'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)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/125/157/original/File%202020-03-28%2015%2042%2009.jpeg?1585378270" class="editor-image img-responsive" data-smartkarma-image-id="125157"></figure><div class="content-caption">Source • Mainichi Photography</div>STAY AT HOME (PLEASE) - With the 2020 Olympics now destined for 2021, the authorities can focus on containing Covid-19 which continues to spread in Tokyo.  Governor Koike and the Governors of the surrounding prefectures have responded to the recent growth in cases in the metropolis by requesting that citizens stay at home this weekend. Parks and many shops and restaurants have closed, and inclement weather (it is snowing across most of the Kanto plain this Sunday) has resulted in a high degree of compliance.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/125/263/original/File%202020-03-29%206%2035%2050.jpeg?1585431441" class="editor-image img-responsive" data-smartkarma-image-id="125263"></figure><div class="content-caption">Source • aatishb.com</div>CATCHING UP - Without the implementation of the measures adopted in China and South Korea, Japan is now moving more in line with the global trends shown above in terms of log-scale incremental rate of change. Sixty-three new cases were reported on Saturday, the largest single-day total to date. Over half of the new cases were in the 'Longevity General Hospital' in Taito Ward, taking the total for the capital to 362. For Japan as a whole, the total one cases for Saturday was 194 a 68% one-day increase. Covid-19 fatalities increased by six to 53.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/125/264/original/File%202020-03-29%206%2037%2003.jpeg?1585431468" class="editor-image img-responsive" data-smartkarma-image-id="125264"></figure><div class="content-caption">Source • aatishb.com</div>THE SWEDISH MODEL - PM Abe is concerned that a full societal 'lockdown' would damage the economy and has yet to invoke his newly-minted emergency powers - which, in any case, do not provide for such a measure. For now, Japan is following Sweden's social experiment of permitting life to go on as usual as much as possible. Both countries have been criticised for their 'novel' approach; however, their trajectories are noticeably different from the US and Italy. Let us hope than Japan's remarkably low-incidence of, and CFR from, Covid-19 infection can hold.CORONA 'SHOKKU' - At a press conference yesterday Abe pledged to introduce an economic package that would exceed Japan's response to the "Lehman Shock" with a particular focus on SMEs and distressed households. The details are to be announced in the next ten days.RATIONING BOOK - In other news, Kinokuniya bookstore in Tokyo is limiting purchases of the now-existential necessity Camus' The Plague' to one per person.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/125/256/original/2020-03-28_08-20-51.png?1585429894" class="editor-image img-responsive" data-smartkarma-image-id="125256"></figure><div class="content-caption">Source • Japan Analytics</div>PULLING OUT ALL THE STOPS - On Thursday the Bank of Japan's ETF purchase programme constituted 6% of Value Traded as the total interventions this month now total ¥1.3 trillion has recovered 18% from the last weeks' low and is 'only' 16% below the December high. Our Results Score is now negative, and the Forecast/Revision Score will follow next week. With over 3 billion people around the world in some form of social isolation, we expect both of our Scores to reach new five year lows by May and for equities to follow, despite Governor Kuroda's machinations.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/125/260/original/2020-03-29_06-20-04.png?1585430434" class="editor-image img-responsive" data-smartkarma-image-id="125260"></figure><div class="content-caption">Source • Japan Analytics</div>NO MAN'S LAND - As Aggregate TTM and Forecast Operating and Net Income head lower, the last week's bear-market-bounce has taken multiples back towards the long-term averages. With 3 quarters of results before a possible cycle low, Japanese equities are stuck in no man's land, neither overvalued not undervalued.  <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/125/158/original/2020-03-28_15-56-17.png?1585378601" class="editor-image img-responsive" data-smartkarma-image-id="125158"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/125/305/original/2020-03-29_08-40-46.png?1585438866" class="editor-image img-responsive" data-smartkarma-image-id="125305"></figure><div class="content-caption">Source • Japan Analytics</div>FRIDAY 27th MARCH - Friday saw six companies reporting results, of which two - <a href="https://www.smartkarma.com/entities/jastec-co-ltd" target="_blank" data-smartkarma-citation="entities:9201:1" rel="noopener">Jastec (9717 JP)</a>- and<a href="https://www.smartkarma.com/entities/niitaka-co-ltd" target="_blank" data-smartkarma-citation="entities:4911:1" rel="noopener">Niitaka (4465 JP)</a> had positive scores. Fifteen companies revised their forecasts, and one - <a href="https://www.smartkarma.com/entities/imv-corp" target="_blank" data-smartkarma-citation="entities:14159:1" rel="noopener">IMV (7760 JP)</a> withdrew its forecast entirely. In terms of our scoring system, the ratio of positive to negative 'scores' was 6:10, with <a href="https://www.smartkarma.com/entities/jfe-holdings-inc" target="_blank" data-smartkarma-citation="entities:210:1" rel="noopener">JFE (5411 JP)</a> being the largest negative-scoring company. High-tech lamp maker <a href="https://www.smartkarma.com/entities/ushio-inc" target="_blank" data-smartkarma-citation="entities:6640:1" rel="noopener">Ushio (6925 JP)</a> cut its forecast for Operating Income to ¥6b - which would be the lowest outcome since 1994 and implies a fourth-quarter operating loss of ¥0.35b.<a href="https://www.smartkarma.com/entities/sony-corp" target="_blank" data-smartkarma-citation="entities:563:1" rel="noopener">Sony (6758 JP)</a>announced that its forecasts made in February are now likely to be revised down and that the company may not be able to release FY2020 earnings as scheduled on 30th April due to delays in accounting procedures. <a href="https://www.smartkarma.com/entities/honda-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:154:1" rel="noopener">Honda Motor (7267 JP)</a>has shut down two plants in Japan, reflecting a weaker sales outlook.

Source • Mainichi PhotographySTAY AT HOME (PLEASE) - With the 2020 Olympics now destined for 2021, the authorities can focus on containing Covid-19 which continues to spread in Tokyo.  Governor Koike and the Governors of the surrounding prefectures have responded to the recent growth in cases in the metropolis by requesting that citizens stay at home this weekend. Parks and many shops and restaurants have closed, and inclement weather (it is snowing across most of the Kanto plain this Sunday) has resulted in a high degree of compliance.Source • aatishb.comCATCHING UP - Without the implementation of the measures adopted in China and South Korea, Japan is now moving more in line with the global trends shown above in terms of log-scale incremental rate of change. Sixty-three new cases were reported on Saturday, the largest single-day total to date. Over half of the new cases were in the 'Longevity General Hospital' in Taito Ward, taking the total for the capital to 362. For Japan as a whole, the total one cases for Saturday was 194 a 68% one-day increase. Covid-19 fatalities increased by six to 53.Source • aatishb.comTHE SWEDISH MODEL - PM Abe is concerned that a full societal 'lockdown' would damage the economy and has yet to invoke his newly-minted emergency powers - which, in any case, do not provide for such a measure. For now, Japan is following Sweden's social experiment of permitting life to go on as usual as much as possible. Both countries have been criticised for their 'novel' approach; however, their trajectories are noticeably different from the US and Italy. Let us hope than Japan's remarkably low-incidence of, and CFR from, Covid-19 infection can hold.CORONA 'SHOKKU' - At a press conference yesterday Abe pledged to introduce an economic package that would exceed Japan's response to the "Lehman Shock" with a particular focus on SMEs and distressed households. The details are to be announced in the next ten days.RATIONING BOOK - In other news, Kinokuniya bookstore in Tokyo is limiting purchases of the now-existential necessity Camus' The Plague' to one per person.Source • Japan AnalyticsPULLING OUT ALL THE STOPS - On Thursday the Bank of Japan's ETF purchase programme constituted 6% of Value Traded as the total interventions this month now total ¥1.3 trillion has recovered 18% from the last weeks' low and is 'only' 16% below the December high. Our Results Score is now negative, and the Forecast/Revision Score will follow next week. With over 3 billion people around the world in some form of social isolation, we expect both of our Scores to reach new five year lows by May and for equities to follow, despite Governor Kuroda's machinations.Source • Japan AnalyticsNO MAN'S LAND - As Aggregate TTM and Forecast Operating and Net Income head lower, the last week's bear-market-bounce has taken multiples back towards the long-term averages. With 3 quarters of results before a possible cycle low, Japanese equities are stuck in no man's land, neither overvalued not undervalued.  Source • Japan AnalyticsFRIDAY 27th MARCH - Friday saw six companies reporting results, of which two - Jastec (9717 JP)- andNiitaka (4465 JP) had positive scores. Fifteen companies revised their forecasts, and one - IMV (7760 JP) withdrew its forecast entirely. In terms of our scoring system, the ratio of positive to negative 'scores' was 6:10, with JFE (5411 JP) being the largest negative-scoring company. High-tech lamp maker Ushio (6925 JP) cut its forecast for Operating Income to ¥6b - which would be the lowest outcome since 1994 and implies a fourth-quarter operating loss of ¥0.35b.Sony (6758 JP)announced that its forecasts made in February are now likely to be revised down and that the company may not be able to release FY2020 earnings as scheduled on 30th April due to delays in accounting procedures. Honda Motor (7267 JP)has shut down two plants in Japan, reflecting a weaker sales outlook.

🇯🇵 JAPAN • Revisions & Results Alert - 27th March - A Weekend at Home with the Swedish Model

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/keiyo-co-ltd" target="_blank" data-smartkarma-citation="entities:14415:1" rel="noopener">Keiyo Co Ltd (8168 JP)</a> has recommended <a href="https://www.smartkarma.com/entities/dcm-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:13042:1" rel="noopener">DCM Holdings (3050 JP)</a>’s tender offer of JPY1,300 per share, a 58.3% premium to the undisturbed price (29 September).</li>
<li>The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 35.68% ownership ratio.</li>
<li>Irrevocables represent a 0.88% ownership ratio. The minimum acceptance condition (lower limit) requires a 50.4% minority acceptance rate, which is achievable as the offer price represents a ten-year high.</li>
</ul>



Keiyo Co Ltd (8168 JP) has recommended DCM Holdings (3050 JP)’s tender offer of JPY1,300 per share, a 58.3% premium to the undisturbed price (29 September).
The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 35.68% ownership ratio.
Irrevocables represent a 0.88% ownership ratio. The minimum acceptance condition (lower limit) requires a 50.4% minority acceptance rate, which is achievable as the offer price represents a ten-year high.


Keiyo (8168 JP): DCM’s JPY1,300 Tender Offer

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. 

The Japanese sports retail market has traditionally been dominated by four big retailers, <a href="https://www.smartkarma.com/entities/alpen-co-ltd" target="_blank" data-smartkarma-citation="entities:17762:1" rel="noopener">Alpen Co Ltd (3028 JP)</a>, <a href="https://www.smartkarma.com/entities/xebio-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:13955:1" rel="noopener">Xebio Holdings (8281 JP)</a>, Mega Sports (owned by <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> and <a href="https://www.smartkarma.com/entities/himaraya-co-ltd" target="_blank" data-smartkarma-citation="entities:5307:1" rel="noopener">Himaraya Co Ltd (7514 JP)</a>. With <a href="https://www.smartkarma.com/entities/mitsubishi-corp" target="_blank" data-smartkarma-citation="entities:20668:1" rel="noopener">Mitsubishi Corp (8058 JP)'s</a> financial and supply chain support, Himaraya overtook Mega Sports a few years ago but Himaraya’s sales have since contracted and Mitsubishi gradually reduced its stake while still retaining its core supply role.Mitsubishi will now divest all shares and end its supply relationship too, leaving Himaraya open to takeover.Given that sports/outdoor is one of the few sure growth markets, Himaraya won’t lack for potential suitors.This is a time of transition for the big multi-brand sports retailers. The number of stores increased up to 2018 but last year the total number of stores began to contract for the first time since 1990 with new competitors emerging, including <a href="https://www.smartkarma.com/entities/workman-co-ltd" target="_blank" data-smartkarma-citation="entities:8467:1" rel="noopener">Workman Co Ltd (7564 JP)</a> and Decathlon.

The Japanese sports retail market has traditionally been dominated by four big retailers, Alpen Co Ltd (3028 JP), Xebio Holdings (8281 JP), Mega Sports (owned by Aeon Co Ltd (8267 JP)) and Himaraya Co Ltd (7514 JP). With Mitsubishi Corp (8058 JP)'s financial and supply chain support, Himaraya overtook Mega Sports a few years ago but Himaraya’s sales have since contracted and Mitsubishi gradually reduced its stake while still retaining its core supply role.Mitsubishi will now divest all shares and end its supply relationship too, leaving Himaraya open to takeover.Given that sports/outdoor is one of the few sure growth markets, Himaraya won’t lack for potential suitors.This is a time of transition for the big multi-brand sports retailers. The number of stores increased up to 2018 but last year the total number of stores began to contract for the first time since 1990 with new competitors emerging, including Workman Co Ltd (7564 JP) and Decathlon.

Japan Sports Retail in Flux as Mitsubishi Ditches Himaraya

Equity Bottom-Up

<ul class="">
<li>
<a href="https://www.smartkarma.com/entities/14750" target="_blank" data-smartkarma-citation="entities:14750:1">Rizap (2928 JP)</a> is an opportunistic business, starting out in health foods and gyms, and then acquiring its way to a significant share of the fashion and lifestyle business. 
</li>
<li>If its forecasts are right, by the end of this year it will have increased sales 10-fold in five years, while also extracting value from chains like <a href="https://www.smartkarma.com/entities/13185" target="_blank" data-smartkarma-citation="entities:13185:1">JeansMate Corp (7448 JP)</a> that had lain dormant for decades.</li>
<li>At the same time, it is showing signs of exploiting the growing convergence of the fashion and sports markets through a manufacturing-to-retail business. 
</li>
<li>Given sports fashion is both the most buoyant and most profitable mass market fashion category right now, this is a compelling strategy – if Rizap can implement it well.</li>
<li>This post focuses on the lifestyle businesses of Rizap. For more on the gym and body management side, please see these useful posts by <a href="https://www.smartkarma.com/insights/rizap-offering-some-colour-on-this-fad-nomenon-and-mio-s-diet-and-health-advice-you-never-wanted" target="_blank">Mio Kato at Lightstream</a> and <a href="https://www.smartkarma.com/insights/rizap-group-placement-a-less-known-name-with-sales-to-double-in-three-years" target="_blank">Ke Yan</a>.</li>
</ul>



Rizap (2928 JP) is an opportunistic business, starting out in health foods and gyms, and then acquiring its way to a significant share of the fashion and lifestyle business. 

If its forecasts are right, by the end of this year it will have increased sales 10-fold in five years, while also extracting value from chains like JeansMate Corp (7448 JP) that had lain dormant for decades.
At the same time, it is showing signs of exploiting the growing convergence of the fashion and sports markets through a manufacturing-to-retail business. 

Given sports fashion is both the most buoyant and most profitable mass market fashion category right now, this is a compelling strategy – if Rizap can implement it well.
This post focuses on the lifestyle businesses of Rizap. For more on the gym and body management side, please see these useful posts by Mio Kato at Lightstream and Ke Yan.


Rizap: 10-Fold Growth in Five Years and More to Come

Japan

HIMARAYA Co., Ltd. operates a chain of sporting goods stores based in the Chubu region.  The Company mainly sells ski, snowboard, golf, and camping equipment.

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Himaraya Co Ltd (7514 JP)

🇯🇵 JAPAN • Revisions & Results Alert - 27th March - A Weekend at Home with the Swedish Model

STAY AT HOME (PLEASE) - With the 2020 Olympics now destined for 2021, the authorities can focus on containing Covid-19 which continues to spread in...

Campbell Gunn

Keiyo (8168 JP): DCM’s JPY1,300 Tender Offer

The minimum acceptance condition (lower limit) requires a 50.4% minority acceptance rate, which is achievable as the offer price represents a ten...

Arun George

Japan Sports Retail in Flux as Mitsubishi Ditches Himaraya

Mitsubishi will divest its long-standing holding in sports retailer, Himaraya. With the sports retail market in flux, Himaraya is a likely target...

Michael Causton

Rizap: 10-Fold Growth in Five Years and More to Come

Rizap (2928 JP) is an opportunistic business, starting out in health foods and gyms, and then acquiring its way to a significant share of the...

Michael Causton

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