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.

Event-Driven

<ul>
<li>A trade idea involving <a href="https://www.smartkarma.com/entities/kirin-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:16977:1" rel="noopener">Kirin Holdings (2503 JP)</a> from a Holdco perspective, which we suggested last year outperformed Topix by more than 30% in the first 9 months of 2022.</li>
<li>Since November 2022, Kirin has underperformed Topix by 18% (driven by input cost inflation) to push the Holdco discount yet again to an attractive level.</li>
<li>The price hike announcement yesterday could change the cost inflation narrative and help Kirin to keep on unwinding the Holdco discount.</li>
</ul>


A trade idea involving Kirin Holdings (2503 JP) from a Holdco perspective, which we suggested last year outperformed Topix by more than 30% in the first 9 months of 2022.
Since November 2022, Kirin has underperformed Topix by 18% (driven by input cost inflation) to push the Holdco discount yet again to an attractive level.
The price hike announcement yesterday could change the cost inflation narrative and help Kirin to keep on unwinding the Holdco discount.


Kirin’s Holdco Discount Could Keep Unwinding After The Price Hikes Announcement

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/fancl-corp" target="_blank" data-smartkarma-citation="entities:15862:1" rel="noopener">Fancl Corp (4921 JP)</a> delivered 3QFY23 results yesterday, which saw revenue and operating profit decrease by 2.5% and 5.0% YoY respectively to ¥28.3bn (consensus ¥29.8bn) and ¥3.1bn (consensus ¥3.4bn).</li>
<li>Cosmetics growth being the main reason for Fancl’s FY+2 EV/OP of 22.4x, recent trends look scary with cosmetics revenue and OP down 24% and 27% respectively from the pre-COVID level.</li>
<li>Therefore, we would look to short Fancl expecting shares to fall around 25-30% in the short term.</li>
</ul>



Fancl Corp (4921 JP) delivered 3QFY23 results yesterday, which saw revenue and operating profit decrease by 2.5% and 5.0% YoY respectively to ¥28.3bn (consensus ¥29.8bn) and ¥3.1bn (consensus ¥3.4bn).
Cosmetics growth being the main reason for Fancl’s FY+2 EV/OP of 22.4x, recent trends look scary with cosmetics revenue and OP down 24% and 27% respectively from the pre-COVID level.
Therefore, we would look to short Fancl expecting shares to fall around 25-30% in the short term.


FANCL: The Flagship FANCL Brand in Trouble

<ul>
<li>A couple of Japanese cosmetics names, reported their quarterly results this week, with considerable earnings misses</li>
<li>
<a href="https://www.smartkarma.com/entities/kao-corp" target="_blank" data-smartkarma-citation="entities:12933:1" rel="noopener">Kao Corp (4452 JP)</a> fell 8.5% today following a 40% OP miss while <a href="https://www.smartkarma.com/entities/pola-orbis-holdings-inc" target="_blank" data-smartkarma-citation="entities:2287:1" rel="noopener">Pola Orbis Holdings (4927 JP)</a> was flat after a narrow miss of 2% from a relatively low consensus estimate.</li>
<li>If the two reports released this week are something to go by, we could expect large misses, for <a href="https://www.smartkarma.com/entities/fancl-corp" target="_blank" data-smartkarma-citation="entities:15862:1" rel="noopener">Fancl Corp (4921 JP)</a> and <a href="https://www.smartkarma.com/entities/kose-corp" target="_blank" data-smartkarma-citation="entities:18009:1" rel="noopener">Kose Corp (4922 JP)</a> next week.</li>
</ul>


A couple of Japanese cosmetics names, reported their quarterly results this week, with considerable earnings misses

Kao Corp (4452 JP) fell 8.5% today following a 40% OP miss while Pola Orbis Holdings (4927 JP) was flat after a narrow miss of 2% from a relatively low consensus estimate.
If the two reports released this week are something to go by, we could expect large misses, for Fancl Corp (4921 JP) and Kose Corp (4922 JP) next week.


Japanese Cosmetics: Trading Around Q3 Earnings

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/giant-biogene-holding-co-ltd" target="_blank" data-smartkarma-citation="entities:35950:1" rel="noopener">Giant Biogene Holding (GBH HK)</a> has launched its HKEx listing atHK$24.30-27.70 per share to raise up to US$80 million, materially below previous expectations of a US$500 million raise.</li>
<li>We previously discussed the IPO in <a href="https://www.smartkarma.com/insights/giant-biogene-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:81963" rel="noopener">Giant Biogene IPO: The Bull Case</a>, <a href="https://www.smartkarma.com/insights/giant-biogene-ipo-the-bear-case" target="_blank" data-smartkarma-citation="insights:82037" rel="noopener">Giant Biogene IPO: The Bear Case</a> and<a href="https://www.smartkarma.com/insights/giant-biogene-ipo-valuation-first-look" target="_blank" data-smartkarma-citation="insights:82648" rel="noopener">Giant Biogene IPO: Valuation First Look</a>.</li>
<li>The China A Share peers have derated due to the sharp sell-off in the last few days. Nevertheless, Biogene is attractively valued at the IPO price range. We would participate. </li>
</ul>



Giant Biogene Holding (GBH HK) has launched its HKEx listing atHK$24.30-27.70 per share to raise up to US$80 million, materially below previous expectations of a US$500 million raise.
We previously discussed the IPO in Giant Biogene IPO: The Bull Case, Giant Biogene IPO: The Bear Case andGiant Biogene IPO: Valuation First Look.
The China A Share peers have derated due to the sharp sell-off in the last few days. Nevertheless, Biogene is attractively valued at the IPO price range. We would participate. 


<ul>
<li>
<a href="https://www.smartkarma.com/entities/giant-biogene-holding-co-ltd" target="_blank" data-smartkarma-citation="entities:35950:1" rel="noopener">Giant Biogene Holding (GBH HK)</a>, a leading professional skin care product manufacturer, is set to launch a US$500 million HKEx IPO.  </li>
<li>We previously discussed the IPO in <a href="https://www.smartkarma.com/insights/giant-biogene-ipo-the-bull-case" target="_blank" data-smartkarma-citation="insights:81963" rel="noopener">Giant Biogene IPO: The Bull Case</a> and <a href="https://www.smartkarma.com/insights/giant-biogene-ipo-the-bear-case" target="_blank" data-smartkarma-citation="insights:82037" rel="noopener">Giant Biogene IPO: The Bear Case</a>.</li>
<li>In this note, we present our forecasts and take the first look at Giant Biogene's potential valuation range. </li>
</ul>



Giant Biogene Holding (GBH HK), a leading professional skin care product manufacturer, is set to launch a US$500 million HKEx IPO.  
We previously discussed the IPO in Giant Biogene IPO: The Bull Case and Giant Biogene IPO: The Bear Case.
In this note, we present our forecasts and take the first look at Giant Biogene's potential valuation range. 


Japan

FANCL CORPORATION produces and sells additive-free skin care cosmetics for both women and men.  The Company's products include cleansing creams, hair care goods such as shampoos and conditioners, and facial make up products.  Fancl also makes and distributes dietary supplements including royal jelly and various tablets with extracted essence from mushrooms, garlic, ginseng, and soy beans.

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Fancl Corp (4921 JP)

Kirin’s Holdco Discount Could Keep Unwinding After The Price Hikes Announcement

With price hikes possibly turning around the recent negative sentiment, we think the Kirin Holdco trade could yet again get going in the short-term...

Oshadhi Kumarasiri

FANCL: The Flagship FANCL Brand in Trouble

Cosmetics growth being the main reason for Fancl’s lofty FY24 EV/OP of 22.4x, recent trends look quite scary with cosmetics revenue and OP down by...

Oshadhi Kumarasiri

Japanese Cosmetics: Trading Around Q3 Earnings

POla Orbis signalled tough conditions in both local and overseas markets with domestic revenue falling by 1.8% YoY and overseas business affected...

Oshadhi Kumarasiri

Giant Biogene IPO: Valuation Insights

The China A Share peers have derated due to the sharp sell-off in the last few days. Nevertheless, Biogene is attractively valued at the IPO price...

Arun George

Giant Biogene IPO: Valuation First Look

Giant Biogene will launch its US$500 million HKEx IPO this week. In this note, we present our forecasts and take the first look at its potential...

Arun George

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