Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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.

Equity Bottom-Up

Following up on <a href="https://www.smartkarma.com/profiles/campbell-gunn" target="_blank" data-smartkarma-citation="accounts:2531" rel="noopener">Campbell Gunn</a>’s excellent <a href="https://www.smartkarma.com/insights/japan-who-s-swimming-naked-part-2-altman-z-score" target="_blank" rel="noopener">work</a> on screening for potentially distressed companies in the deteriorating economic environment, we decided to look closer at Colowide. The company did not show up on the audit screen but featured prominently on the Altman Z-score screen. We discuss why and detail our concerns regarding the company below.

Following up on Campbell Gunn’s excellent work on screening for potentially distressed companies in the deteriorating economic environment, we decided to look closer at Colowide. The company did not show up on the audit screen but featured prominently on the Altman Z-score screen. We discuss why and detail our concerns regarding the company below.

Colowide – Swimming Naked into the Covid Sea

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Quantitative Analysis

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<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/080/230/original/2019-02-26_16-49-25.png?1551182690" class="editor-image img-responsive" data-smartkarma-image-id="80230"></figure>
Source: Japan Analytics
</div>
LARGE CAP RESULTS &amp; REVISION SCORES - The final instalment of our series of reviews of Japan's most recent earnings and revisions announcements covers the Results &amp; Revision Scores for Japan's 785 larger capitalisation companies with a market capitalisation of over ¥100b.
In the DETAIL section below we look at:- 
<ul>
<li>The 30 top and bottom-ranked companies by Results &amp; Revision Score as well as the top and bottom thirty ranked by change in score over the last quarter and provide brief comments on companies and topics of note.</li>
<li>By comparing Results Scores and Forecast/Revision Scores, we sort companies into'Optimists', 'Pessimists', 'Increasingly Optimistic' and 'Increasingly Pessimistic' categories.</li>
<li>As shown above, the relationship between the Results &amp; Revision Score (RRS) and our Relative Price Score (RPS) for each company and divide the large-cap universe into four 'quadrants' - 'Contrarian Buy' (Low RRS &amp; Low RPS) , 'Contrarian Sell' (High RRS &amp; High RPS), 'Peak Growth' (High RRS &amp; Low RPS) and 'Ex-Growth/Turnaround'  (Low RRS &amp; High RPS), highlighting the outliers in each quadrant.
<ul>
<li>In the two 'Contrarian' quadrants, the market is aligned with the current earnings momentum of the companies suggesting opportunities exist only for those willing or brave enough to take a contrarian view. </li>
<li>For 'Peak Growth', the market is calling for a downturn in momentum that has yet to be reflected in quarterly earnings. Where the cycle is more prolonged than expected, there are often opportunities for short-term rebounds in what are normally relatively-inexpensive companies.</li>
<li>The 'Ex-Growth' quadrant often consists of former 'Contrarian Sell's where the market is reluctant to acknowledge that the cycle has turned. This quadrant can also contain 'Turnarounds' - formerly 'Contrarian Buys' where the market is correctly anticipating a change in fortunes.   </li>
</ul>
</li>
<li>Finally, we provide tables of the top and bottom five ranked companies in each of our 30 Sectors.</li>
</ul>



Source: Japan Analytics

LARGE CAP RESULTS &amp; REVISION SCORES - The final instalment of our series of reviews of Japan's most recent earnings and revisions announcements covers the Results &amp; Revision Scores for Japan's 785 larger capitalisation companies with a market capitalisation of over ¥100b.
In the DETAIL section below we look at:- 

The 30 top and bottom-ranked companies by Results &amp; Revision Score as well as the top and bottom thirty ranked by change in score over the last quarter and provide brief comments on companies and topics of note.
By comparing Results Scores and Forecast/Revision Scores, we sort companies into'Optimists', 'Pessimists', 'Increasingly Optimistic' and 'Increasingly Pessimistic' categories.
As shown above, the relationship between the Results &amp; Revision Score (RRS) and our Relative Price Score (RPS) for each company and divide the large-cap universe into four 'quadrants' - 'Contrarian Buy' (Low RRS &amp; Low RPS) , 'Contrarian Sell' (High RRS &amp; High RPS), 'Peak Growth' (High RRS &amp; Low RPS) and 'Ex-Growth/Turnaround'  (Low RRS &amp; High RPS), highlighting the outliers in each quadrant.

In the two 'Contrarian' quadrants, the market is aligned with the current earnings momentum of the companies suggesting opportunities exist only for those willing or brave enough to take a contrarian view. 
For 'Peak Growth', the market is calling for a downturn in momentum that has yet to be reflected in quarterly earnings. Where the cycle is more prolonged than expected, there are often opportunities for short-term rebounds in what are normally relatively-inexpensive companies.
The 'Ex-Growth' quadrant often consists of former 'Contrarian Sell's where the market is reluctant to acknowledge that the cycle has turned. This quadrant can also contain 'Turnarounds' - formerly 'Contrarian Buys' where the market is correctly anticipating a change in fortunes.   


Finally, we provide tables of the top and bottom five ranked companies in each of our 30 Sectors.


🇯🇵 Japan • Winter Large Cap Results & Revision Scores - Contrarian Buys & Sells/​Peak & Ex-Growth

Event-Driven

Sushiro originally listed on the TSE’s 2nd section in 2003 but was bought in a TOB by Unison Capital and its listing was cancelled. Following this, the company was acquired by another fund, Permira Advisors, and was relisted in March 2017, where the relisting ended with the stock breaking its offering price on its first day of trading, closing at JPY3,430. Even now, in October, the stock trades around the JPY3,600 mark which is in line with its offering price. The recently announced merger occurred following the end of the post-listing 180 day lock up period is predicated on the gradually saturating domestic conveyor sushi industry’s operating conditions, potential increases in profitability from a rationalized store network, the acceleration of foreign expansion and greater vertical integration in the sourcing of sushi rice.Based on these strategic needs, both the industry’s number five player, Genki Sushi and number one player Sushiro have agreed to the merger suggested by the leading private rice wholesaler Shinmei, which was also Genki Sushi’s largest shareholder. It is important to bear in mind however, that there have been previous efforts to consolidate the sector and each of these has failed, with Shinmei having been involved in one of these attempts already. Based on the history of the industry it seems likely that further consolidation efforts will be made with Shinmei at the centre and potentially Zennoh (the National Federation of Agricultural Cooperative Associations) also involving itself in an attempt to increase the proportion of direct sales of rice and raise margins for its members.

Sushiro originally listed on the TSE’s 2nd section in 2003 but was bought in a TOB by Unison Capital and its listing was cancelled. Following this, the company was acquired by another fund, Permira Advisors, and was relisted in March 2017, where the relisting ended with the stock breaking its offering price on its first day of trading, closing at JPY3,430. Even now, in October, the stock trades around the JPY3,600 mark which is in line with its offering price. The recently announced merger occurred following the end of the post-listing 180 day lock up period is predicated on the gradually saturating domestic conveyor sushi industry’s operating conditions, potential increases in profitability from a rationalized store network, the acceleration of foreign expansion and greater vertical integration in the sourcing of sushi rice.Based on these strategic needs, both the industry’s number five player, Genki Sushi and number one player Sushiro have agreed to the merger suggested by the leading private rice wholesaler Shinmei, which was also Genki Sushi’s largest shareholder. It is important to bear in mind however, that there have been previous efforts to consolidate the sector and each of these has failed, with Shinmei having been involved in one of these attempts already. Based on the history of the industry it seems likely that further consolidation efforts will be made with Shinmei at the centre and potentially Zennoh (the National Federation of Agricultural Cooperative Associations) also involving itself in an attempt to increase the proportion of direct sales of rice and raise margins for its members.

Background to The Sushiro-Genki Sushi Merger and Japan's Conveyor Sushi Consolidation Path

Japan

COLOWIDE CO., LTD. manages, as a holding company, its group companies that operate Japanese style pub restaurant chain named Kantaro and Italian restaurant chain named Itameshiya La Pausa primarily in Tokyo.  The Company also operates KARAOKE business.

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Colowide Co Ltd (7616 JP)

Colowide – Swimming Naked into the Covid Sea

Following up on Campbell Gunn’s excellent work on screening for potentially distressed companies in the deteriorating economic environment, we...

Mio Kato

🇯🇵 Japan • Winter Large Cap Results & Revision Scores - Contrarian Buys & Sells/Peak & Ex-Growth

LARGE CAP RESULTS & REVISION SCORES - The final instalment of our series of reviews of Japan's most recent earnings and revisions...

Campbell Gunn

Background to The Sushiro-Genki Sushi Merger and Japan's Conveyor Sushi Consolidation Path

Sushiro originally listed on the TSE’s 2nd section in 2003 but was bought in a TOB by Unison Capital and its listing was cancelled. Following this,...

Mio Kato

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Colowide – Swimming Naked into the Covid Sea

Following up on Campbell Gunn’s excellent work on screening for potentially distressed companies in the deteriorating economic environment, we...

Mio Kato

🇯🇵 Japan • Winter Large Cap Results & Revision Scores - Contrarian Buys & Sells/​Peak & Ex-Growth

LARGE CAP RESULTS & REVISION SCORES - The final instalment of our series of reviews of Japan's most recent earnings and revisions...

Campbell Gunn

Background to The Sushiro-Genki Sushi Merger and Japan's Conveyor Sushi Consolidation Path

Sushiro originally listed on the TSE’s 2nd section in 2003 but was bought in a TOB by Unison Capital and its listing was cancelled. Following this,...

Mio Kato

🇯🇵 Japan • Winter Large Cap Results & Revision Scores - Contrarian Buys & Sells/Peak & Ex-Growth