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

SMM: Forecast 25% Below Consensus Is Not THAT Conservative

SMM: Disordered Structures for Li-Ion Increase Risk of Cobalt and Nickel Substitution with Manganese

Pacific Metals: Boost from Indonesian Nickel Ore Export Resumption Could Put This on 7x PE

Dowa Visit: Accelerating Silver Powder Growth, Higher Metal Prices Should Lift PE to Double Digits

Sumitomo Metal Mining: Metal Price Recovery and Battery Material Growth Priced In; Upside Limited

Dowa Holdings Earnings in Line With Nikkei Preview, Zinc Prices Could Drive Stock if TCs Normalise

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

<p>SMM boosted its current profit outlook from JPY97bn to JPY90bn after reporting 1H current profit of JPY46.3bn. This was JPY6.7bn below the company's own 1H guidance and 2Q current profit of JPY16.3bn was only about half of consensus' 2Q estimate of JPY31.1bn. The Mineral Resources segment was particularly weak as a large hit to Cerro Verde from a tax penalty assessed by the Peruvian government was incurred and results at Sierra Gorde deteriorated again, resulting in the segment only posting JPY885m in 2Q profit compared to JPY16,728m in 1Q. Similarly, profit almost halved in the Electronic and Advanced Materials segment as inventory corrections bit. The Metals segment saw profit increase sequentially from JPY8.5bn in 1Q to JPY9.6bn in 2Q but these results still underwhelm compared to 3Q and 4Q FY03/17 which posted profits of JPY17.0bn and JPY12.7bn respectively.</p><p>Are things as bad as they look? We delve into the details below.</p>

SMM boosted its current profit outlook from JPY97bn to JPY90bn after reporting 1H current profit of JPY46.3bn. This was JPY6.7bn below the company's own 1H guidance and 2Q current profit of JPY16.3bn was only about half of consensus' 2Q estimate of JPY31.1bn. The Mineral Resources segment was particularly weak as a large hit to Cerro Verde from a tax penalty assessed by the Peruvian government was incurred and results at Sierra Gorde deteriorated again, resulting in the segment only posting JPY885m in 2Q profit compared to JPY16,728m in 1Q. Similarly, profit almost halved in the Electronic and Advanced Materials segment as inventory corrections bit. The Metals segment saw profit increase sequentially from JPY8.5bn in 1Q to JPY9.6bn in 2Q but these results still underwhelm compared to 3Q and 4Q FY03/17 which posted profits of JPY17.0bn and JPY12.7bn respectively.Are things as bad as they look? We delve into the details below.

SMM: 2Q Results Look Weak Due to Various One-Offs, Underlying Trend Positive, Still Expensive Though