President, Vision Research

Robert C Prather Jr

President

Vision Research

Vision Research was formed in 2004 with the vision of generating the best possible fundamental analysis and investment research for smid cap US equities. In 2008, we broadened our coverage to include mid/large cap US stocks.  After researching a  few ideas outside the US each year for a number of years, we launched a dedicated non-US equity product at the end of 2015.  This was followed by the introduction of a product focused on IPOs in mid-2017.

Fundamental Insight

Equity Bottom-Up

<ul>
<li>2/3 of sales face secular decline in housing demand/shrinking population and the other 1/3 facing weak housing environment due to rising rates</li>
<li>Competition from private label and weak trends and ratios exist</li>
<li>The valuation does not seem to reflect the risks highlighted</li>
</ul>


2/3 of sales face secular decline in housing demand/shrinking population and the other 1/3 facing weak housing environment due to rising rates
Competition from private label and weak trends and ratios exist
The valuation does not seem to reflect the risks highlighted


Lixil (5938 JP): Levered Business Facing Cyclical & Secular Headwinds & Continued Mkt Share Pressure

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>The review period for the September rebalance of the S&amp;P/ASX family of indices ends on Friday. There will be a lot of changes across the family.</li>
<li>Hang Seng Indices will announce the changes to the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hang Seng Index</a>, <a href="https://www.smartkarma.com/entities/hang-seng-china-enterprises-index" target="_blank" data-smartkarma-citation="entities:22900:1" rel="noopener">Hang Seng China Enterprises Index</a>, <a href="https://www.smartkarma.com/entities/hang-seng-tech-index" target="_blank" data-smartkarma-citation="entities:31367:1" rel="noopener">Hang Seng TECH Index</a> and the HSCI after market close on Friday.</li>
<li>There were HUGE inflows to onshore China focused ETFs during the week with <a href="https://www.smartkarma.com/entities/shanghai-shenzhen-csi-300-inde" target="_blank" data-smartkarma-citation="entities:22906:1" rel="noopener">CSI 300 Index</a>, <a href="https://www.smartkarma.com/entities/csi-smallcap-500-index-shang" target="_blank" data-smartkarma-citation="entities:35347:1" rel="noopener">CSI 500 Index</a> and <a href="https://www.smartkarma.com/entities/shanghai-stock-exchange-sse-50-a-share-index" target="_blank" data-smartkarma-citation="entities:31073:1" rel="noopener">SSE50 Index</a> ETFs taking in the largest amounts.</li>
</ul>


The review period for the September rebalance of the S&amp;P/ASX family of indices ends on Friday. There will be a lot of changes across the family.
Hang Seng Indices will announce the changes to the Hang Seng Index, Hang Seng China Enterprises Index, Hang Seng TECH Index and the HSCI after market close on Friday.
There were HUGE inflows to onshore China focused ETFs during the week with CSI 300 Index, CSI 500 Index and SSE50 Index ETFs taking in the largest amounts.


Index Rebalance & ETF Flow Recap: JPXNK400, Kenedix, Positioning - India, Japan, Korea

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nisshin-seifun-group-inc" target="_blank" data-smartkarma-citation="entities:640:1" rel="noopener">Nisshin Seifun Group</a>, <a href="https://www.smartkarma.com/entities/oji-holdings-corp" target="_blank" data-smartkarma-citation="entities:11348:1" rel="noopener">Oji Holdings</a>, <a href="https://www.smartkarma.com/entities/nippon-shinyaku-co-ltd" target="_blank" data-smartkarma-citation="entities:6634:1" rel="noopener">Nippon Shinyaku</a>, <a href="https://www.smartkarma.com/entities/cyberagent-inc" target="_blank" data-smartkarma-citation="entities:8197:1" rel="noopener">CyberAgent Inc</a>, <a href="https://www.smartkarma.com/entities/ngk-insulators-ltd" target="_blank" data-smartkarma-citation="entities:12580:1" rel="noopener">NGK Insulators</a>, <a href="https://www.smartkarma.com/entities/lixil-group-corp" target="_blank" data-smartkarma-citation="entities:454:1" rel="noopener">Lixil Group</a> and <a href="https://www.smartkarma.com/entities/sharp-corp" target="_blank" data-smartkarma-citation="entities:391:1" rel="noopener">Sharp Corp</a> have all underperformed the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> over the last 3-4 months.</li>
<li>The underperformance could lead to adjustments in global passive portfolios and liquidity events on some of the stocks.</li>
<li>Short interest has started to increase and there could be more pre-positioning yet to come over the next few weeks.</li>
</ul>



Nisshin Seifun Group, Oji Holdings, Nippon Shinyaku, CyberAgent Inc, NGK Insulators, Lixil Group and Sharp Corp have all underperformed the Nikkei 225 (NKY INDEX) over the last 3-4 months.
The underperformance could lead to adjustments in global passive portfolios and liquidity events on some of the stocks.
Short interest has started to increase and there could be more pre-positioning yet to come over the next few weeks.


Japan - Increase in Shorts on Some Interesting Stocks

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>The TSE will move to a new cash equity market structure on 4 April 2022. There will be three new sections: TSE Prime, TSE Standard, and TSE Growth.</li>
<li>The Nikkei Index Team in July 2021 <a href="https://indexes.nikkei.co.jp/nkave/archives/news/20210705E_1.pdf" target="_blank" rel="noopener">announced</a> a change to the Nikkei 225 Average Guidebook language which said constituents had to be members of TSE Prime going forward.  </li>
<li>At least one Nikkei 225 name and possibly two are headed for TSE Standard when the TSE makes its announcement on 11 January 2022. Suggested treatments are discussed.</li>
</ul>


The TSE will move to a new cash equity market structure on 4 April 2022. There will be three new sections: TSE Prime, TSE Standard, and TSE Growth.
The Nikkei Index Team in July 2021 announced a change to the Nikkei 225 Average Guidebook language which said constituents had to be members of TSE Prime going forward.  
At least one Nikkei 225 name and possibly two are headed for TSE Standard when the TSE makes its announcement on 11 January 2022. Suggested treatments are discussed.


Nikkei 225 Deletions/Additions in March(?) 2022 Due to TSE Market Structure Changes

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. 

Leading home centre group <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> announced it will acquire <a href="https://www.smartkarma.com/entities/shimachu-co-ltd" target="_blank" data-smartkarma-citation="entities:5235:1" rel="noopener">Shimachu Co Ltd (8184 JP)</a>, the seventh largest chain, in November. The move will catapult DCM back to the top of the ranking.
The deal could also provide a catalyst for further consolidation in a sector that’s long overdue for more after remaining static for much of the past 15 years. While the drugstore and homecentre sectors are very different, they do share one similarity: the leaders dominate in certain territories but none are true national retailers. In drugstores, national coverage through M&amp;A has been happening in the last two years but in homecentres only two firms are cross-regional.
While the leading 10 chains had a 65.5%, share and the top 30 more than 90% in FY2019, to scale effectively against competition from all sides, true national leaders will have to emerge.
The proposed takeover is also an expression of the current flux in the homecentre market as consumers increase further their consumption of home decoration and home improvement category. Although this is a long-term trend, homecentre retailers were slow to exploit this, leaving the field to <a href="https://www.smartkarma.com/entities/nitori-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20386:1" rel="noopener">Nitori Holdings (9843 JP)</a> and other dedicated home decoration retailers.
There are now more signs of the sector leaders doing more to widen private label merchandise ranges to take a slice of this growing market, and some are even launching dedicated chains (<a href="https://www.smartkarma.com/insights/targeting-nitori-cainz-follows-workman-s-success-into-homeware-retailing-with-style-factory-chain" target="_blank" rel="noopener">see this insight for a detailed look at the new threat to Nitori from Cainz</a>, the unlisted homecentre sector leader – at least until DCM absorbs Shimachu). See this separate insight for more on this. Shimachu will be a key help to DCM in targeting this market given its more consumer-oriented history.
I.e. this is not just another old-style Japan retail case of expansion for the sake of it, but a genuinely interesting and useful strategic deal.

Leading home centre group Dcm Holdings (3050 JP) announced it will acquire Shimachu Co Ltd (8184 JP), the seventh largest chain, in November. The move will catapult DCM back to the top of the ranking.
The deal could also provide a catalyst for further consolidation in a sector that’s long overdue for more after remaining static for much of the past 15 years. While the drugstore and homecentre sectors are very different, they do share one similarity: the leaders dominate in certain territories but none are true national retailers. In drugstores, national coverage through M&amp;A has been happening in the last two years but in homecentres only two firms are cross-regional.
While the leading 10 chains had a 65.5%, share and the top 30 more than 90% in FY2019, to scale effectively against competition from all sides, true national leaders will have to emerge.
The proposed takeover is also an expression of the current flux in the homecentre market as consumers increase further their consumption of home decoration and home improvement category. Although this is a long-term trend, homecentre retailers were slow to exploit this, leaving the field to Nitori Holdings (9843 JP) and other dedicated home decoration retailers.
There are now more signs of the sector leaders doing more to widen private label merchandise ranges to take a slice of this growing market, and some are even launching dedicated chains (see this insight for a detailed look at the new threat to Nitori from Cainz, the unlisted homecentre sector leader – at least until DCM absorbs Shimachu). See this separate insight for more on this. Shimachu will be a key help to DCM in targeting this market given its more consumer-oriented history.
I.e. this is not just another old-style Japan retail case of expansion for the sake of it, but a genuinely interesting and useful strategic deal.

A New Era of Home Centre Consolidation Starts as DCM Buys Shimachu

Japan

LIXIL Group Corporation produces aluminum housing materials such as doors, windows,curtain walls, and screens.  The Company also sells interior materials and a variety of housing equipment.

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

Lixil Group (5938 JP)

Index Rebalance & ETF Flow Recap: JPXNK400, Kenedix, Positioning - India, Japan, Korea

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

Japan - Increase in Shorts on Some Interesting Stocks

There are a bunch of stocks in Japan that have underperformed the NKY over the last few months and that could lead to a liquidity event due to the...

Brian Freitas

Nikkei 225 Deletions/Additions in March(?) 2022 Due to TSE Market Structure Changes

There is likely to be one Nikkei 225 Change around the end of Q1 2022. There may be more. We will know more on 11 Jan 2022 how many deletions are...

Travis Lundy

A New Era of Home Centre Consolidation Starts as DCM Buys Shimachu

Leading home centre group DCM announced it will acquire Shimachu, the seventh largest chain, in November. The move will catapult DCM back to the...

Michael Causton

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Lixil (5938 JP): Levered Business Facing Cyclical & Secular Headwinds & Continued Mkt Share Pressure

Expensive stock with a levered balance sheet, increasing competition, declining cash flow where Free Cash Flow does not cover the dividend, and...

Robert C Prather Jr

Index Rebalance & ETF Flow Recap: JPXNK400, Kenedix, Positioning - India, Japan, Korea

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

Japan - Increase in Shorts on Some Interesting Stocks

There are a bunch of stocks in Japan that have underperformed the NKY over the last few months and that could lead to a liquidity event due to the...

Brian Freitas

Nikkei 225 Deletions/Additions in March(?) 2022 Due to TSE Market Structure Changes

There is likely to be one Nikkei 225 Change around the end of Q1 2022. There may be more. We will know more on 11 Jan 2022 how many deletions are...

Travis Lundy

A New Era of Home Centre Consolidation Starts as DCM Buys Shimachu

Leading home centre group DCM announced it will acquire Shimachu, the seventh largest chain, in November. The move will catapult DCM back to the...

Michael Causton