Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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

Mitsui Mining & Smelting Co / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/15998" target="_blank" data-smartkarma-citation="entities:15998:1">Mining &amp; Smelting Co (5706 JP)</a> has been the best performer among the smelters since the start of 2017, up 64.5% as its engineering segment delivered current profit growth of 92% in FY03/18, driven by expanding sales of its Microthin electrolytic copper film. The stock is actually down 31.7% since early January as the company incurred a JPY34.6bn impairment loss on its investment in the Caserones Copper mine in Chile, operated by <a href="https://www.smartkarma.com/entities/638" target="_blank" data-smartkarma-citation="entities:638:1">JX Holdings Inc (5020 JP)</a>.<div class="content-highlight">Among the Japanese smelters, we favour…</div>

Mining &amp; Smelting Co (5706 JP) has been the best performer among the smelters since the start of 2017, up 64.5% as its engineering segment delivered current profit growth of 92% in FY03/18, driven by expanding sales of its Microthin electrolytic copper film. The stock is actually down 31.7% since early January as the company incurred a JPY34.6bn impairment loss on its investment in the Caserones Copper mine in Chile, operated by JX Holdings Inc (5020 JP).Among the Japanese smelters, we favour…

Mitsui Mining: New Smartphone Clients for Microthin HDI Circuit Boards to Drive Growth

SMM reported CP of JPY125bn for FY03/18, more or less in line with consensus at JPY126.4bn. At the time the company raised its guidance to JPY89bn at 1H results, we suggested that a JPY20bn beat was possible and we do not consider the result a surprise (the materials segments outperformed somewhat compared to our forecasts). Guidance was much weaker than consensus as the company projected PTP (accounting standards will change to IFRS for next year) of JPY121bn vs. consensus at JPY161bn.The…

SMM reported CP of JPY125bn for FY03/18, more or less in line with consensus at JPY126.4bn. At the time the company raised its guidance to JPY89bn at 1H results, we suggested that a JPY20bn beat was possible and we do not consider the result a surprise (the materials segments outperformed somewhat compared to our forecasts). Guidance was much weaker than consensus as the company projected PTP (accounting standards will change to IFRS for next year) of JPY121bn vs. consensus at JPY161bn.The…

SMM: Forecast 25% Below Consensus Is Not THAT Conservative

We have discussed <a href="https://www.smartkarma.com/entities/20957" target="_blank" data-smartkarma-citation="entities:20957:1">Yasunaga Corp (7271 JP)</a> a couple of times, noting that the company has been highly conservative with its earnings guidance in the past and that its initial guidance for JPY1.2bn in OP this year looked highly conservative. In Jul 2017, we estimated a potential range of JPY1.35-1.75bn in OP based on the company's marginal profit ratios and a relatively wide revenue growth range. After raising guidance to JPY1.42bn in February the company raised guidance to JPY1.8bn OP yesterday.…

We have discussed Yasunaga Corp (7271 JP) a couple of times, noting that the company has been highly conservative with its earnings guidance in the past and that its initial guidance for JPY1.2bn in OP this year looked highly conservative. In Jul 2017, we estimated a potential range of JPY1.35-1.75bn in OP based on the company's marginal profit ratios and a relatively wide revenue growth range. After raising guidance to JPY1.42bn in February the company raised guidance to JPY1.8bn OP yesterday.…

Yasunaga/Hirata/SMM: Up 14, 10 and 7%% - EV Battery Names Surging for Various Reasons

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

TSE Tokyo Price Index TOPIX / Technical Analysis

Economic data finally confirms what the charts have been saying all year: global growth in the major regions is now in sync.  We see the bullish advance in equities continuing well into 2018, a continuation of a long-term trend. However, the Sectors that propel this trend may be different.In our December International Strategy, we explore these and the following themes in further detail: <ul><li>Overweight Japan. </li><li>Cyclicals continue to lead, defensive continues to lag. </li><li>Actionable Sector/Group themes:<ol><li>Global banks are breaking out/bullishly inflecting. </li><li>Energy is bottoming – still a non-consensus view. </li><li>Pullback opportunity in metals &amp; mining.</li></ol></li></ul>

Economic data finally confirms what the charts have been saying all year: global growth in the major regions is now in sync.  We see the bullish advance in equities continuing well into 2018, a continuation of a long-term trend. However, the Sectors that propel this trend may be different.In our December International Strategy, we explore these and the following themes in further detail: Overweight Japan. Cyclicals continue to lead, defensive continues to lag. Actionable Sector/Group themes:Global banks are breaking out/bullishly inflecting. Energy is bottoming – still a non-consensus view. Pullback opportunity in metals &amp; mining.

International Equity Strategy: Bullish Big Picture

<a href="https://www.smartkarma.com/entities/14050" target="_blank" data-smartkarma-citation="entities:14050:1">Dowa Holdings Co Ltd (5714 JP)</a> reported 2Q results of JPY108.2bn revenue (consensus JPY111.6bn), JPY6.4bn OP (consensus JPY7.4bn), current profit of JPY8.2bn (consensus JPY7.9bn) and net profit of JPY5.6bn (consensus JPY5.5bn). On the whole, while the OP miss was disappointing, current profit is increasingly more relevant for the company due to the increasing contribution from stakes in mining assets. At the current profit level, all segments aside from Other/Elimination demonstrated YoY growth…

Dowa Holdings Co Ltd (5714 JP) reported 2Q results of JPY108.2bn revenue (consensus JPY111.6bn), JPY6.4bn OP (consensus JPY7.4bn), current profit of JPY8.2bn (consensus JPY7.9bn) and net profit of JPY5.6bn (consensus JPY5.5bn). On the whole, while the OP miss was disappointing, current profit is increasingly more relevant for the company due to the increasing contribution from stakes in mining assets. At the current profit level, all segments aside from Other/Elimination demonstrated YoY growth…

Dowa Holdings: 2Q Results In-Line but Silver Powder Recovery, Zinc and Indium Prices Are Positive

Japan

Sumitomo Metal Mining Co., Ltd. develops and mines non-ferrous metals in Japan and overseas.  The Company's primary products include copper, gold, silver, nickel, lead, and zinc.  The Company refines, produces, and sells precious metals.  Sumitomo Metal Mining also produces and markets electronic & housing construction materials and provides civil engineering works.

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Sumitomo Metal Mining (5713 JP)

Mitsui Mining: New Smartphone Clients for Microthin HDI Circuit Boards to Drive Growth

Mining & Smelting Co (5706 JP) has been the best performer among the smelters since the start of 2017, up 64.5% as its engineering segment...

Mio Kato

SMM: Forecast 25% Below Consensus Is Not THAT Conservative

SMM reported CP of JPY125bn for FY03/18, more or less in line with consensus at JPY126.4bn. At the time the company raised its guidance to JPY89bn...

Mio Kato

Yasunaga/Hirata/SMM: Up 14, 10 and 7%% - EV Battery Names Surging for Various Reasons

We have discussed Yasunaga Corp (7271 JP) a couple of times, noting that the company has been highly conservative with its earnings guidance in the...

Mio Kato

International Equity Strategy: Bullish Big Picture

Economic data finally confirms what the charts have been saying all year: global growth in the major regions is now in sync. We see the bullish...

Vermilion Research

Dowa Holdings: 2Q Results In-Line but Silver Powder Recovery, Zinc and Indium Prices Are Positive

Dowa Holdings Co Ltd (5714 JP) reported 2Q results of JPY108.2bn revenue (consensus JPY111.6bn), JPY6.4bn OP (consensus JPY7.4bn), current profit...

Mio Kato

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