Equity Analyst, LightStream Research

Supun Walpola

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.

Equity Bottom-Up

<ul><li>
<a href="https://www.smartkarma.com/entities/kakaku-com-inc" target="_blank" data-smartkarma-citation="entities:7408:1" rel="noopener">Kakaku.Com Inc (2371 JP)</a> (Kakaku)’s share price has fallen by around 33% since last February (since the company’s last financial results presentation). We believe that the stock is now in oversold territory. </li></ul><ul><li>The traditional price comparison service’s growth is dying, but Tabelog continues to impress, eating into the market share of its high-profile counterparts like Hot Pepper and Gurunavi.</li></ul>


Kakaku.Com Inc (2371 JP) (Kakaku)’s share price has fallen by around 33% since last February (since the company’s last financial results presentation). We believe that the stock is now in oversold territory. The traditional price comparison service’s growth is dying, but Tabelog continues to impress, eating into the market share of its high-profile counterparts like Hot Pepper and Gurunavi.

Kakaku.com: In Oversold Territory; Tabelog Continues to Impress

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

Recruit Holdings / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a> announced a secondary offering of 121.5 million shares (7.2% of shares outstanding), assuming the over-allotment options are fully exercised. Recruit has launched the offering to provide an opportunity for thirteen shareholders to reduce their holdings.<div class="content-highlight">Recruit shares have increased around 3x in three years, adjusting for the three-for-one stock split effective on July 2017. The strong outperformance is due to the solid performance of its three business segments - HR Technology, Media &amp; Solutions and Staffing. However, from a valuation perspective, Recruit is fully priced, and we would need a 10% discount to participate in the offering.</div>

Recruit Holdings (6098 JP) announced a secondary offering of 121.5 million shares (7.2% of shares outstanding), assuming the over-allotment options are fully exercised. Recruit has launched the offering to provide an opportunity for thirteen shareholders to reduce their holdings.Recruit shares have increased around 3x in three years, adjusting for the three-for-one stock split effective on July 2017. The strong outperformance is due to the solid performance of its three business segments - HR Technology, Media &amp; Solutions and Staffing. However, from a valuation perspective, Recruit is fully priced, and we would need a 10% discount to participate in the offering.

Recruit Holdings Secondary Offering: Coming at a Full Valuation

'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. 

Thematic (Sector/Industry)

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/083/132/original/2019-03-25_18-58-11.png?1553507902" class="editor-image img-responsive" data-smartkarma-image-id="83132"></figure>Source: Japan Analytics
</div>There are currently 241 listed Japanese companies that can be categorised as Internet businesses. Our classification overlaps with the TOPIX-33 Information &amp; Communication sub-Sector but is broader in that it encompasses all companies listed on all sections and exchanges but is also narrower in that we have excluded Telecommunications (including <a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">S</a><a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">oftbank Group (9984 JP)</a>) and Information Technology companies. We have adopted a 'quantamental' approach which covers the long-term and current trends for Japan's Internet Sector as a whole, as well as eight sub-Sectors or Peer Groups and the Sectors' leading companies by market capitalisation.  Our focus is exclusively on the locally-listed universe and is based on disclosed financial and market data. We do not provide any forecasts, other than the companies' own forecasts and we do not attempt to make any business model or strategic judgments. Our focus is purely on financial and market performance. We do not cover unlisted and defunct companies such as Livedoor and, therefore, there is implicit survivor bias in the data. The broad themes that are developed in DETAIL below are grouped into six topics as follows: - • SUMMARY •  • FUNDAMENTAL OVERVIEW •  • SCORING - RESULTS &amp; REVISIONS / RELATIVE PRICE •  • RESULTS TRENDS •  • VALUATION • • RECOMMENDATIONS •<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/083/206/original/2019-03-25_17-46-58.png?1553565764" class="editor-image img-responsive" data-smartkarma-image-id="83206"></figure><div class="content-caption">Source: Japan Analytics</div>OVERVIEW - As will be covered in greater DETAIL below, Japan has failed to evolve a substantial Internet Sector and, in many business models, has been passed by global competitors including in the home market. Although Internet Sector revenues have grown steadily and now account for close to 1% of the total for all listed companies, operating margins have declined by half in the last seven years and are now only four percentage points higher than the market average. Accordingly, as measured by our Results &amp; Revision Score, the Sector is close to a twelve-year low. The market's response is an unchanged Sector weight in the market composite despite the addition of 111 new companies in the last six years, and a Relative Price Score that has moved in a narrow range over that period. The Sector averages disguise the weak business and market performance of a handful of Sector leaders as well as the overvaluation of the Sector's more successful business models, which is partly a result of a lack of alternatives. Despite the world's most significant Internet investor - <a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">Softbank Group (9984 JP)</a>'s Vision Fund - being based in Japan, this fund and other global investors in Internet business have been right to give Japan a 'pass'.


Source: Japan Analytics
There are currently 241 listed Japanese companies that can be categorised as Internet businesses. Our classification overlaps with the TOPIX-33 Information &amp; Communication sub-Sector but is broader in that it encompasses all companies listed on all sections and exchanges but is also narrower in that we have excluded Telecommunications (including Softbank Group (9984 JP)) and Information Technology companies. We have adopted a 'quantamental' approach which covers the long-term and current trends for Japan's Internet Sector as a whole, as well as eight sub-Sectors or Peer Groups and the Sectors' leading companies by market capitalisation.  Our focus is exclusively on the locally-listed universe and is based on disclosed financial and market data. We do not provide any forecasts, other than the companies' own forecasts and we do not attempt to make any business model or strategic judgments. Our focus is purely on financial and market performance. We do not cover unlisted and defunct companies such as Livedoor and, therefore, there is implicit survivor bias in the data. The broad themes that are developed in DETAIL below are grouped into six topics as follows: - • SUMMARY •  • FUNDAMENTAL OVERVIEW •  • SCORING - RESULTS &amp; REVISIONS / RELATIVE PRICE •  • RESULTS TRENDS •  • VALUATION • • RECOMMENDATIONS •Source: Japan AnalyticsOVERVIEW - As will be covered in greater DETAIL below, Japan has failed to evolve a substantial Internet Sector and, in many business models, has been passed by global competitors including in the home market. Although Internet Sector revenues have grown steadily and now account for close to 1% of the total for all listed companies, operating margins have declined by half in the last seven years and are now only four percentage points higher than the market average. Accordingly, as measured by our Results &amp; Revision Score, the Sector is close to a twelve-year low. The market's response is an unchanged Sector weight in the market composite despite the addition of 111 new companies in the last six years, and a Relative Price Score that has moved in a narrow range over that period. The Sector averages disguise the weak business and market performance of a handful of Sector leaders as well as the overvaluation of the Sector's more successful business models, which is partly a result of a lack of alternatives. Despite the world's most significant Internet investor - Softbank Group (9984 JP)'s Vision Fund - being based in Japan, this fund and other global investors in Internet business have been right to give Japan a 'pass'. 

🇯🇵 Japan • Internet Sector Review - 'Japan Passing'

Chacko Jacob

<a href="https://www.smartkarma.com/entities/7408" target="_blank" data-smartkarma-citation="entities:7408:1">Kakaku.Com Inc (2371 JP)</a> is a Japanese internet company.  Established in May 2000, Kakaku.com, Inc operates Japan's largest price comparison website, 'kakaku.com The company was listed on TSE Mothers in 2003 before moving to the 1st Section. With a market cap of JPY 450bn, it is one of the largest internet stocks in Japan. Since its stock market listing in 2003, Kakaku.com's revenues have grown steadily and are forecast to exceed ¥50 billion this fiscal year.

Kakaku.Com Inc (2371 JP) is a Japanese internet company.  Established in May 2000, Kakaku.com, Inc operates Japan's largest price comparison website, 'kakaku.com The company was listed on TSE Mothers in 2003 before moving to the 1st Section. With a market cap of JPY 450bn, it is one of the largest internet stocks in Japan. Since its stock market listing in 2003, Kakaku.com's revenues have grown steadily and are forecast to exceed ¥50 billion this fiscal year.

Kakaku.com (2371 JP): Rising Household Spending and Online Table Reservations Seen Boosting Topline

Making sense of the Global Market, Euromonitor International Ltd.

Yu Mitsuhashi

Making sense of the Global Market

Euromonitor International Ltd.

We are a global market research company focused on industries, countries, economies and consumers worldwide. Our cross-country comparable research helps your organisation identify opportunities and develop growth strategies in countries and regions across the globe. With offices around the world, 1,200 analysts in 100 countries and market research on every key trend and driver, we give you powerful access to the real story behind consumer change.

In this second of a series of articles examining the FashionTech scene in Japan, Euromonitor International looks at Japanese FashionTech companies operating in BtoC areas, particularly via sharing economy and personalisation. For the first article, please click <a href="https://www.smartkarma.com/insights/can-tech-save-the-declining-japanese-apparel-industry-fashiontech-series-1-3" target="_blank">here</a>.

In this second of a series of articles examining the FashionTech scene in Japan, Euromonitor International looks at Japanese FashionTech companies operating in BtoC areas, particularly via sharing economy and personalisation. For the first article, please click here.

Can Tech Save The Declining Japanese Apparel Industry? Fashion-Tech Series (2/3)

Japan

Gurunavi, Inc. operates search engine for restaurants. The Company also offers sales promotion support service to its participating restaurants. Gurunavi provides information on restaurants throughout Japan in multiple languages.

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Gurunavi Inc (2440 JP)

Kakaku.com: In Oversold Territory; Tabelog Continues to Impress

Kakaku.Com Inc (2371 JP) (Kakaku)’s share price has fallen by around 33% since last February (since the company’s last financial results...

Supun Walpola

Recruit Holdings Secondary Offering: Coming at a Full Valuation

Recruit Holdings (6098 JP) announced a secondary offering of 121.5 million shares (7.2% of shares outstanding), assuming the over-allotment options...

Arun George

🇯🇵 Japan • Internet Sector Review - 'Japan Passing'

There are currently 241 listed Japanese companies that can be categorised as Internet businesses. Our classification overlaps with the TOPIX-33...

Campbell Gunn

Kakaku.com (2371 JP): Rising Household Spending and Online Table Reservations Seen Boosting Topline

Kakaku.Com Inc (2371 JP) is a Japanese internet company. Established in May 2000, Kakaku.com, Inc operates Japan's largest price comparison...

Chacko Jacob

Can Tech Save The Declining Japanese Apparel Industry? Fashion-Tech Series (2/3)

In this second of a series of articles examining the FashionTech scene in Japan, Euromonitor International looks at Japanese FashionTech companies...

Euromonitor International Ltd.

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