'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. 

Thematic (Sector/Industry)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/118/081/original/2020-02-15_06-17-37.png?1581880049" class="editor-image img-responsive" data-smartkarma-image-id="118081"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/118/082/original/2020-02-17_04-10-15.png?1581880238" class="editor-image img-responsive" data-smartkarma-image-id="118082"></figure><div class="content-caption">Source • Japan Analytics</div>14TH FEBRUARY ROUNDUP - With apologies to <a href="https://www.smartkarma.com/entities/trend-micro-inc" target="_blank" data-smartkarma-citation="entities:13172:1" rel="noopener">Trend Micro (4704 JP)</a> and <a href="https://www.smartkarma.com/entities/bridgestone-corp" target="_blank" data-smartkarma-citation="entities:8914:1" rel="noopener">Bridgestone (5108 JP)</a> who have yet to report, this will be our last daily roundup for this 'season'. After an additional 398 results and 253 forecasts/revision announcements, our Results Score dropped by a further eight basis points to -0.84, a decline of 190 basis points since the beginning of the year. The Forecast/Revision Score added three bps to reach 0.70, forty basis point higher than at the end of December. The last time that the Forecast/Revision Score was more than 150 bps higher than the Results Score was in the first calendar quarter of 2016 and preceded a sharp market upturn. The current market value is, however, ¥160 trillion higher than at that point, assisted by the constant market intervention by the Bank of Japan. Covid-19's impact will see the 2016 playbook repeated next quarter with a lower Results Score and a 'sideways' Forecast/Results Score. We are less optimistic that the market will repeat the 14% rise seen in 2016-Q2. The cycle low point will be reached with the mostly-interim results to be released in six months.

Source • Japan Analytics14TH FEBRUARY ROUNDUP - With apologies to Trend Micro (4704 JP) and Bridgestone (5108 JP) who have yet to report, this will be our last daily roundup for this 'season'. After an additional 398 results and 253 forecasts/revision announcements, our Results Score dropped by a further eight basis points to -0.84, a decline of 190 basis points since the beginning of the year. The Forecast/Revision Score added three bps to reach 0.70, forty basis point higher than at the end of December. The last time that the Forecast/Revision Score was more than 150 bps higher than the Results Score was in the first calendar quarter of 2016 and preceded a sharp market upturn. The current market value is, however, ¥160 trillion higher than at that point, assisted by the constant market intervention by the Bank of Japan. Covid-19's impact will see the 2016 playbook repeated next quarter with a lower Results Score and a 'sideways' Forecast/Results Score. We are less optimistic that the market will repeat the 14% rise seen in 2016-Q2. The cycle low point will be reached with the mostly-interim results to be released in six months. 

🇯🇵 JAPAN • Results & Revisions Daily Roundup - 14th February ▲2212 4927 8358 ▼ 6502 6098 9435

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

When Origami, the only independent mobile payments provider, last month agreed to be bought by Mercari and merge its systems with Mercari’s own Merpay service, it was a sign of the growing necessity for scale in what is the fastest consolidating sector in Japan today.
Origami had scored a couple of major successes since launching in 2016 but, after the recent consolidation among the biggest players, it realised it just didn't have the budget to scale fast enough on its own. Mercari is in a similar situation but, even with Origami, Merpay remains one of the smaller players in the market.
Origami, Merpay and LINE are all too small to be able to afford the kind of aggressive incentives that PayPay has been offering and is a key reason why LINE agreed to a takeover by Z Holdings and Origami's merger with Merpay. Even then, this is not enough to take on the digital zaibatsu, Softbank/Z and Rakuten.
Last week's announcement of a tie-up between Mercari and NTT Docomo and the latter's determination not to lose out to Rakuten and Softbank/Z – it even tied with Amazon to avoid this – and the impossibility of Merpay being able to scale alone, suggests a full takeover of Merpay by NTT Docomo is on the cards.
If so, NTT Docomo has a chance to be one of the big 3 in cashless payments in Japan, alongside PayPay and Rakuten Pay (in the long-term).
The trouble is no one is going to be making money out of payments for a long time – unless PayPay stops offering all those juicy incentives.

When Origami, the only independent mobile payments provider, last month agreed to be bought by Mercari and merge its systems with Mercari’s own Merpay service, it was a sign of the growing necessity for scale in what is the fastest consolidating sector in Japan today.
Origami had scored a couple of major successes since launching in 2016 but, after the recent consolidation among the biggest players, it realised it just didn't have the budget to scale fast enough on its own. Mercari is in a similar situation but, even with Origami, Merpay remains one of the smaller players in the market.
Origami, Merpay and LINE are all too small to be able to afford the kind of aggressive incentives that PayPay has been offering and is a key reason why LINE agreed to a takeover by Z Holdings and Origami's merger with Merpay. Even then, this is not enough to take on the digital zaibatsu, Softbank/Z and Rakuten.
Last week's announcement of a tie-up between Mercari and NTT Docomo and the latter's determination not to lose out to Rakuten and Softbank/Z – it even tied with Amazon to avoid this – and the impossibility of Merpay being able to scale alone, suggests a full takeover of Merpay by NTT Docomo is on the cards.
If so, NTT Docomo has a chance to be one of the big 3 in cashless payments in Japan, alongside PayPay and Rakuten Pay (in the long-term).
The trouble is no one is going to be making money out of payments for a long time – unless PayPay stops offering all those juicy incentives.

Japan Payment Wars: NTT Docomo and Merpay/Origami to Attempt Catch up with PayPay and Rakuten

Equity Analyst, LightStream Research

Supun Walpola

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.

A slowdown in the HR Technology business, which operates two popular employment websites, indeed.com (Indeed) and glassdoor.com (Glassdoor), is one of many risks for <a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a> (Recruit) that we have highlighted in our previous notes. Our traffic analysis of Indeed and Glassdoor for 3Q FY03/20 show that HR Technology business revenue growth is likely to fall below 30% YoY for the first time.Both Indeed and Glassdoor are a big part of Recruit’s bull thesis and we believe they account for c.44% of the company’s total EV. The implied EV/Revenue multiple for the HR Technology business is currently 7x and is broadly on par with both Indeed’s and Glassdoor’s acquisition multiples. However, we doubt whether the market should continue to value the HR Technology at the same multiple now that growth has more than halved compared to the historical 5-year CAGR of c.69%.

A slowdown in the HR Technology business, which operates two popular employment websites, indeed.com (Indeed) and glassdoor.com (Glassdoor), is one of many risks for Recruit Holdings (6098 JP) (Recruit) that we have highlighted in our previous notes. Our traffic analysis of Indeed and Glassdoor for 3Q FY03/20 show that HR Technology business revenue growth is likely to fall below 30% YoY for the first time.Both Indeed and Glassdoor are a big part of Recruit’s bull thesis and we believe they account for c.44% of the company’s total EV. The implied EV/Revenue multiple for the HR Technology business is currently 7x and is broadly on par with both Indeed’s and Glassdoor’s acquisition multiples. However, we doubt whether the market should continue to value the HR Technology at the same multiple now that growth has more than halved compared to the historical 5-year CAGR of c.69%.

Recruit Holdings [Alternative Data]: Should the Slowdown in Indeed Warrant a Discount?

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/yeahka-limited" target="_blank" data-smartkarma-citation="entities:28436:1" rel="noopener">Yeahka Limited (1781144D CH)</a> is leading payment-based technology platform in China. Yeahka was seeking to launch an HK IPO to raise around $250 million, but the plan has been put on hold due to the coronavirus outbreak, according to press reports. <div class="content-highlight">In <a href="https://www.smartkarma.com/insights/yeahka-ipo-initiation-cashing-in" target="_blank" rel="noopener">our initiation note</a>, we stated that peeling back the benefit of market growth, Yeahka’s fundamentals offer more positives than negatives. Our benchmarking study supports this view. </div>

Yeahka Limited (1781144D CH) is leading payment-based technology platform in China. Yeahka was seeking to launch an HK IPO to raise around $250 million, but the plan has been put on hold due to the coronavirus outbreak, according to press reports. In our initiation note, we stated that peeling back the benefit of market growth, Yeahka’s fundamentals offer more positives than negatives. Our benchmarking study supports this view. 

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Major Japanese broadcaster <a href="https://www.smartkarma.com/entities/tokyo-broadcasting-system" target="_blank" data-smartkarma-citation="entities:12981:1" rel="noopener">Tokyo Broadcasting System (9401 JP)</a> has a long history of being a target for wannabe activists. The company has long held a large securities portfolio, anchored by shares in <a href="https://www.smartkarma.com/entities/tokyo-electron-ltd" target="_blank" data-smartkarma-citation="entities:280:1" rel="noopener">Tokyo Electron (8035 JP)</a> (Tokyo Electron was originally a spinoff of TBS) and <a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a>. The company has long had cash and other securities, and a decent chunk of real estate in a prime area of Akasaka (for a while I even used to work next to their HQ, and walked through the grounds on the way to the subway every day). But the company has long rebuffed corporate overtures to bring it into new businesses, and investor overtures to get to With a new buyback program announced last week after a sale of some securities, the company has finally thrown shareholders - and the two known activists - a bone.It is a tiny bone, with most of the meat already picked off.These two activists together may hold &lt;3% of shares out. They have too little heft to compete against management backed by corporate and financial crossholders who appear to hold more like 55+%. While there is tremendous value in the shares, it is not clear that TBS has any interest in selling its assets other than little by little, providing a little cash to shareholders here and there, and investing the rest.More below.

Major Japanese broadcaster Tokyo Broadcasting System (9401 JP) has a long history of being a target for wannabe activists. The company has long held a large securities portfolio, anchored by shares in Tokyo Electron (8035 JP) (Tokyo Electron was originally a spinoff of TBS) and Recruit Holdings (6098 JP). The company has long had cash and other securities, and a decent chunk of real estate in a prime area of Akasaka (for a while I even used to work next to their HQ, and walked through the grounds on the way to the subway every day). But the company has long rebuffed corporate overtures to bring it into new businesses, and investor overtures to get to With a new buyback program announced last week after a sale of some securities, the company has finally thrown shareholders - and the two known activists - a bone.It is a tiny bone, with most of the meat already picked off.These two activists together may hold &lt;3% of shares out. They have too little heft to compete against management backed by corporate and financial crossholders who appear to hold more like 55+%. While there is tremendous value in the shares, it is not clear that TBS has any interest in selling its assets other than little by little, providing a little cash to shareholders here and there, and investing the rest.More below.

The Activism at TBS - There's a History, And There Is NEW Activity, But Don't Hold Your Breath

Japan

Recruit Holdings Co. Ltd. operates information providing services in human resource, housing, bridal, travel, restaurants, beauty, automobiles, and education and more. The company also operate staffing services and advertising business.

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Recruit Holdings (6098 JP)

🇯🇵 JAPAN • Results & Revisions Daily Roundup - 14th February ▲2212 4927 8358 ▼ 6502 6098 9435

14TH FEBRUARY ROUNDUP - With apologies to Trend Micro (4704 JP) and Bridgestone (5108 JP) who have yet to report, this will be our last daily...

Campbell Gunn

Japan Payment Wars: NTT Docomo and Merpay/Origami to Attempt Catch up with PayPay and Rakuten

When Origami, the only independent mobile payments provider, last month agreed to be bought by Mercari and merge its systems with Mercari’s own...

Michael Causton

Recruit Holdings [Alternative Data]: Should the Slowdown in Indeed Warrant a Discount?

A slowdown in the HR Technology business, which operates two popular employment websites, indeed.com (Indeed) and glassdoor.com (Glassdoor), is one...

Supun Walpola

Yeahka IPO: Peer Benchmark Analysis

Yeahka Limited (1781144D CH) is leading payment-based technology platform in China. Yeahka was seeking to launch an HK IPO to raise around $250...

Arun George

The Activism at TBS - There's a History, And There Is NEW Activity, But Don't Hold Your Breath

Major Japanese broadcaster Tokyo Broadcasting System (9401 JP) has a long history of being a target for wannabe activists. The company has long...

Travis Lundy

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