Japan/Asia Long-Short, LightStream Research

Mio Kato

Over 15 years analysing Japanese and Asian stocks from a long/short perspective

I focus on cyclically driven sectors such as Gaming, Factory Automation and Autos

An eclectic background as a long-short analyst, upper management at a financial data startup through its listing, and as the founder of a team analysing big/alternative data, all of which supports independent and differentiated views... we hope

An appreciation for Mathematics drives the development of a "Micro-Quantamental" process which can provide a data-driven, historically-informed and semi-automated foundation upon which to layer more qualitative and judgemental analysis, thus improving investment decision-making speed and accuracy

Japan/Asia Long-Short

SMC – OP Guidance May Not Be Conservative

SMC – OP Beat Incoming but so Is the Downcycle

SMC – Consensus Estimates Ignore Potential Down Cycle

SMC (6273 JP): Contraction Accelerates Again in 1Q

SMC (6273 JP): Getting in Line with Reality

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

SMC’s business turned around sharply in 3Q with revenue of ¥140bn (+12.8% QOQ, +6.4% YoY) and operating profit of ¥41bn (for an OPM of 29.2% compared to the OPM of 26.6% in 3QFY20).<table class="table table-striped"><tbody>
<tr>
<td style="width: 30.06%;">In ¥bn</td>
<td style="width: 24.94%;">Revenue </td>
<td style="width: 25.64%;">OP</td>
<td style="width: 19.34%;">OPM</td>
</tr>
<tr>
<td style="width: 30.06%;">Actual Results - 3QFY21</td>
<td style="width: 24.94%;">140</td>
<td style="width: 25.64%;">41</td>
<td style="width: 19.34%;">29.2%</td>
</tr>
<tr>
<td style="width: 30.06%;">Consensus - 3QFY21</td>
<td style="width: 24.94%;">131</td>
<td style="width: 25.64%;">35</td>
<td style="width: 19.34%;">26.4%</td>
</tr>
<tr>
<td style="width: 30.06%;">Surprise</td>
<td style="width: 24.94%;">6.7%</td>
<td style="width: 25.64%;">18.1%</td>
<td style="width: 19.34%;">2.8% points</td>
</tr>
<tr>
<td style="width: 30.06%;"> </td>
<td style="width: 24.94%;"> </td>
<td style="width: 25.64%;"> </td>
<td style="width: 19.34%;"> </td>
</tr>
<tr>
<td style="width: 30.06%;">Guidance</td>
<td style="width: 24.94%;">525</td>
<td style="width: 25.64%;">141</td>
<td style="width: 19.34%;">26.9%</td>
</tr>
<tr>
<td style="width: 30.06%;">Consensus</td>
<td style="width: 24.94%;">514</td>
<td style="width: 25.64%;">138</td>
<td style="width: 19.34%;">26.8%</td>
</tr>
<tr>
<td style="width: 30.06%;">Difference</td>
<td style="width: 24.94%;">2.1%</td>
<td style="width: 25.64%;">2.4%</td>
<td style="width: 19.34%;">0.1% points</td>
</tr>
<tr>
<td style="width: 30.06%;"> </td>
<td style="width: 24.94%;"> </td>
<td style="width: 25.64%;"> </td>
<td style="width: 19.34%;"> </td>
</tr>
<tr>
<td style="width: 30.06%;">Implied Guidance- 4QFY21</td>
<td style="width: 24.94%;">133</td>
<td style="width: 25.64%;">35</td>
<td style="width: 19.34%;">26.4%</td>
</tr>
<tr>
<td style="width: 30.06%;">Consensus - 4QFY21</td>
<td style="width: 24.94%;">139</td>
<td style="width: 25.64%;">40</td>
<td style="width: 19.34%;">28.6%</td>
</tr>
<tr>
<td style="width: 30.06%;">Difference</td>
<td style="width: 24.94%;">-3.9%</td>
<td style="width: 25.64%;">-11.3%</td>
<td style="width: 19.34%;">-2.2% points</td>
</tr>
</tbody></table><div style="text-align: left;" class="content-caption">Source: Company disclosures, CapIQ</div>Revenue guidance was revised up by 9.4% while OP guidance was revised up by 21.5% to ¥141bn.

SMC’s business turned around sharply in 3Q with revenue of ¥140bn (+12.8% QOQ, +6.4% YoY) and operating profit of ¥41bn (for an OPM of 29.2% compared to the OPM of 26.6% in 3QFY20).

In ¥bn
Revenue 
OP
OPM


Actual Results - 3QFY21
140
41
29.2%


Consensus - 3QFY21
131
35
26.4%


Surprise
6.7%
18.1%
2.8% points


 
 
 
 


Guidance
525
141
26.9%


Consensus
514
138
26.8%


Difference
2.1%
2.4%
0.1% points


 
 
 
 


Implied Guidance- 4QFY21
133
35
26.4%


Consensus - 4QFY21
139
40
28.6%


Difference
-3.9%
-11.3%
-2.2% points

Source: Company disclosures, CapIQRevenue guidance was revised up by 9.4% while OP guidance was revised up by 21.5% to ¥141bn.

SMC – Expensive but Looking Better Than Peers

SMC Corp

SMC – Expensive but Looking Better Than Peers