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<p>Preface: Why I Wanted to Write This Book xi</p> <p>Introduction: How to Approach Company Analysis xv</p> <p>List of Acronyms xix</p> <p><b>Part I: </b><b>Lessons From the Past: My Story as an Analyst 1</b></p> <p>From Fish Cakes to Computer Numerical Control (1988–1995) 2</p> <p>Not Just a Japanese Tourist – Becoming a China H-share Analyst (1996–1998) 5</p> <p>A Truly Global Research Experience – Semiconductor Analyst (1998–2007) 7</p> <p>New Lexicon: Clinical Trial, Cap Rate, Embedded Value, Metal Spread (2008–2013) 11</p> <p>Importing DM Experience to EM: From Japan to Asia-Pacific (2014–2017) 13</p> <p>Connecting the Dots: From Asia to Global (2018–now) 16</p> <p><b>Part II: </b><b>Laying the Groundwork 19</b></p> <p><b>Chapter 1: Understand the ‘Character’ of the Industry 21</b></p> <p>Six Basic Steps for Forecasting Industry Growth 22</p> <p>TAM Growth Rate 27</p> <p>Ten Additional Angles for Testing Forecasts 28</p> <p><b>Chapter 2: Assess the Earnings Drivers in Different Industries 37</b></p> <p>Hyper Growth – Internet, Fintech, Biotechnology 45</p> <p>Secular Growth – Software, Medical Technology 48</p> <p>Cyclical – Capital Goods, Transport, Energy,</p> <p>Commodities, Chemicals, Autos 49</p> <p>Cyclical Growth – Semiconductor, Electronic Components, Technology Hardware, Clean Energy 54</p> <p>Stable – Consumer Staples, Retail, Consumer Discretionary, Pharmaceutical, Media, Business Services 58</p> <p>Interest Rate Sensitive – REITs, Property Developers, Banks, Insurance 63</p> <p>Regulated – Utilities, Telecoms 66</p> <p><b>Chapter 3: Identify the ‘Personality’ of the Company 71</b></p> <p>Product and Service 71</p> <p>Origin and History 72</p> <p>Management Profile 73</p> <p>Ownership Structure 73</p> <p>Value Chain 74</p> <p>Competitive Moat 75</p> <p>Track Record of Strategic Decisions 76</p> <p>Corporate Culture by Country 77</p> <p>Earnings Guidance Track Record 77</p> <p>Controversy Record 78</p> <p>Management Quality – A Framework 78</p> <p><b>Part III: </b><b>Analyse and Apply the Findings 83</b></p> <p><b>Chapter 4: Put Findings into the Earnings Model 85</b></p> <p>Segmental Revenue Forecast 87</p> <p>Income Statement Forecast 88</p> <p>Balance Sheet Forecast 95</p> <p>Cash Flow Forecast 98</p> <p>How to Put Cyclicality into Long-term Earnings Forecasts 100</p> <p>Quarterly Forecasts can be Helpful 100</p> <p>A Birdseye View is Helpful 101</p> <p>Financial and Property Sectors are Unique 101</p> <p><b>Chapter 5: Summarize All Thoughts 105</b></p> <p>A Suggested Method for Creating a Practical Scorecard 105</p> <p><b>Chapter 6: Find the Appropriate Valuation Framework 109</b></p> <p>Hyper Growth – Internet, Biotechnology 112</p> <p>Secular Growth – Software, Medical Technology 114</p> <p>Cyclical – Capital Goods, Transport, Energy,</p> <p>Commodities, Chemicals, Autos 115</p> <p>Cyclical Growth – Semiconductor, Technology Hardware, Clean Energy 116</p> <p>Stable – Consumer Staples, Retail, Consumer Discretionary, Pharmaceutical, Media, Business Services 117</p> <p>Interest Rate Sensitive – Banks, Emerging Market Banks, Insurance, Property, REITs 118</p> <p>Regulated – Utilities, Telecoms 120</p> <p>Conglomerates 121</p> <p>Additional Considerations on Valuation 124</p> <p><b>Chapter 7: Differentiation versus Street 131</b></p> <p>Is the View Actually Different? 131</p> <p>Where is the Difference? 132</p> <p>What is Driving the Difference? 133</p> <p>Value of an Undifferentiated Conclusion 134</p> <p><b>Part IV: </b><b>What to Research and How to Power the Analysis 135</b></p> <p><b>Chapter 8: How to Generate Exciting Ideas 137</b></p> <p>1: Burning Questions 137</p> <p>2: Products to Solve Problems 138</p> <p>3: Forgotten New Technologies 138</p> <p>4: ‘Little Stories’ 139</p> <p>5: New Language 140</p> <p>6: B2B and Orphan Stocks 140</p> <p>7: The Second or Third Derivatives of Structural Changes 141</p> <p>8: Local Trends 141</p> <p>9: Inputs from the Real World 141</p> <p><b>Chapter 9: How to Deal with Disruptors, Emerging Markets, ESG, and Downturns 145</b></p> <p>How to Forecast and Value ‘Disruptors’ 145</p> <p>How Should Emerging Markets be Looked at? 149</p> <p>How to Think about ESG Issues 151</p> <p>How to Cope with Economic Downturns 155</p> <p><b>Chapter 10: Using Soft Skills to Power the Analysis 157</b></p> <p>How to Build a Relationship with Companies 157</p> <p>How to Leverage the Team 159</p> <p>How to Communicate Ideas Effectively 161</p> <p>What Types of Training Should New Analysts Ask for? 163</p> <p>Time Management 165</p> <p><b>Part V: </b><b>Recap and Closing Thoughts 169</b></p> <p>About the Author 173</p> <p>Acknowledgements 175</p> <p>Index 177</p>

<p><b>SHIN HORIE</b> is cohead of Global Single-Name Research (Equity and Credit Research) for Goldman Sachs and is a board member of Goldman Sachs Asia LLC. He is the former director of the Japan Equity Research Department and the former manager of the Korea and Taiwan Equity Research Departments.</p>

<p><b>Praise for <i>Survival Kit for an Equity Analyst</b></i></p> <p>“Shin Horie has come up with an excellent guidebook for young equity analysts, providing both an overall investment framework and personal episodes useful for professional development. I believe his book would also be valuable to private equity professionals, for valuation analysis, developing investment thesis and analyzing risk factors. The highest recommendation for any professionals engaged in investment activities.” <p><b>—John Ehara,</b> Co-founder, Unison Capital <p>“The book is very clearly written and well organized. It is bursting with practical insights that come from decades of experience combined with analytical understanding. Shin has distilled an extraordinarily complex process into an easy-to-follow manual that is valuable for new and seasoned analysts alike. The checklists at the end of each chapter provide useful summaries, making it easy for someone to go back and quickly find what they are looking for after reading it. The book will become the standard for equity analysts for years to come.” <p><b>—Randall S. Kroszner,</b> Deputy Dean for Executive Programs, Norman R. Bobins Professor of Economics, The University of Chicago Booth School of Business <p>“A practical how-to from someone who was one of the best himself and who supervised the best in the business for over two decades. A rare look inside how the process really works rather than the standard clichés.” <p><b>—Steve Strongin,</b> Former head of Global Investment Research, Goldman Sachs <p>“This book elaborates on how experienced equity analysts analyze industries and companies with frameworks and structure. It is highly recommendable not only for financial professionals but also for senior corporate managers in order to understand how equity analysts and investors are assessing strategies, financials and valuations of companies in practice. His personal anecdotes are also a quite enjoyable read.” <p><b>—Tetsuo (Tom) Tsuneishi,</b> Chairman of the board, Tokyo Electron Ltd.

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