'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

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.

Thematic (Sector/Industry)

<div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/147/477/original/2020-07-23_10-42-06.png?1595468537" class="editor-image img-responsive" data-smartkarma-image-id="147477"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/147/478/original/2020-07-23_10-44-59.png?1595468712" class="editor-image img-responsive" data-smartkarma-image-id="147478"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/147/483/original/2020-07-23_11-31-51.png?1595471532" class="editor-image img-responsive" data-smartkarma-image-id="147483"></figure><div class="content-caption">Source • Japan Analytics</div>
<p><strong><a href="https://www.smartkarma.com/entities/obic-co-ltd" target="_blank" data-smartkarma-citation="entities:1273:1" rel="noopener">OBIC (4684 JP)</a></strong>- OBIC was the largest-cap company to report on Wednesday before the four-day holiday break. Despite a deceleration in the rate of revenue growth, the operating profit margin reached a record level of 58% in the first quarter as both COGS and SG&amp;A continue to decline. The other end of the Income Statement is less impressive. The 17 percentage point gap between the operating and CITC margins is also a new record. OBIC's ability to control its securities investment and returns at unconsolidated subsidiaries is much less impressive. OBIC is now the most Overbought IT Sector company in Japan, although the company's peer-relative earnings and forecast momentum has been declining. At an EV/ TTM OP of 34x times, valuations have only been higher during the 1999/2000 tech bubble and will act a constraint to the upside. With little margin for safety, we would not be buyers at this level.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/147/485/original/2020-07-23_11-40-21.png?1595472039" class="editor-image img-responsive" data-smartkarma-image-id="147485"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/147/480/original/2020-07-23_11-19-55.png?1595470809" class="editor-image img-responsive" data-smartkarma-image-id="147480"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/147/479/original/2020-07-23_10-46-52.png?1595468831" class="editor-image img-responsive" data-smartkarma-image-id="147479"></figure><div class="content-caption">Source • Japan Analytics<hr>
</div>
<p style="text-align: center;"><strong>DAILY STATS</strong></p>
</div><hr><div><p style="text-align: center;"><strong>24 Quarterly Results</strong></p></div><div><ul>
<li>
<strong>Results Score:</strong> 10 Positive / 1 Neutral / 13 Negative</li>
<li>
<strong>Average Results Score Change:</strong> -1.3</li>
<li>
<strong>Average % Change in Revenue:</strong> +1.8% Quarter YoY / +2.9% Rolling TTM YoY<em> (exc. Kosei Secs) </em>
</li>
<li>
<strong>Average Operating Profit Margin Change:</strong> -0.3ppt <em>(exc. Kosei Secs)</em>
</li>
<li>
<strong>Percentage Making Quarterly Losses:</strong> 25%</li>
</ul></div><hr><div><p style="text-align: center;"><br><strong>13 Annual • 11 Interim Forecasts/Revisions</strong></p></div><div><ul>
<li>Annual Forecast/Revision Score: 3 Positive / 2 Neutral / 8 Negative</li>
<li>Interim Forecast/Revision Score Change: 3 Positive / 1 Neutral / 7 Negative</li>
<li>Average Forecast/Revision Score Change: -7.6</li>
</ul></div>


Source • Japan Analytics
OBIC (4684 JP)- OBIC was the largest-cap company to report on Wednesday before the four-day holiday break. Despite a deceleration in the rate of revenue growth, the operating profit margin reached a record level of 58% in the first quarter as both COGS and SG&amp;A continue to decline. The other end of the Income Statement is less impressive. The 17 percentage point gap between the operating and CITC margins is also a new record. OBIC's ability to control its securities investment and returns at unconsolidated subsidiaries is much less impressive. OBIC is now the most Overbought IT Sector company in Japan, although the company's peer-relative earnings and forecast momentum has been declining. At an EV/ TTM OP of 34x times, valuations have only been higher during the 1999/2000 tech bubble and will act a constraint to the upside. With little margin for safety, we would not be buyers at this level.
Source • Japan Analytics

DAILY STATS
24 Quarterly Results

Results Score: 10 Positive / 1 Neutral / 13 Negative

Average Results Score Change: -1.3

Average % Change in Revenue: +1.8% Quarter YoY / +2.9% Rolling TTM YoY (exc. Kosei Secs) 


Average Operating Profit Margin Change: -0.3ppt (exc. Kosei Secs)


Percentage Making Quarterly Losses: 25%
 13 Annual • 11 Interim Forecasts/Revisions
Annual Forecast/Revision Score: 3 Positive / 2 Neutral / 8 Negative
Interim Forecast/Revision Score Change: 3 Positive / 1 Neutral / 7 Negative
Average Forecast/Revision Score Change: -7.6


🇯🇵 JAPAN • Results & Revisions 22nd July - OBIC, CyberAgent, Tokyo Steel & The Deep Freeze

<div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/146/359/original/2020-07-16_06-39-04.png?1594849241" class="editor-image img-responsive" data-smartkarma-image-id="146359"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/146/360/original/2020-07-16_06-42-12.png?1594849361" class="editor-image img-responsive" data-smartkarma-image-id="146360"></figure><div class="content-caption">Source • Japan Analytics</div>
<p><strong><a href="https://www.smartkarma.com/entities/money-forward-inc" target="_blank" data-smartkarma-citation="entities:25919:1" rel="noopener">Money Forward (3994 JP)</a></strong>- Money Forward's impressive revenue growth continued unabated in the second quarter. However necessary the ¥611 million (22% of sales) quarterly advertising budget is to sustain such revenue momentum, the lack of 'margin' improvement has shaved two points from our Results Score. The shares are close to a new Relative Price Score high and to being Overbought. We would trim into any announcement bounce above ¥8,000.</p>
<p style="text-align: center;"><strong>DAILY STATS</strong></p>
</div><hr><div><p style="text-align: center;"><strong>66 Quarterly Results</strong></p></div><div><ul>
<li>
<strong>Results Score:</strong> 10 Positive / 9 Neutral / 47 Negative</li>
<li>
<strong>Average Results Score Change:</strong> -5.4</li>
<li>
<strong>Average % Change in Revenue:</strong> -14.7% Quarter YoY / +1.3% Rolling TTM YoY</li>
<li>
<strong>Average Operating Profit Margin Change:</strong> -3.2ppt</li>
<li>
<strong>Percentage Making Quarterly Losses:</strong> 42%</li>
</ul></div><hr><div><p style="text-align: center;"><br><strong>24 Annual • 9 Interim Forecasts/Revisions</strong></p></div><div><ul>
<li>
<strong>Annual Forecast/Revision Score:</strong> 7 Positive / 4 Neutral / 13 Negative</li>
<li>
<strong>Interim Forecast/Revision Score Change:</strong> 1 Positive / 0 Neutral / 8 Negative</li>
<li>
<strong>Average Forecast/Revision Score Change:</strong> -9.3</li>
</ul></div>


Source • Japan Analytics
Money Forward (3994 JP)- Money Forward's impressive revenue growth continued unabated in the second quarter. However necessary the ¥611 million (22% of sales) quarterly advertising budget is to sustain such revenue momentum, the lack of 'margin' improvement has shaved two points from our Results Score. The shares are close to a new Relative Price Score high and to being Overbought. We would trim into any announcement bounce above ¥8,000.
DAILY STATS
66 Quarterly Results

Results Score: 10 Positive / 9 Neutral / 47 Negative

Average Results Score Change: -5.4

Average % Change in Revenue: -14.7% Quarter YoY / +1.3% Rolling TTM YoY

Average Operating Profit Margin Change: -3.2ppt

Percentage Making Quarterly Losses: 42%
 24 Annual • 9 Interim Forecasts/Revisions

Annual Forecast/Revision Score: 7 Positive / 4 Neutral / 13 Negative

Interim Forecast/Revision Score Change: 1 Positive / 0 Neutral / 8 Negative

Average Forecast/Revision Score Change: -9.3


🇯🇵 JAPAN • Results & Revisions 15th July - Money Forward, TKP, Nachi-Fujikoshi, Tokyo Steel

Japan TMT Analyst

Pelham Smithers

Market Intel on Asian Tech with a Japan focus

Pelham Smithers Associates

Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods. 

Research is provided by the following:
Pelham Smithers: Macro, consumer electronics, telecoms & pharma
Joel Scheiman: Electronics materials / components
Julie Boote: Autos
Will Nestuk: Capital goods, machinery & transportation equipment parts
Thao Nguyen: eCommerce, internet content, marketing & advertising

<p>With the Japanese stock market on the up-and-up, the big question – though not necessarily one on all that many minds – is whether this is a seasonal rally, or whether this is structural. Invariably under Abe, and more often than not during the quantitative easing (QE) era (2003~?), Japanese equities have gone up in the fourth quarter. However, on two occasions, 2014 and 2016, they’ve slumped as we’ve moved into the new year, more than offsetting the fourth quarter gains. Given that Kuroda…</p>

With the Japanese stock market on the up-and-up, the big question – though not necessarily one on all that many minds – is whether this is a seasonal rally, or whether this is structural. Invariably under Abe, and more often than not during the quantitative easing (QE) era (2003~?), Japanese equities have gone up in the fourth quarter. However, on two occasions, 2014 and 2016, they’ve slumped as we’ve moved into the new year, more than offsetting the fourth quarter gains. Given that Kuroda…

Japan Market Strategy - Will the Frequent January Sell-Off Ruin the Current Market Rally?

Equity Bottom-Up

<p>Although it isn't necessarily the case that the earlier a Japanese company reports its earnings, the better run it is, there's no real surprise that it is hyper-competitive firms like <a href="https://www.smartkarma.com/entities/16195" target="_blank" data-smartkarma-citation="entities:16195:1">Tokyo Steel</a>, <a href="https://www.smartkarma.com/entities/7245" target="_blank" data-smartkarma-citation="entities:7245:1">Nidec</a> and <a href="https://www.smartkarma.com/entities/3777" target="_blank" data-smartkarma-citation="entities:3777:1">Shimano</a> that are consistently among the fastest out of the traps. By extension, these companies usually get the results season off to a good start, and by extension there is something of an expectation of this, which starts to get built into valuations. On a forward EV/OP basis, Nidec and…</p>

Although it isn't necessarily the case that the earlier a Japanese company reports its earnings, the better run it is, there's no real surprise that it is hyper-competitive firms like Tokyo Steel, Nidec and Shimano that are consistently among the fastest out of the traps. By extension, these companies usually get the results season off to a good start, and by extension there is something of an expectation of this, which starts to get built into valuations. On a forward EV/OP basis, Nidec and…

Valuations May Prove Key As Early Japanese Results Highlight Sell-Side Optimism

<p>This week sees the start of Japan’s earnings season with <a href="https://www.smartkarma.com/entities/2458" target="_blank" data-smartkarma-citation="entities:2458:1">Yaskawa Electric Corp (6506 JP)</a> reporting on 20<sup>th</sup> and <a href="https://www.smartkarma.com/entities/16195" target="_blank" data-smartkarma-citation="entities:16195:1">Tokyo Steel Mfg Co Ltd (5423 JP)</a> reporting on 21<sup>st</sup>. Whereas in previous years, results season has been pretty predictable, there’s little in the way of consensus about this year’s. Whilst the March quarter started off optimistically, sentiment deteriorated through the quarter as the yen rallied. That said, we go into FY17, with pretty easy YoY comparisons through September, so unless…</p>

This week sees the start of Japan’s earnings season with Yaskawa Electric Corp (6506 JP) reporting on 20th and Tokyo Steel Mfg Co Ltd (5423 JP) reporting on 21st. Whereas in previous years, results season has been pretty predictable, there’s little in the way of consensus about this year’s. Whilst the March quarter started off optimistically, sentiment deteriorated through the quarter as the yen rallied. That said, we go into FY17, with pretty easy YoY comparisons through September, so unless…

Japan Earnings - Thumbnail Preview of Those Reporting Early

Japan

TOKYO STEEL MANUFACTURING CO., LTD. is an electric furnace steel manufacturer. The Company manufactures and sells steel bars, varieties of steel materials, and specialized steel products, including H beams, universal plates, and I beams. Tokyo Steel also operates financial, real estate, insurance, restaurant, and sports complex management businesses.

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Tokyo Steel Mfg (5423 JP)

🇯🇵 JAPAN • Results & Revisions 22nd July - OBIC, CyberAgent, Tokyo Steel & The Deep Freeze

OBIC (4684 JP)- OBIC was the largest-cap company to report on Wednesday before the four-day holiday break. Despite a deceleration in the rate of...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 15th July - Money Forward, TKP, Nachi-Fujikoshi, Tokyo Steel

Money Forward (3994 JP)- Money Forward's impressive revenue growth continued unabated in the second quarter. However necessary the ¥611 million...

Campbell Gunn

Japan Market Strategy - Will the Frequent January Sell-Off Ruin the Current Market Rally?

With the Japanese stock market on the up-and-up, the big question – though not necessarily one on all that many minds – is whether this is a...

Pelham Smithers Associates

Valuations May Prove Key As Early Japanese Results Highlight Sell-Side Optimism

Although it isn't necessarily the case that the earlier a Japanese company reports its earnings, the better run it is, there's no real surprise...

Pelham Smithers Associates

Japan Earnings - Thumbnail Preview of Those Reporting Early

This week sees the start of Japan’s earnings season with Yaskawa Electric Corp (6506 JP) reporting on 20th and Tokyo Steel Mfg Co Ltd (5423 JP)...

Pelham Smithers Associates

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