Equity Analyst, LightStream Research

Aqila Ali

Equity Analyst

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

<ul>
<li>Despite 1Qs being usually weak for <a href="https://www.smartkarma.com/entities/panasonic-corp" target="_blank" data-smartkarma-citation="entities:222:1" rel="noopener">Panasonic Corp (6752 JP)</a>, this quarter was also disappointing. Panasonic saw revenue down by 5% and OP down by 44% (OPM of 3% down from 5% in 1Q FY03/19), below consensus and our estimates primary due to sluggish sales in China alongside escalating losses in the Automotive Product segment. While we felt that FY03/19 was a troubled year for Panasonic, it seems that the start of FY20 indicates no improvement. Despite Panasonic taking the necessary steps to secure the future growth of its business (especially the Automotive Batteries segment), the company’s overall business performance seems bleak at present. Panasonic opened 3.2% down following its earnings release.</li>
<li>The company kept its guidance for FY03/20E unchanged. We feel that Panasonic is likely to miss its FY03/20 guidance and approach our worst-case scenario for the year (Details of the scenario analysis in <a href="https://www.smartkarma.com/insights/a-look-at-panasonic-s-battery-business-will-the-company-drift-away-from-tesla" target="_blank" data-smartkarma-citation="insights:21069" rel="noopener">A Look at Panasonic’s Battery Business: Will the Company Drift Away from Tesla?</a> ) given the slow market conditions in China alongside the continuing volatility in the company’s battery business stemming from <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a>.</li>
<li>The company’s new mid-term strategy looks good but successful execution is a challenge and could take time. Our key concerns, for now, surround Panasonic’s two key business segments:</li>
</ul>
1.  Industrial Solution segment (core-business segment): Likely to see a negative impact for a while, until China’s uncertain business environment improves.
2. Automotive Segment: Increasing losses is a concern although partnering with <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1" rel="noopener">Toyota Motor (7203 JP)</a> seems to be the only hope to turn around the segment in future
<ul>
<li>Trading at an FY PE of 9.5x below its historical median, Panasonic is starting to look cheap. However, the current unfavourable market conditions for its core business segment and the volatility in its battery business (which are both likely to continue for a while) indicates the possibility for some downside risk still. Thus, even though we like the long-term growth prospects of the company, we wouldn’t recommend accumulating more of the stocks as of now, but feel the company is worth monitoring as significant upside should be available once it passes through this weak period.</li>
</ul>


Despite 1Qs being usually weak for Panasonic Corp (6752 JP), this quarter was also disappointing. Panasonic saw revenue down by 5% and OP down by 44% (OPM of 3% down from 5% in 1Q FY03/19), below consensus and our estimates primary due to sluggish sales in China alongside escalating losses in the Automotive Product segment. While we felt that FY03/19 was a troubled year for Panasonic, it seems that the start of FY20 indicates no improvement. Despite Panasonic taking the necessary steps to secure the future growth of its business (especially the Automotive Batteries segment), the company’s overall business performance seems bleak at present. Panasonic opened 3.2% down following its earnings release.
The company kept its guidance for FY03/20E unchanged. We feel that Panasonic is likely to miss its FY03/20 guidance and approach our worst-case scenario for the year (Details of the scenario analysis in A Look at Panasonic’s Battery Business: Will the Company Drift Away from Tesla? ) given the slow market conditions in China alongside the continuing volatility in the company’s battery business stemming from Tesla Motors (TSLA US).
The company’s new mid-term strategy looks good but successful execution is a challenge and could take time. Our key concerns, for now, surround Panasonic’s two key business segments:

1.  Industrial Solution segment (core-business segment): Likely to see a negative impact for a while, until China’s uncertain business environment improves.
2. Automotive Segment: Increasing losses is a concern although partnering with Toyota Motor (7203 JP) seems to be the only hope to turn around the segment in future

Trading at an FY PE of 9.5x below its historical median, Panasonic is starting to look cheap. However, the current unfavourable market conditions for its core business segment and the volatility in its battery business (which are both likely to continue for a while) indicates the possibility for some downside risk still. Thus, even though we like the long-term growth prospects of the company, we wouldn’t recommend accumulating more of the stocks as of now, but feel the company is worth monitoring as significant upside should be available once it passes through this weak period.


A Disappointing 1Q: Panasonic Likely to Approach Our Worst-Case Scenario

Founder & CEO Bond Angle, LLC, Bond Angle, LLC

Vicki Bryan

Founder & CEO Bond Angle, LLC

Bond Angle, LLC

Insightful commentary and analysis on bond markets and market movers, including financial, economic, and industry catalysts and management shenanigans. 

High yield market investment research

Credit

<a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a> filed its 10-Q for the second quarter on Monday which, as usual, raised new questions and concerns without really filling in all the gaps in disclosure left hanging after its disappointing earnings report last week (see "<a href="https://www.smartkarma.com/insights/tesla-q2-results-diminishing-returns" target="_blank" data-smartkarma-citation="insights:31300" rel="noopener">Tesla Q2 Results: Diminishing Returns")</a>.
<ul>
<li>I warned again in <a href="https://www.smartkarma.com/insights/tesla-q2-deliveries-beat-demand-and-profit-trends-less-clear" target="_blank" data-smartkarma-citation="insights:30907" rel="noopener">Tesla Q2 Deliveries Beat; Demand and Profit Trends Less Clear</a> that underlying demand trends in 2019 have been marked with escalatingweakness that drastic pricing discounts haven't fixed. The 10-Q revealed more clues that Tesla may have needed another white knight to land its record second-quarter deliveries at the last minute, likely at severe price discounts. 
</li>
<li>Tesla ended the quarter with a big increase in cash, but the 10-Q <a href="https://www.smartkarma.com/insights/tesla-q2-results-diminishing-returns" target="_blank" rel="noopener">confirmed my concerns</a> that operations actually generated almost none of it--again. This is bad news given Tesla's sizable and still unsupported cash drain in operations every quarter plus its massively underfunded pipeline obligations--including one likely expensive surprise project it's yet to disclose.
</li>
<li>We also learned what Tesla sacrificed to get the Shanghai factory dealin China and how it could lose it all. </li>
<li>One critical loss Tesla will suffer more immediately is JB Straubel, longtime Chief Technology Officer and the company's last co-founder besides CEO Elon Musk who surprised the market last week by announcing he is leaving. An amended agreement with Panasonic disclosed in the 10-Q offers hints about why now, after sixteen years of helping to build a company he clearly loved, Straubel decided to leave as Tesla is supposedly on the brink of fruition with so many vital projects under his stewardship.
</li>
</ul>
Read on for Bond Angle analysis.

Tesla Motors (TSLA US) filed its 10-Q for the second quarter on Monday which, as usual, raised new questions and concerns without really filling in all the gaps in disclosure left hanging after its disappointing earnings report last week (see "Tesla Q2 Results: Diminishing Returns").

I warned again in Tesla Q2 Deliveries Beat; Demand and Profit Trends Less Clear that underlying demand trends in 2019 have been marked with escalatingweakness that drastic pricing discounts haven't fixed. The 10-Q revealed more clues that Tesla may have needed another white knight to land its record second-quarter deliveries at the last minute, likely at severe price discounts. 

Tesla ended the quarter with a big increase in cash, but the 10-Q confirmed my concerns that operations actually generated almost none of it--again. This is bad news given Tesla's sizable and still unsupported cash drain in operations every quarter plus its massively underfunded pipeline obligations--including one likely expensive surprise project it's yet to disclose.

We also learned what Tesla sacrificed to get the Shanghai factory dealin China and how it could lose it all. 
One critical loss Tesla will suffer more immediately is JB Straubel, longtime Chief Technology Officer and the company's last co-founder besides CEO Elon Musk who surprised the market last week by announcing he is leaving. An amended agreement with Panasonic disclosed in the 10-Q offers hints about why now, after sixteen years of helping to build a company he clearly loved, Straubel decided to leave as Tesla is supposedly on the brink of fruition with so many vital projects under his stewardship.


Read on for Bond Angle analysis.

Thematic (Sector/Industry)

Highlights for June are as follows:
<ul class="">
<li>
<a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a> plans to develop its own batteries following the halt in investments in its Gigafactory with Panasonic.</li>
<li>European automakers are striving to compete with the US and Asian players in the EV space and smooth battery production is considered key in achieving their EV aims. Automakers and certain significant investors are financing the ‘Swedish project’, which involves building a battery plant jointly with local battery maker Northvolt, in an attempt to compete with the Gigafactory.</li>
<li>
<a href="https://www.smartkarma.com/entities/contemporary-amperex-techn-a" target="_blank" data-smartkarma-citation="entities:24404:1" rel="noopener">CATL (A) (300750 CH)</a> increases investment plans in Europe provoked by aggressive EV targets set by Automakers such as <a href="https://www.smartkarma.com/entities/volkswagen-ag" target="_blank" data-smartkarma-citation="entities:21738:1" rel="noopener">Volkswagen (VOW GR)</a> and <a href="https://www.smartkarma.com/entities/bayerische-motoren-werke-ag" target="_blank" data-smartkarma-citation="entities:21591:1" rel="noopener">Bayerische Motoren Werke Ag (BMW GR)</a>.</li>
<li>The leading battery players witnessed a relatively steady movement in stock last month, supported by steady movement in the overall markets. Tesla has outperformed the market during the month, but we are still sceptical of the company’s continuous steady performance and view the company’s performance to be highly volatile.</li>
</ul>
<div class="content-caption"> Leading Battery Makers Show a Relatively Steady Movement in Stock 
</div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/092/106/original/11.jpg?1562151110" class="editor-image img-responsive" data-smartkarma-image-id="92106"></figure>
<div class="content-remarks">
Source: CapIQ
</div>
<div class="content-caption">Market Performance Has Also Been Positive in June</div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/092/107/original/12.jpg?1562151129" class="editor-image img-responsive" data-smartkarma-image-id="92107"></figure>
<div class="content-remarks">
Source: CapIQ
</div>
Previous Monthly: <a href="https://www.smartkarma.com/insights/a-monthly-on-ev-batteries-intense-competition-on-capacity-expansions-and-securing-deals" target="_blank" data-smartkarma-citation="insights:30238" rel="noopener">A Monthly on EV Batteries: Intense Competition on Capacity Expansions and Securing Deals</a>

Highlights for June are as follows:


Tesla Motors (TSLA US) plans to develop its own batteries following the halt in investments in its Gigafactory with Panasonic.
European automakers are striving to compete with the US and Asian players in the EV space and smooth battery production is considered key in achieving their EV aims. Automakers and certain significant investors are financing the ‘Swedish project’, which involves building a battery plant jointly with local battery maker Northvolt, in an attempt to compete with the Gigafactory.

CATL (A) (300750 CH) increases investment plans in Europe provoked by aggressive EV targets set by Automakers such as Volkswagen (VOW GR) and Bayerische Motoren Werke Ag (BMW GR).
The leading battery players witnessed a relatively steady movement in stock last month, supported by steady movement in the overall markets. Tesla has outperformed the market during the month, but we are still sceptical of the company’s continuous steady performance and view the company’s performance to be highly volatile.

 Leading Battery Makers Show a Relatively Steady Movement in Stock 



Source: CapIQ

Market Performance Has Also Been Positive in June


Source: CapIQ

Previous Monthly: A Monthly on EV Batteries: Intense Competition on Capacity Expansions and Securing Deals 

Monthly on EV Batteries: Panasonic Giving Up on Tesla?; Europe in The Limelight For Battery Players

'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

• RELATIVE PRICE SCORE • <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/090/226/original/2019-06-13_16-47-07.png?1560412038" class="editor-image img-responsive" data-smartkarma-image-id="90226"></figure><div class="content-caption">Source: Japan Analytics</div>INTRODUCTION - The Relative Price Score (RPS) is a measure of stock price performance relative to TOPIX calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices. As all companies are thus on a comparable scale, 'Overbought' and 'Oversold' outliers and changes in scoring can reveal short-term and longer-term trading opportunities. Company outlier thresholds are set at +4 &amp; -2 and equate to the top and bottom first-to-second percentiles of historical observations from which mean reversion takes a matter of months. RPS outliers with a Score of greater than 10.0 are rare outside of the 2000 tech 'bubble'. <a href="https://www.smartkarma.com/entities/goldwin-inc" target="_blank" data-smartkarma-citation="entities:410:1">Goldwin (8111 JP)</a> has the distinction of being one of only two large-cap RPS 'ten-baggers' since that time.This insight updates our list of Overbought and Oversold companies, reviews the best and worst performing companies in terms of RPS over the last three months and adds some specific comments on stocks on each category.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/090/196/original/2019-06-13_11-15-27.png?1560392157" class="editor-image img-responsive" data-smartkarma-image-id="90196"></figure><div class="content-caption">Source: Japan Analytics</div>STATISTICS - Currently, of the 3,832 listed companies for which daily RPS data is available, 94 companies are 'Overbought', and 131 are 'Oversold' - 2.5% and 3.4%, respectively of the total. For the 758 companies with a market capitalisation of over ¥100b, there are 50 'Overbought' and 18 'Oversold' companies, 6.6% and 5.0%, respectively. As noted the companion Insight, <a href="https://www.smartkarma.com/insights/japan-june-relative-price-scores-market-sectors-peer-groups-more-of-the-same" target="_blank" data-smartkarma-citation="insights:30323">🇯🇵 Japan • June Relative Price Scores: Market, Sectors &amp; Peer Groups - More of The Same</a>, these numbers and percentages are unusual and were last seen in the Japanese market in 2000. <hr>• RELATIVE PRICE SCORE TOPS •<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/090/202/original/2019-06-13_13-06-49.png?1560398835" class="editor-image img-responsive" data-smartkarma-image-id="90202"></figure><div class="content-caption">Source: Japan Analytics</div>RPS 'TOPS' - In the last two years, 444 companies have achieved an RPS of '4' or more and the average Overbought 'persistence' is 43 days. 1.4% of the total of 1.29 million traded stock days were by companies with an RPS of over 4. For companies with a market capitalisation higher than ¥100b, the numbers are 96 companies and 75 days - demonstrating the superior persistence of large capitalisation companies in this regard. Some examples of RPS mean reversion in the last three months have been <a href="https://www.smartkarma.com/entities/descente-ltd" target="_blank" data-smartkarma-citation="entities:8225:1">Descente (8114 JP)</a>, <a href="https://www.smartkarma.com/entities/alfresa-holdings-corp" target="_blank" data-smartkarma-citation="entities:10610:1">Alfresa (2784 JP)</a>, <a href="https://www.smartkarma.com/entities/320" target="_blank" data-smartkarma-citation="entities:320:1">FamilyMart Uny (8028 JP)</a>, <a href="https://www.smartkarma.com/entities/kikkoman-corp" target="_blank" data-smartkarma-citation="entities:11720:1">Kikkoman (2801 JP)</a>, <a href="https://www.smartkarma.com/entities/kobayashi-pharmaceutical-co" target="_blank" data-smartkarma-citation="entities:14930:1">Kobayashi Pharmaceutical (4967 JP)</a>, and <a href="https://www.smartkarma.com/entities/eiken-chemical-co-ltd" target="_blank" data-smartkarma-citation="entities:12675:1">Eiken Chemical (4549 JP)</a>.  <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/090/201/original/2019-06-13_13-04-38.png?1560398780" class="editor-image img-responsive" data-smartkarma-image-id="90201"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/090/203/original/2019-06-13_13-08-46.png?1560398945" class="editor-image img-responsive" data-smartkarma-image-id="90203"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/090/204/original/2019-06-13_13-09-37.png?1560399049" class="editor-image img-responsive" data-smartkarma-image-id="90204"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/090/205/original/2019-06-13_13-12-01.png?1560399142" class="editor-image img-responsive" data-smartkarma-image-id="90205"></figure><div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/090/316/original/2019-06-15_19-45-47.png?1560595558" class="editor-image img-responsive" data-smartkarma-image-id="90316"></figure>Source: Japan Analytics
</div>RPS 'BOTTOMS' - 372 companies have seen their RPS fall to '-2' or below in the last two years, and the average Oversold 'persistence' is 61 days. 1.5% of the total of 1.29 million traded stock days were by companies with an RPS of less than -2.  For larger capitalisation companies, the numbers are 85 companies and 89 days. A recent example of positive RPS mean reversion is <a href="https://www.smartkarma.com/entities/k-o-energy-group-inc" target="_blank" data-smartkarma-citation="entities:17701:1">K&amp;O Energy (1663 JP)</a>.<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/090/207/original/2019-06-13_13-14-03.png?1560399270" class="editor-image img-responsive" data-smartkarma-image-id="90207"></figure>Source: Japan Analytics
</div><div class="content-highlight">In the DETAIL section below, we list the current very overbought (RPS&gt;5), too late to buy (RPS &gt;4&lt;5) and oversold (RPS &lt;-2) stocks as well as the most substantial three-month positive and negative changes in RPS.</div>

• RELATIVE PRICE SCORE • Source: Japan AnalyticsINTRODUCTION - The Relative Price Score (RPS) is a measure of stock price performance relative to TOPIX calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices. As all companies are thus on a comparable scale, 'Overbought' and 'Oversold' outliers and changes in scoring can reveal short-term and longer-term trading opportunities. Company outlier thresholds are set at +4 &amp; -2 and equate to the top and bottom first-to-second percentiles of historical observations from which mean reversion takes a matter of months. RPS outliers with a Score of greater than 10.0 are rare outside of the 2000 tech 'bubble'. Goldwin (8111 JP) has the distinction of being one of only two large-cap RPS 'ten-baggers' since that time.This insight updates our list of Overbought and Oversold companies, reviews the best and worst performing companies in terms of RPS over the last three months and adds some specific comments on stocks on each category.Source: Japan AnalyticsSTATISTICS - Currently, of the 3,832 listed companies for which daily RPS data is available, 94 companies are 'Overbought', and 131 are 'Oversold' - 2.5% and 3.4%, respectively of the total. For the 758 companies with a market capitalisation of over ¥100b, there are 50 'Overbought' and 18 'Oversold' companies, 6.6% and 5.0%, respectively. As noted the companion Insight, 🇯🇵 Japan • June Relative Price Scores: Market, Sectors &amp; Peer Groups - More of The Same, these numbers and percentages are unusual and were last seen in the Japanese market in 2000. • RELATIVE PRICE SCORE TOPS •Source: Japan AnalyticsRPS 'TOPS' - In the last two years, 444 companies have achieved an RPS of '4' or more and the average Overbought 'persistence' is 43 days. 1.4% of the total of 1.29 million traded stock days were by companies with an RPS of over 4. For companies with a market capitalisation higher than ¥100b, the numbers are 96 companies and 75 days - demonstrating the superior persistence of large capitalisation companies in this regard. Some examples of RPS mean reversion in the last three months have been Descente (8114 JP), Alfresa (2784 JP), FamilyMart Uny (8028 JP), Kikkoman (2801 JP), Kobayashi Pharmaceutical (4967 JP), and Eiken Chemical (4549 JP).  
Source: Japan Analytics
RPS 'BOTTOMS' - 372 companies have seen their RPS fall to '-2' or below in the last two years, and the average Oversold 'persistence' is 61 days. 1.5% of the total of 1.29 million traded stock days were by companies with an RPS of less than -2.  For larger capitalisation companies, the numbers are 85 companies and 89 days. A recent example of positive RPS mean reversion is K&amp;O Energy (1663 JP).
Source: Japan Analytics
In the DETAIL section below, we list the current very overbought (RPS&gt;5), too late to buy (RPS &gt;4&lt;5) and oversold (RPS &lt;-2) stocks as well as the most substantial three-month positive and negative changes in RPS.

🇯🇵 Japan • Relative Price Scores - Overbought & Oversold Companies - June 2019

Contemporary Amperex Technology (CATL) / Equity Bottom-Up

On Friday, the Nikkei reported that <a href="https://www.smartkarma.com/entities/toyota-motor-corp" target="_blank" data-smartkarma-citation="entities:73:1">Toyota Motor (7203 JP)</a> had signed a memorandum of understanding (MOU) with <a href="https://www.smartkarma.com/entities/contemporary-amperex-techn-a" target="_blank" data-smartkarma-citation="entities:24404:1">CATL (A) (300750 CH)</a> to supply batteries for their EVs that are to be released in China as well as in other markets. The deal was made on the back of the company’s intention to accelerate its EV plan by 5 years. The Nikkei also reported that, apart from CATL, Toyota has also signed deals with China’s <a href="https://www.smartkarma.com/entities/byd-co-ltd" target="_blank" data-smartkarma-citation="entities:26048:1">BYD Co Ltd (002594 CH)</a>, and Japan’s <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1">Toshiba Corp (6502 JP)</a> and <a href="https://www.smartkarma.com/entities/gs-yuasa-corp" target="_blank" data-smartkarma-citation="entities:8298:1">Gs Yuasa Corp (6674 JP)</a> for batteries. However, the highlight of the news was the companies MOU with CATL.
The information on the deal that was reported is as follows:
<ul>
<li>CATL will supply lithium-ion batteries for Toyota’s EVs that will be released in China as well as in other markets next year onwards</li>
<li>CATL and Toyota will collaborate on improving battery quality, adopting shared standards, and reusing batteries</li>
</ul>
In our opinion, this looks like a win-win situation for both Toyota and CATL provided the companies are able to meet their production targets. However, battery leader, <a href="https://www.smartkarma.com/entities/panasonic-corp" target="_blank" data-smartkarma-citation="entities:222:1">Panasonic Corp (6752 JP)</a> seems to be placed in a rather competitive situation. Although we felt that Panasonic would be able to have a strong hold on Toyota via its JV with the latter and diversifying its customer base away from Tesla, this move may weaken Panasonic’s position somewhat. Our detailed view on the news is given below.

On Friday, the Nikkei reported that Toyota Motor (7203 JP) had signed a memorandum of understanding (MOU) with CATL (A) (300750 CH) to supply batteries for their EVs that are to be released in China as well as in other markets. The deal was made on the back of the company’s intention to accelerate its EV plan by 5 years. The Nikkei also reported that, apart from CATL, Toyota has also signed deals with China’s BYD Co Ltd (002594 CH), and Japan’s Toshiba Corp (6502 JP) and Gs Yuasa Corp (6674 JP) for batteries. However, the highlight of the news was the companies MOU with CATL.
The information on the deal that was reported is as follows:

CATL will supply lithium-ion batteries for Toyota’s EVs that will be released in China as well as in other markets next year onwards
CATL and Toyota will collaborate on improving battery quality, adopting shared standards, and reusing batteries

In our opinion, this looks like a win-win situation for both Toyota and CATL provided the companies are able to meet their production targets. However, battery leader, Panasonic Corp (6752 JP) seems to be placed in a rather competitive situation. Although we felt that Panasonic would be able to have a strong hold on Toyota via its JV with the latter and diversifying its customer base away from Tesla, this move may weaken Panasonic’s position somewhat. Our detailed view on the news is given below.

Toyota Sides with CATL to Accelerate Its EV Goals; Reliance on Panasonic Reduces

Japan

Panasonic Corporation manufactures electric and electronic products. The Company produces home appliances, audio & video, computer peripherals, telecommunications, industrial equipment, and electronic parts. Panasonic has associatedcompanies around the world.

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Panasonic Corp Spon Adr (PCRFY US)

A Disappointing 1Q: Panasonic Likely to Approach Our Worst-Case Scenario

Despite 1Qs being usually weak for Panasonic Corp (6752 JP), this quarter was also disappointing. Panasonic saw revenue down by 5% and OP down by...

Aqila Ali

Tesla Q219 10-Q Notes and Big Red Flags

Tesla Motors (TSLA US) filed its 10-Q for the second quarter on Monday which, as usual, raised new questions and concerns without really filling in...

Vicki Bryan

Monthly on EV Batteries: Panasonic Giving Up on Tesla?; Europe in The Limelight For Battery Players

Highlights for June are as follows: Tesla Motors (TSLA US) plans to develop its own batteries following the halt in investments in its...

Aqila Ali

🇯🇵 Japan • Relative Price Scores - Overbought & Oversold Companies - June 2019

• RELATIVE PRICE SCORE • INTRODUCTION - The Relative Price Score (RPS) is a measure of stock price performance relative to TOPIX calculated by...

Campbell Gunn

Toyota Sides with CATL to Accelerate Its EV Goals; Reliance on Panasonic Reduces

On Friday, the Nikkei reported that Toyota Motor (7203 JP) had signed a memorandum of understanding (MOU) with CATL (A) (300750 CH) to supply...

Aqila Ali

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