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. 

Equity Bottom-Up

<ul>
<li>LINE Gift is fast becoming the most popular way to send gifts of all kinds, even traditional gifts sent at mid-year and New Year. </li>
<li>This is good news for <a href="https://www.smartkarma.com/entities/z-holdings-corp" target="_blank" data-smartkarma-citation="entities:19603:1" rel="noopener">Z Holdings (4689 JP)</a> and Softbank, as well as LINE, as the gifting platform acts as a unifying point for their disparate e-commerce platforms.</li>
<li>Although the corporate gift market is in decline, personal gift giving remains a growth market, offering further upside.</li>
</ul>


LINE Gift is fast becoming the most popular way to send gifts of all kinds, even traditional gifts sent at mid-year and New Year. 
This is good news for Z Holdings (4689 JP) and Softbank, as well as LINE, as the gifting platform acts as a unifying point for their disparate e-commerce platforms.
Although the corporate gift market is in decline, personal gift giving remains a growth market, offering further upside.


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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Inc (4755 JP)</a> is currently trading 20% below the bottom end of the long term trend channel.</li>
<li>With consensus FY+2 EBITDA at ¥309.8bn, Rakuten’s current EV/EBITDA is at an all-time low of 1.7x compared to the historical median and peak of 9.0x and 16.1x respectively.</li>
<li>Based on the consensus FY+2 EBITDA and EV trend, we feel the fair valuation of Rakuten could be somewhere around ¥3,000bn EV.</li>
</ul>



Rakuten Inc (4755 JP) is currently trading 20% below the bottom end of the long term trend channel.
With consensus FY+2 EBITDA at ¥309.8bn, Rakuten’s current EV/EBITDA is at an all-time low of 1.7x compared to the historical median and peak of 9.0x and 16.1x respectively.
Based on the consensus FY+2 EBITDA and EV trend, we feel the fair valuation of Rakuten could be somewhere around ¥3,000bn EV.


Rakuten: At a New Forward EV/EBITDA Bottom

Telco/Internet specialist

Kirk Boodry

Redex Research

<ul>
<li>The core eCommerce and Fintech segments posted good results for the quarter but that will certainly get lost in the discussion on mobile</li>
<li>Mobile operating losses exceeded $1bn in Q4 and whilst management is guiding to losses bottoming out in Q1 22, the magnitude of improvements remains undefined</li>
<li>Rakuten Mobile capex is on par with incumbents and will remain unchanged in FY22</li>
</ul>


The core eCommerce and Fintech segments posted good results for the quarter but that will certainly get lost in the discussion on mobile
Mobile operating losses exceeded $1bn in Q4 and whilst management is guiding to losses bottoming out in Q1 22, the magnitude of improvements remains undefined
Rakuten Mobile capex is on par with incumbents and will remain unchanged in FY22


Rakuten (Neutral) - Q4 21 Results Reaction: Hard to Look past Mobile Losses

<ul>
<li>Results were pretty much in line with expectations as growth from Z Holdings and Enterprise sales offset consumer mobile weakness.</li>
<li>The company is slightly behind the pace needed to meet its full-year operating profit target but appears confident on meeting FY21 and FY22 commitments</li>
<li>Management reports that cashless app PayPay generated ¥21bn in Q3 revenue as SME monetization kicked in</li>
</ul>


Results were pretty much in line with expectations as growth from Z Holdings and Enterprise sales offset consumer mobile weakness.
The company is slightly behind the pace needed to meet its full-year operating profit target but appears confident on meeting FY21 and FY22 commitments
Management reports that cashless app PayPay generated ¥21bn in Q3 revenue as SME monetization kicked in


Softbank Corp (Buy) - Q3 21 Results Reaction: Weak Consumer Mobile but FY Targets in Sight

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/askul-corp" target="_blank" data-smartkarma-citation="entities:16807:1" rel="noopener">Askul Corp (2678 JP)</a> today announced a 4.9% buyback, likely via ToSTNeT-3, designed to lower the holding of parent <a href="https://www.smartkarma.com/entities/z-holdings-corp" target="_blank" data-smartkarma-citation="entities:19603:1" rel="noopener">Z Holdings (4689 JP)</a>, to meet TSE Prime Tradable Share criteria.</li>
<li>While 5.1% earnings accretive, it will not be enough, and the structure suggests despite significant excess cash, the next tranche won't come immediately.</li>
<li>There is short-term strategy, and there is longer-term positioning. Both may work in this case.</li>
</ul>



Askul Corp (2678 JP) today announced a 4.9% buyback, likely via ToSTNeT-3, designed to lower the holding of parent Z Holdings (4689 JP), to meet TSE Prime Tradable Share criteria.
While 5.1% earnings accretive, it will not be enough, and the structure suggests despite significant excess cash, the next tranche won't come immediately.
There is short-term strategy, and there is longer-term positioning. Both may work in this case.


ASKUL (2678) - Large, Accretive, Not Enough for Prime So Look For More

Japan

LY Corporation operates as an internet search engine "Yahoo! JAPAN". The Company provides electronic commerce and settlement finance services for small medium enterprises and individuals. LY also operates media business including search linked advertising and display advertising services.

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LY (4689 JP)

LINE Gift up 330% in 2021

LINE Gift is growing faster than any other e-commerce platform and is testament to the potential synergies across Z Holdings. Much more can be done...

Michael Causton

Rakuten: At a New Forward EV/EBITDA Bottom

After falling 6% following Q4 earnings and 39% since March 2021 to ¥945 per share, Rakuten seems an attractive bet on the long side in the Japanese...

Oshadhi Kumarasiri

Rakuten (Neutral) - Q4 21 Results Reaction: Hard to Look past Mobile Losses

Rakuten’s mobile business is losing a billion dollars per quarter and capital spending is higher than incumbents. That is going to obscure solid...

Kirk Boodry

Softbank Corp (Buy) - Q3 21 Results Reaction: Weak Consumer Mobile but FY Targets in Sight

Through Q3, SBC is behind last year’s pace to meet a similar operating profit target but Q4 growth looks achievable and management remains...

Kirk Boodry

ASKUL (2678) - Large, Accretive, Not Enough for Prime So Look For More

ASKUL announced a large buyback today, designed to lower parent Z Holdings ownership to be able to meet the TSE Prime Tradable Share Ratio...

Travis Lundy

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