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>Subscription usage continues to rise in Japan and a new survey suggests just under 50% of teens and 20s plan to use a subscription service this year.</li>
<li>Daimaru-Matsuzakaya’s luxury and designer brand rental business has been so successful that the company had to turn away new members for a while.</li>
<li>The department store's owner, <a href="https://www.smartkarma.com/entities/j-front-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:8947:1" rel="noopener">J Front Retailing (3086 JP),</a> sees subscriptions as a third pillar to its business in the future.</li>
</ul>


Subscription usage continues to rise in Japan and a new survey suggests just under 50% of teens and 20s plan to use a subscription service this year.
Daimaru-Matsuzakaya’s luxury and designer brand rental business has been so successful that the company had to turn away new members for a while.
The department store's owner, J Front Retailing (3086 JP), sees subscriptions as a third pillar to its business in the future.


Subscriptions Provide Growth Model for J Front's Daimaru-Matsuzakaya

Event-Driven

<ul>
<li>Numerous reports indicate that Seven &amp; I is preparing its Sogo Seibu department store subsidiary for sale. </li>
<li>This follows years of calls from major investors to dispose of underperforming assets at Japan’s second largest retail conglomerate.</li>
<li>Seven &amp; I still has many problems to solve in its domestic business. Ito-Yokado remains the biggest problem but perhaps won't be disposed of while the company's 98-year old founder lives.</li>
</ul>


Numerous reports indicate that Seven &amp; I is preparing its Sogo Seibu department store subsidiary for sale. 
This follows years of calls from major investors to dispose of underperforming assets at Japan’s second largest retail conglomerate.
Seven &amp; I still has many problems to solve in its domestic business. Ito-Yokado remains the biggest problem but perhaps won't be disposed of while the company's 98-year old founder lives.


Seven & I: Selling Sogo Seibu Is Just the Start

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Quantitative Analysis

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/121/977/original/2020-03-09_14-29-36.png?1583731808" class="editor-image img-responsive" data-smartkarma-image-id="121977"></figure><div class="content-caption">Source • Stoxx.com</div>ALTMAN'S Z-SCORE - Dr Edward Altman's Z-Score has been in use for over 50 years as a statistical model to calculate the probability of bankruptcy which built on the work of William Beaver and R.A. Fisher. Altman's original article (attached below) was published in the September 1968 issue of the Journal of Finance when he was an assistant professor of finance at NYU Stern.  The 'classic' Z-Score sampled publically-traded manufacturing companies. Later versions were formulated for private companies, non-manufacturing companies and emerging markets.  The model is between 80% and 90% accurate in predicting bankruptcy one year ahead of the event, while the rate of false positives has been between 15% and 20%.APPLICATION TO JAPAN - We have been using Altman Z-Scores in Japan since the mid-1980s. We have found the Scores to be reasonably predictive, as has been confirmed by several academic papers, including  <a href="https://www.semanticscholar.org/paper/A-Model-of-Bankruptcy-Prediction%3A-Calibration-of/5565168f75b578ba28115ef314acbdd387f82483" target="_blank" rel="noopener">Gurau (2013)</a>. The persistence of a large number of 'zombie' companies supported by banks or keiretsu 'relatives' has, however, reduced the overall 'hit' rate for larger listed companies. The following charts show a timeline of the Altman Z-Score and Market Capitalisation for several memorable Japanese corporate bankruptcies. <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/122/005/original/2020-03-09_15-53-11.png?1583736804" class="editor-image img-responsive" data-smartkarma-image-id="122005"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/122/006/original/2020-03-09_15-54-52.png?1583736903" class="editor-image img-responsive" data-smartkarma-image-id="122006"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/122/007/original/2020-03-09_15-56-58.png?1583737032" class="editor-image img-responsive" data-smartkarma-image-id="122007"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/122/009/original/2020-03-09_15-59-08.png?1583737161" class="editor-image img-responsive" data-smartkarma-image-id="122009"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/122/011/original/2020-03-09_16-03-28.png?1583737425" class="editor-image img-responsive" data-smartkarma-image-id="122011"></figure><div class="content-caption">Source • Japan Analytics</div><div class="content-highlight">This Insight is the second part of a three-part series attempting to highlight those Japanese companies that at the highest risk from the 2020 Covid-19 recession. The first focused on the<a href="https://www.smartkarma.com/insights/japan-who-s-swimming-naked-part-1-audit-score" target="_blank" data-smartkarma-citation="insights:37265" rel="noopener">Audit Score</a>, while a forthcoming Insight will look at Cumulative Cash Flows.</div>

Source • Stoxx.comALTMAN'S Z-SCORE - Dr Edward Altman's Z-Score has been in use for over 50 years as a statistical model to calculate the probability of bankruptcy which built on the work of William Beaver and R.A. Fisher. Altman's original article (attached below) was published in the September 1968 issue of the Journal of Finance when he was an assistant professor of finance at NYU Stern.  The 'classic' Z-Score sampled publically-traded manufacturing companies. Later versions were formulated for private companies, non-manufacturing companies and emerging markets.  The model is between 80% and 90% accurate in predicting bankruptcy one year ahead of the event, while the rate of false positives has been between 15% and 20%.APPLICATION TO JAPAN - We have been using Altman Z-Scores in Japan since the mid-1980s. We have found the Scores to be reasonably predictive, as has been confirmed by several academic papers, including  Gurau (2013). The persistence of a large number of 'zombie' companies supported by banks or keiretsu 'relatives' has, however, reduced the overall 'hit' rate for larger listed companies. The following charts show a timeline of the Altman Z-Score and Market Capitalisation for several memorable Japanese corporate bankruptcies. Source • Japan AnalyticsThis Insight is the second part of a three-part series attempting to highlight those Japanese companies that at the highest risk from the 2020 Covid-19 recession. The first focused on theAudit Score, while a forthcoming Insight will look at Cumulative Cash Flows.

🇯🇵 JAPAN • Who’s Swimming Naked? > Part 2: Altman Z-Score

<a href="https://www.smartkarma.com/entities/j-front-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:8947:1" rel="noopener">J Front Retailing (3086 JP)</a> has been busy with rebuilding and remodelling, culminating in November with the reopening of Parco Shibuya, as it shifts from department store dependence to become a mixed format developer.
This should ensure a bright future – and why it has just announced the purchase of all remaining shares in <a href="https://www.smartkarma.com/entities/parco-co-ltd" target="_blank" data-smartkarma-citation="entities:8431:1" rel="noopener">Parco Co Ltd (8251 JP)</a>.
The deal will help J Front continue to use Parco's expertise in management of its own buildings while J Front's access to funds will further Parco's revitalisation after two decades of under-investment under previous owners.

J Front Retailing (3086 JP) has been busy with rebuilding and remodelling, culminating in November with the reopening of Parco Shibuya, as it shifts from department store dependence to become a mixed format developer.
This should ensure a bright future – and why it has just announced the purchase of all remaining shares in Parco Co Ltd (8251 JP).
The deal will help J Front continue to use Parco's expertise in management of its own buildings while J Front's access to funds will further Parco's revitalisation after two decades of under-investment under previous owners.

J Front Accelerates Diversification Plan with Parco Share Purchase

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<div>
Last Week in Event SPACE ...
</div>
<div>
<ul>
<li>It does not seem impossible for <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a> to raise its offer for <a href="https://www.smartkarma.com/entities/nuflare-technology-inc" target="_blank" data-smartkarma-citation="entities:9635:1" rel="noopener">Nuflare Technology (6256 JP)</a>, but the company is in the driver’s seat and is unlikely to take the altruistic route.</li>
<li>The Tender Offer for <a href="https://www.smartkarma.com/entities/line-corp" target="_blank" data-smartkarma-citation="entities:22772:1" rel="noopener">LINE Corp (3938 JP)</a> is a VERY good deal for <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a> and a decent deal for <a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank Corp (9434 JP)</a>, executed to the net detriment (in terms of significant earnings dilution and loss of control) of <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> minority shareholders.</li>
<li>We have a "friendly" deal from Lone Star for <a href="https://www.smartkarma.com/entities/unizo-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:5209:1" rel="noopener">Unizo Holdings (3258 JP)</a>, which gets shareholders out of their shares at a 150+% premium to the July undisturbed price. That is something of a success. But it has issues.</li>
<li>A long-awaited deal at a decent premium and all-time high - there is no risk the transaction for <a href="https://www.smartkarma.com/entities/parco-co-ltd" target="_blank" data-smartkarma-citation="entities:8431:1" rel="noopener">Parco Co Ltd (8251 JP)</a> doesn't go through.</li>
<li>It is difficult to tell whether <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a> played itself or whether it acted in a disciplined manner for <a href="https://www.smartkarma.com/entities/just-eat-plc" target="_blank" data-smartkarma-citation="entities:22014:1" rel="noopener">Just Eat PLC (JE/ LN)</a>. <a href="https://www.smartkarma.com/entities/takeaway-com-nv" target="_blank" data-smartkarma-citation="entities:28360:1" rel="noopener">Takeaway.com NV (TKWY NA)</a> probably wins this battle at any place better than 95% of the Prosus bid. </li>
<li>Five months after its IPO - one priced at the low-end of the range - <a href="https://www.smartkarma.com/entities/douyu-international-hold-adr" target="_blank" data-smartkarma-citation="entities:28045:1" rel="noopener">Douyu International Holdings (DOYU US)</a> oddly announces a buyback.</li>
<li>Plus, other events, CCASS movements and Mood Spins.</li>
</ul>
</div>
<div>
(This insight covers specific insights &amp; comments involving Stubs, Pairs, Arbitrage, share Classifications, and Events - or SPACE - in the past week)
</div>


Last Week in Event SPACE ...



It does not seem impossible for Toshiba Corp (6502 JP) to raise its offer for Nuflare Technology (6256 JP), but the company is in the driver’s seat and is unlikely to take the altruistic route.
The Tender Offer for LINE Corp (3938 JP) is a VERY good deal for Naver Corp (035420 KS) and a decent deal for Softbank Corp (9434 JP), executed to the net detriment (in terms of significant earnings dilution and loss of control) of Z Holdings (4689 JP) minority shareholders.
We have a "friendly" deal from Lone Star for Unizo Holdings (3258 JP), which gets shareholders out of their shares at a 150+% premium to the July undisturbed price. That is something of a success. But it has issues.
A long-awaited deal at a decent premium and all-time high - there is no risk the transaction for Parco Co Ltd (8251 JP) doesn't go through.
It is difficult to tell whether Prosus (PRX NA) played itself or whether it acted in a disciplined manner for Just Eat PLC (JE/ LN). Takeaway.com NV (TKWY NA) probably wins this battle at any place better than 95% of the Prosus bid. 
Five months after its IPO - one priced at the low-end of the range - Douyu International Holdings (DOYU US) oddly announces a buyback.
Plus, other events, CCASS movements and Mood Spins.



(This insight covers specific insights &amp; comments involving Stubs, Pairs, Arbitrage, share Classifications, and Events - or SPACE - in the past week)


Last Week in Event SPACE: Nuflare, LINE/Z Holdings, Unizo, Parco, Just Eat, DouYu

Japan

PARCO CO., LTD. operates shopping centers specializing in fashion shops in Kanto, Chubu, Kansai, Hokkaido, and Kyushu area.  The Company also operates playhouses and theaters.

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Parco Co Ltd (8251 JP)

Subscriptions Provide Growth Model for J Front's Daimaru-Matsuzakaya

Subscription retailing is on the up in Japan including at the luxury end, providing a way for J Front to not only add new revenue streams but also...

Michael Causton

Seven & I: Selling Sogo Seibu Is Just the Start

Seven & I could be one of Japan's most profitable retailers – in part because one if its parts already is. The problem is the rest of the group but...

Michael Causton

🇯🇵 JAPAN • Who’s Swimming Naked? > Part 2: Altman Z-Score

ALTMAN'S Z-SCORE - Dr Edward Altman's Z-Score has been in use for over 50 years as a statistical model to calculate the probability of bankruptcy...

Campbell Gunn

Last Week in Event SPACE: Nuflare, LINE/Z Holdings, Unizo, Parco, Just Eat, DouYu

Last Week in Event SPACE ... It does not seem impossible for Toshiba Corp (6502 JP) to raise its offer for Nuflare Technology (6256 JP), but...

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Subscriptions Provide Growth Model for J Front's Daimaru-Matsuzakaya

Subscription retailing is on the up in Japan including at the luxury end, providing a way for J Front to not only add new revenue streams but also...

Michael Causton

Seven & I: Selling Sogo Seibu Is Just the Start

Seven & I could be one of Japan's most profitable retailers – in part because one if its parts already is. The problem is the rest of the group but...

Michael Causton

🇯🇵 JAPAN • Who’s Swimming Naked? > Part 2: Altman Z-Score

ALTMAN'S Z-SCORE - Dr Edward Altman's Z-Score has been in use for over 50 years as a statistical model to calculate the probability of bankruptcy...

Campbell Gunn

J Front Accelerates Diversification Plan with Parco Share Purchase

J Front Retailing (3086 JP) has been busy with rebuilding and remodelling, culminating in November with the reopening of Parco Shibuya, as it...

Michael Causton

Last Week in Event SPACE: Nuflare, LINE/Z Holdings, Unizo, Parco, Just Eat, DouYu

Last Week in Event SPACE ... It does not seem impossible for Toshiba Corp (6502 JP) to raise its offer for Nuflare Technology (6256 JP), but...

David Blennerhassett