Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analysed the earning revision of component stocks of MS-Japan in the past month.</li>
<li>We tabulated stocks with the top impact on index's EPS, stocks' EPS revision, and revenue revision.</li>
<li>We highlighted EPS revision on Nissan Motor, Sony Financial, Mitsui Mining &amp; Smelting, Resonac, Orix, Rakuten, Kioxia.</li>
</ul>


We analysed the earning revision of component stocks of MS-Japan in the past month.
We tabulated stocks with the top impact on index's EPS, stocks' EPS revision, and revenue revision.
We highlighted EPS revision on Nissan Motor, Sony Financial, Mitsui Mining &amp; Smelting, Resonac, Orix, Rakuten, Kioxia.


MS-Japan Index Earning Revision (Jun): Nissan Motor, Sony Financial, Mitsui Mining & Smelting, Orix

Index Rebalance

<ul>
<li>MSCI Japan June 2026 added 3 stocks and deleted 14. With the first implementation week complete, we review current-cycle performance vs history.</li>
<li>ADDs gave back after a positive bridge. All 3 ADDs fell in WI0-4, with aggregate return of -9.0% vs the historical ADD mean of -2.9%.</li>
<li>DELETEs rose +3.4% in WI0-4, the strongest first-week result in the study history. Low-velocity DELETEs also rose, returning +2.6% across 4 names with data.</li>
</ul>


MSCI Japan June 2026 added 3 stocks and deleted 14. With the first implementation week complete, we review current-cycle performance vs history.
ADDs gave back after a positive bridge. All 3 ADDs fell in WI0-4, with aggregate return of -9.0% vs the historical ADD mean of -2.9%.
DELETEs rose +3.4% in WI0-4, the strongest first-week result in the study history. Low-velocity DELETEs also rose, returning +2.6% across 4 names with data.


MS-Japan June 2026 Rebalance: Post-Implementation Review

'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)

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/172/203/original/2020-11-17_12-24-48.png?1605583510" class="editor-image img-responsive" data-smartkarma-image-id="172203"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div>
<p><strong>BRIGHTER, LATER</strong> - Forecast Aggregate Net Income for the universe of Japanese listed companies ended the quarter, higher than three months ago by ¥1.2 trillion. As a result, the market's forward multiple is unchanged at 31 times, despite a 7% rise in market capitalisation. Although this 'season' was the best in two years in terms of forecast profits, trailing earnings are still falling, by almost ¥3 trillion in the case of operating income. Much of the market optimism rests on a Japan experiencing a mild COVID winter and the impact of the incoming Biden administration's policy pronouncements on the US dollar. </p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/172/219/original/2020-11-17_13-33-54.png?1605587647" class="editor-image img-responsive" data-smartkarma-image-id="172219"></figure></section><p><strong>5.2% TTM OPERATING MARGINS</strong> - Aggregate Operating Income has declined by a third year-on-year on a 10% decline in revenues. The good news is that the pace of decline is slowing. Nevertheless, all of the Abe-era gains in earnings have now been unwound.</p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/172/230/original/2020-11-17_13-47-49.png?1605588488" class="editor-image img-responsive" data-smartkarma-image-id="172230"></figure><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/172/394/original/2020-11-18_07-24-55.png?1605651921" class="editor-image img-responsive" data-smartkarma-image-id="172394"></figure></section><p><strong>4.8% FORECAST OPERATING MARGINS</strong> - Operating margins are forecast to contract further over the next five months to 4.8%. Forecast revenues and operating income are both 3% lower than three months ago, the slowest rate of attrition in three quarters. The current market euphoria, which has taken total capitalisation to within 3% of the pre-COVID high is implying that the next 'print' of this data series, will be positive.    </p></section><section class="figure"></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/172/256/original/2020-11-17_14-22-29.png?1605590564" class="editor-image img-responsive" data-smartkarma-image-id="172256"></figure></section><p><strong>POSITIVE MOMENTUM</strong> - The sharp recovery in earnings momentum, which the market has been discounting is now materialising. Our Forecast/Revision Score has returned to March levels while the trailing Results Score has bottomed out well above the low of 2009. </p>
<section class="figure"><section class="figure"></section><div class="content-highlight"><p>In the <strong>DETAIL</strong> section below, we shall review the actual results and initial and revised forecasts by Sector and highlight the best and worst-performing companies by one-quarter revenue and margin changes. </p></div></section></section>

Source for all charts &amp; tables: Japan Analytics
BRIGHTER, LATER - Forecast Aggregate Net Income for the universe of Japanese listed companies ended the quarter, higher than three months ago by ¥1.2 trillion. As a result, the market's forward multiple is unchanged at 31 times, despite a 7% rise in market capitalisation. Although this 'season' was the best in two years in terms of forecast profits, trailing earnings are still falling, by almost ¥3 trillion in the case of operating income. Much of the market optimism rests on a Japan experiencing a mild COVID winter and the impact of the incoming Biden administration's policy pronouncements on the US dollar. 
5.2% TTM OPERATING MARGINS - Aggregate Operating Income has declined by a third year-on-year on a 10% decline in revenues. The good news is that the pace of decline is slowing. Nevertheless, all of the Abe-era gains in earnings have now been unwound.
4.8% FORECAST OPERATING MARGINS - Operating margins are forecast to contract further over the next five months to 4.8%. Forecast revenues and operating income are both 3% lower than three months ago, the slowest rate of attrition in three quarters. The current market euphoria, which has taken total capitalisation to within 3% of the pre-COVID high is implying that the next 'print' of this data series, will be positive.    POSITIVE MOMENTUM - The sharp recovery in earnings momentum, which the market has been discounting is now materialising. Our Forecast/Revision Score has returned to March levels while the trailing Results Score has bottomed out well above the low of 2009. 
In the DETAIL section below, we shall review the actual results and initial and revised forecasts by Sector and highlight the best and worst-performing companies by one-quarter revenue and margin changes. 

🇯🇵 JAPAN • IT’S A WRAP - Autumn 2020 Results & Revisions Review

President

Thomas Coughlin

Coughlin Associates

<p>High capacity HDDs, particularly nearline drives for enterprise and hyper scale data centers are the one growth area for HDDs going forward.  We project that growth in demand for nearline storage could stop the decline in HDD shipments by 2024-2025.   The growth of capacity-oriented nearline drives will result in more components per drive out to 2025.  We project that total shipments of heads and media will exceed the peak in 2014 by 2024-2025, largely due to the growth of high capacity (many heads and media) hard disk drives.</p>

High capacity HDDs, particularly nearline drives for enterprise and hyper scale data centers are the one growth area for HDDs going forward.  We project that growth in demand for nearline storage could stop the decline in HDD shipments by 2024-2025.   The growth of capacity-oriented nearline drives will result in more components per drive out to 2025.  We project that total shipments of heads and media will exceed the peak in 2014 by 2024-2025, largely due to the growth of high capacity (many heads and media) hard disk drives.

HDD C3Q Results, Continued Decline in Units but Growth in High Capacity HDDs

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/153/689/original/2020-08-20_08-32-43.png?1597879991" class="editor-image img-responsive" data-smartkarma-image-id="153689"></figure><div class="content-caption">All charts sourced from Japan Analytics.</div><p><strong>BRUTAL</strong> - The summer earnings 'season' reflected the broadening impact of COVID-19 on the Japanese and world economies, however, in terms of profit decline, the pace is more moderate than in the previous quarter. Japanese corporates are starting to engage in aggressive cost controls. As a result, an with no signs of virus abating or a vaccine being readily available, earnings will continue to decline in the current quarter. We have yet to reach a low point in this earnings cycle. Many companies delayed making initial forecasts for the current year. As that deficiency is gradually remedied, earnings forecasts are leading trailing results to the downside. The 'gap' for operating profits is ¥5.7 trillion, or 13%. A similar percentage fall applies to net income. Operating income is forecast to be 41% below the peak level of 2019; for net income, the decline is 57%. The aggregate forecast operating margin of 4.8%% is 294 bps lower than the peak, while the forecast net margin is 318 bps lower at 2.67%. If achieved, this outcome will exceed that of the 2008/9 financial crisis when the aggregate was negative. </p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/153/694/original/2020-08-20_09-02-34.png?1597881766" class="editor-image img-responsive" data-smartkarma-image-id="153694"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/153/695/original/2020-08-20_09-03-07.png?1597881801" class="editor-image img-responsive" data-smartkarma-image-id="153695"></figure><p><strong>TTM RESULTS &amp; FORECASTS</strong> - Using trailing-twelve-month data to smooth out the seasonality in earnings, TTM operating income is 29% lower year-on-year on a 6% decline in sales. Running the same comparison using published forecasts, operating profit expectations are 40% lower than a year ago and revenues 10% lower.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/153/727/original/2020-08-20_10-57-21.png?1597888653" class="editor-image img-responsive" data-smartkarma-image-id="153727"></figure><p><strong>DAMN THE TORPEDOES</strong> - Our scoring methodology tracks all quarterly results since 2003 and every annual and interim forecast made since 2013. The lines above represent the cap-weighted aggregates of those scores overlayed with the daily series for TOPIX. Other than the three years before the advent of 'Abenomics' and the last six months, the directional correlation is clear.  Mr Market, supported by the BoJ and Federal Reserve, is 'banking' on a sharp and sustained recovery over the next two quarters. </p><div class="content-highlight"><p>In the<strong> DETAIL</strong> section below, we shall review the actual results and initial and revised forecasts by Sector and highlight the best and worst-performing companies by one-quarter revenue and margin changes. We shall also review our Results and Revision Scoring for the market, Sectors and Companies.</p></div>

All charts sourced from Japan Analytics.BRUTAL - The summer earnings 'season' reflected the broadening impact of COVID-19 on the Japanese and world economies, however, in terms of profit decline, the pace is more moderate than in the previous quarter. Japanese corporates are starting to engage in aggressive cost controls. As a result, an with no signs of virus abating or a vaccine being readily available, earnings will continue to decline in the current quarter. We have yet to reach a low point in this earnings cycle. Many companies delayed making initial forecasts for the current year. As that deficiency is gradually remedied, earnings forecasts are leading trailing results to the downside. The 'gap' for operating profits is ¥5.7 trillion, or 13%. A similar percentage fall applies to net income. Operating income is forecast to be 41% below the peak level of 2019; for net income, the decline is 57%. The aggregate forecast operating margin of 4.8%% is 294 bps lower than the peak, while the forecast net margin is 318 bps lower at 2.67%. If achieved, this outcome will exceed that of the 2008/9 financial crisis when the aggregate was negative. TTM RESULTS &amp; FORECASTS - Using trailing-twelve-month data to smooth out the seasonality in earnings, TTM operating income is 29% lower year-on-year on a 6% decline in sales. Running the same comparison using published forecasts, operating profit expectations are 40% lower than a year ago and revenues 10% lower.DAMN THE TORPEDOES - Our scoring methodology tracks all quarterly results since 2003 and every annual and interim forecast made since 2013. The lines above represent the cap-weighted aggregates of those scores overlayed with the daily series for TOPIX. Other than the three years before the advent of 'Abenomics' and the last six months, the directional correlation is clear.  Mr Market, supported by the BoJ and Federal Reserve, is 'banking' on a sharp and sustained recovery over the next two quarters. In the DETAIL section below, we shall review the actual results and initial and revised forecasts by Sector and highlight the best and worst-performing companies by one-quarter revenue and margin changes. We shall also review our Results and Revision Scoring for the market, Sectors and Companies.

🇯🇵 JAPAN • IT’S A WRAP - Summer 2020 Results & Revisions Review

Japan

Resonac Holdings Corporation manufactures and distributes chemical products. The Company produces synthetic resins, petrochemical products, inorganics, and other related products. Resonac Holdings also produces ceramics, metals, carbon, electronic materials, and other products.

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Resonac Holdings (4004 JP)

MS-Japan Index Earning Revision (Jun): Nissan Motor, Sony Financial, Mitsui Mining & Smelting, Orix

We analyzed MS-Japan's consensus for Jun 2026 and highlighted changes of EPS in Nissan Motor, Sony Financial, Mitsui Mining & Smelting, Resonac,...

Ke Yan, CFA, FRM

MS-Japan June 2026 Rebalance: Post-Implementation Review

MSCI Japan June 2026 rebalance has passed the first post-implementation week. We review what worked, what did not, and how current results compare...

Ke Yan, CFA, FRM

🇯🇵 JAPAN • IT’S A WRAP - Autumn 2020 Results & Revisions Review

BRIGHTER, LATER - Forecast Aggregate Net Income for the universe of Japanese listed companies ended the quarter, higher than three months ago by...

Campbell Gunn

HDD C3Q Results, Continued Decline in Units but Growth in High Capacity HDDs

HDD Annual Shipments in continued decline, high capacity HDD shipments expected to grow. C3Q benefited from consumer sales and continued capacity...

Thomas Coughlin

🇯🇵 JAPAN • IT’S A WRAP - Summer 2020 Results & Revisions Review

BRUTAL - The summer earnings 'season' reflected the broadening impact of COVID-19 on the Japanese and world economies, however, in terms of profit...

Campbell Gunn

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