Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

This insight is meant to be read in conjunction with <a href="https://www.smartkarma.com/profiles/janaghan-jeyakumar-cfa" target="_blank" data-smartkarma-citation="accounts:3173" rel="noopener">Janaghan Jeyakumar, CFA</a>'s <a href="https://www.smartkarma.com/insights/topix-upweights-big-april-basket-2021-pre-event-is-a-win-now-the-event-leg" target="_blank" data-smartkarma-citation="insights:50084" rel="noopener">TOPIX Upweights: Big April Basket 2021 Pre-Event Is a WIN! Now the Event-Leg!</a> (which is the announced result of the proposed 50-name buy basket introduced in the explanation of an annual but obscure aspect of TOPIX Index calculation rebalancing explained in <a href="https://www.smartkarma.com/insights/topix-index-upweights-the-big-april-basket-2021" target="_blank" data-smartkarma-citation="insights:49660" rel="noopener">TOPIX Index Upweights: The Big April Basket 2021</a>).Suffice it to say, he got 48 out of the 50 names chosen right, and there are a few more trades related to this on the side. That is US$1.1bn to buy. This insight is about all the OTHER names in the TOPIX rebalance for April 2020, including a total of 43 up-weights and 16 down-weights with ~ US$500mm to buy and US$260mm to sell.That means there will be a US$1bn sell on the close of the 28th too. Not huge, but there. The trades to do here are for investors to see if any of these situations warrant use as a liquidity event.

This insight is meant to be read in conjunction with Janaghan Jeyakumar, CFA's TOPIX Upweights: Big April Basket 2021 Pre-Event Is a WIN! Now the Event-Leg! (which is the announced result of the proposed 50-name buy basket introduced in the explanation of an annual but obscure aspect of TOPIX Index calculation rebalancing explained in TOPIX Index Upweights: The Big April Basket 2021).Suffice it to say, he got 48 out of the 50 names chosen right, and there are a few more trades related to this on the side. That is US$1.1bn to buy. This insight is about all the OTHER names in the TOPIX rebalance for April 2020, including a total of 43 up-weights and 16 down-weights with ~ US$500mm to buy and US$260mm to sell.That means there will be a US$1bn sell on the close of the 28th too. Not huge, but there. The trades to do here are for investors to see if any of these situations warrant use as a liquidity event. 

TOPIX April-End Rebalance - The OTHER Trades

'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

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/080/728/original/2019-03-02_20-40-55.png?1551526871" class="editor-image img-responsive" data-smartkarma-image-id="80728"></figure>Source: Japan Analytics
</div>LIQUIDITY RULES - Despite the continuous stream of negative macroeconomic news from Japan and other economies, financial liquidity trends are the strongest in over two years, and much of this 'boom' is flowing into risk assets. Large-scale repatriation of offshore funds by US companies has also helped boost the US dollar against the yen. The Market Composite responded by rising 2.3% over the last two weeks, although only by 1% in US dollar terms.WEAK MACRO - Net exports and higher inventories offset private investment and consumption during the fourth quarter, resulting in flat GDP growth year-on-year. January industrial production fell to the lowest level in 30 months, and, with the manufacturing PMI nearing 50, the prospect is for further weakness this quarter. Inventories continue to rise and, in North Asia, to levels last seen in 2005. Combined with the sharp fall in exports in Japan, Korea and Taiwan, export pricing in back in deflationary territory, putting further upward pressure on real interest rates.  Meanwhile, January retail sales saw the largest month-on-month decline in over three years as department stores saw fewer Chinese tourists over the New Year.  Equity markets are living on 'borrowed time'.  <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/080/722/original/2019-03-02_18-02-59.png?1551517390" class="editor-image img-responsive" data-smartkarma-image-id="80722"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/080/724/original/2019-03-02_18-07-56.png?1551517689" class="editor-image img-responsive" data-smartkarma-image-id="80724"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/080/729/original/2019-03-02_20-41-51.png?1551526925" class="editor-image img-responsive" data-smartkarma-image-id="80729"></figure><div class="content-caption">Source: Japan Analytics</div>HOLD FOR NOW - This bear market rally is two months old and is maturing. The Value Traded ratio is below trend again, the RSI is neutral, and the Toraku is signalling caution. We expect another month of liquidity/weak Yen-driven strength before the economic realities begin to prevail.MARKET/SECTOR STRATEGY- We continue to recommend an underweight position in Japan in global portfolios and favour undervalued domestically-orientated companies in the Information Technology, Internet, Media, Transportation, Healthcare and Telecommunications sectors. We would avoid or short the financial sectors Banks, Non-Bank Finance and Multi-Industry. We would underweight the Auto, Retail and Other Consumer Products sectors as consumer spending contracts further in the US, Europe, China and Japan. In the DETAIL section below, we will review Sector performance, company results, revisions and stock performance over the previous two weeks, as well as adding some brief comments on <a href="https://www.smartkarma.com/entities/10020" target="_blank" data-smartkarma-citation="entities:10020:1">Sakai Moving Service (9039 JP)</a>, <a href="https://www.smartkarma.com/entities/20269" target="_blank" data-smartkarma-citation="entities:20269:1">Sumitomo Chemical (4005 JP)</a>, <a href="https://www.smartkarma.com/entities/8431" target="_blank" data-smartkarma-citation="entities:8431:1">Parco (8251 JP)</a>, <a href="https://www.smartkarma.com/entities/4489" target="_blank" data-smartkarma-citation="entities:4489:1">Chugai Pharmaceutical (4519 JP)</a>, <a href="https://www.smartkarma.com/entities/14674" target="_blank" data-smartkarma-citation="entities:14674:1">Nichias (5393 JP)</a>, <a href="https://www.smartkarma.com/entities/27043" target="_blank" data-smartkarma-citation="entities:27043:1">Raksul (4384 JP)</a>, <a href="https://www.smartkarma.com/entities/10503" target="_blank" data-smartkarma-citation="entities:10503:1">Daito Trust (1878 JP)</a>, and <a href="https://www.smartkarma.com/entities/14502" target="_blank" data-smartkarma-citation="entities:14502:1">Benefit One (2412 JP)</a>.


Source: Japan Analytics
LIQUIDITY RULES - Despite the continuous stream of negative macroeconomic news from Japan and other economies, financial liquidity trends are the strongest in over two years, and much of this 'boom' is flowing into risk assets. Large-scale repatriation of offshore funds by US companies has also helped boost the US dollar against the yen. The Market Composite responded by rising 2.3% over the last two weeks, although only by 1% in US dollar terms.WEAK MACRO - Net exports and higher inventories offset private investment and consumption during the fourth quarter, resulting in flat GDP growth year-on-year. January industrial production fell to the lowest level in 30 months, and, with the manufacturing PMI nearing 50, the prospect is for further weakness this quarter. Inventories continue to rise and, in North Asia, to levels last seen in 2005. Combined with the sharp fall in exports in Japan, Korea and Taiwan, export pricing in back in deflationary territory, putting further upward pressure on real interest rates.  Meanwhile, January retail sales saw the largest month-on-month decline in over three years as department stores saw fewer Chinese tourists over the New Year.  Equity markets are living on 'borrowed time'.  Source: Japan AnalyticsHOLD FOR NOW - This bear market rally is two months old and is maturing. The Value Traded ratio is below trend again, the RSI is neutral, and the Toraku is signalling caution. We expect another month of liquidity/weak Yen-driven strength before the economic realities begin to prevail.MARKET/SECTOR STRATEGY- We continue to recommend an underweight position in Japan in global portfolios and favour undervalued domestically-orientated companies in the Information Technology, Internet, Media, Transportation, Healthcare and Telecommunications sectors. We would avoid or short the financial sectors Banks, Non-Bank Finance and Multi-Industry. We would underweight the Auto, Retail and Other Consumer Products sectors as consumer spending contracts further in the US, Europe, China and Japan. In the DETAIL section below, we will review Sector performance, company results, revisions and stock performance over the previous two weeks, as well as adding some brief comments on Sakai Moving Service (9039 JP), Sumitomo Chemical (4005 JP), Parco (8251 JP), Chugai Pharmaceutical (4519 JP), Nichias (5393 JP), Raksul (4384 JP), Daito Trust (1878 JP), and Benefit One (2412 JP).   

🇯🇵 Japan • Fortnightly Update - Liquidity Rules

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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 Capital Markets

Raksul (ラクスル) can be read in Japanese as "to make easy", and within the printing and delivery markets, that is precisely what the company aims to do. Raksul's main business is an EC site that connects small lot printing customers with SME print shops. In addition, as the company's customers include a large number of SMEs, additional marketing services such as advertising through the distribution of flyers are offered. Finally, the company also offers an EC service for package delivery, once again targeting SMEs owning less than twenty trucks, as suppliers.<div class="content-caption">Basic Information</div><table class="table table-striped"><tbody><tr><td>Company Name</td><td>Raksul Inc.</td></tr><tr><td>Company Ticker</td><td>4382</td></tr><tr><td>Stock Exchange</td><td>TSE Mothers Section</td></tr><tr><td>Business Description</td><td>Discount net printing and delivery</td></tr><tr><td>Unit Size</td><td>100</td></tr><tr><td>New Shares Offered</td><td>2,500,000</td></tr><tr><td>Existing Shares Offered</td><td>8,449,900</td></tr><tr><td>Overallotment (Existing Shares)</td><td>1,642,100</td></tr><tr><td>Total Shares Offered</td><td>12,592,000</td></tr><tr><td>Tentative Price</td><td>1,300-1,500</td></tr><tr><td>Estimated Capital to be Raised (JPY)</td><td>3,500,000,000</td></tr><tr><td>Pricing Date</td><td>23rd May</td></tr><tr><td>Bookbuilding</td><td>16th May -  22nd May</td></tr><tr><td>Application Dates</td><td>24th May - 29th May</td></tr><tr><td>Listing Date</td><td>31st May</td></tr><tr><td>Shares Outstanding at Listing</td><td>29,349,800</td></tr><tr><td>Estimated Market Capitalisation (JPY)</td><td>41,089,000,000</td></tr></tbody></table><div style="text-align: left;" class="content-caption">Source: Company Disclosures, LightStream Research</div><div class="content-caption">Underwriters</div><table class="table table-striped"><tbody><tr><td>　</td><td>Broker</td></tr><tr><td rowspan="3">Lead Underwriters</td><td>Daiwa Securities</td></tr><tr><td>MUFG Morgan Stanley  Securities</td></tr><tr><td>Mizuho Securities</td></tr><tr><td rowspan="4">Underwriters</td><td>SBI Securities</td></tr><tr><td>SMBC Nikko Securities</td></tr><tr><td>Monex Securities</td></tr><tr><td>Kabu.com Securities</td></tr></tbody></table><div style="text-align: left;" class="content-caption">Source: Company Disclosures, LightStream Research</div>

Raksul (ラクスル) can be read in Japanese as "to make easy", and within the printing and delivery markets, that is precisely what the company aims to do. Raksul's main business is an EC site that connects small lot printing customers with SME print shops. In addition, as the company's customers include a large number of SMEs, additional marketing services such as advertising through the distribution of flyers are offered. Finally, the company also offers an EC service for package delivery, once again targeting SMEs owning less than twenty trucks, as suppliers.Basic InformationCompany NameRaksul Inc.Company Ticker4382Stock ExchangeTSE Mothers SectionBusiness DescriptionDiscount net printing and deliveryUnit Size100New Shares Offered2,500,000Existing Shares Offered8,449,900Overallotment (Existing Shares)1,642,100Total Shares Offered12,592,000Tentative Price1,300-1,500Estimated Capital to be Raised (JPY)3,500,000,000Pricing Date23rd MayBookbuilding16th May -  22nd MayApplication Dates24th May - 29th MayListing Date31st MayShares Outstanding at Listing29,349,800Estimated Market Capitalisation (JPY)41,089,000,000Source: Company Disclosures, LightStream ResearchUnderwriters　BrokerLead UnderwritersDaiwa SecuritiesMUFG Morgan Stanley  SecuritiesMizuho SecuritiesUnderwritersSBI SecuritiesSMBC Nikko SecuritiesMonex SecuritiesKabu.com SecuritiesSource: Company Disclosures, LightStream Research

Raksul IPO: Under the Radar, Shouldn't Be, but Too Expensive to Get Excited Immediately

Japan

Raksul, Inc. provides Internet based services. The Company mainly offers net printing, net transportation, and other services. Raksul provides services in Japan.

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Raksul Inc (4384 JP)

TOPIX April-End Rebalance - The OTHER Trades

The April TOPIX Rebalance is about $1.5bn one way, with two thirds of that on Liquidity Factor changes, one-third on normal FFW changes. Toshiba,...

Travis Lundy

🇯🇵 Japan • Fortnightly Update - Liquidity Rules

LIQUIDITY RULES - Despite the continuous stream of negative macroeconomic news from Japan and other economies, financial liquidity trends are the...

Campbell Gunn

Raksul IPO: Under the Radar, Shouldn't Be, but Too Expensive to Get Excited Immediately

Raksul (ラクスル) can be read in Japanese as "to make easy", and within the printing and delivery markets, that is precisely what the company aims to...

Mio Kato

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