Factory Automation Earnings: Is the Fanuc Shock for Real?

Thematic (Sector/Industry)

Factory automation names are down today (Yaskawa -2.5%, Fanuc -3.2%, Nabtesco -2.4%, Harmonic Drive -4.9%, Omron -1.8%, Keyence -3.0%, SMC -1.3%, THK -3.5%, Nippon Thomson -1.7%) following continued news flow regarding additional tariffs on China. Surprisingly, machine tool names (Makino Milling +1.2%, DMG Mori +2.4%, Okuma -0.6% and Toshiba Machine +0.5%) are taking this much better. Or perhaps it's not so surprising given the PE valuations:<ul>
<li>Yaskawa - 25x</li>
<li>Fanuc - 25x</li>
<li>Nabtesco - 21x</li>
<li>Harmonic Drive -…</li>
</ul>

Factory automation names are down today (Yaskawa -2.5%, Fanuc -3.2%, Nabtesco -2.4%, Harmonic Drive -4.9%, Omron -1.8%, Keyence -3.0%, SMC -1.3%, THK -3.5%, Nippon Thomson -1.7%) following continued news flow regarding additional tariffs on China. Surprisingly, machine tool names (Makino Milling +1.2%, DMG Mori +2.4%, Okuma -0.6% and Toshiba Machine +0.5%) are taking this much better. Or perhaps it's not so surprising given the PE valuations:
Yaskawa - 25x
Fanuc - 25x
Nabtesco - 21x
Harmonic Drive -…


Director, Pearl Hill Advisors

Nicholas Tanner

Director

Pearl Hill Advisors

These shares have done well since our June 2017 buy note, outperforming TOPIX by 25% and rising by 50%. We now feel that all is priced in the share price. There are some very bullish sales forecasts out there for 3/19 (some calling for another 10% sales growth after a very good 3/18). Assuming overall auto capex and semiconductor capex remains buoyant, we feel that sales more realistically will come in at about Y900bn (+5%), also assuming a flat forex. The company has only one month visibility…

These shares have done well since our June 2017 buy note, outperforming TOPIX by 25% and rising by 50%. We now feel that all is priced in the share price. There are some very bullish sales forecasts out there for 3/19 (some calling for another 10% sales growth after a very good 3/18). Assuming overall auto capex and semiconductor capex remains buoyant, we feel that sales more realistically will come in at about Y900bn (+5%), also assuming a flat forex. The company has only one month visibility…

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

<ul>
<li>The huge investment being made in autonomous vehicles will dramatically boost the use of robots in new sectors, as sensors such as Lidar give them real-time awareness of their environment.</li>
<li>Japan still dominates the industry and even as local Chinese brands benefit from state support, most value add in the form of actuators, servos and other key components will have to imported.</li>
<li>Amazon which has integrated Kiva, Midea which now owns Kuka, Honda which has teamed with SenseTime and UK online…</li>
</ul>


The huge investment being made in autonomous vehicles will dramatically boost the use of robots in new sectors, as sensors such as Lidar give them real-time awareness of their environment.
Japan still dominates the industry and even as local Chinese brands benefit from state support, most value add in the form of actuators, servos and other key components will have to imported.
Amazon which has integrated Kiva, Midea which now owns Kuka, Honda which has teamed with SenseTime and UK online…


Online Retail Boom and Autonomous Car Sensors Transforming Robotics…

APAC IPOs & Placements

Zhen Zhou, Toh

Smartkarma

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

Research Reinvented

Equity Capital Markets

MUFG is selling 3.3m shares of <a href="https://www.smartkarma.com/entities/15904" target="_blank" data-smartkarma-citation="entities:15904:1">Omron Corp (6645 JP)</a>, worth approximately, US$184m. Post-sale, MUFG will still hold 2.5% of the company's total outstanding shares.The deal scores very well on our framework owing to the strong earnings momentum and better balance sheet compared to peers. However, it was partially offset by its expensive valuation relative to peers. The company recently announced a strong Q2 result. The extended trading should also allow the selldown to be priced in and the…

MUFG is selling 3.3m shares of Omron Corp (6645 JP), worth approximately, US$184m. Post-sale, MUFG will still hold 2.5% of the company's total outstanding shares.The deal scores very well on our framework owing to the strong earnings momentum and better balance sheet compared to peers. However, it was partially offset by its expensive valuation relative to peers. The company recently announced a strong Q2 result. The extended trading should also allow the selldown to be priced in and the…

Omron Placement - Everything You Need to Pocket the Placement Discount

Japan

OMRON Corporation manufactures electronic components, equipment and systems used for factory automation. The Company provides products and services in a variety of fields including industrial automation, electronic components, automotive electronics, social systems such as ticket gate machines and traffic control, and healthcare.

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Omron Corp (6645 JP)

Factory Automation Earnings: Is the Fanuc Shock for Real?

Fanuc Corp (6954 JP) shocked markets last Thursday by forecasting a 34% drop in OP, together with somewhat underwhelming results. Consensus...

Mio Kato

Factory Automation and Trade Wars

Factory automation names are down today (Yaskawa -2.5%, Fanuc -3.2%, Nabtesco -2.4%, Harmonic Drive -4.9%, Omron -1.8%, Keyence -3.0%, SMC -1.3%,...

Mio Kato

Omron (6645) Maybe Time to Let This Go

These shares have done well since our June 2017 buy note, outperforming TOPIX by 25% and rising by 50%. We now feel that all is priced in the share...

Pearl Hill Advisors

Online Retail Boom and Autonomous Car Sensors Transforming Robotics…

The huge investment being made in autonomous vehicles will dramatically boost the use of robots in new sectors, as sensors such as Lidar give them...

Sean Maher

Omron Placement - Everything You Need to Pocket the Placement Discount

MUFG is selling 3.3m shares of Omron Corp (6645 JP), worth approximately, US$184m. Post-sale, MUFG will still hold 2.5% of the company's total...

Zhen Zhou, Toh

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