'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Quantitative Analysis

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/001/original/2019-07-13_16-16-31.png?1563002212" class="editor-image img-responsive" data-smartkarma-image-id="93001"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/005/original/2019-07-13_16-25-24.png?1563002742" class="editor-image img-responsive" data-smartkarma-image-id="93005"></figure>Source: Japan Analytics
</div>MOVING AVERAGE BREAKOUT - Japanese equities have now risen by 5.1% since the low of 4th June and, since July 1st, the Total Market Value has exceeded the 50-Day Moving Average for the first time since 26th April. Over the last two weeks, the Total Market Value has gained 1.7% in both Yen and US dollar times. For the previous twelve months, the equity market has moved in line with the US dollar/Japanese Yen exchange rate. It remains to be seen how the 'gap' that has opened up in the last month will be closed. Any further strength in the Yen from current levels will likely see the market slip below the 50-Day Moving Average again.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/020/original/2019-07-14_06-28-16.png?1563053334" class="editor-image img-responsive" data-smartkarma-image-id="93020"></figure><div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/024/original/2019-07-14_06-45-29.png?1563054338" class="editor-image img-responsive" data-smartkarma-image-id="93024"></figure> Source: Japan Analytics</div>VALUE TRADED RATIO - The Value Traded Ratio (Value Traded/Total Market Value) has seen two new eighteen-month lows. If the three days around Christmas are excluded, the current apathy towards Japanese equities is the most extreme since 2012 and is confirmed by recent BAML investor surveys. In the past, such periods of inactivity (marked"▲"above)  have preceded changes in market direction, more often upwards rather than downwards and suggest the current rally has more 'legs'. <div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/025/original/2019-07-14_06-47-40.png?1563054585" class="editor-image img-responsive" data-smartkarma-image-id="93025"></figure> Source: Japan Analytics</div>TORAKU INDEX - Conversely, the Toraku advance/decline index is suggesting a degree of caution having breached the 120 'overbought' line for only the third time in eighteen months. Combining this analysis with the Value Traded Ratio, there is scope for a short-term upward move akin to that of October 2018 to be followed by a sharper downward trend into the autumn.  <div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/026/original/2019-07-14_06-54-51.png?1563054906" class="editor-image img-responsive" data-smartkarma-image-id="93026"></figure> Source: Japan Analytics</div>VOLUME SCORE TIMELINE - The lull in market turnover is confirmed in the greener 'bias' in our Sector volume timeline. The Retail and Restaurant Sectors are hot as we are in the middle of the quarterly results announcements for February/May/August/November year-end companies. REITs remain the 'go-to' defensive Sector while the Information Technology and Internet Sectors are the 'tema-du-jour' - to mix language metaphors. The 'untouchables' are Metals, Banks, UtilitiesTransportation,  and Multi-Industry.<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/028/original/2019-07-14_07-31-40.png?1563057109" class="editor-image img-responsive" data-smartkarma-image-id="93028"></figure> Source: Japan Analytics</div>3-MONTH SECTOR CONTRIBUTION - Over the last three months, a long Telcos/short Autos strategy would have yielded 82 basis points of performance. The Retail Sector has responded well to the results released so far led by drugstores <a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1" rel="noopener">Welcia (3141 JP)</a> and <a href="https://www.smartkarma.com/entities/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">Tsuruha (3391 JP), </a><a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a><a href="https://www.smartkarma.com/entities/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">, and </a><a href="https://www.smartkarma.com/entities/lawson-inc" target="_blank" data-smartkarma-citation="entities:1040:1" rel="noopener">Lawson (2651 JP)</a>. Electrical Equipment has suffered from weakness in component stocks <a href="https://www.smartkarma.com/entities/alps-alpine-co-ltd" target="_blank" data-smartkarma-citation="entities:12001:1" rel="noopener">Alps Alpine (6770 JP)</a> (-38% over one year), <a href="https://www.smartkarma.com/entities/murata-manufacturing-co-ltd" target="_blank" data-smartkarma-citation="entities:11649:1" rel="noopener">Murata (6981 JP)</a> (see <a href="https://www.smartkarma.com/profiles/scott-foster" target="_blank" data-smartkarma-citation="accounts:1134" rel="noopener">Scott Foster</a>'s <a href="https://www.smartkarma.com/insights/murata-mfg-6981-jp-buy-on-decline-for-the-long-term" target="_blank" data-smartkarma-citation="insights:30919" rel="noopener">(Buy on Decline for the Long Term</a>), and <a href="https://www.smartkarma.com/entities/taiyo-yuden-co-ltd" target="_blank" data-smartkarma-citation="entities:9924:1" rel="noopener">Taiyo Yuden (6976 JP)</a>, while <a href="https://www.smartkarma.com/entities/smc-corp" target="_blank" data-smartkarma-citation="entities:20866:1" rel="noopener">SMC (6273 JP)</a>, <a href="https://www.smartkarma.com/entities/fanuc-corp" target="_blank" data-smartkarma-citation="entities:752:1" rel="noopener">Fanuc (6954 JP)</a>, and <a href="https://www.smartkarma.com/entities/komatsu-ltd" target="_blank" data-smartkarma-citation="entities:8416:1" rel="noopener">Komatsu (6301 JP)</a> have weighed on the Machinery Sector.<div class="content-caption">
<figure class="editor-figure mceNonEditable"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/031/original/2019-07-14_07-44-47.png?1563057897" class="editor-image img-responsive" data-smartkarma-image-id="93031"></figure></figure> Source: Japan Analytics</div>SECTOR SCORE MATRIX - Arranging our cap-weighted Sector Relative Price Scores and Results &amp; Revisions Scores in a four-quadrant matrix whose extremes are Contrarian Sell, Contrarian Buy, Unrequited Growth, and Ex-Growth suggest profit-taking in Information Technology (<a href="https://www.smartkarma.com/entities/obic-co-ltd" target="_blank" data-smartkarma-citation="entities:1273:1" rel="noopener">OBIC (4684 JP)</a>, Other Commerical Products (<a href="https://www.smartkarma.com/entities/hoya-corp" target="_blank" data-smartkarma-citation="entities:8990:1" rel="noopener">Hoya Corp (7741 JP)</a>, and Commercial Services (<a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit 6098 JP).</a> We are not contrarian enough to fall into the banking 'trap', however, the Metals Sector may offer some 'crumbs' of comfort for those in need of a deep value 'fix' (<a href="https://www.smartkarma.com/entities/nippon-steel-sumitomo-metal-corp" target="_blank" data-smartkarma-citation="entities:961:1" rel="noopener">Nippon Steel &amp; Sumitomo Metal (5401 JP)</a>) <div class="content-highlight">In the DETAIL section below, we will review Sector performance, scores and valuation in more detail, as well as Company Results &amp; Revisions and individual stock performance over the previous two weeks, as well as adding some brief comments on <a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1" rel="noopener">Welcia (3141 JP)</a>, <a href="https://www.smartkarma.com/entities/daiseki-co-ltd" target="_blank" data-smartkarma-citation="entities:2330:1" rel="noopener">Daiseki (9793 JP), </a><a href="https://www.smartkarma.com/entities/yaskawa-electric-corp" target="_blank" data-smartkarma-citation="entities:2458:1" rel="noopener">Yaskawa Electric (6506 JP), </a><a href="https://www.smartkarma.com/entities/pola-orbis-holdings-inc" target="_blank" data-smartkarma-citation="entities:2287:1" rel="noopener">Pola Orbis (4927 JP)</a>, <a href="https://www.smartkarma.com/entities/sekisui-house-ltd" target="_blank" data-smartkarma-citation="entities:4508:1" rel="noopener">Sekisui House (1928 JP)</a>, <a href="https://www.smartkarma.com/entities/keyence-corp" target="_blank" data-smartkarma-citation="entities:3077:1" rel="noopener">Keyence (6861 JP)</a>, <a href="https://www.smartkarma.com/entities/japan-post-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:840:1" rel="noopener">Japan Post Insurance (7181 JP)</a>, and <a href="https://www.smartkarma.com/entities/obic-co-ltd" target="_blank" data-smartkarma-citation="entities:1273:1" rel="noopener">Obic (4684 JP)</a>.</div>


Source: Japan Analytics
MOVING AVERAGE BREAKOUT - Japanese equities have now risen by 5.1% since the low of 4th June and, since July 1st, the Total Market Value has exceeded the 50-Day Moving Average for the first time since 26th April. Over the last two weeks, the Total Market Value has gained 1.7% in both Yen and US dollar times. For the previous twelve months, the equity market has moved in line with the US dollar/Japanese Yen exchange rate. It remains to be seen how the 'gap' that has opened up in the last month will be closed. Any further strength in the Yen from current levels will likely see the market slip below the 50-Day Moving Average again.
 Source: Japan AnalyticsVALUE TRADED RATIO - The Value Traded Ratio (Value Traded/Total Market Value) has seen two new eighteen-month lows. If the three days around Christmas are excluded, the current apathy towards Japanese equities is the most extreme since 2012 and is confirmed by recent BAML investor surveys. In the past, such periods of inactivity (marked"▲"above)  have preceded changes in market direction, more often upwards rather than downwards and suggest the current rally has more 'legs'. 
 Source: Japan AnalyticsTORAKU INDEX - Conversely, the Toraku advance/decline index is suggesting a degree of caution having breached the 120 'overbought' line for only the third time in eighteen months. Combining this analysis with the Value Traded Ratio, there is scope for a short-term upward move akin to that of October 2018 to be followed by a sharper downward trend into the autumn.  
 Source: Japan AnalyticsVOLUME SCORE TIMELINE - The lull in market turnover is confirmed in the greener 'bias' in our Sector volume timeline. The Retail and Restaurant Sectors are hot as we are in the middle of the quarterly results announcements for February/May/August/November year-end companies. REITs remain the 'go-to' defensive Sector while the Information Technology and Internet Sectors are the 'tema-du-jour' - to mix language metaphors. The 'untouchables' are Metals, Banks, UtilitiesTransportation,  and Multi-Industry.
 Source: Japan Analytics3-MONTH SECTOR CONTRIBUTION - Over the last three months, a long Telcos/short Autos strategy would have yielded 82 basis points of performance. The Retail Sector has responded well to the results released so far led by drugstores Welcia (3141 JP) and Tsuruha (3391 JP), Fast Retailing (9983 JP), and Lawson (2651 JP). Electrical Equipment has suffered from weakness in component stocks Alps Alpine (6770 JP) (-38% over one year), Murata (6981 JP) (see Scott Foster's (Buy on Decline for the Long Term), and Taiyo Yuden (6976 JP), while SMC (6273 JP), Fanuc (6954 JP), and Komatsu (6301 JP) have weighed on the Machinery Sector.
 Source: Japan AnalyticsSECTOR SCORE MATRIX - Arranging our cap-weighted Sector Relative Price Scores and Results &amp; Revisions Scores in a four-quadrant matrix whose extremes are Contrarian Sell, Contrarian Buy, Unrequited Growth, and Ex-Growth suggest profit-taking in Information Technology (OBIC (4684 JP), Other Commerical Products (Hoya Corp (7741 JP), and Commercial Services (Recruit 6098 JP). We are not contrarian enough to fall into the banking 'trap', however, the Metals Sector may offer some 'crumbs' of comfort for those in need of a deep value 'fix' (Nippon Steel &amp; Sumitomo Metal (5401 JP)) In the DETAIL section below, we will review Sector performance, scores and valuation in more detail, as well as Company Results &amp; Revisions and individual stock performance over the previous two weeks, as well as adding some brief comments on Welcia (3141 JP), Daiseki (9793 JP), Yaskawa Electric (6506 JP), Pola Orbis (4927 JP), Sekisui House (1928 JP), Keyence (6861 JP), Japan Post Insurance (7181 JP), and Obic (4684 JP).

🇯🇵 JAPAN • Market Update - Levitating on Thin Air

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

First rumoured back in late January - although arguably the sale was in the cross-hairs after <a href="https://www.smartkarma.com/entities/lafargeholcim-ltd" target="_blank" data-smartkarma-citation="entities:27916:1" rel="noopener">LafargeHolcim Ltd (LHN SW)</a> divested Holcim Indonesia late last year - <a href="https://www.smartkarma.com/entities/san-miguel-corporation" target="_blank" data-smartkarma-citation="entities:22728:1" rel="noopener">San Miguel (SMC PM)</a> ​and Lafarge had entered into a <a href="http://edge.pse.com.ph/downloadHtml.do?file_id=582973" target="_blank" rel="noopener">share purchase agreement</a> whereby SMC would acquire an 85.73% in <a href="https://www.smartkarma.com/entities/holcim-philippines-inc" target="_blank" data-smartkarma-citation="entities:22702:1" rel="noopener">Holcim Philippines (HLCM PM)</a>. Here is Lafarge's <a href="https://www.lafargeholcim.com/lafargeholcim-divests-activities-philippines" target="_blank" rel="noopener">announcement</a>.
The agreement places a valuation of US$2.15bn for HLCM on a 100% basis, inclusive of fees for transitional service agreements, or ~PHP16.60-PHP17.00/share, depending on how that 100% basis is calculated - the actual price/share is not public.
The purchase price is subject to an upward or downward post-closing purchase price adjustment, if any. 
Following the completion of the transaction, which is subject to approval from the Philippine Competition Commission (“PCC”), SMC will conduct a tender offer for the remaining 14.27%. This will be done at the same price (at least) as the price under the SPA.
SMC has asked the Securities and Exchange Commission to defer the mandatory tender offer until after pricing has been finalized and the deal cleared by the PCC. The application was lodged with the PCC on the 9 June.
There are various moving parts here - pricing is subject to a revision; there are evident competition concerns; plus the timetable for the tender offer offers up various outcomes.
This stock has run up a long way since January. Yet with a conservative late-2019/early-2020 completion, current pricing still looks attractive here. <a href="https://www.holcim.ph/sites/philippines/files/atoms/files/march_02_2018_hpi_annual_report_2017_part_1_sec_17a.pdf" target="_blank" rel="noopener"></a>

First rumoured back in late January - although arguably the sale was in the cross-hairs after LafargeHolcim Ltd (LHN SW) divested Holcim Indonesia late last year - San Miguel (SMC PM) ​and Lafarge had entered into a share purchase agreement whereby SMC would acquire an 85.73% in Holcim Philippines (HLCM PM). Here is Lafarge's announcement.
The agreement places a valuation of US$2.15bn for HLCM on a 100% basis, inclusive of fees for transitional service agreements, or ~PHP16.60-PHP17.00/share, depending on how that 100% basis is calculated - the actual price/share is not public.
The purchase price is subject to an upward or downward post-closing purchase price adjustment, if any. 
Following the completion of the transaction, which is subject to approval from the Philippine Competition Commission (“PCC”), SMC will conduct a tender offer for the remaining 14.27%. This will be done at the same price (at least) as the price under the SPA.
SMC has asked the Securities and Exchange Commission to defer the mandatory tender offer until after pricing has been finalized and the deal cleared by the PCC. The application was lodged with the PCC on the 9 June.
There are various moving parts here - pricing is subject to a revision; there are evident competition concerns; plus the timetable for the tender offer offers up various outcomes.
This stock has run up a long way since January. Yet with a conservative late-2019/early-2020 completion, current pricing still looks attractive here.  

SMC Pursues A Ready-Mixed Fortune With Holcim

SPRING RESULTS &amp; REVISION SCORES - Better late than never, we Detail below lists the top and bottom-ranked companies measured by their Results &amp; Revision Scores as well as the top and bottom one-quarter changes and the Optimists (Forecasts &gt; TTM results) and Pessimists (TTM results &gt; Forecasts). For newcomers to these Insights, our Results &amp; Revision Scores, Results Scores, and Forecast/Revisions Scores provide a standardised 'scoring' of the trend and momentum in both results and initial forecasts/revisions for every listed Japanese company. The data series, which starts in 2008, covers over 160,000 quarterly results and 120,000 initial forecasts and subsequent forecast revisions. <div class="content-remarks"><ul>
<li>
Results Scores are calculated using the most recent eight quarters of data for revenues, operating income and operating margin and, for each, measure the rate, degree, and consistency of change. The score has a maximum of +30 and a minimum of -30 for each period. In cases where the data is insufficient, incomplete or non-comparable data, the score defaults to zero. Usually, 25% of Japanese company quarterly earnings show losses, and therefore scoring methodology is more revealing of trends than percentage changes.</li>
<li>The Forecast/Revision Score is based on both Annual and Interim period forecasts and compares changes from previous forecasts as well as against the trailing twelve-month (TTM) or past first-half results, with annual forecasts being double-weighted. This score also has a maximum of +30 and a minimum of -30 for each period.</li>
<li>The Results &amp; Revision Score is an average of the Results Scores and the Forecasts/Revision Score and is used to sort the universe by score and change in score in the tables below.</li>
</ul></div>

SPRING RESULTS &amp; REVISION SCORES - Better late than never, we Detail below lists the top and bottom-ranked companies measured by their Results &amp; Revision Scores as well as the top and bottom one-quarter changes and the Optimists (Forecasts &gt; TTM results) and Pessimists (TTM results &gt; Forecasts). For newcomers to these Insights, our Results &amp; Revision Scores, Results Scores, and Forecast/Revisions Scores provide a standardised 'scoring' of the trend and momentum in both results and initial forecasts/revisions for every listed Japanese company. The data series, which starts in 2008, covers over 160,000 quarterly results and 120,000 initial forecasts and subsequent forecast revisions. 

Results Scores are calculated using the most recent eight quarters of data for revenues, operating income and operating margin and, for each, measure the rate, degree, and consistency of change. The score has a maximum of +30 and a minimum of -30 for each period. In cases where the data is insufficient, incomplete or non-comparable data, the score defaults to zero. Usually, 25% of Japanese company quarterly earnings show losses, and therefore scoring methodology is more revealing of trends than percentage changes.
The Forecast/Revision Score is based on both Annual and Interim period forecasts and compares changes from previous forecasts as well as against the trailing twelve-month (TTM) or past first-half results, with annual forecasts being double-weighted. This score also has a maximum of +30 and a minimum of -30 for each period.
The Results &amp; Revision Score is an average of the Results Scores and the Forecasts/Revision Score and is used to sort the universe by score and change in score in the tables below.


🇯🇵 Japan • Spring Large Cap Results & Revision Scores

Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

Equity Bottom-Up

The contraction of SMC's business accelerated in 4Q of FY Mar-19, with sales down 12.7% and operating profit down 18.9% year-on-year. Shipments to the electronics, auto and machine tool industries continued to decline. Operating profit and the operating margin dropped to the lowest levels in two years.In FY Mar-19 as a whole, sales were down 2.4% and operating profit down 6.4%. Inventory increased by 12% but payables dropped by more than half, pointing to a substantial inventory ahead. Data for the month of April show a rebound in orders from Asia-Pacific, but continued weakness elsewhere.For 1H of FY Mar-20, management is guiding for a 9.1% year-on-year decline in sales and an 18.0% decline in operating profit. Guidance for 2H is the same as guidance for 1H, indicating a lack of visibility and perhaps over-optimism regarding the recovery of the semiconductor and other user industries (see <a href="https://www.smartkarma.com/insights/why-commodities-drive-the-semiconductor-cycle" target="_blank" data-smartkarma-citation="insights:30110">Why Commodities Drive the Semiconductor Cycle</a> by Jim Handy).  Year-on-year comparisons are likely to remain difficult at least through 1H and perhaps longer.Capital spending rose from ¥24.2 billion in FY Mar-18 to 29.6 billion in FY Mar-19 and is scheduled to reach ¥49 billion in FY Mar-20 as the company goes ahead with factory construction in Vietnam and Tianjin. Depreciation is forecast to rise from ¥16.1 billion in FY Mar-19 to ¥18.1 billion in FY Mar-20 and is likely to increase again in FY Mar-21 as the company prepares for its next growth cycle in Asia.At ¥36,700 (Thursday, May 30, closing price), the shares are selling at 21.5x management's EPS guidance for FY Mar-20.  This compares with a 5-year historical P/E range of 13.8x - 28.5x. From January to April, SMC's share price rose by 51%, from ¥30,820 to ¥46,670, probably due to unwarranted expectations for a U.S. - China trade deal. Those expectations have been put on hold, but could easily be reignited by President Trump. Calculations by Japan Analytics show the share price near the company's no-growth valuation. Wait for a positive catalyst while keeping in mind that year-on-year sales and profit growth may not resume for several quarters.

The contraction of SMC's business accelerated in 4Q of FY Mar-19, with sales down 12.7% and operating profit down 18.9% year-on-year. Shipments to the electronics, auto and machine tool industries continued to decline. Operating profit and the operating margin dropped to the lowest levels in two years.In FY Mar-19 as a whole, sales were down 2.4% and operating profit down 6.4%. Inventory increased by 12% but payables dropped by more than half, pointing to a substantial inventory ahead. Data for the month of April show a rebound in orders from Asia-Pacific, but continued weakness elsewhere.For 1H of FY Mar-20, management is guiding for a 9.1% year-on-year decline in sales and an 18.0% decline in operating profit. Guidance for 2H is the same as guidance for 1H, indicating a lack of visibility and perhaps over-optimism regarding the recovery of the semiconductor and other user industries (see Why Commodities Drive the Semiconductor Cycle by Jim Handy).  Year-on-year comparisons are likely to remain difficult at least through 1H and perhaps longer.Capital spending rose from ¥24.2 billion in FY Mar-18 to 29.6 billion in FY Mar-19 and is scheduled to reach ¥49 billion in FY Mar-20 as the company goes ahead with factory construction in Vietnam and Tianjin. Depreciation is forecast to rise from ¥16.1 billion in FY Mar-19 to ¥18.1 billion in FY Mar-20 and is likely to increase again in FY Mar-21 as the company prepares for its next growth cycle in Asia.At ¥36,700 (Thursday, May 30, closing price), the shares are selling at 21.5x management's EPS guidance for FY Mar-20.  This compares with a 5-year historical P/E range of 13.8x - 28.5x. From January to April, SMC's share price rose by 51%, from ¥30,820 to ¥46,670, probably due to unwarranted expectations for a U.S. - China trade deal. Those expectations have been put on hold, but could easily be reignited by President Trump. Calculations by Japan Analytics show the share price near the company's no-growth valuation. Wait for a positive catalyst while keeping in mind that year-on-year sales and profit growth may not resume for several quarters.

SMC (6273 JP): Getting in Line with Reality

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Our positive outlook on global equities (both the MSCI ACWI and ACWI ex-US) remains intact and we believe a “buy the dip” strategy is warranted. We recommend taking advantage of recent weakness -- where applicable -- by adding exposure to cyclical Sectors. Today’s recommendations focus on autos, auto parts, and machinery which span the Consumer Discretionary and Manufacturing Sectors.

Our positive outlook on global equities (both the MSCI ACWI and ACWI ex-US) remains intact and we believe a “buy the dip” strategy is warranted. We recommend taking advantage of recent weakness -- where applicable -- by adding exposure to cyclical Sectors. Today’s recommendations focus on autos, auto parts, and machinery which span the Consumer Discretionary and Manufacturing Sectors. 

Global Equity Strategy: Overweight Cyclicals

Japan

SMC CORPORATION manufactures directional control devices such as power, hand, and air valves.  The Company also produces air filters, cylinders, and actuators along with other pneumatic equipment.  SMC seeks to become a comprehensive maker of automated equipment through the market demand of information and communications products.

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SMC Corp (6273 JP)

🇯🇵 JAPAN • Market Update - Levitating on Thin Air

MOVING AVERAGE BREAKOUT - Japanese equities have now risen by 5.1% since the low of 4th June and, since July 1st, the Total Market Value has...

Campbell Gunn

SMC Pursues A Ready-Mixed Fortune With Holcim

First rumoured back in late January - although arguably the sale was in the cross-hairs after LafargeHolcim Ltd (LHN SW) divested Holcim Indonesia...

David Blennerhassett

🇯🇵 Japan • Spring Large Cap Results & Revision Scores

SPRING RESULTS & REVISION SCORES - Better late than never, we Detail below lists the top and bottom-ranked companies measured by their Results...

Campbell Gunn

SMC (6273 JP): Getting in Line with Reality

The contraction of SMC's business accelerated in 4Q of FY Mar-19, with sales down 12.7% and operating profit down 18.9% year-on-year. Shipments to...

Scott Foster

Global Equity Strategy: Overweight Cyclicals

Our positive outlook on global equities (both the MSCI ACWI and ACWI ex-US) remains intact and we believe a “buy the dip” strategy is warranted. We...

Vermilion Research

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