President, Vision Research

Robert C Prather Jr

President

Vision Research

Vision Research was formed in 2004 with the vision of generating the best possible fundamental analysis and investment research for smid cap US equities. In 2008, we broadened our coverage to include mid/large cap US stocks.  After researching a  few ideas outside the US each year for a number of years, we launched a dedicated non-US equity product at the end of 2015.  This was followed by the introduction of a product focused on IPOs in mid-2017.

Fundamental Insight

Equity Bottom-Up

LIXIL Group Corporation produces aluminum housing materials such as doors, windows,curtain walls, and screens.  The Company also sells interior materials and a variety of housing equipment.

<ul>
<li>2/3 of sales face secular decline in housing demand/shrinking population and the other 1/3 facing weak housing environment due to rising rates</li>
<li>Competition from private label and weak trends and ratios exist</li>
<li>The valuation does not seem to reflect the risks highlighted</li>
</ul>


2/3 of sales face secular decline in housing demand/shrinking population and the other 1/3 facing weak housing environment due to rising rates
Competition from private label and weak trends and ratios exist
The valuation does not seem to reflect the risks highlighted


Lixil (5938 JP): Levered Business Facing Cyclical & Secular Headwinds & Continued Mkt Share Pressure

Shenzhou Intl Group Holdings / Equity Bottom-Up

Shenzhou International Group Holdings Ltd manufactures and processes textiles.  The Company produces, dyes, finishes, prints, embroiders, cuts, and sews knitwear.

<ul>
<li>Key customers &amp; their retail partners battling excess inventory, waning consumer demand, and market share losses in certain geographies</li>
<li>Plans for capacity expansion amid demand uncertainties and alt data and macro picture may prove aggressive and along with risks of reshoring/nearshoring &amp; friend-shoring may prove margin dilutive</li>
<li>Consensus expectations for 2H23 and 2024 appear overly optimistic and valuation is not cheap given the growth profile</li>
</ul>


Key customers &amp; their retail partners battling excess inventory, waning consumer demand, and market share losses in certain geographies
Plans for capacity expansion amid demand uncertainties and alt data and macro picture may prove aggressive and along with risks of reshoring/nearshoring &amp; friend-shoring may prove margin dilutive
Consensus expectations for 2H23 and 2024 appear overly optimistic and valuation is not cheap given the growth profile


Shenzhou (2313 HK): Contract Mfr for Leading Sportswear Brands Facing Challenging Demand Outlook.

RICOH COMPANY, LTD. manufactures and markets office automation equipment, electronic devices, and photographic instruments.  The Company's diverse product line includes facsimiles, image scanners, printers, digital cameras, and personal computers, as well as a full range of analog, digital, and color copiers. Ricoh operates with a network of sales offices and tie-ups worldwide.

<ul>
<li>Large portion of the business is in secular decline and facing pricing pressure</li>
<li>
<a href="https://www.smartkarma.com/entities/ricoh-company-ltd" target="_blank" data-smartkarma-citation="entities:15359:1" rel="noopener">Ricoh Company Ltd (7752 JP)</a> appears to be losing share in a shrinking market</li>
<li>Estimates are above overly optimistic guidance making shares look optically inexpensive</li>
</ul>


Large portion of the business is in secular decline and facing pricing pressure

Ricoh Company Ltd (7752 JP) appears to be losing share in a shrinking market
Estimates are above overly optimistic guidance making shares look optically inexpensive


Ricoh (7752 JP) - Long Term Structural Decliner with a Recent Boost in Inorganic Rev & Profits

Pure Storage, Inc. provides enterprise storage solutions. The Company offers flash enterprise arrays for high performance workloads, including server consolidation, virtualization desktop, database, and cloud computing. Pure Storage serves customers throughout the United States.

<ul>
<li>Enterprise storage hardware market faces numerous headwinds and increasing commoditization</li>
<li>STaaS is cannibalistic, facing increasing competition, and decelerated in the MRQ</li>
<li>Each of the last 2 quarters have seen some meaningful, non-recurring revenues lead to PSTG beating estimates</li>
</ul>


Enterprise storage hardware market faces numerous headwinds and increasing commoditization
STaaS is cannibalistic, facing increasing competition, and decelerated in the MRQ
Each of the last 2 quarters have seen some meaningful, non-recurring revenues lead to PSTG beating estimates


Pure Storage (PSTG): Market Leader Facing Commoditization of Its Products

Nokian Renkaat Oyj develops and manufactures premium tires for passenger cars and heavy machineries. The company primarily operates in the tire replacement market, and its products are sold in more than 60 countries worldwide. The Group also includes the Vianor chain, specialising in vehicle maintenance and tire services.

<ul>
<li>Has the Russia/Ukraine Conflict's Impact On Tire Retail Distribution and Manufacturing Been Priced In?</li>
<li>Have The Impact of Higher Raw Materials Costs Already Been Factored Into Margin Expectations?</li>
<li>Will Gasoline Prices Negatively Impact Miles Driven and Slow Replacement Cycles?</li>
</ul>


Has the Russia/Ukraine Conflict's Impact On Tire Retail Distribution and Manufacturing Been Priced In?
Have The Impact of Higher Raw Materials Costs Already Been Factored Into Margin Expectations?
Will Gasoline Prices Negatively Impact Miles Driven and Slow Replacement Cycles?


After Falling 50%+ in a Few Months Is Nokian Renkaat (TYRES FH) A "Buy" Or "Sell"?

Vision Research LLC (founded in 2011) is an independent equity research firm using fundamental analysis to help investors avoid risk & profit from structurally challenged equities. The research is focused on US & European equities. Primary sectors include consumer, TMT and industrials.  Team background includes 3 CFA Charter holders, 2 Certified Public Accountants, global L/S experience, TMT credit experience, management consulting, software engineer, and long biased international equities.