'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.

Thematic (Sector/Industry)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/146/859/original/2020-07-20_05-45-19.png?1595191529" class="editor-image img-responsive" data-smartkarma-image-id="146859"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong><a href="https://www.smartkarma.com/entities/pasona-group-inc" target="_blank" data-smartkarma-citation="entities:15778:1" rel="noopener">Pasona (2168 JP)</a></strong>- Pasona was the largest capitalisation company to report on Friday. At the end of June, the company warned on impairment losses at the full-year ended in May 2020. The outcome was a write-off of ¥2.7 billion, resulting in a 63% decline in Comprehensive Income to Common (CITC) to ¥676 million. In the<strong> DETAIL </strong>below, we review the operating performance and valuation of this 'activist trap'.</p><hr><p style="text-align: center;"><strong>DAILY STATS</strong></p><hr><div><p style="text-align: center;"><strong>4 Quarterly Results</strong></p></div><div><ul>
<li>
<strong>Results Score:</strong> 2 Positive / 0 Neutral / 2 Negative</li>
<li>
<strong>Average Results Score Change:</strong> +2.3</li>
<li>
<strong>Average % Change in Revenue</strong>: -20% Quarter YoY / -12.9% Rolling TTM YoY</li>
<li>
<strong>Average Operating Profit Margin Change:</strong> -0.1ppt</li>
<li>
<strong>Percentage Making Quarterly Losses:</strong> 50%</li>
</ul></div><hr><div><p style="text-align: center;"><br><strong>5 Annual • 4 Interim Forecasts/Revisions</strong></p></div><div><ul>
<li>
<strong>Annual Forecast/Revision Score:</strong> 1 Positive / 0 Neutral / 4 Negative</li>
<li>
<strong>Interim Forecast/Revision Score Change:</strong> 1 Positive / 0 Neutral / 3 Negative</li>
<li>
<strong>Average Forecast/Revision Score Change:</strong> -10.0</li>
</ul></div>

Source • Japan AnalyticsPasona (2168 JP)- Pasona was the largest capitalisation company to report on Friday. At the end of June, the company warned on impairment losses at the full-year ended in May 2020. The outcome was a write-off of ¥2.7 billion, resulting in a 63% decline in Comprehensive Income to Common (CITC) to ¥676 million. In the DETAIL below, we review the operating performance and valuation of this 'activist trap'.DAILY STATS4 Quarterly Results

Results Score: 2 Positive / 0 Neutral / 2 Negative

Average Results Score Change: +2.3

Average % Change in Revenue: -20% Quarter YoY / -12.9% Rolling TTM YoY

Average Operating Profit Margin Change: -0.1ppt

Percentage Making Quarterly Losses: 50%
 5 Annual • 4 Interim Forecasts/Revisions

Annual Forecast/Revision Score: 1 Positive / 0 Neutral / 4 Negative

Interim Forecast/Revision Score Change: 1 Positive / 0 Neutral / 3 Negative

Average Forecast/Revision Score Change: -10.0


🇯🇵 JAPAN • Results & Revisions 17th July -

<div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/143/669/original/2020-07-01_05-28-36.png?1593548938" class="editor-image img-responsive" data-smartkarma-image-id="143669"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/143/673/original/2020-07-01_06-01-59.png?1593550949" class="editor-image img-responsive" data-smartkarma-image-id="143673"></figure><div class="content-caption">Source • Japan Analytics</div>
<p><strong>WASTE NOT.</strong>.- Waste treatment company <a href="https://www.smartkarma.com/entities/daiseki-co-ltd" target="_blank" data-smartkarma-citation="entities:2330:1" rel="noopener">Daiseki (9793 JP)</a>'s first-quarter results saw Net Income decline by 17% on a 1% decline in sales. However, the 19% and 24% cuts to both Operating and Net Income for the first half and full-year highlight the current decline in industrial activity in Japan is likely to be prolonged and, possibly, similar to that seen in 2009. The outlook for Daiseki's listed subsidiary <a href="https://www.smartkarma.com/entities/daiseki-eco-solution-co-ltd" target="_blank" data-smartkarma-citation="entities:13776:1" rel="noopener">Daiseki Eco. Solution (1712 JP)</a> is equally subdued.  Meanwhile, <a href="https://www.smartkarma.com/entities/japan-display-inc" target="_blank" data-smartkarma-citation="entities:8280:1" rel="noopener">Japan Display (6740 JP)</a> annual losses 'improved' to only ¥101 billion at the net level on ¥504 billion in sales, while <a href="https://www.smartkarma.com/entities/pasona-group-inc" target="_blank" data-smartkarma-citation="entities:15778:1" rel="noopener">Pasona (2168 JP)</a> revised down the soon-to-be-declared FY2020 Net Income by 66% relative to TTM on further Anime theme park write-offs. LCD/SPE specialist <a href="https://www.smartkarma.com/entities/marumae-co-ltd" target="_blank" data-smartkarma-citation="entities:16671:1" rel="noopener">Marumae (6264 JP)</a> produced the best results of the day driven by a 38% year-on-year increase in quarterly sales.</p>
<hr>
<p style="text-align: center;"><strong>DAILY STATS</strong></p>
<hr>
</div><div><p style="text-align: center;"><strong>21 Quarterly Results</strong></p></div><div><ul>
<li>
<strong>Results Score:</strong> 6 Positive / 3 Neutral / 12 Negative</li>
<li>
<strong>Average Results Score Change:</strong>-3.2</li>
<li>
<strong>Average % Change in Revenue:</strong> +0.2% Quarter YoY / -5.9% Rolling TTM YoY</li>
<li>
<strong>Average Operating Profit Margin Change</strong>: 0.0ppt</li>
</ul></div><hr><div><p style="text-align: center;"><br><strong>13 Annual • 8 Interim Forecasts/Revisions</strong></p></div><div><ul>
<li>
<strong>Annual Forecast/Revision Score:</strong> 4 Positive / 2 Neutral / 7 Negative</li>
<li>
<strong>Interim Forecast/Revision Score Change:</strong> 2 Positive / 1 Neutral / 5 Negative</li>
<li>
<strong>Average Forecast/Revision Score Change:</strong> -5.6</li>
</ul></div>


Source • Japan Analytics
WASTE NOT..- Waste treatment company Daiseki (9793 JP)'s first-quarter results saw Net Income decline by 17% on a 1% decline in sales. However, the 19% and 24% cuts to both Operating and Net Income for the first half and full-year highlight the current decline in industrial activity in Japan is likely to be prolonged and, possibly, similar to that seen in 2009. The outlook for Daiseki's listed subsidiary Daiseki Eco. Solution (1712 JP) is equally subdued.  Meanwhile, Japan Display (6740 JP) annual losses 'improved' to only ¥101 billion at the net level on ¥504 billion in sales, while Pasona (2168 JP) revised down the soon-to-be-declared FY2020 Net Income by 66% relative to TTM on further Anime theme park write-offs. LCD/SPE specialist Marumae (6264 JP) produced the best results of the day driven by a 38% year-on-year increase in quarterly sales.

DAILY STATS

21 Quarterly Results

Results Score: 6 Positive / 3 Neutral / 12 Negative

Average Results Score Change:-3.2

Average % Change in Revenue: +0.2% Quarter YoY / -5.9% Rolling TTM YoY

Average Operating Profit Margin Change: 0.0ppt
 13 Annual • 8 Interim Forecasts/Revisions

Annual Forecast/Revision Score: 4 Positive / 2 Neutral / 7 Negative

Interim Forecast/Revision Score Change: 2 Positive / 1 Neutral / 5 Negative

Average Forecast/Revision Score Change: -5.6


🇯🇵 JAPAN • Results & Revisions 30th June - Waste Not..

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>A year ago I wrote <a href="https://www.smartkarma.com/entities/sun-corp" target="_blank" data-smartkarma-citation="entities:10803:1" rel="noopener">Sun Corp (6736 JP)</a> was still/again cheap. Back then it traded at a 48% discount to the value of its shares in <a href="https://www.smartkarma.com/entities/cellebrite-di-ltd" target="_blank" data-smartkarma-citation="entities:37102:1" rel="noopener">Cellebrite DI (CLBT US)</a>. </li>
<li>It spent much of the last few months at a 25-35% discount. Last Tuesday it was a 25% discount. By Friday, it was a 1.2% discount after Cellebrite shares plummeted. </li>
<li>Sun Corp shares have reacted this morning but the discount is entirely too narrow. If you have the pair on, time to take it off. </li>
</ul>


A year ago I wrote Sun Corp (6736 JP) was still/again cheap. Back then it traded at a 48% discount to the value of its shares in Cellebrite DI (CLBT US). 
It spent much of the last few months at a 25-35% discount. Last Tuesday it was a 25% discount. By Friday, it was a 1.2% discount after Cellebrite shares plummeted. 
Sun Corp shares have reacted this morning but the discount is entirely too narrow. If you have the pair on, time to take it off. 


[Japan Activism] Sun Corp (6736 JP) - Not So Cheap Anymore

David Blennerhassett

<ul>
<li>On the 12th May, <strong><a href="https://www.smartkarma.com/entities/kakaku-com-inc" target="_blank" data-smartkarma-citation="entities:7408:1" rel="noopener">Kakaku.com Inc (2371 JP)</a></strong> recommended EQT's Offer at ¥3,000/share. The docs flagged Bain+ <strong><a href="https://www.smartkarma.com/entities/ly-corp" target="_blank" data-smartkarma-citation="entities:19603:1" rel="noopener">LY (4689 JP)</a></strong> had also brought in a last minute bid</li>
<li>On the 14th May (today), LY announced it had submitted an initial bid at ¥3,232/share, contingent on due diligence being granted and passed.</li>
<li>Kakaku is potentially worth ~¥ 3,700/share, and is currently trading at ~¥ 3,400. Still some gas in the tank. Separately, I'd also run a ruler over <strong><a href="https://www.smartkarma.com/entities/digital-garage-inc" target="_blank" data-smartkarma-citation="entities:13747:1" rel="noopener">Digital Garage (4819 JP)</a></strong>.</li>
</ul>


On the 12th May, Kakaku.com Inc (2371 JP) recommended EQT's Offer at ¥3,000/share. The docs flagged Bain+ LY (4689 JP) had also brought in a last minute bid
On the 14th May (today), LY announced it had submitted an initial bid at ¥3,232/share, contingent on due diligence being granted and passed.
Kakaku is potentially worth ~¥ 3,700/share, and is currently trading at ~¥ 3,400. Still some gas in the tank. Separately, I'd also run a ruler over Digital Garage (4819 JP).


Digital Garage (4819 JP) Is Cheap As LY & EQT Jostle For Kakaku (2371 JP)'s Control

<ul>
<li>Despite the recent pull-back, <strong><a href="https://www.smartkarma.com/entities/sun-corp" target="_blank" data-smartkarma-citation="entities:10803:1" rel="noopener">Sun Corp (6736 JP)</a></strong>'s implied stub, netting off 44.3%-held <strong><a href="https://www.smartkarma.com/entities/cellebrite-di-ltd" target="_blank" data-smartkarma-citation="entities:37102:1" rel="noopener">Cellebrite DI (CLBT US)</a></strong>, remains elevated.</li>
<li>Preceding my comments on Sun Corp are the current setup/unwind tables for Asia-Pacific Holdcos.</li>
<li>These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.</li>
</ul>


Despite the recent pull-back, Sun Corp (6736 JP)'s implied stub, netting off 44.3%-held Cellebrite DI (CLBT US), remains elevated.
Preceding my comments on Sun Corp are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation &gt;20%.


StubWorld: Sun Corp (6736 JP) As A Value Play Is Less Apparent

Japan

Pasona Group Inc. manages companies that provide placement and staffing services for clients in the information technology sector.

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Pasona Group (2168 JP)

🇯🇵 JAPAN • Results & Revisions 17th July -

Pasona (2168 JP)- Pasona was the largest capitalisation company to report on Friday. At the end of June, the company warned on impairment losses at...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 30th June - Waste Not..

WASTE NOT..- Waste treatment company Daiseki (9793 JP)'s first-quarter results saw Net Income decline by 17% on a 1% decline in sales. However,...

Campbell Gunn

[Japan Activism] Sun Corp (6736 JP) - Not So Cheap Anymore

Sun Corp saw its discount to CLBT holdings widen from 1.2% when I wrote to 23% in about 8 days. Then it started narrowing again. The company...

Travis Lundy

Digital Garage (4819 JP) Is Cheap As LY & EQT Jostle For Kakaku (2371 JP)'s Control

Kakaku has more upside, should EQT/LY jostle for control. Separately, post deal, Digital Garage will be sitting on a chunk of cash. The caveat is...

David Blennerhassett

StubWorld: Sun Corp (6736 JP) As A Value Play Is Less Apparent

Sun Corp as a value play is less clear here. I'd look to reverse the stub if the discount to the CLBT holding dips to mid-teens. But not...

David Blennerhassett

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