Japanese Turnaround Situations, Short-Ideas, Azabu Research

Michael Allen

Japanese Turnaround Situations, Short-Ideas

Azabu Research

Azabu Research is a publishing and consulting firm focused on distressed equities in the Japanese market. We specialize in turnaround strategies, corporate combinations, divestitures, and restructuring.

Publisher of the Tokyo Turnaround Letter, which conducts the most thorough research possible of publicly available information, including forensic tests for fraudulent overstatement of assets and understatement of liabilities, as well as rigorous market and industry analysis to assess the underlying strengths of the company’s products or services, the appropriateness of the company’s turnaround strategy, and the skill of its current management team. The average length of a report exceeds 25 pages of text and tables, excluding any disclosures or executive summaries.

We have more than 30 years of experience in applying this process to distressed equities in Japan. Additionally, subscribers have free access to detailed, yet easily navigated earnings models for the target company as well as the top five comparable companies, and unlimited access to the analyst for follow-up questions.

Azabu Research also conducts be-spoke research on a project basis, and provides consulting services to companies looking to restructure, divest, make acquisitions, go public, or improve investor sentiment toward their stock.

Independent Research and Consulting Firm

Equity Bottom-Up

<ul>
<li>Yamada, Japan’s leading home appliance retailer, trade at a PER of less than 9x. Nitori, the leading furniture retailer trades at about 17x.</li>
<li>Both companies, having saturated their core market, are diversifying into the other’s territory.</li>
<li>Key Takeaway: Nitori is diversifying into a business with inherently lower margins, while Yamada moves into one with inherently higher margins.</li>
</ul>


Yamada, Japan’s leading home appliance retailer, trade at a PER of less than 9x. Nitori, the leading furniture retailer trades at about 17x.
Both companies, having saturated their core market, are diversifying into the other’s territory.
Key Takeaway: Nitori is diversifying into a business with inherently lower margins, while Yamada moves into one with inherently higher margins.


When Giants Clash: Yamada (9831) Vs. Nitori (9843)

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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.

Quantitative Analysis

<ul>
<li>We analyzed the changes in margin trading positions of JPX stocks as of May 16th. The aggregated net margin trading position is USD16,876m.</li>
<li>We tabulate league tables for top/bottom net long/short of margin trading by value, margin trading position as multiples of ADT.</li>
<li>We highlight net margin buy/sell changes in Dena, Rakuten, Sumitomo Mitsui Financial, Toyota Motor, Mitsui O.S.K. Lines, Kawasaki Heavy Industries, Mitsubishi Ufj Financial, Nippon Yusen Kabushiki Kaisha.</li>
</ul>


We analyzed the changes in margin trading positions of JPX stocks as of May 16th. The aggregated net margin trading position is USD16,876m.
We tabulate league tables for top/bottom net long/short of margin trading by value, margin trading position as multiples of ADT.
We highlight net margin buy/sell changes in Dena, Rakuten, Sumitomo Mitsui Financial, Toyota Motor, Mitsui O.S.K. Lines, Kawasaki Heavy Industries, Mitsubishi Ufj Financial, Nippon Yusen Kabushiki Kaisha.


JPX Margin Trading Weekly (May 16th): Dena, Rakuten, Sumitomo Mitsui Financial, Toyota Motor

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. 

<ul>
<li>Muji continues its impressive growth streak both at home and abroad – sales in March alone rose 33% in Japan.</li>
<li>Muji has grown in part because of its ability to move into new categories, even cosmetics and food, possible because <strong>Muji's biggest asset is how well it is trusted</strong>.</li>
<li>The latest, with significant potential given inbound demand, is Muji Stay which includes its own hotels, rooms in other hotels and inns, as well as house rentals on Airbnb.</li>
</ul>


Muji continues its impressive growth streak both at home and abroad – sales in March alone rose 33% in Japan.
Muji has grown in part because of its ability to move into new categories, even cosmetics and food, possible because Muji's biggest asset is how well it is trusted.
The latest, with significant potential given inbound demand, is Muji Stay which includes its own hotels, rooms in other hotels and inns, as well as house rentals on Airbnb.


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>
<a href="https://www.smartkarma.com/entities/baycurrent-consulting-inc" target="_blank" data-smartkarma-citation="entities:25985:1" rel="noopener">BayCurrent Consulting (6532 JP)</a> replaces <a href="https://www.smartkarma.com/entities/mitsubishi-logistics-corp" target="_blank" data-smartkarma-citation="entities:11909:1" rel="noopener">Mitsubishi Logistics (9301 JP)</a> in 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> at the close of trading on 31 March.</li>
<li>Since announcement, <a href="https://www.smartkarma.com/entities/baycurrent-consulting-inc" target="_blank" data-smartkarma-citation="entities:25985:1" rel="noopener">BayCurrent Consulting (6532 JP)</a> stock is up with cumulative excess volume increasing, while <a href="https://www.smartkarma.com/entities/mitsubishi-logistics-corp" target="_blank" data-smartkarma-citation="entities:11909:1" rel="noopener">Mitsubishi Logistics (9301 JP)</a> is lower on a much bigger increase in cumulative excess volume.</li>
<li>Some of the forecast adds and deletes have moved as one would expect, but positioning for the September rebalance could lead to reversals over the next few weeks and months.</li>
</ul>



BayCurrent Consulting (6532 JP) replaces Mitsubishi Logistics (9301 JP) in the Nikkei 225 (NKY INDEX) at the close of trading on 31 March.
Since announcement, BayCurrent Consulting (6532 JP) stock is up with cumulative excess volume increasing, while Mitsubishi Logistics (9301 JP) is lower on a much bigger increase in cumulative excess volume.
Some of the forecast adds and deletes have moved as one would expect, but positioning for the September rebalance could lead to reversals over the next few weeks and months.


Nikkei 225 Index Rebalance: Positioning With a Few Days to Implementation

<ul>
<li>Seven &amp; I continues to seek shareholder approval for its own path, offering not just improved efficiency but a massive ¥2 trillion buyback albeit one over a long time frame.</li>
<li>This is a lot, especially when the core Seven Eleven chain in Japan is still struggling to keep up with its peers on monthly growth rates.</li>
<li>But this forgets retail media which is set to become a major new income stream for CVS and, judging by forecasts, would help pay for a chunk of that buyback.</li>
</ul>


Seven &amp; I continues to seek shareholder approval for its own path, offering not just improved efficiency but a massive ¥2 trillion buyback albeit one over a long time frame.
This is a lot, especially when the core Seven Eleven chain in Japan is still struggling to keep up with its peers on monthly growth rates.
But this forgets retail media which is set to become a major new income stream for CVS and, judging by forecasts, would help pay for a chunk of that buyback.


Retail Media Can Help Pay for a ¥2 Trillion Buyback

Japan

Nitori Holdings Co., Ltd., is based in Hokkaido and operates a furniture retail chain.  The Company sells living room furniture, storage furniture, dining furniture, office furniture, beds, and interior goods.  Nitori Holdings also sells original brand merchandise and imported merchandise.

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Nitori Holdings (9843 JP)

When Giants Clash: Yamada (9831) Vs. Nitori (9843)

Yamada and Nitori, Japan's top retailers, are diversifying into each other's markets with different margin implications. Yamada is moving up,...

Michael Allen

JPX Margin Trading Weekly (May 16th): Dena, Rakuten, Sumitomo Mitsui Financial, Toyota Motor

We analyzed JPX margin trading position report for the past week and highlighted margin trading activities in Mitsui O.S.K. Lines, Kawasaki Heavy...

Ke Yan, CFA, FRM

Trust in Muji Reaps Big Returns

Muji's rapid growth fuelled by trust, allowing it to expand into growing new categories like cosmetics and food, now venturing into inbound...

Michael Causton

Nikkei 225 Index Rebalance: Positioning With a Few Days to Implementation

Baycurrent could follow Nitori's playbook. Mitsubishi Logistics could drop some more. Kokusai is underperforming the SOX. Okuma and Tokuyama are up...

Brian Freitas

Retail Media Can Help Pay for a ¥2 Trillion Buyback

Seven & I seeks shareholder approval for ¥2 trillion buyback despite Seven Eleven's struggles, but retail media could potentially help fund a...

Michael Causton

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

When Giants Clash: Yamada (9831) Vs. Nitori (9843)

​Yamada and Nitori, Japan's top retailers, are diversifying into each other's markets with different margin implications. Yamada is moving up,...

Michael Allen

JPX Margin Trading Weekly (May 16th): Dena, Rakuten, Sumitomo Mitsui Financial, Toyota Motor

We analyzed JPX margin trading position report for the past week and highlighted margin trading activities in Mitsui O.S.K. Lines, Kawasaki Heavy...

Ke Yan, CFA, FRM

Trust in Muji Reaps Big Returns

​Muji's rapid growth fuelled by trust, allowing it to expand into growing new categories like cosmetics and food, now venturing into inbound...

Michael Causton

Nikkei 225 Index Rebalance: Positioning With a Few Days to Implementation

Baycurrent could follow Nitori's playbook. Mitsubishi Logistics could drop some more. Kokusai is underperforming the SOX. Okuma and Tokuyama are up...

Brian Freitas

Retail Media Can Help Pay for a ¥2 Trillion Buyback

​Seven & I seeks shareholder approval for ¥2 trillion buyback despite Seven Eleven's struggles, but retail media could potentially help fund a...

Michael Causton

Yamada and Nitori, Japan's top retailers, are diversifying into each other's markets with different margin implications. Yamada is moving up,...

Muji's rapid growth fuelled by trust, allowing it to expand into growing new categories like cosmetics and food, now venturing into inbound...

Seven & I seeks shareholder approval for ¥2 trillion buyback despite Seven Eleven's struggles, but retail media could potentially help fund a...