Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>The Nikkei Stock Average declined 738 yen (1.9%) in the second week of January as heavy-weight stocks sell-off</li>
<li>Nintendo (7974 JP) ended the trading week marginally higher by 0.7% after a partial unveiling of its new Swich 2 Console. Less earnings cyclicality, but less upside?</li>
<li>The BoJ looks set to lift interest rates again next week, unless market turbulence following Trump's  inauguration, delays the inevitable</li>
</ul>


The Nikkei Stock Average declined 738 yen (1.9%) in the second week of January as heavy-weight stocks sell-off
Nintendo (7974 JP) ended the trading week marginally higher by 0.7% after a partial unveiling of its new Swich 2 Console. Less earnings cyclicality, but less upside?
The BoJ looks set to lift interest rates again next week, unless market turbulence following Trump's  inauguration, delays the inevitable


Japan Strategy Weekly | Nintendo’s Switch and Trump’s Return

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>As designed, the JPX-Nikkei400 Index is something of a disaster. It aims to be slightly 'smart' vs other cap-weighted indices like TOPIX, but tracking error vs TOPIX is de minimus.</li>
<li>This year, in week 1, the ADD vs DELETE performance is positive. If we sector-hedge the ADDs vs DELETEs, it's doing even better.</li>
<li>This is probably due to relatively low pre-positioning, and cares. Momentum suggests one could be long ADDs vs DELETEs. And there is the perennial trade to watch out for.</li>
</ul>


As designed, the JPX-Nikkei400 Index is something of a disaster. It aims to be slightly 'smart' vs other cap-weighted indices like TOPIX, but tracking error vs TOPIX is de minimus.
This year, in week 1, the ADD vs DELETE performance is positive. If we sector-hedge the ADDs vs DELETEs, it's doing even better.
This is probably due to relatively low pre-positioning, and cares. Momentum suggests one could be long ADDs vs DELETEs. And there is the perennial trade to watch out for.


2022 JPX Nikkei 400 Rebal Update - Going the Right Way

'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.

<p style="text-align: center;"><strong>• $ BREAKOUT •</strong></p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/181/831/original/2021-01-11_09-50-40.png?1610326256" class="editor-image img-responsive" data-smartkarma-image-id="181831"></figure></section><p><strong>NEW $ HIGH</strong> - The TOPIX index posted a new post-bubble high in US dollar terms on Friday, exceeding the previous high of January 31st 2018. A new high in Yen terms is only 3% away and, given the current sentiment, should also be reached this month. As the market factors in the possibility of a return to commodity inflation and digests another State of Emergency, the <strong>Technology Hardware</strong> Sector joins <strong>Electrical Equipment</strong> and <strong>Machinery</strong> in Overbought territory. <strong>Energy</strong> and<strong> Metals</strong> stocks have seen a significant rebound while the COVID 'losers' <strong>Restaurants</strong>, <strong>Transportation</strong>, <strong>Real Estate</strong> &amp; <strong>REITs</strong>, and <strong>Consumer Service</strong>s Sectors search for new relative lows.   </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/181/832/original/2021-01-11_10-55-08.png?1610330120" class="editor-image img-responsive" data-smartkarma-image-id="181832"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/181/833/original/2021-01-11_10-55-34.png?1610330145" class="editor-image img-responsive" data-smartkarma-image-id="181833"></figure></section><p><strong>MARKET PER 33X</strong> -The market rally has pushed the forward earnings multiple back up to 33 times discounting one or more years of recovery.  </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/181/875/original/2021-01-11_14-38-44.png?1610343543" class="editor-image img-responsive" data-smartkarma-image-id="181875"></figure></section><p><strong>SECTOR OP TRENDS</strong> - The only Sectors with rising operating income over the last three months are<strong> Energy</strong>, <strong> Internet Content &amp; Services</strong>, <strong>Food Beverages &amp; Tobacco</strong>,  <strong>Utilities</strong> and <strong>Other Consumer Products</strong>. The largest declines are in<strong> Consumer Services</strong>,<strong> Transport</strong>, <strong>Restaurants</strong>, <strong>Healthcare</strong> and <strong>Telecommunications</strong>.   </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/181/876/original/2021-01-11_14-54-40.png?1610344493" class="editor-image img-responsive" data-smartkarma-image-id="181876"></figure></section><section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/181/878/original/2021-01-11_14-58-55.png?1610344748" class="editor-image img-responsive" data-smartkarma-image-id="181878"></figure></section><p><strong>REVISIONS ▲ RESULTS ►</strong> - Our momentum-based scoring methodology has seen a strong upturn in the Forecast/Revision Score and a more muted recovery in the trailing Results Score. The Sectors with the strongest upward momentum are <strong>Autos</strong>, <strong>Machinery</strong>,<strong> Electrical Equipment</strong>, <strong>Metals</strong> and <strong>Multi-Industry</strong>-  all but the last have outperformed over the last three months. Lagging Sectors include <strong><a href="https://www.dropbox.com/s/efjcusx11m46con/2021-01-11_15-29-27.png?dl=0" target="_blank" rel="noopener">Media</a></strong>, <strong>Non-Bank Finance</strong>,<strong> Information Technology</strong>, <strong>Retail</strong>, <strong>Energy</strong> and <strong>Transportation</strong>. </p></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/181/880/original/2021-01-11_15-14-41.png?1610345693" class="editor-image img-responsive" data-smartkarma-image-id="181880"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/181/881/original/2021-01-11_15-29-27.png?1610346581" class="editor-image img-responsive" data-smartkarma-image-id="181881"></figure></section><hr><p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p><p style="text-align: left;">Friday's best and worst large-cap pairing is cutting-tool specialist <a href="https://www.smartkarma.com/entities/osg-corp" target="_blank" data-smartkarma-citation="entities:19178:1" rel="noopener">OSG (6136 JP)</a> and drugstore <a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1" rel="noopener">Welcia (3141 JP)</a>.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/181/937/original/2021-01-12_06-44-33.png?1610401488" class="editor-image img-responsive" data-smartkarma-image-id="181937"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/181/938/original/2021-01-12_06-45-03.png?1610401520" class="editor-image img-responsive" data-smartkarma-image-id="181938"></figure></section>

• $ BREAKOUT •NEW $ HIGH - The TOPIX index posted a new post-bubble high in US dollar terms on Friday, exceeding the previous high of January 31st 2018. A new high in Yen terms is only 3% away and, given the current sentiment, should also be reached this month. As the market factors in the possibility of a return to commodity inflation and digests another State of Emergency, the Technology Hardware Sector joins Electrical Equipment and Machinery in Overbought territory. Energy and Metals stocks have seen a significant rebound while the COVID 'losers' Restaurants, Transportation, Real Estate &amp; REITs, and Consumer Services Sectors search for new relative lows.   MARKET PER 33X -The market rally has pushed the forward earnings multiple back up to 33 times discounting one or more years of recovery.  SECTOR OP TRENDS - The only Sectors with rising operating income over the last three months are Energy,  Internet Content &amp; Services, Food Beverages &amp; Tobacco,  Utilities and Other Consumer Products. The largest declines are in Consumer Services, Transport, Restaurants, Healthcare and Telecommunications.   REVISIONS ▲ RESULTS ► - Our momentum-based scoring methodology has seen a strong upturn in the Forecast/Revision Score and a more muted recovery in the trailing Results Score. The Sectors with the strongest upward momentum are Autos, Machinery, Electrical Equipment, Metals and Multi-Industry-  all but the last have outperformed over the last three months. Lagging Sectors include Media, Non-Bank Finance, Information Technology, Retail, Energy and Transportation. • BEST &amp; WORST •Friday's best and worst large-cap pairing is cutting-tool specialist OSG (6136 JP) and drugstore Welcia (3141 JP).

🇯🇵 JAPAN • New Post Bubble $ High + Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​01/​​​08

<p style="text-align: center;"><strong>• LEADING INDICATOR •</strong></p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/164/379/original/2020-10-10_12-16-59.png?1602299856" class="editor-image img-responsive" data-smartkarma-image-id="164379"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div><p><strong>LEADING THE WAY</strong> - The market continues to make new post-COVID highs supported by global and local liquidity conditions and now a bottoming of earnings momentum. As was the case in 2009, the Cabinet Office Leading Indicator, which is published with a lag of two months, identified the low point ahead of the market and our Results &amp; Revision Score. At present, only three Sectors - Internet Content &amp; Services, Information Technology, and Non-Bank Finance have positive Scores, of which only the first and last are rising. We expect the coming 'wave' of announcements to turn the tide as has been 'previewed' in the percentages of positive results and revision over the last week.    </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/164/382/original/2020-10-10_12-48-29.png?1602301755" class="editor-image img-responsive" data-smartkarma-image-id="164382"></figure><div><p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p></div><div>
<p>The best and worst pair from yesterday's announcements is <a href="https://www.smartkarma.com/entities/sakata-seed-corp" target="_blank" data-smartkarma-citation="entities:9825:1" rel="noopener">Sakata Seed (1377 JP)</a>  and dental, surgical and ophthalmic instrument maker <a href="https://www.smartkarma.com/entities/mani-inc" target="_blank" data-smartkarma-citation="entities:6534:1" rel="noopener">Mani (7730 JP)</a>. the latter despite the company's very bullish fully-year forecast. </p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/164/515/original/2020-10-11_11-27-17.png?1602383275" class="editor-image img-responsive" data-smartkarma-image-id="164515"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/164/516/original/2020-10-11_11-30-09.png?1602383437" class="editor-image img-responsive" data-smartkarma-image-id="164516"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div></section><hr>
<div><p style="text-align: center;"><strong>DAILY STATS</strong></p></div>
<hr>
<div><p style="text-align: center;"><strong>26 Quarterly Results</strong></p></div>
<div><ul style="list-style-type: disc;">
<li><p><strong>Results Score:</strong> 58% Positive / 10% Neutral / 32% Negative</p></li>
<li><p><strong>Average Results Score Change:</strong> +2.2 points</p></li>
<li><p><strong>Average % Change in Revenue:</strong> +2.1% Quarter YoY / -4.5% Rolling TTM YoY </p></li>
<li><p><strong>Average Operating Profit Margin Change:</strong> -1.9ppt</p></li>
<li><p><strong>Percentage Making Quarterly Losses:</strong> 18%</p></li>
</ul></div>
<hr>
<div><p style="text-align: center;"><strong>32 Annual • 12 Interim Forecasts/Revisions</strong></p></div>
<div><ul style="list-style-type: disc;">
<li><p><strong>Annual Forecast/Revision Score:</strong> 41% Positive / 6% Neutral / 53% Negative</p></li>
<li><p><strong>Interim Forecast/Revision Score Change:</strong> 42% Positive / 8% Neutral / 50% Negative</p></li>
<li><p><strong>Average Forecast/Revision Score Change:</strong> -2.1 point</p></li>
</ul></div>
</div>

• LEADING INDICATOR •Source for all charts &amp; tables: Japan AnalyticsLEADING THE WAY - The market continues to make new post-COVID highs supported by global and local liquidity conditions and now a bottoming of earnings momentum. As was the case in 2009, the Cabinet Office Leading Indicator, which is published with a lag of two months, identified the low point ahead of the market and our Results &amp; Revision Score. At present, only three Sectors - Internet Content &amp; Services, Information Technology, and Non-Bank Finance have positive Scores, of which only the first and last are rising. We expect the coming 'wave' of announcements to turn the tide as has been 'previewed' in the percentages of positive results and revision over the last week.    • BEST &amp; WORST •
The best and worst pair from yesterday's announcements is Sakata Seed (1377 JP)  and dental, surgical and ophthalmic instrument maker Mani (7730 JP). the latter despite the company's very bullish fully-year forecast. 
Source for all charts &amp; tables: Japan Analytics
DAILY STATS

26 Quarterly Results

Results Score: 58% Positive / 10% Neutral / 32% Negative
Average Results Score Change: +2.2 points
Average % Change in Revenue: +2.1% Quarter YoY / -4.5% Rolling TTM YoY 
Average Operating Profit Margin Change: -1.9ppt
Percentage Making Quarterly Losses: 18%


32 Annual • 12 Interim Forecasts/Revisions

Annual Forecast/Revision Score: 41% Positive / 6% Neutral / 53% Negative
Interim Forecast/Revision Score Change: 42% Positive / 8% Neutral / 50% Negative
Average Forecast/Revision Score Change: -2.1 point



🇯🇵 JAPAN • Results & Revisions 10/​​​​​​​​​​09 - Yaskawa, MANI, OSG, JINS, Sakata Seed

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/157/854/original/2020-09-09_04-55-21.png?1599594979" class="editor-image img-responsive" data-smartkarma-image-id="157854"></figure><div class="content-caption">Source for all charts: Japan Analytics</div><p><strong><a href="https://www.smartkarma.com/entities/stream-co-ltd" target="_blank" data-smartkarma-citation="entities:10256:1" rel="noopener">Stream (3071 JP)</a></strong>- Micro-cap internet mail-order platform Stream produced the best of Tuesday's results. Quarterly sales rose by 36% year-on-year, taking quarterly margins to a record-high 3.4% and making the 180-day old full-year forecasts obsolete. If sustained for the second half, EV/OP falls to an attractive 4.8 times. Given the low liquidity, the shares should enjoy a nice 'pop'.   </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/157/855/original/2020-09-09_05-01-17.png?1599595294" class="editor-image img-responsive" data-smartkarma-image-id="157855"></figure><div>
<hr>
<p style="text-align: center;"><strong>DAILY STATS</strong></p>
</div><hr><div><p><strong>NET POSITIVE</strong> - Mostly due to the mix of businesses, Tuesday's results were net-positive and, for the first time in many months, none of the companies reporting saw a quarterly loss. Of the two forecasts, the net score was also positive. </p></div><hr><div><p style="text-align: center;"><strong>10 Quarterly Results</strong></p></div><div><ul style="list-style-type: disc;">
<li>
<strong>Results Score:</strong> 50% Positive / 10% Neutral / 40% Negative</li>
<li>
<strong>Average Results Score Change:</strong> 1.8 points</li>
<li>
<strong>Average % Change in Revenue</strong>: 7.7% Quarter YoY / 3.2% Rolling TTM YoY </li>
<li>
<strong>Average Operating Profit Margin Change:</strong> -0.2 ppt</li>
<li>
<strong>Percentage Making Quarterly Losses:</strong> 0%</li>
</ul></div><div>
<hr>
<p></p>
</div>

Source for all charts: Japan AnalyticsStream (3071 JP)- Micro-cap internet mail-order platform Stream produced the best of Tuesday's results. Quarterly sales rose by 36% year-on-year, taking quarterly margins to a record-high 3.4% and making the 180-day old full-year forecasts obsolete. If sustained for the second half, EV/OP falls to an attractive 4.8 times. Given the low liquidity, the shares should enjoy a nice 'pop'.   

DAILY STATS
NET POSITIVE - Mostly due to the mix of businesses, Tuesday's results were net-positive and, for the first time in many months, none of the companies reporting saw a quarterly loss. Of the two forecasts, the net score was also positive. 10 Quarterly Results

Results Score: 50% Positive / 10% Neutral / 40% Negative

Average Results Score Change: 1.8 points

Average % Change in Revenue: 7.7% Quarter YoY / 3.2% Rolling TTM YoY 

Average Operating Profit Margin Change: -0.2 ppt

Percentage Making Quarterly Losses: 0%





🇯🇵 JAPAN • Results & Revisions 09/​​​​08 - Net Positive, Stream, OSG, Subaru Ent., Beenos

Japan

OSG CORPORATION manufactures machine tool equipment such as taps, end mills, thread rolling dies, gauges, and drills.  The Company also produces the corresponding machinery including drill grinders, band saws, and rolling machines.  OSG operates overseas production plants in the United States, Brazil, and Taiwan.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

OSG Corp (6136 JP)

Japan Strategy Weekly | Nintendo’s Switch and Trump’s Return

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Mark Chadwick

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JPX Nikkei 400 rebalance is going the right way in the 6 trading days so far, and it wasn't done on Day1 (which was lacklustre). It may be under...

Travis Lundy

🇯🇵 JAPAN • New Post Bubble $ High + Results & Revisions 01/08

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Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 10/09 - Yaskawa, MANI, OSG, JINS, Sakata Seed

🇯🇵 JAPAN • Results & Revisions 10/09 - Yaskawa, MANI, OSG, JINS, Sakata Seed________________________________

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 09/08 - Net Positive, Stream, OSG, Subaru Ent., Beenos

Source for all charts: Japan Analytics

Campbell Gunn

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Japan Strategy Weekly | Nintendo’s Switch and Trump’s Return

​Nikkei Stock Average drops due to heavy-weight stock sell-off, Nintendo sees slight gain with new console unveiling, BoJ likely to raise interest...

Mark Chadwick

2022 JPX Nikkei 400 Rebal Update - Going the Right Way

JPX Nikkei 400 rebalance is going the right way in the 6 trading days so far, and it wasn't done on Day1 (which was lacklustre). It may be under...

Travis Lundy

🇯🇵 JAPAN • New Post Bubble $ High + Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​01/​​​08

NEW $ HIGH - The TOPIX index posted a new post-bubble high in US dollar terms on Friday, exceeding the previous high of January 31st 2018. A new...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 10/​​​​​​​​​​09 - Yaskawa, MANI, OSG, JINS, Sakata Seed

🇯🇵 JAPAN • Results & Revisions 10/​​​​​​​​​​09 - Yaskawa, MANI, OSG, JINS, Sakata Seed________________________________

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 09/​​​​08 - Net Positive, Stream, OSG, Subaru Ent., Beenos

Source for all charts: Japan Analytics

Campbell Gunn

Nikkei Stock Average drops due to heavy-weight stock sell-off, Nintendo sees slight gain with new console unveiling, BoJ likely to raise interest...

🇯🇵 JAPAN • New Post Bubble $ High + Results & Revisions 01/08

🇯🇵 JAPAN • Results & Revisions 10/09 - Yaskawa, MANI, OSG, JINS, Sakata Seed

🇯🇵 JAPAN • Results & Revisions 10/09 - Yaskawa, MANI, OSG, JINS, Sakata Seed________________________________

🇯🇵 JAPAN • Results & Revisions 09/08 - Net Positive, Stream, OSG, Subaru Ent., Beenos