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

Quantum Solutions Co Ltd / Equity Bottom-Up

<ul>
<li>Quantum Solutions has given up 63% of its recent gain but has more NVIDIA GPU related orders in the pipeline. Keep an eye on the stock and the news flow.</li>
<li>The recent upward revision to sales and profit guidance has been followed by the announcement of a capital and business tie-up with Hajime Tabata's JP Games.</li>
<li>The addition of Web-3.0 gaming to distribution of AI servers and Arm-based edge computing hardware could change the nature of the investment.</li>
</ul>


Quantum Solutions has given up 63% of its recent gain but has more NVIDIA GPU related orders in the pipeline. Keep an eye on the stock and the news flow.
The recent upward revision to sales and profit guidance has been followed by the announcement of a capital and business tie-up with Hajime Tabata's JP Games.
The addition of Web-3.0 gaming to distribution of AI servers and Arm-based edge computing hardware could change the nature of the investment.


Quantum Solutions (2338 JP): Look Again at Small Cap Play on AI Servers and Web-3.0 Gaming

Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>OVERSEAS. SPX Flat as Chips stocks sell off on potential new China restrictions;  Fed Chair Powell keeps hawkish stance saying more hikes on the horizon; Micron calling bottom on Memory. </li>
<li>JAPAN. NKY Futs +0.1% vs Cash; USDJPY 144.4; Japan FX Tsar concerned saying govt will  respond "appropriately" on excessive weakness; Final Fantasy 16 off to a solid start</li>
<li>NUGGET. Katitas - specialist in remodelling vacant homes. 40% YTD underpeformance vs TPX. Govt stepping up support of vacant home sector - supportive of Katitas's business.</li>
</ul>


OVERSEAS. SPX Flat as Chips stocks sell off on potential new China restrictions;  Fed Chair Powell keeps hawkish stance saying more hikes on the horizon; Micron calling bottom on Memory. 
JAPAN. NKY Futs +0.1% vs Cash; USDJPY 144.4; Japan FX Tsar concerned saying govt will  respond "appropriately" on excessive weakness; Final Fantasy 16 off to a solid start
NUGGET. Katitas - specialist in remodelling vacant homes. 40% YTD underpeformance vs TPX. Govt stepping up support of vacant home sector - supportive of Katitas's business.


Ohayo Japan|Chips Sell Off; Micron Calls Memory Bottom; NUGGET: Katitas(8919)-Future Looks Bright

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dena-co-ltd" target="_blank" data-smartkarma-citation="entities:747:1" rel="noopener">DeNA (2432 JP)</a> announced in June a buyback programme to buy up to ¥15bn of stock over the next nine months. They are two-thirds the way through. </li>
<li>At current pace, they should finish by end-Jan or early Feb, then cancel 8mm shares, leading to a small TOPIX selldown <em>likely</em> in March or April. </li>
<li>The company remains cash and securities rich (net cash, after-tax value of securities, and equity affiliates are 100% of market cap). And growth lines will slowly claw their way positive.</li>
</ul>



DeNA (2432 JP) announced in June a buyback programme to buy up to ¥15bn of stock over the next nine months. They are two-thirds the way through. 
At current pace, they should finish by end-Jan or early Feb, then cancel 8mm shares, leading to a small TOPIX selldown likely in March or April. 
The company remains cash and securities rich (net cash, after-tax value of securities, and equity affiliates are 100% of market cap). And growth lines will slowly claw their way positive.


DeNA (2432) Buyback - Accretive on a Low Leverage Business Which Will Grow In Time

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nexon-co-ltd" target="_blank" data-smartkarma-citation="entities:16032:1" rel="noopener">Nexon (3659 JP)</a> reported Q2 earnings and Q3 forecasts today. Everything is generally "in-line" to tilting slightly light. But USD/yen volatility matters a lot. </li>
<li>The company announced a small dividend hike, from largely meaningless to ever-so-slightly less meaningless. And a plan to buy back ¥100bn of shares over 3 years. </li>
<li>The inheritance tax issue remains a big one, but overhang appears delayed and buyback accretion is small, and also appears delated. And there's an index sell at end-September.</li>
</ul>



Nexon (3659 JP) reported Q2 earnings and Q3 forecasts today. Everything is generally "in-line" to tilting slightly light. But USD/yen volatility matters a lot. 
The company announced a small dividend hike, from largely meaningless to ever-so-slightly less meaningless. And a plan to buy back ¥100bn of shares over 3 years. 
The inheritance tax issue remains a big one, but overhang appears delayed and buyback accretion is small, and also appears delated. And there's an index sell at end-September.


Nexon Q2 In-Line, New Buyback Plan Too Small To Matter Near-Term

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

<ul>
<li>Square Enix results were mildly above consensus (by 2.4% at the revenue line and 3.4% at the OP line). </li>
<li>The company did not provide guidance on account of the pending transfer of its overseas development studios. </li>
<li>However, we expect the sale to lift a significant burden from the bottom line enabling significant YoY OP growth.</li>
</ul>


Square Enix results were mildly above consensus (by 2.4% at the revenue line and 3.4% at the OP line). 
The company did not provide guidance on account of the pending transfer of its overseas development studios. 
However, we expect the sale to lift a significant burden from the bottom line enabling significant YoY OP growth.


Square Enix – Bounce Suggests Market Was Far Too Pessimistic

Japan

SQUARE ENIX HOLDINGS CO., LTD. develops and sells entertainment software for home video game consoles including Dragon Quest and Final Fantasy series. The Company also publishes books such as informational guide books for its game software, and comic magazines and books.  Additionally, Square Enix sells character goods and stationery items from its software products.

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Square Enix Holdings (9684 JP)

Quantum Solutions (2338 JP): Look Again at Small Cap Play on AI Servers and Web-3.0 Gaming

Illiquid small cap distributor of AI servers with NVIDIA GPUs with new Web-3.0 game tie-up. Has given up 60%+ of recent gains after guidance raised...

Scott Foster

Ohayo Japan|Chips Sell Off; Micron Calls Memory Bottom; NUGGET: Katitas(8919)-Future Looks Bright

SPX Flat; Chip stocks sell off; NKY Futs +0.1% vs Cash; USDJPY 144.4; Japan FX Tsar concerned saying govt will respond "appropriately" on...

Mark Chadwick

DeNA (2432) Buyback - Accretive on a Low Leverage Business Which Will Grow In Time

DeNA (2432) is a nice pot of assets with a small business attached. It should be better. It appears to be on its way to getting better. It is very...

Travis Lundy

Nexon Q2 In-Line, New Buyback Plan Too Small To Matter Near-Term

Nexon (3659) earnings are up strongly this year, some improvement, some weak yen. The company announced a new buyback plan for the next 3yrs but it...

Travis Lundy

Square Enix – Bounce Suggests Market Was Far Too Pessimistic

Square Enix could see significant OP uplift this year after the sale of its overseas studios and could benefit from numerous upside catalysts from...

Mio Kato

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