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

MODEC: Order Win in Mexico Is a Positive, Stock Rebounds 7% as MS Initiates with Buy

MODEC: 17% Price Jump as Results Beat, Guidance Is Lowballed

Japan: Moving Average Outliers - Lasertec, SanBio, Digital Arts, Modec & Leopalace21

MODEC: +8% on 2Q Earnings Surge, Gross Margin Recovery and Large Revenue Bump Should Continue

MODEC Rally Points with Laggard Potential

MODEC: Starting Breakout as Presalt Potential Is Realised After 180 Million Years

MODEC Could Be Our Favourite Pick for 2018

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><a href="https://www.smartkarma.com/entities/2840" target="_blank" data-smartkarma-citation="entities:2840:1">Modec Inc (6269 JP)</a> shares have steadily ground higher this year, up 13.9% YTD while Topix has fallen 5.3%. We visited the company to find longer-term positive conditions largely unchanged, though continuing disagreements regarding local content in Brazil could push out much-anticipated orders from Petrobras. Nevertheless, we expect the company to win perhaps one order this year from India and/or Mexico, supporting continued earnings growth and we would expect FIDs from Petrobras early next year.</p><ul>
<li>Modec continues to trade at a significant discount to peers at under 12x PE, when peers trade at 15-18x.</li>
<li>The recent leniency agreement between SBM Offshore and Brazilian authorities is a negative as it eliminates Modec's monopolist position for deepwater presalt FPSOs but projects are numerous enough that Modec should be able to split the market with SBM and still generate healthy orders.</li>
<li>Modec is in the running to win potentially two orders of about USD1bn in scale in India and Mexico. We expect Modec to win one of these, with FIDs likely to occur in Nov or Dec. Another seven projects are being tendered for and we would expect Modec to win perhaps three of them, though FIDs are likely to occur next year.</li>
<li>We believe there is about 40% upside from multiple expansion and potentially 30% upside from above consensus earnings.</li>
</ul>

Modec Inc (6269 JP) shares have steadily ground higher this year, up 13.9% YTD while Topix has fallen 5.3%. We visited the company to find longer-term positive conditions largely unchanged, though continuing disagreements regarding local content in Brazil could push out much-anticipated orders from Petrobras. Nevertheless, we expect the company to win perhaps one order this year from India and/or Mexico, supporting continued earnings growth and we would expect FIDs from Petrobras early next year.
Modec continues to trade at a significant discount to peers at under 12x PE, when peers trade at 15-18x.
The recent leniency agreement between SBM Offshore and Brazilian authorities is a negative as it eliminates Modec's monopolist position for deepwater presalt FPSOs but projects are numerous enough that Modec should be able to split the market with SBM and still generate healthy orders.
Modec is in the running to win potentially two orders of about USD1bn in scale in India and Mexico. We expect Modec to win one of these, with FIDs likely to occur in Nov or Dec. Another seven projects are being tendered for and we would expect Modec to win perhaps three of them, though FIDs are likely to occur next year.
We believe there is about 40% upside from multiple expansion and potentially 30% upside from above consensus earnings.


モデック：ペトロブラスの受注遅延はマイナスだが、インドとメキシコからの受注がバックログを支える可能性