'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

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

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/176/175/original/2020-12-03_05-39-01.png?1606941555" class="editor-image img-responsive" data-smartkarma-image-id="176175"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics </div></section><div><p><strong>FOUR QUADRANTS PICKS</strong> - Our recent series of Insights covering companies that are extreme outliers in our Relative Price Score/Results &amp; Revision Score matrix has featured the following seven companies:-  </p></div><div>
<ul style="list-style-type: disc;">
<li>
<strong>CONTRARIAN BUYS</strong> - <a href="https://www.smartkarma.com/entities/nikon-corp" target="_blank" data-smartkarma-citation="entities:7117:1" rel="noopener">Nikon (7731 JP)</a>, <a href="https://www.smartkarma.com/entities/fuji-media-holdings-inc" target="_blank" data-smartkarma-citation="entities:3191:1" rel="noopener">Fuji Media (4676 JP)</a>, <a href="https://www.smartkarma.com/entities/east-japan-railway-co" target="_blank" data-smartkarma-citation="entities:14271:1" rel="noopener">East Japan Railway (9020 JP)</a> </li>
<li>
<strong>CONTRARIAN SELLS</strong> - <a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener">M3 (2413 JP)</a>, <a href="https://www.smartkarma.com/entities/disco-corp" target="_blank" data-smartkarma-citation="entities:15817:1" rel="noopener">DISCO (6146 JP)</a> </li>
<li>
<strong>TURNAROUND BUYS</strong> - <a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank Corp (9434 JP)</a> </li>
<li>
<strong>EX-GROWTH SELLS</strong> - <a href="https://www.smartkarma.com/entities/kao-corp" target="_blank" data-smartkarma-citation="entities:12933:1" rel="noopener">Kao  (4452 JP)</a> </li>
</ul>
<p><strong>2021 HIGH CONVICTION COLLECTION</strong> - For Smartkarma's '2021 High Conviction Collection' we have chosen one of the seven to be our selection. Given the lack of short ideas so far - only two and both in the US - our pick, <a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener">M3 (2413 JP)</a>, is the first Asian, and first Japanese, 'short' to join the Collection.</p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/176/209/original/2020-12-03_10-35-14.png?1606959327" class="editor-image img-responsive" data-smartkarma-image-id="176209"></figure></section><p><a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener"><strong>M3</strong></a>- M3 is the most extreme outlier of the seven stocks we have featured and was recommended as a 'Suga Growth Long in our Smartkarma Original - <a href="https://www.smartkarma.com/insights/japan-in-the-suga-era-policy-priorities-suga-stocks" target="_blank" data-smartkarma-citation="insights:43773" rel="noopener">Japan in the Suga Era - Policy Priorities &amp; 'Suga Stocks'</a>. Since then the stock has appreciated by 40% and by 10% since we published <a href="https://www.smartkarma.com/insights/japan-four-quadrants-contrarian-sells" target="_blank" data-smartkarma-citation="insights:45725" rel="noopener">Contrarian Sells</a>, adding almost ¥2 trillion in market value M3 is Japan's fifteenth largest company with a market value of ¥6.4 trillion, despite having only ¥144 billion in trailing revenues, ¥43 billion in trailing operating income, and just ¥18 billion in trailing CITC. While valuations may be less of a concern in the momentum-driven post-COVID era, we have highlighted several areas of concern regarding the company's margin-diluting diversification, that suggest that M3's tripling in value seen in 2020 will not be repeated. <strong>M3 is our 2021 'High Conviction Sell' </strong>     </p>
</div>

Source for all charts &amp; tables: Japan Analytics FOUR QUADRANTS PICKS - Our recent series of Insights covering companies that are extreme outliers in our Relative Price Score/Results &amp; Revision Score matrix has featured the following seven companies:-  


CONTRARIAN BUYS - Nikon (7731 JP), Fuji Media (4676 JP), East Japan Railway (9020 JP) 

CONTRARIAN SELLS - M3 (2413 JP), DISCO (6146 JP) 

TURNAROUND BUYS - Softbank Corp (9434 JP) 

EX-GROWTH SELLS - Kao  (4452 JP) 

2021 HIGH CONVICTION COLLECTION - For Smartkarma's '2021 High Conviction Collection' we have chosen one of the seven to be our selection. Given the lack of short ideas so far - only two and both in the US - our pick, M3 (2413 JP), is the first Asian, and first Japanese, 'short' to join the Collection.
M3- M3 is the most extreme outlier of the seven stocks we have featured and was recommended as a 'Suga Growth Long in our Smartkarma Original - Japan in the Suga Era - Policy Priorities &amp; 'Suga Stocks'. Since then the stock has appreciated by 40% and by 10% since we published Contrarian Sells, adding almost ¥2 trillion in market value M3 is Japan's fifteenth largest company with a market value of ¥6.4 trillion, despite having only ¥144 billion in trailing revenues, ¥43 billion in trailing operating income, and just ¥18 billion in trailing CITC. While valuations may be less of a concern in the momentum-driven post-COVID era, we have highlighted several areas of concern regarding the company's margin-diluting diversification, that suggest that M3's tripling in value seen in 2020 will not be repeated. M3 is our 2021 'High Conviction Sell'      


2021 High Conviction 🇯🇵 Sell M3 (2413 JP)

Thematic (Sector/Industry)

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/175/683/original/2020-12-01_09-00-54.png?1606780869" class="editor-image img-responsive" data-smartkarma-image-id="175683"></figure></section><div class="content-caption">Source for all charts &amp; tables: Japan Analytics </div><p><strong>FOUR QUADRANTS</strong> - By combining our two scoring methodologies - the Relative Price Score (RPS) and the Results &amp; Revision Score (RRS), we can assign companies into four quadrants:-</p><div>
<ul style="list-style-type: disc;">
<li>
<strong>CONTRARIAN BUYS</strong> - Low Results &amp; Revision and Relative Price Scores</li>
<li>
<strong>CONTRARIAN SELLS</strong> - High Results &amp; Revision and Relative Price Scores</li>
<li>
<strong>TURNAROUND BUYS </strong>- High Results &amp; Revision Scores &amp; low Relative Price Scores</li>
<li>
<strong>EX-GROWTH SELLS</strong> - Low Results &amp; Revision Scores &amp; high Relative Price Scores</li>
</ul>
<p>The Ex-Growth Sells quadrant offers more fertile ground for shorting as the decline in earnings momentum is already clear, however, in many cases, the market is reluctant to sell the 'darlings' of the past. Examples of profitable Ex-Growth Sells from 2020 are <a href="https://www.smartkarma.com/entities/kyudenko-corp" target="_blank" data-smartkarma-citation="entities:5414:1" rel="noopener">Kyudenko(1959 JP)</a>, <a href="https://www.smartkarma.com/entities/ariake-japan-co-ltd" target="_blank" data-smartkarma-citation="entities:4908:1" rel="noopener">Ariake Japan (2815 JP)</a>, and <a href="https://www.smartkarma.com/entities/santen-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:8602:1" rel="noopener">Santen Pharmaceutical (4536 JP)</a>. </p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/175/693/original/2020-12-01_10-13-31.png?1606785235" class="editor-image img-responsive" data-smartkarma-image-id="175693"></figure></section><section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/175/699/original/2020-12-01_10-22-36.png?1606785767" class="editor-image img-responsive" data-smartkarma-image-id="175699"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/175/700/original/2020-12-01_10-23-41.png?1606785833" class="editor-image img-responsive" data-smartkarma-image-id="175700"></figure></section><p><strong><a href="https://www.dropbox.com/s/7b61jl02dh0pzno/2020-11-25_12-43-55.png?dl=0" target="_blank" rel="noopener">EX-GROWTH SELLS</a></strong> - In the <strong>DETAIL</strong> section below, we shall review the current Ex-Growth Sells. The is the last Insight in this four-part mini-series. The first three Insights can be found at - <a href="https://www.smartkarma.com/insights/japan-four-quadrants-contrarian-buys" target="_blank" data-smartkarma-citation="insights:45688" rel="noopener">Contrarian Buys,</a> <a href="https://www.smartkarma.com/insights/japan-four-quadrants-contrarian-sells" target="_blank" data-smartkarma-citation="insights:45725" rel="noopener">Contrarian Sells</a>, and <a href="https://www.smartkarma.com/insights/japan-four-quadrants-turnaround-buys" target="_blank" data-smartkarma-citation="insights:45829" rel="noopener">Turnaround Buys</a>.   </p></section>
</div>

Source for all charts &amp; tables: Japan Analytics FOUR QUADRANTS - By combining our two scoring methodologies - the Relative Price Score (RPS) and the Results &amp; Revision Score (RRS), we can assign companies into four quadrants:-


CONTRARIAN BUYS - Low Results &amp; Revision and Relative Price Scores

CONTRARIAN SELLS - High Results &amp; Revision and Relative Price Scores

TURNAROUND BUYS - High Results &amp; Revision Scores &amp; low Relative Price Scores

EX-GROWTH SELLS - Low Results &amp; Revision Scores &amp; high Relative Price Scores

The Ex-Growth Sells quadrant offers more fertile ground for shorting as the decline in earnings momentum is already clear, however, in many cases, the market is reluctant to sell the 'darlings' of the past. Examples of profitable Ex-Growth Sells from 2020 are Kyudenko(1959 JP), Ariake Japan (2815 JP), and Santen Pharmaceutical (4536 JP). 
EX-GROWTH SELLS - In the DETAIL section below, we shall review the current Ex-Growth Sells. The is the last Insight in this four-part mini-series. The first three Insights can be found at - Contrarian Buys, Contrarian Sells, and Turnaround Buys.   


🇯🇵 JAPAN • Four Quadrants - Ex-Growth Sells

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Blue Moon Group Holdings / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/guangzhou-blue-moon-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:29179:1" rel="noopener">Blue Moon Group Holdings (BMG HK)</a> (BMG) plans to raise around US$1bn in its Hong Kong listing. The company is backed by Hillhouse who first invested in the company in 2010. </p></div><div><p>BMG is a consumer household care company in China, which sells its products in three main categories: fabric care, personal hygiene and home care. As per Frost &amp; Sullivan, it has been the market leader in liquid laundry detergent, liquid soap and concentrated liquid laundry detergent market over 2017-19. </p></div><div><p>In my earlier insights:</p></div><div><ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/blue-moon-group-pre-ipo-the-positives-dominant-market-share-strong-online-sales" target="_blank" rel="noopener">Blue Moon Group Pre-IPO - The Positives - Dominant Market Share, Strong Online Sales</a>, I spoke about the positive aspects of the deal.</li>
<li>In <a href="https://www.smartkarma.com/insights/blue-moon-group-pre-ipo-the-negatives-flagging-offline-sales-not-really-a-primary-raising" target="_blank" rel="noopener">Blue Moon Group Pre-IPO - The Negatives - Flagging Offline Sales, Not Really a Primary Raising</a>, I spoke about the not so flattering aspects of the deal</li>
<li>While my colleague, <a href="https://www.smartkarma.com/profiles/ming-lu" target="_blank" data-smartkarma-citation="accounts:2496" rel="noopener">Ming Lu, </a>commented on the offline presence in <a href="https://www.smartkarma.com/insights/blue-moon-no-1-but-no-exclusive-advantage-observation-on-the-ground" target="_blank" rel="noopener">Blue Moon: No. 1 but no exclusive advantage, observation on the ground.</a>
</li>
<li>
<a href="https://www.smartkarma.com/insights/blue-moon-group-pre-ipo-online-reviews-and-peer-comparison" target="_blank" rel="noopener">Blue Moon Group Pre-IPO - Online Reviews and Peer Comparison</a>, I compared the company compares with some of its listed peers.</li>
<li>
<a href="https://www.smartkarma.com/insights/blue-moon-group-pre-ipo-initial-thoughts-on-valuation" target="_blank" rel="noopener">Blue Moon Group Pre-IPO - Initial Thoughts on Valuation</a>, I took a first stab at valuations.</li>
<li>
<a href="https://www.smartkarma.com/insights/blue-moon-group-pre-ipo-phip-updates-a-mixed-bag" target="_blank" rel="noopener">Blue Moon Group Pre-IPO - PHIP Updates - A Mixed Bag</a>, I spoke about the updates from the PHIP filing</li>
</ul></div><div><p>In this insight, I'll talk about updates to my previous valuations.</p></div>

Blue Moon Group Holdings (BMG HK) (BMG) plans to raise around US$1bn in its Hong Kong listing. The company is backed by Hillhouse who first invested in the company in 2010. BMG is a consumer household care company in China, which sells its products in three main categories: fabric care, personal hygiene and home care. As per Frost &amp; Sullivan, it has been the market leader in liquid laundry detergent, liquid soap and concentrated liquid laundry detergent market over 2017-19. In my earlier insights:

Blue Moon Group Pre-IPO - The Positives - Dominant Market Share, Strong Online Sales, I spoke about the positive aspects of the deal.
In Blue Moon Group Pre-IPO - The Negatives - Flagging Offline Sales, Not Really a Primary Raising, I spoke about the not so flattering aspects of the deal
While my colleague, Ming Lu, commented on the offline presence in Blue Moon: No. 1 but no exclusive advantage, observation on the ground.


Blue Moon Group Pre-IPO - Online Reviews and Peer Comparison, I compared the company compares with some of its listed peers.

Blue Moon Group Pre-IPO - Initial Thoughts on Valuation, I took a first stab at valuations.

Blue Moon Group Pre-IPO - PHIP Updates - A Mixed Bag, I spoke about the updates from the PHIP filing
In this insight, I'll talk about updates to my previous valuations.

Blue Moon Group Pre-IPO - Valuation Updates

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

<p>By using a tool usually associated with social media influencers, Japanese cosmetics makers have put a twist on advertising, especially for China’s largest shopping event of the year.</p><p><a href="https://www.smartkarma.com/entities/shiseido-company-limited" target="_blank" data-smartkarma-citation="entities:5718:1" rel="noopener">Shiseido Company (4911 JP)</a> has been livestreaming almost every day since late October, when marketing campaigns for China’s Singles’ Day sale held every year on November 11 accelerated. More than 400,000 viewers tuned in to Shiseido’s livestreams from its Tokyo headquarters and a studio in the Chinese city of Hangzhou.</p><p>In Japan, such advertising campaigns were usually carried out by social media influencers. However, Shiseido is relying on its own employees instead of social media influencers to promote its products. Shiseido started using “Miss SHISEIDO” to promote its products as early as 1934, which later evolved to beauty consultants. The consultants have been trained to use technology advancements, and c. 7,400 people have enrolled at the Shiseido Digital Academy. We believe that the trend towards live e-commerce and livestreaming events will continue to accelerate post-pandemic, not just with Shiseido but also with other Japanese cosmetic companies.</p>

By using a tool usually associated with social media influencers, Japanese cosmetics makers have put a twist on advertising, especially for China’s largest shopping event of the year.Shiseido Company (4911 JP) has been livestreaming almost every day since late October, when marketing campaigns for China’s Singles’ Day sale held every year on November 11 accelerated. More than 400,000 viewers tuned in to Shiseido’s livestreams from its Tokyo headquarters and a studio in the Chinese city of Hangzhou.In Japan, such advertising campaigns were usually carried out by social media influencers. However, Shiseido is relying on its own employees instead of social media influencers to promote its products. Shiseido started using “Miss SHISEIDO” to promote its products as early as 1934, which later evolved to beauty consultants. The consultants have been trained to use technology advancements, and c. 7,400 people have enrolled at the Shiseido Digital Academy. We believe that the trend towards live e-commerce and livestreaming events will continue to accelerate post-pandemic, not just with Shiseido but also with other Japanese cosmetic companies.

How Livestreaming, The Latest Trend in E-Commerce Is Revolutionising Cosmetics Retail

<p>Although <a href="https://www.smartkarma.com/entities/shiseido-company-limited" target="_blank" data-smartkarma-citation="entities:5718:1" rel="noopener">Shiseido Company (4911 JP)</a> beat consensus OP comprehensively in Q3, the company lowered its full-year revenue and OP guidance citing weaker than expected demand in Japan and worsening COVID-19 health crisis in Europe and the US. However, Shiseido shares were up 4.7% yesterday following the release of positive COVID-19 vaccine update by Pfizer. With the 2021 EV/OP multiple at an all-time high of 52.0x, it appears that the post-pandemic recovery is already priced in.</p>

Although Shiseido Company (4911 JP) beat consensus OP comprehensively in Q3, the company lowered its full-year revenue and OP guidance citing weaker than expected demand in Japan and worsening COVID-19 health crisis in Europe and the US. However, Shiseido shares were up 4.7% yesterday following the release of positive COVID-19 vaccine update by Pfizer. With the 2021 EV/OP multiple at an all-time high of 52.0x, it appears that the post-pandemic recovery is already priced in.

Shiseido: Departing From Cost Discipline or Playing Safe?

Japan

Kao Corporation is a manufacturer of household and chemical products. The company produces cosmetics, laundry and cleaning products, hygiene products, fatty chemicals, edible oils, and specialty chemicals.

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Kao Corp (4452 JP)

2021 High Conviction 🇯🇵 Sell M3 (2413 JP)

2021 HIGH CONVICTION COLLECTION - For Smartkarma's '2021 High Conviction Collection' we have chosen one of our seven RPS/RRS outliers to be our...

Campbell Gunn

🇯🇵 JAPAN • Four Quadrants - Ex-Growth Sells

EX-GROWTH SELLS - In the DETAIL section below, we shall review the current Ex-Growth Sells. The is the last Insight in this four-part mini-series.

Campbell Gunn

Blue Moon Group Pre-IPO - Valuation Updates

Blue Moon Group Holdings (BMG HK) (BMG) plans to raise around US$1bn in its Hong Kong listing. The company is backed by Hillhouse who first...

Sumeet Singh

How Livestreaming, The Latest Trend in E-Commerce Is Revolutionising Cosmetics Retail

By using a tool usually associated with social media influencers, Japanese cosmetics makers have put a twist on advertising, especially for China’s...

Oshadhi Kumarasiri

Shiseido: Departing From Cost Discipline or Playing Safe?

Although Shiseido beat consensus OP comprehensively in Q3, the company lowered its full-year revenue and OP guidance citing weaker than expected...

Oshadhi Kumarasiri

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