Daily BriefsJapan

Japan: Japan Post Insurance, Renesas Electronics, Keyence Corp, Shiseido Company, Sky Perfect Jsat, Yaskawa Electric and more

In today’s briefing:

  • JPX-Nikkei 400 Rebalance 2021: Pre-Event Basket Adjustments for April-End
  • Renesas – Profitability Is the Story Here, Not Factory Fires
  • Keyence – Snapback to All-Time Highs
  • Japanese Cosmetics Industry: 1Q21 Statistics Update
  • Sky Perfect JSAT Q4 20 Results: Quarterly Beat and Revenue Growth for FY21
  • Yaskawa – Some Thoughts After Our Call With IR

JPX-Nikkei 400 Rebalance 2021: Pre-Event Basket Adjustments for April-End

By Janaghan Jeyakumar, CFA

JPX-Nikkei 400 is composed of common stocks listed in the First Section, Second Section, MOTHERS Market, and the JASDAQ Market of the Tokyo Stock Exchange. This is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents that are selected based on several factors including market capitalization, trading value, operating profits, and ROE.

A periodic review will be conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. This review will be conducted using the final business day of June as the base date. 

Quiddity provides quantitative research on pre-event basket strategies surrounding this Index Rebalance event. Below is a discussion on the latest adjustments required for the basket portfolio for the 2021 Rebalance based on April-end data. 


Renesas – Profitability Is the Story Here, Not Factory Fires

By Mio Kato

Renesas posted strong 1Q results despite concerns regarding a fire at its production facilities that is exacerbating shortages for automotive semiconductors. Revenue came in just 1.3% above consensus but the real story was margins which improved very significantly QoQ with OPM moving from 19.4% in 4Q20 to 25.8% in 1Q21 (above guidance of 22.0%).


Keyence – Snapback to All-Time Highs

By Mio Kato

Keyence put up impressive comeback numbers at results on Wednesday as both revenue and OP refreshed new quarterly highs. While results overall in the FA sector have been strong, Keyence is demonstrating its superior business model at a time when peers are just midway through their recoveries.


Japanese Cosmetics Industry: 1Q21 Statistics Update

By Oshadhi Kumarasiri

With 36.7% YoY growth in 1Q21, cosmetics exports continue to drive the recovery of the Japanese cosmetics sector. However, the out-of-control COVID-19 situation in the domestic market continues to offset the resurgence of exports with 19.9% YoY decline in January and February 2021.

The earnings season of the Japanese cosmetics commenced yesterday with Pola Orbis Holdings (4927 JP) generating a modest 0.6% YoY revenue growth in 1Q21, the company’s first YoY revenue growth since June 2018. Kose Corp (4922 JP) reports tomorrow (30th April 2021).

Before earnings go into full swing with Kao Corp (4452 JP), Fancl Corp (4921 JP) and Shiseido Company (4911 JP) scheduled to report on 7th, 10th and 12th of May 2021 respectively, we analyze the 1Q21 cosmetic industry statistics, using the monthly data released by the Ministry of Economy, Trade and Industry (METI) and the Ministry of Finance.


Sky Perfect JSAT Q4 20 Results: Quarterly Beat and Revenue Growth for FY21

By Kirk Boodry

Sky Perfect JSAT results for Q4 20 were ahead of Redex and consensus expectations whilst guidance is mixed with revenue expectations better than expected (seriously, they are) but profitability slightly worse. As for that revenue guidance, an accounting change under Japanese GAAP makes it look like forecasts of a 13% decline but it would like-for-like growth is closer to 3%. Media segment weakness appears set to continue but that is largely expected and growth in the space business, which drives our positive thesis, continues. We remain at Buy. 


Yaskawa – Some Thoughts After Our Call With IR

By Mio Kato

We spoke to Yaskawa on Wednesday to gauge regional trends and get a better understanding of some of the company’s new initiatives. Broadly, checkpoints in terms of regional demand trends are unlikely to surprise investors who have been following earnings but there are a few things worth noting.


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