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>When just viewed as a shop building operator, Marui is a mid-sized property firm with a dependence on the Tokyo market. </li>
<li>Its consumer credit business has always been larger and transactions exceeded ¥3 trillion for the first time last year and should hit ¥5 trillion in  FY2025.</li>
<li>Marui also wants to leverage that data to better manage its buildings and identify fast growing businesses to invest in, resulting in more cross-use and growth businesses.</li>
</ul>


When just viewed as a shop building operator, Marui is a mid-sized property firm with a dependence on the Tokyo market. 
Its consumer credit business has always been larger and transactions exceeded ¥3 trillion for the first time last year and should hit ¥5 trillion in  FY2025.
Marui also wants to leverage that data to better manage its buildings and identify fast growing businesses to invest in, resulting in more cross-use and growth businesses.


Marui: Already a ¥3 Trillion Business but Aiming for ¥5 Trillion

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/base-inc" target="_blank" data-smartkarma-citation="entities:28353:1" rel="noopener">BASE Inc (4477 JP)</a> is up more than 27% today as the Mothers Index bounced back 4.5% following a steep sell-off during the last one-month period.</li>
<li>Nevertheless, results were disappointing on both the top line and the bottom line with Q1 revenue and operating loss of ¥2,512m (consensus ¥2,659m) and ¥272m (consensus ¥139.2m) respectively.</li>
<li>After disappointing the market with a guidance range that was significantly below consensus in 2021, Base Inc has withheld from providing 2022 guidance.</li>
</ul>



BASE Inc (4477 JP) is up more than 27% today as the Mothers Index bounced back 4.5% following a steep sell-off during the last one-month period.
Nevertheless, results were disappointing on both the top line and the bottom line with Q1 revenue and operating loss of ¥2,512m (consensus ¥2,659m) and ¥272m (consensus ¥139.2m) respectively.
After disappointing the market with a guidance range that was significantly below consensus in 2021, Base Inc has withheld from providing 2022 guidance.


Base Inc: Shoppers Return to Offline, More Downside Left

Thematic (Sector/Industry)

<ul>
<li>This is an in-depth review of Japanese e-commerce in the last 18 months, a time when e-commerce expanded rapidly and by 2023, e-commerce will be Japan’s single biggest retail channel.</li>
<li>We are now riding a wave of change as retailers integrate the e-commerce channel into their businesses, increasingly approaching a true omnichannel model.</li>
<li>And this is important in Japan because, although e-commerce penetration appears low, this overlooks the importance, convenience and ease of access to physical shops and integration with online.</li>
</ul>


This is an in-depth review of Japanese e-commerce in the last 18 months, a time when e-commerce expanded rapidly and by 2023, e-commerce will be Japan’s single biggest retail channel.
We are now riding a wave of change as retailers integrate the e-commerce channel into their businesses, increasingly approaching a true omnichannel model.
And this is important in Japan because, although e-commerce penetration appears low, this overlooks the importance, convenience and ease of access to physical shops and integration with online.


<ul>
<li>Both management and consensus seem to think that <a href="https://www.smartkarma.com/entities/base-inc" target="_blank" data-smartkarma-citation="entities:28353:1" rel="noopener">BASE Inc (4477 JP)</a> will be able to maintain the COVID-19 growth trajectory beyond the COVID affected years.</li>
<li>However, investors seem more circumspect with shares currently trading around 90% below the peak level.</li>
<li>With the company likely failing to meet revenue targets and losses expanding exponentially, we think Base Inc could fall another 25-30% towards the pre-COVID level.</li>
</ul>


Both management and consensus seem to think that BASE Inc (4477 JP) will be able to maintain the COVID-19 growth trajectory beyond the COVID affected years.
However, investors seem more circumspect with shares currently trading around 90% below the peak level.
With the company likely failing to meet revenue targets and losses expanding exponentially, we think Base Inc could fall another 25-30% towards the pre-COVID level.


<ul>
<li>We remain very optimistic about the outlook for Mercari's fundamentals, both gross transaction values and operating margins.</li>
<li>The sharing economy in Japan alone remains nascent and Mercari has only just started adding on adjunct value-add services, most of which are (and will) carry high margins.</li>
<li>Even in the core fashion category, which some analysts have assumed is already reaching saturation, CtoC platforms and used retailers have barely scratched the surface as new research shows.</li>
</ul>


We remain very optimistic about the outlook for Mercari's fundamentals, both gross transaction values and operating margins.
The sharing economy in Japan alone remains nascent and Mercari has only just started adding on adjunct value-add services, most of which are (and will) carry high margins.
Even in the core fashion category, which some analysts have assumed is already reaching saturation, CtoC platforms and used retailers have barely scratched the surface as new research shows.


2022 High Conviction – Plenty of Growth Avenues for Mercari, the Apple of CtoC Services

Japan

BASE, Inc. offers internet based services. The Company provides net shop creation, shopping application development, online payment development, and other services. BASE provides its services throughout Japan.

BASE Inc (4477 JP)

Marui: Already a ¥3 Trillion Business but Aiming for ¥5 Trillion

Marui is one of the few really solid bets in Japanese consumer/retail thanks to its mix of a leading consumer finance business and fast evolving...

Michael Causton

Base Inc: Shoppers Return to Offline, More Downside Left

With 27% upside, Base Inc seems to be moving back into the “Short” territory. However, we won’t consider an outright short position as the oversold...

Oshadhi Kumarasiri

E-Commerce in Japan: The Big Review

Japan's e-commerce sector expanded rapidly in the last 18 months. The following is a complete review and analysis of the major trends as well as...

Michael Causton

Base Inc: Down, But Not Down Enough

With the company likely failing to meet consensus medium-term revenue targets and losses expanding exponentially through venturing into new...

Oshadhi Kumarasiri

2022 High Conviction – Plenty of Growth Avenues for Mercari, the Apple of CtoC Services

Mercari is much, much more than its CtoC platform and will emerge as a pivotal part of Japan's consumer goods/services/finance distribution system...

Michael Causton