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

<ul>
<li>SMM beat at the PTP level by 10% driven by the surge in nickel prices but guided for just ¥194bn undershooting consensus by 9.3%. </li>
<li>We do not find guidance credible at all as it would defy historical trends to a very large degree. </li>
<li>In fact we believe that excluding one-off gains from the sale of Sierra Gorda, PTP could actually be up YoY.</li>
</ul>


SMM beat at the PTP level by 10% driven by the surge in nickel prices but guided for just ¥194bn undershooting consensus by 9.3%. 
We do not find guidance credible at all as it would defy historical trends to a very large degree. 
In fact we believe that excluding one-off gains from the sale of Sierra Gorda, PTP could actually be up YoY.


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

<ul>
<li>Broad global MSCI equity indexes (ACWI, ACWI ex-US, EAFE, and EM) remain bearish, as do indexes in Japan, Hong Kong, China, Europe, and Germany.</li>
<li>Until we see these indexes break above downtrends and key resistance levels, we cannot be bullish.</li>
<li>Remain overweight Energy and Materials with the secular commodity bull market intact. Defensive Sectors are also hitting 1-2-year RS highs; we recommend overweights to Health Care, Utilities, and Consumer Staples.</li>
</ul>


Broad global MSCI equity indexes (ACWI, ACWI ex-US, EAFE, and EM) remain bearish, as do indexes in Japan, Hong Kong, China, Europe, and Germany.
Until we see these indexes break above downtrends and key resistance levels, we cannot be bullish.
Remain overweight Energy and Materials with the secular commodity bull market intact. Defensive Sectors are also hitting 1-2-year RS highs; we recommend overweights to Health Care, Utilities, and Consumer Staples.


Opportunities Within Energy and Materials

<ul>
<li>The broad global indexes are decisively below our "lines in the sand" of $54 on MSCI ACWI ex-US (ACWX-US), $75.25 on MSCI EAFE (EFA-US), and $99 on MSCI ACWI (ACWI-US).</li>
<li>As noted in our Feb. 15 Int'l Macro Vision, we are bearish at the index level as long as we are below the aforementioned levels.</li>
<li>Global 10-year sovereign yields remain elevated, leading to outperformance from value Sectors (Energy/Materials/Financials) which remain our preferred area of the market. We also continue to like defensive areas, especially Staples.</li>
</ul>


The broad global indexes are decisively below our "lines in the sand" of $54 on MSCI ACWI ex-US (ACWX-US), $75.25 on MSCI EAFE (EFA-US), and $99 on MSCI ACWI (ACWI-US).
As noted in our Feb. 15 Int'l Macro Vision, we are bearish at the index level as long as we are below the aforementioned levels.
Global 10-year sovereign yields remain elevated, leading to outperformance from value Sectors (Energy/Materials/Financials) which remain our preferred area of the market. We also continue to like defensive areas, especially Staples.


Buying Metals/Mining and Consumer Staples

<ul>
<li>Sumitomo Metal Mining delivered a strong 3Q with ¥73.7bn in current profit vs. consensus at ¥57.1bn. </li>
<li>Guidance was raised from ¥266bn in current profit to ¥314bn although this is inflated by about a ¥74bn gain on Sierra Gorda. </li>
<li>Nevertheless, valuations look cheap relative to earnings and imply a sharp commodity price correction which may not happen very quickly.</li>
</ul>


Sumitomo Metal Mining delivered a strong 3Q with ¥73.7bn in current profit vs. consensus at ¥57.1bn. 
Guidance was raised from ¥266bn in current profit to ¥314bn although this is inflated by about a ¥74bn gain on Sierra Gorda. 
Nevertheless, valuations look cheap relative to earnings and imply a sharp commodity price correction which may not happen very quickly.


SMM – Bump to Guidance Supports Recent Share Price Rise

<ul>
<li>The Nikkei reports that Sumitomo Metal Mining has developed a method to more effectively recycle Li-Ion battery materials. </li>
<li>Importantly, lithium can be recycled in addition to copper, nickel and cobalt and SMM expects costs to be competitive. </li>
<li>This is positive news but timelines also illustrate the hurdles for a quick transition.</li>
</ul>


The Nikkei reports that Sumitomo Metal Mining has developed a method to more effectively recycle Li-Ion battery materials. 
Importantly, lithium can be recycled in addition to copper, nickel and cobalt and SMM expects costs to be competitive. 
This is positive news but timelines also illustrate the hurdles for a quick transition.


SMM – Important Breakthrough for Li-Ion Battery Recycling

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Sumitomo Metal Mining (5713 JP)

SMM – Guidance Makes Little Sense

We believe SMM's share price implies a drastic decline in commodity prices and while that is not impossible we believe it skews risk-reward...

Mio Kato

Opportunities Within Energy and Materials

Global indexes remain below our key lines in the sand of $54 on $ACWX, $75.25 on $EFA, and the 200-day MA on $ACWI. As long as prices are below...

Vermilion Research

Buying Metals/Mining and Consumer Staples

Commodity prices remain in a secular bull market, and now even gold is joining the rally. This is bullish for global metals/mining stocks (precious...

Vermilion Research

SMM – Important Breakthrough for Li-Ion Battery Recycling

SMM has developed a method to more effectively recycle Li-Ion battery materials including lithium cost competitively. This is very positive but...

Mio Kato

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

SMM – Guidance Makes Little Sense

We believe SMM's share price implies a drastic decline in commodity prices and while that is not impossible we believe it skews risk-reward...

Mio Kato

Opportunities Within Energy and Materials

Global indexes remain below our key lines in the sand of $54 on $ACWX, $75.25 on $EFA, and the 200-day MA on $ACWI. As long as prices are below...

Vermilion Research

Buying Metals/Mining and Consumer Staples

Commodity prices remain in a secular bull market, and now even gold is joining the rally. This is bullish for global metals/mining stocks (precious...

Vermilion Research

SMM – Bump to Guidance Supports Recent Share Price Rise

SMM delivered a strong 3Qand guidance was raised to ¥314bn in current profit. Valuations look cheap relative to earnings and imply a sharp...

Mio Kato

SMM – Important Breakthrough for Li-Ion Battery Recycling

SMM has developed a method to more effectively recycle Li-Ion battery materials including lithium cost competitively. This is very positive but...

Mio Kato