Independent Insight Provider, Japanese equities, LightStream Research

Scott Foster

Independent Insight Provider, Japanese equities

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>Use of quantum technology expected to improve electrical die sorting (EDS) performance by several percentage points.</li>
<li>Collaboration with Quanmatic aims at full-scale introduction in April, the first month of FY Mar-25. </li>
<li>Buy for long-term growth led by power semiconductors with margin expansion from efficiency gains.</li>
</ul>


Use of quantum technology expected to improve electrical die sorting (EDS) performance by several percentage points.
Collaboration with Quanmatic aims at full-scale introduction in April, the first month of FY Mar-25. 
Buy for long-term growth led by power semiconductors with margin expansion from efficiency gains.


Rohm (6963 JP): Quantum Process Optimization

<ul>
<li>Rohm's share price was up 6% on Friday, December 8, on the news that the Japanese government will subsidize its collaboration with Toshiba in power semiconductors.</li>
<li>The subsidy will amount to one-third of the ¥388.3 billion yen the two companies plan to invest in Silicon Carbide and Silicon devices for the electric vehicle and other industries.</li>
<li>Rohm hit bottom on October 31, management cut FY Mar-24 guidance on November 1 and the market is now looking to recovery. Toshiba will be delisted on December 20.</li>
</ul>


Rohm's share price was up 6% on Friday, December 8, on the news that the Japanese government will subsidize its collaboration with Toshiba in power semiconductors.
The subsidy will amount to one-third of the ¥388.3 billion yen the two companies plan to invest in Silicon Carbide and Silicon devices for the electric vehicle and other industries.
Rohm hit bottom on October 31, management cut FY Mar-24 guidance on November 1 and the market is now looking to recovery. Toshiba will be delisted on December 20.


Rohm (6963 JP): Government Subsidy for Power Device Project with Toshiba

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>There are 38 adds/36 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.</li>
<li>Based on the adds, deletes and capping changes, we estimate one way turnover of 4.35% and a two-way trade of JPY 461bn (US$3.24bn).</li>
<li>There are a few stocks that will have same way flow from other index trackers within a few weeks of the JPX Nikkei 400 Index rebalance.</li>
</ul>


There are 38 adds/36 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.
Based on the adds, deletes and capping changes, we estimate one way turnover of 4.35% and a two-way trade of JPY 461bn (US$3.24bn).
There are a few stocks that will have same way flow from other index trackers within a few weeks of the JPX Nikkei 400 Index rebalance.


JPX Nikkei 400 Index Rebalance: Some Big Impact Names

<ul>
<li>As expected, Rohm has decided to invest ¥300 billion in the JIP-led buyout of Toshiba: ¥100 billion in voting equity shares and ¥200 billion in non-voting preferred shares. </li>
<li>This would make Toshiba an equity-method affiliate of Rohm, facilitating synergetic cooperation in power semiconductors. The investment is large, but Rohm would still have a sound balance sheet.</li>
<li>Rohm also plans to buy Solar Frontier's Kunitomi factory to meet SiC power device capacity requirements through 2030. Investors can now focus on profit growth, which should resume next year.</li>
</ul>


As expected, Rohm has decided to invest ¥300 billion in the JIP-led buyout of Toshiba: ¥100 billion in voting equity shares and ¥200 billion in non-voting preferred shares. 
This would make Toshiba an equity-method affiliate of Rohm, facilitating synergetic cooperation in power semiconductors. The investment is large, but Rohm would still have a sound balance sheet.
Rohm also plans to buy Solar Frontier's Kunitomi factory to meet SiC power device capacity requirements through 2030. Investors can now focus on profit growth, which should resume next year.


Rohm (6963): Investment in Toshiba Rounds Out Long-Term Plans

<ul>
<li>Share price performance has been strong in spite of pressure on margins from heavy investment in power semiconductors for electric vehicles. </li>
<li>Management's medium-term targets are ambitious, but could be achieved in a reasonably favorable economic environment.</li>
<li>Projected valuations compare favorably with historical ranges. The primary risk to investors appears to be  over-optimism. </li>
</ul>


Share price performance has been strong in spite of pressure on margins from heavy investment in power semiconductors for electric vehicles. 
Management's medium-term targets are ambitious, but could be achieved in a reasonably favorable economic environment.
Projected valuations compare favorably with historical ranges. The primary risk to investors appears to be  over-optimism. 


Japan

ROHM COMPANY LIMITED manufactures custom linear integrated circuits and semiconductor devices for use primarily in consumer electronics.  The Company has plants and sales offices worldwide.  Rohm's subsidiaries include Wako Electric and Apollo Electronics.

ROHM Co Ltd (6963 JP)

Rohm (6963 JP): Quantum Process Optimization

Work with Quanmatic to improve electrical die sorting efficiency by several percent. Buy for growth driven by power semiconductors for EVs and...

Scott Foster

Rohm (6963 JP): Government Subsidy for Power Device Project with Toshiba

Rohm share price up on METI subsidy for power device collaboration with Toshiba. Profit to bottom as inventory cleared in 2H of FY Mar-24, then...

Scott Foster

JPX Nikkei 400 Index Rebalance: Some Big Impact Names

There are 38 adds and 36 deletes for the JPXNK400 Index. The adds have outperformed the deletes and there is a fair bit to trade on a lot of...

Brian Freitas

Rohm (6963): Investment in Toshiba Rounds Out Long-Term Plans

To invest ¥300 billion in the Toshiba buyout. Potential synergy in power devices. The balance sheet should remain sound. Aggressive SiC expansion...

Scott Foster

Rohm (6963 JP): Taking the Long View

Investing heavily in power semiconductors for EVs, aiming for top market share. Depreciation putting pressure on the operating margin, but cash...

Scott Foster