20180612-瑞士信贷_香港_-Top_of_the_Pack_28页_1mb

CREDIT SUISSE Japan Daily Summary

Core Content Overview

This document contains a summary of investment research and analysis from Credit Suisse for the Japan market, focusing on specific stocks and sectors. It includes stock ratings, target prices, financial forecasts, and market performance data for various companies and REITs, as well as insights into broader industry trends and events.

Key Companies and Sectors

Pioneer (6773)

• Rating: Downgraded to UNDERPERFORM
• Target Price: ¥140 (from ¥170, potential return -13%)
• Reasons:
  • Operating losses are expected to increase in FY3/19 and FY3/20 due to the overhaul of the OEM car electronics business and higher fixed costs.
  • Earnings recovery is not expected until FY3/21, with potential for improvement in the long term.
  • Risks include further restructuring costs and potential erosion of book value per share (BPS).
• Upside Risks:
  • Swift establishment of a new OEM structure.
  • LiDAR and autonomous driving-related business turning profitable soon.
  • Forex benefits from a weaker THB vs. USD.
• Valuation:
  • Based on P/B of 0.8x and FY3/19E BPS of ¥168.
  • Previously based on P/B of 0.8x and FY3/19E BPS of ¥212.

Clarion (6796)

• Rating: NEUTRAL
• Target Price: ¥310 (from ¥360, potential return 7%)
• Reasons:
  • Earnings recovery from FY3/20 is still too early to factor in.
  • Anticipated QoQ profit declines in FY3/19 and potential challenges in FY3/20 due to development costs.
• Risks:
  • Further increases in R&D spending.
  • Falls in unit sales to major users.
• Valuation:
  • Based on FY3/19E BPS of ¥165 and P/B of 1.9x.
  • Previously based on P/E of 15x and EPS of ¥24.

J-REIT Sector

• Overall Preference:
  • Office REITs remain the top choice due to steady rent increases.
• Target Price Changes:
  • Raising: Nippon Building Fund (NBF; 8951), Japan Logistics Fund (JLF; 8967), Advance Residence Investment (ADR; 3269), GLP J-REIT (3281), Nippon Prologis REIT (NPR; 3283), and Japan Prime Realty (JPR; 8955).
  • Cutting: Frontier Real Estate (FRE; 8964) and Nomura Real Estate Master Fund (NMF; 3462).
• Rating Changes:
  • JPR upgraded to OUTPERFORM.
  • NMF downgraded to NEUTRAL.
• Key Insights:
  • Office REITs are expected to see DPU growth of 3% annually, while residential REITs may see around 1% growth.
  • Tokyo's central wards are expected to see 1.68 million sqm of new office supply by 2020, with a decline in 2021 and 2022.
  • Investors may become more bullish if lease contracts for 2020 buildings are confirmed.

Japan Prime Realty Inv Corp (8955)

• Rating: OUTPERFORM
• Target Price: ¥450,000 (from ¥430,000, potential return 11%)
• Reasons:
  • Revenue growth from backfilling vacancies and higher rents.
  • Internal growth from rent increases is expected to be the main driver of DPU.
• DPU Forecasts:
  • ¥88 for FP6/18 (+1.2% PoP)
  • ¥262 for FP12/18 (+3.6%)
  • ¥143 for FP6/19 (+1.9%)
• Debt-Servicing Costs:
  • Expected to reduce DPU by 1.7% over the next three years (FP12/20) and 1.2% over 1.5 years (FP6/19).
• Valuation:
  • Based on annualized DPU of ¥14,886 and a distribution yield of 3.3%.
  • Previously based on DPU of ¥15,034 and a distribution yield of 3.5%.

Other Highlights

GMO Internet (9449)

• Rating: OUTPERFORM
• Target Price: ¥3,530 (from ¥2,500, potential return 17%)
• Reasons:
  • Cryptocurrency exchange business is expected to boost profits.
  • Expansion into cloud mining and mining machine sales reduces price fluctuation risks.
• Valuation:
  • Based on revised forecasts incorporating cryptocurrency exchange and mining business.

xEV and xEV Battery Industry

• Update:
  • Credit Suisse raises its xEV volume outlook.
  • Forecasts strong growth for lithium-ion batteries (LIBs).
• Report:
  • Click for detailed analysis on the xEV market and battery demand.

Japan Kyoto Conference

• Event:
  • 3rd Annual Japan Kyoto Conference
  • Dates: August 30 - 31, 2018
  • Location: The Westin Miyako, Kyoto

Market Data Summary

Pioneer (6773)

• Market Cap: ¥60.2 billion
• Enterprise Value: ¥61.1 billion
• Number of Shares: 378.3 million
• Free Float: 70.0%
• 52-Week Price Range: ¥252 - ¥155
• Financial Summary (FY19E):
  • Revenue: ¥378.6 billion
  • Operating Profit: -¥6.4 billion
  • Recurring Profit: -¥6.8 billion
  • Net Profit: -¥13.2 billion
  • EPS: -¥34.9
  • P/E: -4.6
  • P/B: 0.90
  • ROE: -17.9%
  • D/E: 10.6%

Clarion (6796)

• Market Cap: ¥80.3 billion
• Enterprise Value: ¥83.3 billion
• Number of Shares: 281.9 million
• Free Float: 30.0%
• 52-Week Price Range: ¥461 - ¥277
• Financial Summary (FY19E):
  • Revenue: ¥166.9 billion
  • Operating Profit: ¥3.6 billion
  • Recurring Profit: ¥3.6 billion
  • Net Profit: ¥2.1 billion
  • EPS: ¥7.5
  • P/E: 38.0
  • P/B: 1.7
  • ROE: 4.6%
  • D/E: -1.5%

Share Price Performance

Pioneer (6773)

• Absolute Return (1M/3M/12M): -8.5% / -10.1% / -20.3%
• Relative Return (1M/3M/12M): -9.0% / -13.9% / -32.3%

Clarion (6796)

• Absolute Return (1M/3M/12M): -2.0% / -8.8% / -27.6%
• Relative Return (1M/3M/12M): -2.5% / -12.6% / -39.6%

Conclusion

The Credit Suisse Japan Daily report highlights the firm's investment outlook on key stocks and sectors. Pioneer faces challenges in the near term due to its OEM business overhaul and is downgraded to UNDERPERFORM. Clarion's earnings recovery is not yet clear, leading to a NEUTRAL rating. The J-REIT sector remains favorable, with a preference for office REITs, and Japan Prime Realty is upgraded to OUTPERFORM due to revenue and rent growth. The xEV and cryptocurrency exchange sectors are also noted for potential growth, with GMO Internet being a key player. Overall, the report provides a mix of upgrades, downgrades, and valuation insights for investors in the Japanese market.