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.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/aeon-co-ltd" target="_blank" data-smartkarma-citation="entities:3:1" rel="noopener">Aeon Co Ltd (8267 JP)</a>, <a href="https://www.smartkarma.com/entities/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">Tsuruha Holdings (3391 JP)</a> and <a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1" rel="noopener">Welcia Holdings (3141 JP)</a> have announced an alliance to establish the largest drugstore alliance in Japan by December 2027.</li>
<li>Aeon will carry out several Tsuruha transactions – buy Oasis 13.58% stake at JPY15,500 per share and, on receiving regulatory approval, reach 27.17% of the voting rights.  </li>
<li>The agreements involve merging Tsuruha and Welcia through a share exchange offer and Aeon subsequently increasing its Tsuruha voting rights from 27.17% to less than 51%. </li>
</ul>



Aeon Co Ltd (8267 JP), Tsuruha Holdings (3391 JP) and Welcia Holdings (3141 JP) have announced an alliance to establish the largest drugstore alliance in Japan by December 2027.
Aeon will carry out several Tsuruha transactions – buy Oasis 13.58% stake at JPY15,500 per share and, on receiving regulatory approval, reach 27.17% of the voting rights.  
The agreements involve merging Tsuruha and Welcia through a share exchange offer and Aeon subsequently increasing its Tsuruha voting rights from 27.17% to less than 51%. 


Aeon (8267 JP), Tsuruha (3391 JP) And Welcia (3141 JP)’s Long-Dated Plan

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. 

<ul>
<li>The possible merger between Welcia and Tsuruha under Aeon has been talked about for years despite concerns from both drugstores, but may now happen.</li>
<li>But calling these retailers drugstores is increasingly a misnomer: FMCG-drugstores is better because they and many others in the sector, increasingly compete with FMCG retailers like supermarkets and even CVS.</li>
<li>This evolution is rapid so the merits of a deal make more sense when we view it from a sector five years in the future than how it is today.</li>
</ul>


The possible merger between Welcia and Tsuruha under Aeon has been talked about for years despite concerns from both drugstores, but may now happen.
But calling these retailers drugstores is increasingly a misnomer: FMCG-drugstores is better because they and many others in the sector, increasingly compete with FMCG retailers like supermarkets and even CVS.
This evolution is rapid so the merits of a deal make more sense when we view it from a sector five years in the future than how it is today.


Aeon, Welcia and Tsuruha: Creating an FMCG Behemoth

Thematic (Sector/Industry)

<ul>
<li>Major food-drugstores like Kusuri no Aoki and Genky Drugstores continue to pressure local supermarket competition. </li>
<li>The model of funding discount foods and FMCG via high profit pharmaceutical and cosmetics ranges is one that traditional food chains cannot match.</li>
<li>Now the largest players are creating brands and expanding into new regions. Many analysts have predicted saturation in the sector in the last decade. They continue to be wrong.</li>
</ul>


Major food-drugstores like Kusuri no Aoki and Genky Drugstores continue to pressure local supermarket competition. 
The model of funding discount foods and FMCG via high profit pharmaceutical and cosmetics ranges is one that traditional food chains cannot match.
Now the largest players are creating brands and expanding into new regions. Many analysts have predicted saturation in the sector in the last decade. They continue to be wrong.


Japan's Drugstores Taking on – and Beating – Supermarkets

Equity Bottom-Up

<ul>
<li>As outlined in previous reports, Aeon has been working hard to streamline its vast retail empire but also rethinking the fundamentals of retailing for each major format it operates.</li>
<li>The results are now coming through with a big increase in operating profits in 1H2023, up 23% on last year.</li>
<li>There is real momentum now, and the new online supermarket business is central to its ambitions to create the first true national FMCG business.</li>
</ul>


As outlined in previous reports, Aeon has been working hard to streamline its vast retail empire but also rethinking the fundamentals of retailing for each major format it operates.
The results are now coming through with a big increase in operating profits in 1H2023, up 23% on last year.
There is real momentum now, and the new online supermarket business is central to its ambitions to create the first true national FMCG business.


Aeon Keeps Working After High Profit Growth

<ul>
<li>Drugstores were already the fastest growing format before Covid and the health scare only improved their performance further.</li>
<li>Several of the largest chains are now powerful players in food, using their non-food base to shake up the supermarket sector in ways that Japan has never seen before.</li>
<li>Being price-led, inflation is only helping them along, with a much greater capacity to hold down prices than mainstream supermarkets.</li>
</ul>


Drugstores were already the fastest growing format before Covid and the health scare only improved their performance further.
Several of the largest chains are now powerful players in food, using their non-food base to shake up the supermarket sector in ways that Japan has never seen before.
Being price-led, inflation is only helping them along, with a much greater capacity to hold down prices than mainstream supermarkets.


Discount Drugstores Challenging Japanese Supermarkets

Japan

Genky DrugStores Co., Ltd. operates drug stores. The Company sells prescription drugs and medications. Genky DrugStores provides its services in Japan.

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Genky DrugStores Co Ltd (9267 JP)

Aeon (8267 JP), Tsuruha (3391 JP) And Welcia (3141 JP)’s Long-Dated Plan

We prefer to play these transactions through Tsuruha due to a valuation benchmark (Aeon’s acquisition from Oasis at JPY15,500) and undemanding...

Arun George

Aeon, Welcia and Tsuruha: Creating an FMCG Behemoth

Merger between Welcia and Tsuruha under Aeon may happen as FMCG-drugstores increasingly compete with supermarkets and CVS, so we need to view the...

Michael Causton

Japan's Drugstores Taking on – and Beating – Supermarkets

Major food-drugstores dominate local supermarkets, leveraging high-profit pharmaceutical and cosmetics to discount foods. These players are...

Michael Causton

Aeon Keeps Working After High Profit Growth

Aeon's efforts to revamp its retail empire and rethink strategies are paying off, with a 23% rise in OP in 1H2023. A new online store is key to...

Michael Causton

Discount Drugstores Challenging Japanese Supermarkets

Japan's supermarkets are facing unprecedented challenges from new competition in e-commerce but especially drugstores. We highlight the winners in...

Michael Causton

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Aeon (8267 JP), Tsuruha (3391 JP) And Welcia (3141 JP)’s Long-Dated Plan

We prefer to play these transactions through Tsuruha due to a valuation benchmark (Aeon’s acquisition from Oasis at JPY15,500) and undemanding...

Arun George

Aeon, Welcia and Tsuruha: Creating an FMCG Behemoth

​Merger between Welcia and Tsuruha under Aeon may happen as FMCG-drugstores increasingly compete with supermarkets and CVS, so we need to view the...

Michael Causton

Japan's Drugstores Taking on – and Beating – Supermarkets

​Major food-drugstores dominate local supermarkets, leveraging high-profit pharmaceutical and cosmetics to discount foods. These players are...

Michael Causton

Aeon Keeps Working After High Profit Growth

​Aeon's efforts to revamp its retail empire and rethink strategies are paying off, with a 23% rise in OP in 1H2023. A new online store is key to...

Michael Causton

Discount Drugstores Challenging Japanese Supermarkets

Japan's supermarkets are facing unprecedented challenges from new competition in e-commerce but especially drugstores. We highlight the winners in...

Michael Causton

Merger between Welcia and Tsuruha under Aeon may happen as FMCG-drugstores increasingly compete with supermarkets and CVS, so we need to view the...

Major food-drugstores dominate local supermarkets, leveraging high-profit pharmaceutical and cosmetics to discount foods. These players are...

Aeon's efforts to revamp its retail empire and rethink strategies are paying off, with a 23% rise in OP in 1H2023. A new online store is key to...