Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>The European economy is heading for a recession due to surging energy costs</li>
<li>We believe that equity markets have already discounted this severe situation to a large extent</li>
<li>As governments respond with aggressive fiscal measures, we believe 3 Japanese stocks will be key beneficiaries</li>
</ul>


The European economy is heading for a recession due to surging energy costs
We believe that equity markets have already discounted this severe situation to a large extent
As governments respond with aggressive fiscal measures, we believe 3 Japanese stocks will be key beneficiaries


European Recession - 3 Japanese Stocks to BUY for a Rebound

Equity Bottom-Up

<ul>
<li>Shimano's stock price has declined by 25% year to date on expectations that bike sales will soon start going downhill</li>
<li>We model a GFC-style recession and find that Shimano's valuation has already reflected the worst case scenario</li>
<li>If we are heading for a collapse, then <a href="https://www.smartkarma.com/entities/ferrari-n-v" target="_blank" data-smartkarma-citation="entities:21010:1" rel="noopener">Ferrari N.V. (RACE US)</a> should be acting more like Shimano. The valuation discount between the two is as wide as ever</li>
</ul>


Shimano's stock price has declined by 25% year to date on expectations that bike sales will soon start going downhill
We model a GFC-style recession and find that Shimano's valuation has already reflected the worst case scenario
If we are heading for a collapse, then Ferrari N.V. (RACE US) should be acting more like Shimano. The valuation discount between the two is as wide as ever


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>
<a href="https://www.smartkarma.com/entities/mercari-inc" target="_blank" data-smartkarma-citation="entities:27149:1" rel="noopener">Mercari Inc (4385 JP)</a> will be added to the <a href="https://www.smartkarma.com/entities/tokyo-stock-exchange-tokyo-price-index-topix" target="_blank" data-smartkarma-citation="entities:22910:1" rel="noopener">Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX)</a> at the close on 28 July.</li>
<li>There are a lot of FFW changes, mainly reductions. This leads to large funding inflows on the large index stocks.</li>
<li>We estimate the inclusion of Mercari and the FFW changes will lead to a one-way turnover of 0.56% leading to a one-way trade of JPY 442.23bn (US$3.25bn).</li>
</ul>



Mercari Inc (4385 JP) will be added to the Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) at the close on 28 July.
There are a lot of FFW changes, mainly reductions. This leads to large funding inflows on the large index stocks.
We estimate the inclusion of Mercari and the FFW changes will lead to a one-way turnover of 0.56% leading to a one-way trade of JPY 442.23bn (US$3.25bn).


TOPIX July Rebalance: Mercari Inclusion, FFW Changes, US$6.5bn To Trade

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>The July-end TOPIX FFW Rebalance is larger than most expected, I believe. </li>
<li>There should be US$3.5bn one-way, with only a couple of major buy names.</li>
<li>
<a href="https://www.smartkarma.com/entities/chugai-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:4489:1" rel="noopener">Chugai Pharmaceutical (4519 JP)</a>, <a href="https://www.smartkarma.com/entities/canon-inc" target="_blank" data-smartkarma-citation="entities:1:1" rel="noopener">Canon Inc (7751 JP)</a>, <a href="https://www.smartkarma.com/entities/unicharm-corp" target="_blank" data-smartkarma-citation="entities:6246:1" rel="noopener">Unicharm Corp (8113 JP)</a>, <a href="https://www.smartkarma.com/entities/kubota-corp" target="_blank" data-smartkarma-citation="entities:12926:1" rel="noopener">Kubota Corp (6326 JP)</a>, <a href="https://www.smartkarma.com/entities/asahi-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10482:1" rel="noopener">Asahi Group Holdings (2502 JP)</a>, and Shiseido (4911) are each US$170mm+ to sell.</li>
</ul>


The July-end TOPIX FFW Rebalance is larger than most expected, I believe. 
There should be US$3.5bn one-way, with only a couple of major buy names.

Chugai Pharmaceutical (4519 JP), Canon Inc (7751 JP), Unicharm Corp (8113 JP), Kubota Corp (6326 JP), Asahi Group Holdings (2502 JP), and Shiseido (4911) are each US$170mm+ to sell.


TOPIX Rebalance: End-July Rebal Is $3.5bn One-Way - Some Big Sell Names

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<ul>
<li>Channel checks with <a href="https://www.smartkarma.com/entities/merida-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:12226:1" rel="noopener">Merida Industry (9914 TT)</a> and <a href="https://www.smartkarma.com/entities/giant-manufacturing-co-ltd" target="_blank" data-smartkarma-citation="entities:9014:1" rel="noopener">Giant Manufacturing (9921 TT)</a> on the Asia order book provide color on Shimano's results so far. </li>
<li>Channel checks with the Dutch <a href="https://www.smartkarma.com/entities/accell-group" target="_blank" data-smartkarma-citation="entities:21089:1" rel="noopener">Accell Group (ACCEL NA)</a> also do not show any encouraging data either. </li>
<li>Share buyback will provide short term relief but it won't make revenue growth rate to be as high as early 2021. </li>
</ul>


Channel checks with Merida Industry (9914 TT) and Giant Manufacturing (9921 TT) on the Asia order book provide color on Shimano's results so far. 
Channel checks with the Dutch Accell Group (ACCEL NA) also do not show any encouraging data either. 
Share buyback will provide short term relief but it won't make revenue growth rate to be as high as early 2021. 


Shimano (7309): Bumpy Part 2 - Channel Checks

Japan

SHIMANO INC. manufactures and sells products for bicycling, snowboarding, and fishing.  The Company's products include running gears and brake parts for bicycles and rods, reels, and tackles for fishing.  The Company manufactures golf related products as well.  Shimano mainly exports to Asia, Europe, and the United States.

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Shimano Inc (7309 JP)

European Recession - 3 Japanese Stocks to BUY for a Rebound

European stocks have sold off on rising recession risks. We believe that governments will respond with aggressive fiscal measures and Japanese...

Mark Chadwick

Shimano (7309) | Join the Race

We remain bullish on Shimano. The market is assuming that sales and profits collapse next year. We think that valuations already reflect a worst...

Mark Chadwick

TOPIX July Rebalance: Mercari Inclusion, FFW Changes, US$6.5bn To Trade

Mercari will be added to the TPX at the close on 28 July. There are a lot of FFW changes that will result in one-way turnover of 0.56% leading to a...

Brian Freitas

TOPIX Rebalance: End-July Rebal Is $3.5bn One-Way - Some Big Sell Names

The July-end TOPIX rebalance is only have the size of June but that's still big. US$3.5bn a side. There are several large names and lots of names...

Travis Lundy

Shimano (7309): Bumpy Part 2 - Channel Checks

Europe sales do not show any sign that it will have an extremely positive catalyst either. Accell’s revenue growth rate, if anything, is not that...

Henry Soediarko

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