Consumer Discretionary

Report by Azabu Research

Making waves again - Yamaha was trading at ~40x earnings when China decided to start cutting educational budgets that had been the bedrock of the world’s largest market for Classical pianos. The stock has since dropped 56% (vs. Topix up 37%). While earnings missed consensus estimates by an average of 25% over the subsequent 5 quarters, Mike Allen thinks the consensus has begun to overcompensate. The Chinese Piano market is not going to recover, but analysts are overestimating its importance - it probably accounts for less than 2% of Yamaha’s total sales - and are underestimating the company’s ability to cut costs and drive top-line growth through other avenues.

Consumer Discretionary

Report by LightStream Research

Revving up the hydrogen engine - in keeping with its penchant for developing every type of technology imaginable, Toyota has been working on not just fuel cells but also hydrogen engines. Now it is partnering with Mazda, Subaru, Yamaha and KHI to further expand on this concept and add synthetic carbon neutral fuels to the mix. These efforts could provide alternative zero carbon transition paths and are worth understanding, especially since EVs and renewables are nowhere near as mature for mass adoption as is generally portrayed.