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

<ul>
<li>Terra Drone has invested in its two Ukrainian partners, turning them into consolidated subsidiaries. It can now be regarded as an active participant in the Ukraine war.</li>
<li>The company remains in the red, but the bonds with warrants issue made in July should cover capital spending through January 2030. By then, it should break even. </li>
<li>At ¥14,050, the shares are approaching their May high. As a result of the financing, the PBR has dropped from 29X to 7X,</li>
</ul>


Terra Drone has invested in its two Ukrainian partners, turning them into consolidated subsidiaries. It can now be regarded as an active participant in the Ukraine war.
The company remains in the red, but the bonds with warrants issue made in July should cover capital spending through January 2030. By then, it should break even. 
At ¥14,050, the shares are approaching their May high. As a result of the financing, the PBR has dropped from 29X to 7X,


Terra Drone (278A JP): Ukrainian Subsidiaries in the Line of Fire

<ul>
<li>"Full scale" entry into the defense equipment market with investment in Amazing Drones of Ukraine and joint production of interceptor drone "Terra AI."</li>
<li>Gross margin close to 50%, but management guiding for a larger operating loss and a substantial net loss in the year to January 2027.</li>
<li>Could reach breakeven by 2030 if sales double on military-related demand as we expect.</li>
</ul>


"Full scale" entry into the defense equipment market with investment in Amazing Drones of Ukraine and joint production of interceptor drone "Terra AI."
Gross margin close to 50%, but management guiding for a larger operating loss and a substantial net loss in the year to January 2027.
Could reach breakeven by 2030 if sales double on military-related demand as we expect.


Terra Drone (278A JP): Alliance with Ukraine's Amazing Drones

Japanese Equity Specialist, Ortus Advisors

Andrew Jackson

Japanese Equity Specialist

Ortus Advisors

Thematic (Sector/Industry)

<ul>
<li>Kioxia likely to see another strong day after Sandisk was +13.7% after announcing positive long-term guidance.</li>
<li>SPE may face pressure after AMAT's guidance beat failed to impress despite topping estimates.</li>
<li>Liberware and Terradrone may gain a competitive edge after new US tariffs target Chinese drone makers at up to 100%.</li>
</ul>


Kioxia likely to see another strong day after Sandisk was +13.7% after announcing positive long-term guidance.
SPE may face pressure after AMAT's guidance beat failed to impress despite topping estimates.
Liberware and Terradrone may gain a competitive edge after new US tariffs target Chinese drone makers at up to 100%.


Japan Morning Connection: Liberware and Terradrone Stand to Gain as US Targets Chinese Drone Makers

<ul>
<li>Kokusai +25% last week and JX Metals +25.6% likely reversal targets at the open.</li>
<li>TeraDrone is pivoting from industrial drones to defense after consolidating two Ukrainian combat drone companies, an interesting thematic to get behind.</li>
<li>Astroscale continued to drop -8.6% yesterday after its earnings showed increasing losses but still an interesting name given its focus on space-junk removal and orbital services.</li>
</ul>


Kokusai +25% last week and JX Metals +25.6% likely reversal targets at the open.
TeraDrone is pivoting from industrial drones to defense after consolidating two Ukrainian combat drone companies, an interesting thematic to get behind.
Astroscale continued to drop -8.6% yesterday after its earnings showed increasing losses but still an interesting name given its focus on space-junk removal and orbital services.


Japan Morning Connection: AI Related Names Set to Slide Following SOX's Skittish Retreat from Highs

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Index Rebalance

<ul>
<li>The TOPIX Index - Japan's premier domestic equity index - will undergo a sea change in methodology at the end of this month, with ~760 names affected. </li>
<li>There will be roughly 35 or so ADDs, about 700 DELETEs (phased out over 8 quarters), and 40+ Liquidity Factor Removals. There will also be hundreds of FFW changes. </li>
<li>The likely ADDs have handily outperformed their peers over the past year, but some of that has been tech and idiosyncratic circumstances. There may still be trades to do.</li>
</ul>


The TOPIX Index - Japan's premier domestic equity index - will undergo a sea change in methodology at the end of this month, with ~760 names affected. 
There will be roughly 35 or so ADDs, about 700 DELETEs (phased out over 8 quarters), and 40+ Liquidity Factor Removals. There will also be hundreds of FFW changes. 
The likely ADDs have handily outperformed their peers over the past year, but some of that has been tech and idiosyncratic circumstances. There may still be trades to do.


[Quiddity Index] The TOPIX Change in Oct26 - Part V (Final Prep)

Japan

Terra Drone Corp. offers drone services. The Company provides aerial survey, infrastructure inspection, data analysis, agricultural activity support, and other services. Terra Drone also conducts drone development, drone system development, and other businesses.

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Terra Drone (278A JP)