Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

Daily cycle indicators display a topside cap for <a href="https://www.smartkarma.com/entities/6267" target="_blank" data-smartkarma-citation="entities:6267:1">Suruga Bank Ltd (8358 JP)</a> and turn barrier to press for new lows with ideal downside projection the focus to align with RSI and MACD targeted supports.The rise from December 2018 is labeled as corrective and biased for a new low. Price cap will act as resistance for those who favor the short side here.Previous supports at 603 and 590 have been broken and are now upside hurdles to contend with and use as inflection points.Oversold cycle readings are taking shape in the form of daily bull divergence from price as the weekly cycle attempts to find a foot hold in coming months.

Daily cycle indicators display a topside cap for Suruga Bank Ltd (8358 JP) and turn barrier to press for new lows with ideal downside projection the focus to align with RSI and MACD targeted supports.The rise from December 2018 is labeled as corrective and biased for a new low. Price cap will act as resistance for those who favor the short side here.Previous supports at 603 and 590 have been broken and are now upside hurdles to contend with and use as inflection points.Oversold cycle readings are taking shape in the form of daily bull divergence from price as the weekly cycle attempts to find a foot hold in coming months.

'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

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/078/341/original/2019-02-10_05-07-57.png?1549742898" class="editor-image img-responsive" data-smartkarma-image-id="78341"></figure><div class="content-caption">Source: Japan Analytics</div>BOTTOM LINE BREAKDOWN - 1,277 earnings results and/or revisions announcements were released last week in Japan covering 36% of listed market capitalisation. The good news is that aggregate trailing-twelve-month (TTM) Operating Income only declined by ¥300b. Less welcome is the ¥1.7t decline in TTM Net Income to which <a href="https://www.smartkarma.com/entities/73" target="_blank" data-smartkarma-citation="entities:73:1">Toyota Motor (7203 JP)</a>, <a href="https://www.smartkarma.com/entities/154" target="_blank" data-smartkarma-citation="entities:154:1">Honda Motor (7267 JP)</a>, <a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">Softbank Group (9984 JP)</a>, <a href="https://www.smartkarma.com/entities/7797" target="_blank" data-smartkarma-citation="entities:7797:1">Hitachi (6501 JP)</a> were the most significant contributors, each declining by more than ¥200b. Three 'financials', <a href="https://www.smartkarma.com/entities/742" target="_blank" data-smartkarma-citation="entities:742:1">Nomura Holdings (8604 JP)</a>, <a href="https://www.smartkarma.com/entities/219" target="_blank" data-smartkarma-citation="entities:219:1">Mizuho Financial Group (8411 JP)</a>, and <a href="https://www.smartkarma.com/entities/6267" target="_blank" data-smartkarma-citation="entities:6267:1">Suruga Bank (8358 JP)</a> subtracted ¥400b between them. Only <a href="https://www.smartkarma.com/entities/563" target="_blank" data-smartkarma-citation="entities:563:1">Sony (6758 JP)</a> and <a href="https://www.smartkarma.com/entities/637" target="_blank" data-smartkarma-citation="entities:637:1">Toshiba (6502 JP)</a> added more than ¥100b for the quarter. The substantial 'gap' between forecast and TTM Net Income has been reduced to just ¥600b, again confirming the reliability of corporate forecasting in Japan. The All-Market PER is now 13.5 times but will likely rise as aggregate Net Income falls further in the next two weeks.<div class="content-highlight">In the DETAIL section below, we review this year's results of all listed companies in aggregate, update our All-Market and Sector Results &amp; Revision Scores and look at the twenty-five best and worst large-cap company results over the last week, with short comments on <a href="https://www.smartkarma.com/entities/13176" target="_blank" data-smartkarma-citation="entities:13176:1">Nabtesco Corp (6268 JP)</a>, <a href="https://www.smartkarma.com/entities/8467" target="_blank" data-smartkarma-citation="entities:8467:1">Workman (7564 JP)</a>, <a href="https://www.smartkarma.com/entities/20823" target="_blank" data-smartkarma-citation="entities:20823:1">Nakanishi (7716 JP)</a>, and <a href="https://www.smartkarma.com/entities/747" target="_blank" data-smartkarma-citation="entities:747:1">DeNA (2432 JP)</a></div>

Source: Japan AnalyticsBOTTOM LINE BREAKDOWN - 1,277 earnings results and/or revisions announcements were released last week in Japan covering 36% of listed market capitalisation. The good news is that aggregate trailing-twelve-month (TTM) Operating Income only declined by ¥300b. Less welcome is the ¥1.7t decline in TTM Net Income to which Toyota Motor (7203 JP), Honda Motor (7267 JP), Softbank Group (9984 JP), Hitachi (6501 JP) were the most significant contributors, each declining by more than ¥200b. Three 'financials', Nomura Holdings (8604 JP), Mizuho Financial Group (8411 JP), and Suruga Bank (8358 JP) subtracted ¥400b between them. Only Sony (6758 JP) and Toshiba (6502 JP) added more than ¥100b for the quarter. The substantial 'gap' between forecast and TTM Net Income has been reduced to just ¥600b, again confirming the reliability of corporate forecasting in Japan. The All-Market PER is now 13.5 times but will likely rise as aggregate Net Income falls further in the next two weeks.In the DETAIL section below, we review this year's results of all listed companies in aggregate, update our All-Market and Sector Results &amp; Revision Scores and look at the twenty-five best and worst large-cap company results over the last week, with short comments on Nabtesco Corp (6268 JP), Workman (7564 JP), Nakanishi (7716 JP), and DeNA (2432 JP)

Japan: Results & Revisions Second Cut - Bottom Line Breakdown

Senior Bank Analyst - Japanese Banks, Windamee Research

J. Brian Waterhouse

Senior Bank Analyst - Japanese Banks

Windamee Research

Japanese Banks

Equity Bottom-Up

Tokyo Kiraboshi Financial Group / Equity Bottom-Up

Tokyo Kiraboshi Financial Group (7173 JP)

Since our bearish Insight on <a href="https://www.smartkarma.com/entities/5369" target="_blank" data-smartkarma-citation="entities:5369:1">Tokyo Kiraboshi Financial Group (7173 JP)</a> issued in November 2018, <a href="https://www.smartkarma.com/insights/tokyo-kiraboshi-fg-7173-jp-shooting-star" target="_blank" data-smartkarma-citation="insights:25657">Tokyo Kiraboshi FG (7173 JP): Shooting Star</a>, the stock’s subsequent performance has fully justified our pessimism, with the share price finishing CY2018 down 47.7% year-on-year (YoY).  Having touched a low of ¥1,504 on Christmas Day, the shares have recovered 10.1% to ¥1,656 as of Friday’s close: slightly better than the Topix Bank Index, which closed on Friday at 154.44, up 9.0% over the same period.  Trading on a forward-looking price/earnings multiple of 12.5x (using the bank’s current FY3/2019 guidance) and a price/book ratio of 0.21x, TKFG looks cheap. This is deceptive. Adjusting the group’s earnings per share (EPS) for the ¥55 billion (US$507 million) in two still-outstanding preference share issues pushes the PER to over 18x: hardly a bargain.  Meanwhile, the group’s RoA and RoE ratios are woefully low, loan growth has collapsed since end-March 2018, deposits have fallen alarmingly, and main bank subsidiary Kiraboshi Bank is struggling to keep its net return on funds deployed (NRFD) in positive territory.  A stock best avoided.

Since our bearish Insight on Tokyo Kiraboshi Financial Group (7173 JP) issued in November 2018, Tokyo Kiraboshi FG (7173 JP): Shooting Star, the stock’s subsequent performance has fully justified our pessimism, with the share price finishing CY2018 down 47.7% year-on-year (YoY).  Having touched a low of ¥1,504 on Christmas Day, the shares have recovered 10.1% to ¥1,656 as of Friday’s close: slightly better than the Topix Bank Index, which closed on Friday at 154.44, up 9.0% over the same period.  Trading on a forward-looking price/earnings multiple of 12.5x (using the bank’s current FY3/2019 guidance) and a price/book ratio of 0.21x, TKFG looks cheap. This is deceptive. Adjusting the group’s earnings per share (EPS) for the ¥55 billion (US$507 million) in two still-outstanding preference share issues pushes the PER to over 18x: hardly a bargain.  Meanwhile, the group’s RoA and RoE ratios are woefully low, loan growth has collapsed since end-March 2018, deposits have fallen alarmingly, and main bank subsidiary Kiraboshi Bank is struggling to keep its net return on funds deployed (NRFD) in positive territory.  A stock best avoided.

Tokyo Kiraboshi Financial Group (7173 JP): All That Glitters Is Neither Gold Nor Star Quality

The slow-motion ‘train wreck’ that is the once-proud <a href="https://www.smartkarma.com/entities/6267" target="_blank" data-smartkarma-citation="entities:6267:1">Suruga Bank Ltd (8358 JP)</a> ploughs on along its path of self-destruction.  Interim results were awful: a consolidated net loss of ¥98.5 billion (US$866 million), mostly incurred in 2Q FY3/2019 through loan-loss reserving and write-offs totalling ¥121.79 billion in respect of the bank’s “share house” debacle and other property investment lending disasters.  The stock remains highly volatile and remains vulnerable to further market reflection on the bank’s longer-term future despite a strong ‘bounce’ in the share price immediately following the results announcement. Full-year guidance implies that further reserving may yet be necessary later in the fiscal year, and there is still no word of a ‘white knight’ buyer for the Okano family’s 15% shareholdings.  It is tempting to believe that, if the credit losses on the bank’s dreadful misadventure have now been fully absorbed, Suruga Bank has achieved some sort of catharsis and can now start to recover.  Based on current evidence, however, the bank still seems a long way from redemption.  Caveat emptor (May the buyer beware!).

The slow-motion ‘train wreck’ that is the once-proud Suruga Bank Ltd (8358 JP) ploughs on along its path of self-destruction.  Interim results were awful: a consolidated net loss of ¥98.5 billion (US$866 million), mostly incurred in 2Q FY3/2019 through loan-loss reserving and write-offs totalling ¥121.79 billion in respect of the bank’s “share house” debacle and other property investment lending disasters.  The stock remains highly volatile and remains vulnerable to further market reflection on the bank’s longer-term future despite a strong ‘bounce’ in the share price immediately following the results announcement. Full-year guidance implies that further reserving may yet be necessary later in the fiscal year, and there is still no word of a ‘white knight’ buyer for the Okano family’s 15% shareholdings.  It is tempting to believe that, if the credit losses on the bank’s dreadful misadventure have now been fully absorbed, Suruga Bank has achieved some sort of catharsis and can now start to recover.  Based on current evidence, however, the bank still seems a long way from redemption.  Caveat emptor (May the buyer beware!).

Suruga Bank (8358 JP): Purging the Augean Stables 2018 - Part 6: Catharsis?

Concordia Financial Group, Ltd / Equity Bottom-Up

The economic and reputational fall-out from the Higashi-Nippon Bank ’inappropriate lending’ scandal and subsequent FSA Business Improvement Order continues to reverberate at <a href="https://www.smartkarma.com/entities/22704" target="_blank" data-smartkarma-citation="entities:22704:1">Concordia Financial Group, Ltd (7186 JP)</a>, the holding company for Higashi-Nippon Bank and its far larger partner, the Bank of Yokohama.  Interim results were well short of guidance, and the group has cut its full-year guidance for consolidated net profits from ¥70.0 billion to ¥60.0 billion, or just under ¥48/share.  To pour oil on troubled waters, management has announced a ¥5 billion share buyback and raised its cash dividend payout to 33% while maintaining a full shareholder return target (including buybacks) of 50%.  
The market remained unimpressed by such measures, however, sending the share price down almost 6% on Monday to ¥512: the worst-performing bank stock of the day.  
That said, on a prospective PER (using the bank’s revised guidance) of 10.7x and a low PBR of 0.55x, the stock remains attractive against peers as a liquid alternative to the ‘crowded trade’ of simply buying megabanks for exposure to the Japanese financial sector.  Having fallen around 20% over the last six months, and 6% or so in the last two trading days since the interim results were announced, the stock is currently unloved but should appeal to contrarian investors with a slightly longer investment time-horizon.

The economic and reputational fall-out from the Higashi-Nippon Bank ’inappropriate lending’ scandal and subsequent FSA Business Improvement Order continues to reverberate at Concordia Financial Group, Ltd (7186 JP), the holding company for Higashi-Nippon Bank and its far larger partner, the Bank of Yokohama.  Interim results were well short of guidance, and the group has cut its full-year guidance for consolidated net profits from ¥70.0 billion to ¥60.0 billion, or just under ¥48/share.  To pour oil on troubled waters, management has announced a ¥5 billion share buyback and raised its cash dividend payout to 33% while maintaining a full shareholder return target (including buybacks) of 50%.  
The market remained unimpressed by such measures, however, sending the share price down almost 6% on Monday to ¥512: the worst-performing bank stock of the day.  
That said, on a prospective PER (using the bank’s revised guidance) of 10.7x and a low PBR of 0.55x, the stock remains attractive against peers as a liquid alternative to the ‘crowded trade’ of simply buying megabanks for exposure to the Japanese financial sector.  Having fallen around 20% over the last six months, and 6% or so in the last two trading days since the interim results were announced, the stock is currently unloved but should appeal to contrarian investors with a slightly longer investment time-horizon.

Concordia FG (7186 JP): Oil on Troubled Waters

Japan

Suruga Bank Ltd. is a Shizuoka based regional bank mainly operating in the Kanto area (central eastern part of Japan) including Tokyo.  The Bank provides deposits, loans, and foreign exchange transactions.  The Suruga Bank also provides financial services such as leasing, letter of credit, and credit cards services.

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Suruga Bank Ltd (8358 JP)

Suruga Bank Bottom Projection

Daily cycle indicators display a topside cap for Suruga Bank Ltd (8358 JP) and turn barrier to press for new lows with ideal downside projection...

Thomas Schroeder

Japan: Results & Revisions Second Cut - Bottom Line Breakdown

BOTTOM LINE BREAKDOWN - 1,277 earnings results and/or revisions announcements were released last week in Japan covering 36% of listed market...

Campbell Gunn

Tokyo Kiraboshi Financial Group (7173 JP): All That Glitters Is Neither Gold Nor Star Quality

Since our bearish Insight on Tokyo Kiraboshi Financial Group (7173 JP) issued in November 2018, Tokyo Kiraboshi FG (7173 JP): Shooting Star, the...

J. Brian Waterhouse

Suruga Bank (8358 JP): Purging the Augean Stables 2018 - Part 6: Catharsis?

The slow-motion ‘train wreck’ that is the once-proud Suruga Bank Ltd (8358 JP) ploughs on along its path of self-destruction. Interim results were...

J. Brian Waterhouse

Concordia FG (7186 JP): Oil on Troubled Waters

The economic and reputational fall-out from the Higashi-Nippon Bank ’inappropriate lending’ scandal and subsequent FSA Business Improvement Order...

J. Brian Waterhouse

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