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.

Equity Bottom-Up

<ul>
<li>Google Search trends for Tokyo Disneyland and DisneySea in recent months point to potential vulnerabilities in Oriental Land's FQ3 performance.</li>
<li>Tokyo Disneyland's rising ticket prices have narrowed the cost gap with Shanghai and Hong Kong Disneyland, potentially leading to a loss of customers to its counterparts.</li>
<li>Should <a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a> shares fail to surpass its recent peak in January next year, we think shares could undergo a rather substantial correction.</li>
</ul>


Google Search trends for Tokyo Disneyland and DisneySea in recent months point to potential vulnerabilities in Oriental Land's FQ3 performance.
Tokyo Disneyland's rising ticket prices have narrowed the cost gap with Shanghai and Hong Kong Disneyland, potentially leading to a loss of customers to its counterparts.
Should Oriental Land (4661 JP) shares fail to surpass its recent peak in January next year, we think shares could undergo a rather substantial correction.


Oriental Land: Approaching the Tipping Point

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Early predictions for the March 2023 Nikkei rebalance (TBA early Feb) are little changed. One way turnover would still be about 1.4%. I see 3 ADDs and 3 DELETEs.</li>
<li>The 3 ADDs should be <a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661)</a>, <a href="https://www.smartkarma.com/entities/renesas-electronics-corp" target="_blank" data-smartkarma-citation="entities:15933:1" rel="noopener">Renesas Electronics (6723)</a>, and <a href="https://www.smartkarma.com/entities/japan-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1184:1" rel="noopener">Japan Airlines (9201)</a>.  The 3 DELETES <a href="https://www.smartkarma.com/entities/toho-zinc-co-ltd" target="_blank" data-smartkarma-citation="entities:2796:1" rel="noopener">Toho Zinc (5707)</a>, <a href="https://www.smartkarma.com/entities/toyobo-co-ltd" target="_blank" data-smartkarma-citation="entities:6187:1" rel="noopener">Toyobo (3101)</a>, and <a href="https://www.smartkarma.com/entities/nippon-light-metal-holdings" target="_blank" data-smartkarma-citation="entities:1485:1" rel="noopener">Nippon Light Metal (5703)</a>. </li>
<li>Oriental Land is the one to watch in March. The Sep 2023 rebalance and subsequent ones are smaller in size but more interesting in impact.</li>
</ul>


Early predictions for the March 2023 Nikkei rebalance (TBA early Feb) are little changed. One way turnover would still be about 1.4%. I see 3 ADDs and 3 DELETEs.
The 3 ADDs should be Oriental Land (4661), Renesas Electronics (6723), and Japan Airlines (9201).  The 3 DELETES Toho Zinc (5707), Toyobo (3101), and Nippon Light Metal (5703). 
Oriental Land is the one to watch in March. The Sep 2023 rebalance and subsequent ones are smaller in size but more interesting in impact.


Nikkei 225 March 2023 Review Quiddity Leaderboard (Nov 2022)

<ul>
<li>During the initial months of 2QFY24, both Tokyo Disneyland and Tokyo DisneySea experienced a significant double-digit QoQ drop in Google search interest.</li>
<li>Using Google Search trends data for the first two months of 2QFY24, we anticipate a QoQ decline of about 17% in Oriental Land's Theme Parks revenue, dropping below ¥100bn.</li>
<li>2QFY24 consensus OP is 2.5x above the company's guidance, and both short and medium term consensus revenue and OP targets for <a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a> appear blatantly unachievable.</li>
</ul>


During the initial months of 2QFY24, both Tokyo Disneyland and Tokyo DisneySea experienced a significant double-digit QoQ drop in Google search interest.
Using Google Search trends data for the first two months of 2QFY24, we anticipate a QoQ decline of about 17% in Oriental Land's Theme Parks revenue, dropping below ¥100bn.
2QFY24 consensus OP is 2.5x above the company's guidance, and both short and medium term consensus revenue and OP targets for Oriental Land (4661 JP) appear blatantly unachievable.


Oriental Land: Google Searches For Tokyo Disneyland Dips Double Digits in July & August 2023

<ul>
<li>There is a possibility that <a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a>'s revenue and OP in 1QFY24 could surpass the consensus estimates by 8% and 21%, respectively.</li>
<li>However, the outlook for the next three quarters may be different, as consensus appears inflated with annual OP expectations of ¥154.5bn compared to the company's guidance of ¥122bn.</li>
<li>We find medium term consensus expectations unrealistic, leading to potential downside for Oriental Land. We expect FY+2 EV/OP to decline from 46x to 20-30x.</li>
</ul>


There is a possibility that Oriental Land (4661 JP)'s revenue and OP in 1QFY24 could surpass the consensus estimates by 8% and 21%, respectively.
However, the outlook for the next three quarters may be different, as consensus appears inflated with annual OP expectations of ¥154.5bn compared to the company's guidance of ¥122bn.
We find medium term consensus expectations unrealistic, leading to potential downside for Oriental Land. We expect FY+2 EV/OP to decline from 46x to 20-30x.


Oriental Land: A Potential Beat Next Quarter, but Unrealistic Consensus for Long-Term

Keisei Electric Railway Co / Event-Driven

<ul>
<li>Over two decades, <a href="https://www.smartkarma.com/entities/keisei-electric-railway-co" target="_blank" data-smartkarma-citation="entities:10876:1" rel="noopener">Keisei Electric Railway Co (9009 JP)</a> has been the subject of softer and harder activist efforts to have Keisei monetise its stake in affiliate Oriental Land (4661).</li>
<li>The most recent efforts were by Palliser last fall, briefly discussed <a href="https://www.smartkarma.com/insights/keisei-electric-rail-9009-a-buyback-but-it-s-likely-to-be-crossholders-selling-in-tostnet-3" target="_blank" rel="noopener">here</a> two weeks ago when Keisei announced a buyback. </li>
<li>Today, Keisei <a href="https://contents.xj-storage.jp/xcontents/AS01810/961e9d0f/2b7a/4eef/89ba/091c3bf36d72/140120240305549065.pdf" target="_blank" rel="noopener">announced</a> (Japanese only) an Accelerated Block Offering of 1% of Oriental Land shares. The accompanying announcement is worth reading. It's pretty clear.</li>
</ul>


Over two decades, Keisei Electric Railway Co (9009 JP) has been the subject of softer and harder activist efforts to have Keisei monetise its stake in affiliate Oriental Land (4661).
The most recent efforts were by Palliser last fall, briefly discussed here two weeks ago when Keisei announced a buyback. 
Today, Keisei announced (Japanese only) an Accelerated Block Offering of 1% of Oriental Land shares. The accompanying announcement is worth reading. It's pretty clear.


Oriental Land (4661) Placement by Keisei Rail (9009) Says "That's the Door"

Japan

ORIENTAL LAND CO., LTD. operates Tokyo Disney Resort.  The Company also operates restaurants within the complex and sells Disney merchandise.

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Oriental Land (4661 JP)

Oriental Land: Approaching the Tipping Point

Google Search trends suggest potential vulnerabilities in Oriental Land's Q3 performance. Surging ticket prices narrow the cost gap with Shanghai...

Oshadhi Kumarasiri

Nikkei 225 March 2023 Review Quiddity Leaderboard (Nov 2022)

Updated Nikkei 225 Leaderboard for the March 2023 review. 10 weeks of data left til the cutoff. The top 3 ADDs are unch'd since Sep. The 3rd-ranked...

Travis Lundy

Oriental Land: Google Searches For Tokyo Disneyland Dips Double Digits in July & August 2023

Tokyo Disneyland & DisneySea's lower Google interest in early 2QFY24 may cause a 17% QoQ revenue dip for Oriental Land's Theme Parks business.

Oshadhi Kumarasiri

Oriental Land: A Potential Beat Next Quarter, but Unrealistic Consensus for Long-Term

Oriental Land trades at 46x FY+2 EV/OP due to optimistic views on Fantasy Springs. However, we find consensus expectations for Fantasy Springs...

Oshadhi Kumarasiri

Oriental Land (4661) Placement by Keisei Rail (9009) Says "That's the Door"

Keisei Rail today announced the offering/sale of 16+mm shares (1.0%) of Oriental Land. There will be a special div as a result. The announcement...

Travis Lundy

Price Gauge

52-week Range

Market Cap (USDm)

P/E

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Oriental Land: Approaching the Tipping Point

​Google Search trends suggest potential vulnerabilities in Oriental Land's Q3 performance. Surging ticket prices narrow the cost gap with Shanghai...

Oshadhi Kumarasiri

Nikkei 225 March 2023 Review Quiddity Leaderboard (Nov 2022)

Updated Nikkei 225 Leaderboard for the March 2023 review. 10 weeks of data left til the cutoff. The top 3 ADDs are unch'd since Sep. The 3rd-ranked...

Travis Lundy

Oriental Land: Google Searches For Tokyo Disneyland Dips Double Digits in July & August 2023

Tokyo Disneyland & DisneySea's lower Google interest in early 2QFY24 may cause a 17% QoQ revenue dip for Oriental Land's Theme Parks business.

Oshadhi Kumarasiri

Oriental Land: A Potential Beat Next Quarter, but Unrealistic Consensus for Long-Term

Oriental Land trades at 46x FY+2 EV/OP due to optimistic views on Fantasy Springs. However, we find consensus expectations for Fantasy Springs...

Oshadhi Kumarasiri

Oriental Land (4661) Placement by Keisei Rail (9009) Says "That's the Door"

Keisei Rail today announced the offering/sale of 16+mm shares (1.0%) of Oriental Land. There will be a special div as a result. The announcement...

Travis Lundy

Google Search trends suggest potential vulnerabilities in Oriental Land's Q3 performance. Surging ticket prices narrow the cost gap with Shanghai...