Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

On 14 May, <a href="https://www.smartkarma.com/entities/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post Holdings (6178 JP)</a> announced earnings, a new Medium Term Management Plan called <a href="https://www.japanpost.jp/en/ir/news/jpn/pdf/20210514_01.pdf" target="_blank" rel="noopener">JP Vision 2025</a>, and an expected sale of shares of subsidiary <a href="https://www.smartkarma.com/entities/japan-post-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:840:1" rel="noopener">Japan Post Insurance (7181 JP)</a> so that it would end up owning less than 50.00% after the ToSTNeT-3 sale to be conducted 17 May, and the placing of a certain number of shares in trust so that JPH's voting rights into JPI became 49.9%. In the original <a href="https://www.japanpost.jp/en/ir/news/jpn/pdf/20210514_02.pdf" target="_blank" rel="noopener">announcement</a> of the expected sale of JPI shares, made with earnings and the Mid Term Plan announcement on 14 May, JPH said... <blockquote>The Company plans to utilize the funds earned from this disposal of shares for purposes such as the enhancement of corporate value of the Company and the Japan Post Group.</blockquote>On the 17th of May, the following business day, JPH sold that very large block of shares. Yesterday after the close, <a href="https://www.smartkarma.com/entities/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post Holdings (6178 JP)</a> announced that it had arranged the trust to take 559,900 shares of <a href="https://www.smartkarma.com/entities/japan-post-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:840:1" rel="noopener">Japan Post Insurance (7181 JP)</a> (details in the discussion point <a href="https://www.smartkarma.com/insights/huge-japan-post-insurance-buyback-mooted-decks-cleared-time-to-buy" target="_blank" rel="noopener">here</a>) so that it only owned 49.90%, thereby lifting certain restrictions placed on JPI by the Postal Service Privatization Act and lifting certain reporting requirements on JPH under the Insurance Business Act because it no longer held more than 50% of an insurer.<div class="content-highlight">Today after the close, <a href="https://www.smartkarma.com/entities/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post Holdings (6178 JP)</a> made a Japanese-only <a href="https://www.smartkarma.com/insights/huge-japan-post-insurance-buyback-mooted-decks-cleared-time-to-buy" target="_blank" rel="noopener">announcement</a> that it would buy back up to 276,090,500 shares (6.14% of shares out) for up to ¥250 billion in a ToSTNeT-3 buyback conducted at ¥905.5/share on 11 June 2021 before the open. </div>In the <a href="https://www.japanpost.jp/group/governance/pdf/01.pdf" target="_blank" rel="noopener">Corporate Governance Report</a> published (in Japanese only) on 10 May 2021, the company outlined its policy of not favouring the major shareholder (the Finance Ministry owned 63.29% of shares out or creating a disadvantage for minority shareholders. The ToSTNeT-3 buyback is open to all, and therefore fits the goal of JPH being able to treat all shareholders equally. And it leaves the shares in an interesting position.

On 14 May, Japan Post Holdings (6178 JP) announced earnings, a new Medium Term Management Plan called JP Vision 2025, and an expected sale of shares of subsidiary Japan Post Insurance (7181 JP) so that it would end up owning less than 50.00% after the ToSTNeT-3 sale to be conducted 17 May, and the placing of a certain number of shares in trust so that JPH's voting rights into JPI became 49.9%. In the original announcement of the expected sale of JPI shares, made with earnings and the Mid Term Plan announcement on 14 May, JPH said... The Company plans to utilize the funds earned from this disposal of shares for purposes such as the enhancement of corporate value of the Company and the Japan Post Group.On the 17th of May, the following business day, JPH sold that very large block of shares. Yesterday after the close, Japan Post Holdings (6178 JP) announced that it had arranged the trust to take 559,900 shares of Japan Post Insurance (7181 JP) (details in the discussion point here) so that it only owned 49.90%, thereby lifting certain restrictions placed on JPI by the Postal Service Privatization Act and lifting certain reporting requirements on JPH under the Insurance Business Act because it no longer held more than 50% of an insurer.Today after the close, Japan Post Holdings (6178 JP) made a Japanese-only announcement that it would buy back up to 276,090,500 shares (6.14% of shares out) for up to ¥250 billion in a ToSTNeT-3 buyback conducted at ¥905.5/share on 11 June 2021 before the open. In the Corporate Governance Report published (in Japanese only) on 10 May 2021, the company outlined its policy of not favouring the major shareholder (the Finance Ministry owned 63.29% of shares out or creating a disadvantage for minority shareholders. The ToSTNeT-3 buyback is open to all, and therefore fits the goal of JPH being able to treat all shareholders equally. And it leaves the shares in an interesting position.

Japan Post Holdings BUYBACK - Recycling Sale Proceeds As Expected; No BIG Catalyst Yet

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

Thematic (Sector/Industry)

Momentum was building for fashion EC well before 2020 but the situation last year brought an overwhelming response from both consumers and merchants. As a result, market share for the online channel has spiralled upwards and, although there will be a correction once shoppers return to stores, the medium-term trajectory is clear.
The big malls continue to dominate – as Zozo’s 21.5% growth in 2020 attests – but retailers and brands are investing much more in their own online stores, creating a level of dynamism and competition not seen in other fashion retail channels.
The following is an in-depth review of the fashion e-commerce market covering:
<ul>
<li>Market Size and market growth</li>
<li>Winners and losers in the last two years</li>
<li>Ranking of the top vendors online by sales</li>
<li>Ranking of fastest growing e-commerce fashion retailers</li>
<li>Strengths and weaknesses in leading firms</li>
<li>Ranking of firms with highest ratio of online sales to offline</li>
<li>Ranking of firms with highest share of direct online sales vs 3rd party malls.</li>
<li>Review of market share of major malls vs direct sales by retailers and the momentum behind each.</li>
</ul>

Momentum was building for fashion EC well before 2020 but the situation last year brought an overwhelming response from both consumers and merchants. As a result, market share for the online channel has spiralled upwards and, although there will be a correction once shoppers return to stores, the medium-term trajectory is clear.
The big malls continue to dominate – as Zozo’s 21.5% growth in 2020 attests – but retailers and brands are investing much more in their own online stores, creating a level of dynamism and competition not seen in other fashion retail channels.
The following is an in-depth review of the fashion e-commerce market covering:

Market Size and market growth
Winners and losers in the last two years
Ranking of the top vendors online by sales
Ranking of fastest growing e-commerce fashion retailers
Strengths and weaknesses in leading firms
Ranking of firms with highest ratio of online sales to offline
Ranking of firms with highest share of direct online sales vs 3rd party malls.
Review of market share of major malls vs direct sales by retailers and the momentum behind each.


Fashion E-Commerce Has Watershed Year in 2020

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/izumi-co-ltd" target="_blank" data-smartkarma-citation="entities:13173:1" rel="noopener">Izumi Co Ltd (8273 JP)</a> is Japan’s largest retailer in the South and, at least until 2018, was the last GMS to maintain a growth trajectory. Now, with the popularity of the <a href="https://www.smartkarma.com/entities/cosmos-pharmaceutical-corp" target="_blank" data-smartkarma-citation="entities:3797:1" rel="noopener">Cosmos Pharmaceutical (3349 JP)</a>  discount food chain eating into Izumi’s profits in Kyushu and the same lack of enthusiasm for the GMS format also spreading as it has elsewhere, Izumi last month announced a wide-ranging and ambitious plan to reinvent itself over the next five years. Izumi’s alliance with <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I Holdings (3382 JP)</a> will also grow in importance.
These plans include expansion online and investment in discount retailing. The problem with the former is that there are already many more and better organised competitors and in the latte, Izumi has no experience in the kind of supply chain expertise required to build a discount retail business of any scale.
While Izumi has been one of the few well-run GMS operators in the past five years, there is increasing concern that it will fall victim to pressures from discounters on one side and e-commerce competitors on the other.

Izumi Co Ltd (8273 JP) is Japan’s largest retailer in the South and, at least until 2018, was the last GMS to maintain a growth trajectory. Now, with the popularity of the Cosmos Pharmaceutical (3349 JP)  discount food chain eating into Izumi’s profits in Kyushu and the same lack of enthusiasm for the GMS format also spreading as it has elsewhere, Izumi last month announced a wide-ranging and ambitious plan to reinvent itself over the next five years. Izumi’s alliance with Seven &amp; I Holdings (3382 JP) will also grow in importance.
These plans include expansion online and investment in discount retailing. The problem with the former is that there are already many more and better organised competitors and in the latte, Izumi has no experience in the kind of supply chain expertise required to build a discount retail business of any scale.
While Izumi has been one of the few well-run GMS operators in the past five years, there is increasing concern that it will fall victim to pressures from discounters on one side and e-commerce competitors on the other.

Izumi Focus on Food and Online Should Improve Margins

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Renesas Electronics / Equity Capital Markets

<div>
Renesas, along with INCJ, aims to raise around US$3.4bn via selling a mix of primary and secondary shares. We covered most aspects of the deal in our earlier note, <a href="https://www.smartkarma.com/insights/renesas-placement-very-well-flagged-past-deals-have-done-well-but-large-size-warrants-correction" target="_blank" rel="noopener">Renesas Placement - Very Well Flagged, past Deals Have Done Well but Large Size Warrants Correction.</a>
In this note, I'll talk about the updates since then.
</div>


Renesas, along with INCJ, aims to raise around US$3.4bn via selling a mix of primary and secondary shares. We covered most aspects of the deal in our earlier note, Renesas Placement - Very Well Flagged, past Deals Have Done Well but Large Size Warrants Correction.
In this note, I'll talk about the updates since then.


Renesas Placement Update - Doing Much Better than Its past Deals. Could Impact Post-Deal Performance

<a href="https://www.smartkarma.com/entities/zozo-inc" target="_blank" data-smartkarma-citation="entities:18379:1" rel="noopener">ZOZO Inc (3092 JP)</a> today announced a JPY 32bn buyback. And it announced a JPY 25bn placement. The reasoning is that the company wants to have a place in the TSE Prime market and without a higher float, the company won't meet the 35% tradable shares criteria it is supposed to have in June. While this will not get them there by end of June, companies with a "plan" to get there will be granted provisional inclusion if they meet the other criteria, and this construct has a decent chance of getting them there.The explanation by the company is a little odd though. Investors should understand the details. Big picture they don't mean much, but the convoluted nature of the situation suggests

ZOZO Inc (3092 JP) today announced a JPY 32bn buyback. And it announced a JPY 25bn placement. The reasoning is that the company wants to have a place in the TSE Prime market and without a higher float, the company won't meet the 35% tradable shares criteria it is supposed to have in June. While this will not get them there by end of June, companies with a "plan" to get there will be granted provisional inclusion if they meet the other criteria, and this construct has a decent chance of getting them there.The explanation by the company is a little odd though. Investors should understand the details. Big picture they don't mean much, but the convoluted nature of the situation suggests 

Oh No ZoZo! An Overly Complicated Buyback+Issuance To Stay Prime

Japan

Rakuten Group, Inc. provides Internet services. The Company offers Internet finance services which including "Rakuten Card" and "Rakuten Bank". Rakuten Group also provides digital content services including electronic book services.

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Rakuten (4755 JP)

Japan Post Holdings BUYBACK - Recycling Sale Proceeds As Expected; No BIG Catalyst Yet

JPH sold JPY 358bn of shares in JPI, and now is spending 70% of that to buy back its own shares from the govt. That is good, but it should do...

Travis Lundy

Fashion E-Commerce Has Watershed Year in 2020

A complete review of the fashion e-commerce market in Japan, including rankings by sales, fastest growing, winners and losers and reviews of the...

Michael Causton

Izumi Focus on Food and Online Should Improve Margins

Izumi has been one of the few decent performers among GMS retailers in the past five years but now looks under increasing pressure - despite new...

Michael Causton

Renesas Placement Update - Doing Much Better than Its past Deals. Could Impact Post-Deal Performance

Renesas and INCJ, aims to raise around US$3.4bn via selling a mix of primary and secondary shares. We covered most aspects of the deal in our...

Sumeet Singh

Oh No ZoZo! An Overly Complicated Buyback+Issuance To Stay Prime

Zozo's Buyback and Equity Commitment Line is minimally EPS accretive but creates a flow overhang. I expect the ToSTNeT-3 to go differently than the...

Travis Lundy

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