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

Last week, <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>announced that the independent assessment of its Myanmar JV partner, Myanmar Economic Holdings (MEHL), failed to produce any results due to the lack of access to a sufficient amount of MEHL’s information. Kirin is expected to provide an action plan to resolve the issues relating to the Myanmar JV in April 2021. We believe the April 2021 action plan could be accompanied by an asset write-down and therefore suggests taking some money off Kirin before the April 2021 announcement.

Last week, Kirin Holdings (2503 JP)announced that the independent assessment of its Myanmar JV partner, Myanmar Economic Holdings (MEHL), failed to produce any results due to the lack of access to a sufficient amount of MEHL’s information. Kirin is expected to provide an action plan to resolve the issues relating to the Myanmar JV in April 2021. We believe the April 2021 action plan could be accompanied by an asset write-down and therefore suggests taking some money off Kirin before the April 2021 announcement.

Kirin: An Asset Write-Down/Disposal Could Be Pending for the Military Linked Myanmar JV

Japan Specialist

Mark Chadwick

<div>
Corporate governance is hard, messy and often frustrating for everyone. Those frustrations boiled over for shareholders in <a href="https://www.smartkarma.com/entities/fujitec-co-ltd" target="_blank" data-smartkarma-citation="entities:11686:1" rel="noopener">Fujitec Co Ltd (6406 JP)</a> , with two outspoken activist investors going public with their grievances in May this year, ahead of the AGM.  
</div>
<div>
At the AGM, Oasis secured 33% of the votes in favour of its proposals for cancelling the Company’s treasury shares. If it hadn't been for the Coronavirus, the proposals would have been far more intrusive. In the end, there was a dramatic decrease in support for Fujitec’s CEO, Uchiyama-san. If the low level of support for management was a gentle wake-up call, Oasis’ June statement was a ringing alarm clock.   
</div>
<div>
<blockquote>
Oasis will continue its active engagement with the Company and, failing any material change to the situation, will consider a wide variety of options, including calling an EGM later this year, in order to bring about a change of leadership at the Company to ensure that progress is made to improve Fujitec’s corporate value for the medium and long-term, to the benefit of all stakeholders (June 2020) 
</blockquote>
</div>
<div>
 And so here we are today, with grudging consent, Uchiyama-san has <a href="https://www.fujitec.com/common/fjhp/doc/top_global/document/irnews/2139/20201204_Fujitec%20Co.,%20Ltd.%20Announces%20Future%20Strategic%20Direction%20Plan.pdf" target="_blank" rel="noopener">announced a “new” strategic direction</a>. It’s a step in the right direction, but will it be enough to silence the critics?  
</div>


Corporate governance is hard, messy and often frustrating for everyone. Those frustrations boiled over for shareholders in Fujitec Co Ltd (6406 JP) , with two outspoken activist investors going public with their grievances in May this year, ahead of the AGM.  


At the AGM, Oasis secured 33% of the votes in favour of its proposals for cancelling the Company’s treasury shares. If it hadn't been for the Coronavirus, the proposals would have been far more intrusive. In the end, there was a dramatic decrease in support for Fujitec’s CEO, Uchiyama-san. If the low level of support for management was a gentle wake-up call, Oasis’ June statement was a ringing alarm clock.   



Oasis will continue its active engagement with the Company and, failing any material change to the situation, will consider a wide variety of options, including calling an EGM later this year, in order to bring about a change of leadership at the Company to ensure that progress is made to improve Fujitec’s corporate value for the medium and long-term, to the benefit of all stakeholders (June 2020) 



 And so here we are today, with grudging consent, Uchiyama-san has announced a “new” strategic direction. It’s a step in the right direction, but will it be enough to silence the critics?  


Fujitec (6406) - Governance Is Messy – but that Doesn’t Mean It Isn’t Working

Pfizer and BioNTech’s announcement regarding the success rate of over 90% for its OCVID-19 vaccine kickstarted a strong rally in stock markets around the world. Since the announcement of the interim data of the Phase 3 study of the COVID-19 vaccine on 9th November 2020, Japan’s Topix index has rallied by 7.1%.Share prices of Japan’s two biggest beer makers, <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> and <a href="https://www.smartkarma.com/entities/asahi-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10482:1" rel="noopener">Asahi Group Holdings (2502 JP)</a> have gained by 22.8% and 25.8% respectively since the announcement. <a href="https://www.smartkarma.com/entities/sapporo-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14085:1" rel="noopener">Sapporo Holdings (2501 JP)</a>, whose EV is just 14% of Kirin’s and 10% of Asahi’s, increased 13.9% during the post-announcement period.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/176/993/original/image_54568104321607357503773.png?1607357505" class="editor-image img-responsive" data-smartkarma-image-id="176993"></figure>

Pfizer and BioNTech’s announcement regarding the success rate of over 90% for its OCVID-19 vaccine kickstarted a strong rally in stock markets around the world. Since the announcement of the interim data of the Phase 3 study of the COVID-19 vaccine on 9th November 2020, Japan’s Topix index has rallied by 7.1%.Share prices of Japan’s two biggest beer makers, Kirin Holdings (2503 JP) and Asahi Group Holdings (2502 JP) have gained by 22.8% and 25.8% respectively since the announcement. Sapporo Holdings (2501 JP), whose EV is just 14% of Kirin’s and 10% of Asahi’s, increased 13.9% during the post-announcement period.

Japanese Beer Pair Trade: Long Sapporo/Short Asahi

On 21st November 2020, Nikkei reported that <a href="https://www.smartkarma.com/entities/bega-cheese-ltd" target="_blank" data-smartkarma-citation="entities:7272:1" rel="noopener">Bega Cheese Ltd (BGA AU)</a> will acquire <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>’s Australian subsidiary, Lion Dairy &amp; Drinks for an estimated valuation of more than ¥40.0 billion, 13% discount to the November 2019 valuation.Please refer below links for more details regarding the sale of Lion Dairy &amp; Drinks business.<ul>
<li><a href="https://www.smartkarma.com/insights/kirin-completes-the-sale-of-lion-dairy-and-drinks-business-amidst-pressure-from-activist-investor" target="_blank" rel="noopener">Kirin Completes the Sale of Lion Dairy and Drinks Business Amidst Pressure from Activist Investor</a></li>
<li>
<a href="https://www.smartkarma.com/insights/sour-china-australia-diplomatic-relations-halts-china-mengniu-dairy-s-buyout-of-lion-dairy-drinks" target="_blank" rel="noopener">Sour China:Australia Diplomatic Relations Halts China Mengniu Dairy’s Buyout of Lion Dairy &amp; Drinks</a> </li>
<li><a href="https://www.smartkarma.com/insights/kirin-restarts-ldd-sale-after-china-mengniu-deal-falls-through" target="_blank" rel="noopener">Kirin Restarts LDD Sale After China Mengniu Deal Falls Through</a></li>
</ul>

On 21st November 2020, Nikkei reported that Bega Cheese Ltd (BGA AU) will acquire Kirin Holdings (2503 JP)’s Australian subsidiary, Lion Dairy &amp; Drinks for an estimated valuation of more than ¥40.0 billion, 13% discount to the November 2019 valuation.Please refer below links for more details regarding the sale of Lion Dairy &amp; Drinks business.
Kirin Completes the Sale of Lion Dairy and Drinks Business Amidst Pressure from Activist Investor

Sour China:Australia Diplomatic Relations Halts China Mengniu Dairy’s Buyout of Lion Dairy &amp; Drinks 
Kirin Restarts LDD Sale After China Mengniu Deal Falls Through


Bega Cheese to Acquire Kirin’s Lion Dairy & Drinks at a 13% Discount

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Equity Bottom-Up

One of our long-running thematic ideas has been that Japanese corporates are starting to get to grips with improving productivity. This isn’t a universal trend but we had flagged the Toyota group as a bellwether for Japan and that both Toyota and its group companies were demonstrating increasingly flexible and fast decision making capability and less rigid cultural norms. The <a href="https://asia.nikkei.com/Business/Business-trends/Toyota-named-top-ESG-brand-in-Japan-survey2" target="_blank" rel="noopener">Nikkei has an article citing Toyota as the top ESG pick</a> by consumers and business people, and its contents are worth thinking about.

One of our long-running thematic ideas has been that Japanese corporates are starting to get to grips with improving productivity. This isn’t a universal trend but we had flagged the Toyota group as a bellwether for Japan and that both Toyota and its group companies were demonstrating increasingly flexible and fast decision making capability and less rigid cultural norms. The Nikkei has an article citing Toyota as the top ESG pick by consumers and business people, and its contents are worth thinking about.

Toyota – Topping the Nikkei’s ESG Survey and an Indicator of Labour Reform?

Japan

Kirin Holdings Company, Limited produces beer, soft drinks, food products, whisky, and pharmaceuticals.  The Company sells its products in Japan and overseas.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Kirin Holdings (2503 JP)

Kirin: An Asset Write-Down/Disposal Could Be Pending for the Military Linked Myanmar JV

we wouldn’t be surprised, even if Kirin decides to withdraw from Myanmar operations at a significant loss. Even though it looks more likely that a...

Oshadhi Kumarasiri

Fujitec (6406) - Governance Is Messy – but that Doesn’t Mean It Isn’t Working

Fujitec announced a new strategic plan, trying to fend off further activist encroachment. They addressed operational changes, capital allocation...

Mark Chadwick

Japanese Beer Pair Trade: Long Sapporo/Short Asahi

Pfizer and BioNTech’s announcement regarding the success rate of over 90% for its OCVID-19 vaccine kickstarted a strong rally in stock markets...

Oshadhi Kumarasiri

Bega Cheese to Acquire Kirin’s Lion Dairy & Drinks at a 13% Discount

On 21st November 2020, Nikkei reported that Bega Cheese will acquire Kirin’s Australian subsidiary, Lion Dairy & Drinks for an estimated valuation...

Oshadhi Kumarasiri

Toyota – Topping the Nikkei’s ESG Survey and an Indicator of Labour Reform?

Toyota's efforts to reform labour policies bear watching as Japan's change of government and response to COVID's impact on workplaces offer a...

Mio Kato

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)