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. 

Equity Bottom-Up

<ul>
<li>Japan already suffers from a shortage of truck drivers, resulting in both higher wages and solutions such as collaboration between competitors.</li>
<li>The shortage is about to get worse as, in 2024, new rules will restrict truck driver overtime putting pressure on <a href="https://www.smartkarma.com/entities/yamato-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:2:1" rel="noopener">Yamato Holdings (9064 JP)</a> and competitors. </li>
<li>With both demand and supply of e-commerce now so strong, the change in the law should force new solutions to appear quickly.</li>
</ul>


Japan already suffers from a shortage of truck drivers, resulting in both higher wages and solutions such as collaboration between competitors.
The shortage is about to get worse as, in 2024, new rules will restrict truck driver overtime putting pressure on Yamato Holdings (9064 JP) and competitors. 
With both demand and supply of e-commerce now so strong, the change in the law should force new solutions to appear quickly.


Japanese E-Commerce to Struggle Against New Laws

Telco/Internet specialist

Kirk Boodry

Redex Research

<ul>
<li>Management has cut its FY23 EBITDA target from its long-term goal of ¥390bn to c. ¥363bn as its core ad and eCommerce performance gets weaker</li>
<li>Advertising revenue fell 1% YoY whilst eCommerce volumes (GTV) on the core third-party marketplace Yahoo!Shopping were also down significantly</li>
<li>The outlook for FY23 is further blurred by management changes to address business challenges and deeper LINE/Yahoo integration.  We are lowering our target price to ¥425</li>
</ul>


Management has cut its FY23 EBITDA target from its long-term goal of ¥390bn to c. ¥363bn as its core ad and eCommerce performance gets weaker
Advertising revenue fell 1% YoY whilst eCommerce volumes (GTV) on the core third-party marketplace Yahoo!Shopping were also down significantly
The outlook for FY23 is further blurred by management changes to address business challenges and deeper LINE/Yahoo integration.  We are lowering our target price to ¥425


Z Holdings (Neutral) - Q3 22 Results Reaction: Lofty EBITDA Targets Cut on Erosion in Core Business

<ul>
<li>Results for Q2 were better than we expected as B2B sales growth remained robust whilst cost savings on the consumer side boosted margins</li>
<li>A rather robust decline in revenue for Lohaco is the only negative that stands out but this was partially anticipated whilst the corresponding cost savings are a boon</li>
<li>An 11% increase in operating profit for Q2 offsets weakness from the previous report and puts the company on track to meet guidance for full-year growth</li>
</ul>


Results for Q2 were better than we expected as B2B sales growth remained robust whilst cost savings on the consumer side boosted margins
A rather robust decline in revenue for Lohaco is the only negative that stands out but this was partially anticipated whilst the corresponding cost savings are a boon
An 11% increase in operating profit for Q2 offsets weakness from the previous report and puts the company on track to meet guidance for full-year growth


Askul Q2 23 Results Reaction: B2B Growth and B2C Cost Savings Drive Solid Quarter

<ul>
<li>Quick (Q)-commerce continues to grow, with rapid home delivery providing a new level of convenience to meet demand from busy, urban consumers.  </li>
<li>Z Holdings’ team of Yahoo, Askul and Demae-can have run what is now called Yahoo Mart since 2020 which has opened its first three retail stores, a new omnichannel model.</li>
<li>Given the data analysis and supply chain power of its backers, these stores could quickly become a thorn in the side of the big convenience store chains.</li>
</ul>


Quick (Q)-commerce continues to grow, with rapid home delivery providing a new level of convenience to meet demand from busy, urban consumers.  
Z Holdings’ team of Yahoo, Askul and Demae-can have run what is now called Yahoo Mart since 2020 which has opened its first three retail stores, a new omnichannel model.
Given the data analysis and supply chain power of its backers, these stores could quickly become a thorn in the side of the big convenience store chains.


Yahoo Mart's Q-Conbini Stores: A Potential Competitor to the Big 3 CVS?

Thematic (Sector/Industry)

<ul>
<li>The Japan telecom and Internet companies in our coverage universe held ¥1,253bn in public equities as of Q2(Sep) largely built through capital alliances tied to business collaboration</li>
<li>NTT has the largest portfolio at c. ¥958bn (7% of market cap) followed by KDDI. Toyota (¥354bn) and JTower (three strategic telcos) are the largest and most widely held </li>
<li>The P&amp;L impact of valuation changes in Q2 should be muted. We have included tables for all the companies in our coverage</li>
</ul>


The Japan telecom and Internet companies in our coverage universe held ¥1,253bn in public equities as of Q2(Sep) largely built through capital alliances tied to business collaboration
NTT has the largest portfolio at c. ¥958bn (7% of market cap) followed by KDDI. Toyota (¥354bn) and JTower (three strategic telcos) are the largest and most widely held 
The P&amp;L impact of valuation changes in Q2 should be muted. We have included tables for all the companies in our coverage


Japan Telecoms/Internet - A Quick Look at Public Equity Portfolios

Japan

ASKUL Corporation sells office equipment products to medium and small sized business offices via the Internet and facsimiles.  The Company provides next day delivery services throughout Japan.

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Askul Corp (2678 JP)

Japanese E-Commerce to Struggle Against New Laws

Yamato owns about 50% of Japan's delivery business and has long been a solid performer but pressures from a shortage of drivers is about to get...

Michael Causton

Z Holdings (Neutral) - Q3 22 Results Reaction: Lofty EBITDA Targets Cut on Erosion in Core Business

We have another winter surprise from ZHD as weakness in both advertising sales and eCommerce will keep the company from meeting its FY23 EBITDA target

Kirk Boodry

Askul Q2 23 Results Reaction: B2B Growth and B2C Cost Savings Drive Solid Quarter

A solid Q2 puts Askul back on track for full-year growth in operating profit driven by high single-digit growth in B2B eCommerce

Kirk Boodry

Yahoo Mart's Q-Conbini Stores: A Potential Competitor to the Big 3 CVS?

All big 3 e-commerce firms in Japan now have an omnichannel model to win out in the next big fight for share: FMCG. Z Holdings' has been slower...

Michael Causton

Japan Telecoms/Internet - A Quick Look at Public Equity Portfolios

Public equity portfolios in our coverage represent 3% of total market cap, driven by capital alliances tied to business collaboration. We thought...

Kirk Boodry

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