Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, 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>Geared to rising demand for semiconductor and other industrial polishing services in general and rapid growth in the production of advanced power semiconductors in particular.</li>
<li>Sales and operating profit could double over the next 5 years, but dilution from capital raising might hold EPS growth to 50%.</li>
<li>Selling at 9.2x EPS guidance for FY Mar-22. 10x potential EPS implies 65% upside. Risks include small market cap and potentially volatile quarterly earnings.</li>
</ul>


Geared to rising demand for semiconductor and other industrial polishing services in general and rapid growth in the production of advanced power semiconductors in particular.
Sales and operating profit could double over the next 5 years, but dilution from capital raising might hold EPS growth to 50%.
Selling at 9.2x EPS guidance for FY Mar-22. 10x potential EPS implies 65% upside. Risks include small market cap and potentially volatile quarterly earnings.


Mipox (5381 JP): Participation in Power Semiconductor Consortium a Growth Driver

<ul>
<li>Based on following the company for 25 years, I agree with Mio Kato: I do not think Rohm would or should acquire Toshiba's power semiconductor operations.</li>
<li>It would violate Rohm's commitment to a sound financial structure and saddle it with an integration problem that might never be solved.</li>
<li>Far better to keep working with the NEDO power device consortium while continuing to expand and improve its own power device business.</li>
</ul>


Based on following the company for 25 years, I agree with Mio Kato: I do not think Rohm would or should acquire Toshiba's power semiconductor operations.
It would violate Rohm's commitment to a sound financial structure and saddle it with an integration problem that might never be solved.
Far better to keep working with the NEDO power device consortium while continuing to expand and improve its own power device business.


Rohm (6963 JP): Probably Won't Buy Toshiba's Electronic Devices Business

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Event-Driven

<ul>
<li>We have made no secret of the fact that we consider Toshiba’s restructuring plans to be unspectacular. </li>
<li>Initially we saw no reason to separate the infrastructure business and saleable assets but with  that issue addressed it is the position of the devices business which concerns us. </li>
<li>This is because we feel it is rather undersized to stand on its own two feet… but we increasingly feel that Renesas could be the ideal home for the unit.</li>
</ul>


We have made no secret of the fact that we consider Toshiba’s restructuring plans to be unspectacular. 
Initially we saw no reason to separate the infrastructure business and saleable assets but with  that issue addressed it is the position of the devices business which concerns us. 
This is because we feel it is rather undersized to stand on its own two feet… but we increasingly feel that Renesas could be the ideal home for the unit.


Toshiba – Why Renesas Might Be a Better Option for the Devices Business than an IPO

<ul>
<li>Sales, profits and profit margins continued to rise in 3Q, led by IC and discrete semiconductor sales for automotive and industrial applications.</li>
<li>FY Mar-22 guidance looks conservative, but management left it unchanged out of a sense of caution.</li>
<li>Having dropped 21% since November, the share price should now recover based on the fundamentals. </li>
</ul>


Sales, profits and profit margins continued to rise in 3Q, led by IC and discrete semiconductor sales for automotive and industrial applications.
FY Mar-22 guidance looks conservative, but management left it unchanged out of a sense of caution.
Having dropped 21% since November, the share price should now recover based on the fundamentals. 


Rohm (6963 JP): Buy into the Tech Sell-Off

<ul>
<li>In 2020 and 2021 we had nine conviction calls, four of which returned over 50% within just over a year.</li>
<li>Three more returned close to 40%, one returned 15% and just one was an abject failure returning -39%. </li>
<li>On average, alpha generation was 24.3% and our 2022 names are off to a good start putting up 14.7% in alpha in just over a month and a half.</li>
</ul>


In 2020 and 2021 we had nine conviction calls, four of which returned over 50% within just over a year.
Three more returned close to 40%, one returned 15% and just one was an abject failure returning -39%. 
On average, alpha generation was 24.3% and our 2022 names are off to a good start putting up 14.7% in alpha in just over a month and a half.


A Belated Look Back at Our 2020 and 2021 Conviction Calls and a Look Ahead to 2022

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.

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ROHM Co Ltd (6963 JP)

Mipox (5381 JP): Participation in Power Semiconductor Consortium a Growth Driver

Participation in NEDO power semiconductor consortium could support 2X sales and 50% EPS growth. Potentially volatile small cap, but selling at 9x...

Scott Foster

Rohm (6963 JP): Probably Won't Buy Toshiba's Electronic Devices Business

Rohm will probably not acquire Toshiba's power device business. Instead, it will keep working with NEDO to expand its own capabilities. Down 24%...

Scott Foster

Toshiba – Why Renesas Might Be a Better Option for the Devices Business than an IPO

We believe a listing of Toshiba's device business would not create an especially attractive security for investors and that a sale to a domestic...

Mio Kato

Rohm (6963 JP): Buy into the Tech Sell-Off

The share price dropped 21% with the tech sell-off while sales rose, margins expanded and conservative guidance was left unchanged. Buy for long...

Scott Foster

A Belated Look Back at Our 2020 and 2021 Conviction Calls and a Look Ahead to 2022

We take a look back at our conviction calls from 2020 and 2021 to assess performance and put the strong start to our 2022 names in context.

Mio Kato

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