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

Last Week in Event SPACE: Toshiba, Takeda, Spring REIT, SK Holdings, IMAX, Samsung C&T

Toshiba: King Street's Valuation Analysis Is... Punchy?

Toshiba: King Street Assumptions Look Exceedingly Optimistic

Toshiba: King Street's Buyback Proposals Lack Required Detail

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

<h2>Overall, Toshiba Next Plan Looks Sensible Though We Feel Sales May End Up Lower</h2><ul>
<li>We believe that the Toshiba Next Plan is "about right". The targets are non-trivial but still achievable.</li>
<li>Given a rather sub-optimal portfolio of businesses, though one with potential, we feel the company has done a good job of defining problem areas, identifying growth prospects for investment and outlining a clear investment strategy to get to its targets.</li>
<li>CEO Kurumatani emphasised that current multiples were too high to make M&amp;A a favoured method for acquiring growth and that the company would pursue organic growth. We believe a flexible approach would make sense but feel investors will prefer that Toshiba avoid large-scale M&amp;A given previous failures and believe this messaging will be received positively.</li>
<li>As we mentioned in our previous note, the infrastructure systems business is being positioned as the core segment and batteries, HVAC, power semiconductors and nearline HDD are set to receive large shares of the company's investment outlays, which is good.</li>
<li>Shareholder returns and the disposal of the LNG business and NuGen were finally confirmed without any major surprises.</li>
<li><strong>Ultimately the order of the day was clarity. While the near-term targets for the Toshiba Next Plan were significantly above consensus estimates we feel the market was probably also expecting more and do not believe they were a huge surprise. We believe the large move in the stock was mostly due to the final confirmation of moves the market was anticipating and the removal of uncertainty.</strong></li>
</ul>

Overall, Toshiba Next Plan Looks Sensible Though We Feel Sales May End Up Lower
We believe that the Toshiba Next Plan is "about right". The targets are non-trivial but still achievable.
Given a rather sub-optimal portfolio of businesses, though one with potential, we feel the company has done a good job of defining problem areas, identifying growth prospects for investment and outlining a clear investment strategy to get to its targets.
CEO Kurumatani emphasised that current multiples were too high to make M&amp;A a favoured method for acquiring growth and that the company would pursue organic growth. We believe a flexible approach would make sense but feel investors will prefer that Toshiba avoid large-scale M&amp;A given previous failures and believe this messaging will be received positively.
As we mentioned in our previous note, the infrastructure systems business is being positioned as the core segment and batteries, HVAC, power semiconductors and nearline HDD are set to receive large shares of the company's investment outlays, which is good.
Shareholder returns and the disposal of the LNG business and NuGen were finally confirmed without any major surprises.
Ultimately the order of the day was clarity. While the near-term targets for the Toshiba Next Plan were significantly above consensus estimates we feel the market was probably also expecting more and do not believe they were a huge surprise. We believe the large move in the stock was mostly due to the final confirmation of moves the market was anticipating and the removal of uncertainty.


Toshiba: Toshiba Next Plan Looks Sensible, No Major Surprises on Buyback but Clarity Pushes Stock Up

Toshiba Corp

Toshiba: Toshiba Next Plan Looks Sensible, No Major Surprises on Buyback but Clarity Pushes Stock Up