Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Capital Markets

SHEIN Global Holdings / Equity Capital Markets

<ul>
<li>Postal parcel volume bound for the US fell -81% after exemption ended Aug 29</li>
<li>In many cases, logistics providers unwilling to manage US Customs process</li>
<li>We believe the change undermines US model used by SHEIN, Temu, AliExpress</li>
</ul>


Postal parcel volume bound for the US fell -81% after exemption ended Aug 29
In many cases, logistics providers unwilling to manage US Customs process
We believe the change undermines US model used by SHEIN, Temu, AliExpress


SHEIN / Temu / AliExpress: After US Ended "De Minimis" Exemption, Shipments to US Declined 81%

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. 

Thematic (Sector/Industry)

<p>There were some fears that e-commerce growth would stall following massive consumer adoption after March 2020 but for <a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Inc (4755 JP)</a> at least, repeat customers have helped sustain momentum. <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> had a trickier start to the year, however. </p><p>Last year, excluding the big convenience stores, <a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon.com Inc (AMZN US)</a> overtook Fast Retailing to become Japan’s third largest retailer and one of just four with sales over ¥2 trillion and  accounted for <strong>3.2% of all retail sales in Nikkei’s survey of 488 companies</strong>.</p><p>Despite early, pessimistic forecasts for e-commerce in 2020, METI’s latest annual survey released in July shows that BtoC e-commerce surged 21.7% to ¥12.23 trillion.</p>

There were some fears that e-commerce growth would stall following massive consumer adoption after March 2020 but for Rakuten Inc (4755 JP) at least, repeat customers have helped sustain momentum. Z Holdings (4689 JP) had a trickier start to the year, however. Last year, excluding the big convenience stores, Amazon.com Inc (AMZN US) overtook Fast Retailing to become Japan’s third largest retailer and one of just four with sales over ¥2 trillion and  accounted for 3.2% of all retail sales in Nikkei’s survey of 488 companies.Despite early, pessimistic forecasts for e-commerce in 2020, METI’s latest annual survey released in July shows that BtoC e-commerce surged 21.7% to ¥12.23 trillion.

<p>The growth in subscription services is a global phenomenon that has been growing just as fast in Japan as anywhere else. While most attention is given to music and media subscriptions, many brands and retailers of consumer goods are finding that the subscription model can be a key part of their online strategy, delivering multiple benefits across sales growth, customer data, marketing, inventory management and margin improvement.</p>

The growth in subscription services is a global phenomenon that has been growing just as fast in Japan as anywhere else. While most attention is given to music and media subscriptions, many brands and retailers of consumer goods are finding that the subscription model can be a key part of their online strategy, delivering multiple benefits across sales growth, customer data, marketing, inventory management and margin improvement.

The Subscription Economy: Keeping Customers Keen While Earning Recurring Revenues

<p>With people staying at home, deliveries for e-commerce orders have a better chance of succeeding, helping failed delivery rates fall from 25% to just 11% in only five years. No wonder e-commerce and transport companies are posting higher profits.</p>

With people staying at home, deliveries for e-commerce orders have a better chance of succeeding, helping failed delivery rates fall from 25% to just 11% in only five years. No wonder e-commerce and transport companies are posting higher profits.

E-Commerce Efficiency Marches on in Japan

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

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.

<p style="text-align: center;"><strong>• MARKET UPDATE •</strong></p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/185/821/original/2021-01-28_05-31-21.png?1612123987" class="editor-image img-responsive" data-smartkarma-image-id="185821"></figure></section><p><strong>PEAKY</strong> - Thursday's Vale Traded ratio was the highest year-to-date and the third-highest since the COVID-low of 13th March 2020. Down Volume reached 'Panic' levels and was the third-highest in six years. On the previous two 'Panic' days in 2020, this proved to be a buying opportunity. We are less sure this will be this case in 2021.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/185/822/original/2021-02-01_05-17-55.png?1612124290" class="editor-image img-responsive" data-smartkarma-image-id="185822"></figure></section><p><strong>BOJ 'TAPERS'</strong> - The Bank of Japan, naturally intervened by purchasing ETFs but did not, however, raise its recently-reduced buying amount. The central bank also failed to intervene again on Friday, despite the sharp fall in the major indices. As a percentage of Value Traded, Thursday's intervention was the smallest in six years. With long-bond yields rising to a two-year high of 0.5%, perhaps their attention has been diverted elsewhere?</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/185/824/original/2021-01-30_14-31-02.png?1612124614" class="editor-image img-responsive" data-smartkarma-image-id="185824"></figure></section><p><strong>50-DAY MOVING AVERAGE CROSSOVER?</strong> - As a result of Friday's decline, Total Market Value is poised to crossover the 59-Day Moving Average for the first time since 12th October - a further test of this bull market's resolve. As noted last week, 50/200-day moving average 'gaps' of over 60 are rare and normally occur at significant market tops.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/185/827/original/2021-01-30_14-45-46.png?1612124854" class="editor-image img-responsive" data-smartkarma-image-id="185827"></figure></section><p><strong>RESULTS SEASON BEGINS</strong> - Since 15th January, 644 companies have reposted quarterly results. Although, as will be covered in the DETAIL section below, earnings momentum is improving. The aggregate net income forecast is above trailing net income, trailing aggregate operating, and net profit are both still declining.  Trailing and forward earnings multiples are still over 30 times, despite the 3.5% decline from the TOPIX peak on 14th January.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/185/831/original/2021-01-31_17-16-42.png?1612125298" class="editor-image img-responsive" data-smartkarma-image-id="185831"></figure><hr></section><p style="text-align: center;"><strong>• RESULTS SUMMARY - 29th JANUARY •</strong></p><p style="text-align: left;">Of Fridays' 399 results announcements, 71% scored positively for earnings momentum despite trailing revenues falling by 5.3% on average and a 1.7 point decline in operating margins - we are now well past the cycle low point for earnings. Only 11% of companies were in the red for the quarter.  The percentages for forecasts are less optimistic. Only 59% of forecasts and revisions scored positively, although the average score was +2.4 points.  Many large consumer-orientated businesses have yet to see a resumption of pre-COVID levels of activity.</p><p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p><p style="text-align: left;">Our<strong> Best</strong> and <strong>Worst</strong> selection from Friday's announcements is the Diversified Freight Services Peer Group (which includes <a href="https://www.smartkarma.com/entities/yamato-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:2:1" rel="noopener">Yamato Holdings (9064 JP)</a>, <a href="https://www.smartkarma.com/entities/nippon-express-co-ltd" target="_blank" data-smartkarma-citation="entities:18582:1" rel="noopener">Nippon Express (9062 JP)</a>, and <a href="https://www.smartkarma.com/entities/sg-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:26070:1" rel="noopener">SG (9143 JP)</a>) and <a href="https://www.smartkarma.com/entities/daiichi-sankyo-co-ltd" target="_blank" data-smartkarma-citation="entities:3014:1" rel="noopener">Daiichi Sankyo (4568 JP)</a>. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/185/843/original/2021-02-01_06-46-24.png?1612129615" class="editor-image img-responsive" data-smartkarma-image-id="185843"></figure></section><section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/185/846/original/2021-02-01_06-49-21.png?1612129775" class="editor-image img-responsive" data-smartkarma-image-id="185846"></figure></section><p></p></section>

• MARKET UPDATE •PEAKY - Thursday's Vale Traded ratio was the highest year-to-date and the third-highest since the COVID-low of 13th March 2020. Down Volume reached 'Panic' levels and was the third-highest in six years. On the previous two 'Panic' days in 2020, this proved to be a buying opportunity. We are less sure this will be this case in 2021.BOJ 'TAPERS' - The Bank of Japan, naturally intervened by purchasing ETFs but did not, however, raise its recently-reduced buying amount. The central bank also failed to intervene again on Friday, despite the sharp fall in the major indices. As a percentage of Value Traded, Thursday's intervention was the smallest in six years. With long-bond yields rising to a two-year high of 0.5%, perhaps their attention has been diverted elsewhere?50-DAY MOVING AVERAGE CROSSOVER? - As a result of Friday's decline, Total Market Value is poised to crossover the 59-Day Moving Average for the first time since 12th October - a further test of this bull market's resolve. As noted last week, 50/200-day moving average 'gaps' of over 60 are rare and normally occur at significant market tops.RESULTS SEASON BEGINS - Since 15th January, 644 companies have reposted quarterly results. Although, as will be covered in the DETAIL section below, earnings momentum is improving. The aggregate net income forecast is above trailing net income, trailing aggregate operating, and net profit are both still declining.  Trailing and forward earnings multiples are still over 30 times, despite the 3.5% decline from the TOPIX peak on 14th January.• RESULTS SUMMARY - 29th JANUARY •Of Fridays' 399 results announcements, 71% scored positively for earnings momentum despite trailing revenues falling by 5.3% on average and a 1.7 point decline in operating margins - we are now well past the cycle low point for earnings. Only 11% of companies were in the red for the quarter.  The percentages for forecasts are less optimistic. Only 59% of forecasts and revisions scored positively, although the average score was +2.4 points.  Many large consumer-orientated businesses have yet to see a resumption of pre-COVID levels of activity.• BEST &amp; WORST •Our Best and Worst selection from Friday's announcements is the Diversified Freight Services Peer Group (which includes Yamato Holdings (9064 JP), Nippon Express (9062 JP), and SG (9143 JP)) and Daiichi Sankyo (4568 JP). 

🇯🇵 JAPAN • Market + Results & Revisions Update 01/29

Japan

Yamato Holdings Co., Ltd. mainly provides door-to-door parcel delivery services. The Company has developed a nationwide delivery system specializing in time-specified delivery. Yamato Holdings offers moving services and other comprehensive transportation services including logistics services for both domestic and overseas customers as well as financial and autoworks services.

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Yamato Holdings (9064 JP)

SHEIN / Temu / AliExpress: After US Ended "De Minimis" Exemption, Shipments to US Declined 81%

Now that fast-fashion giant SHEIN has finally filed offering documents in Hong Kong (July 27), we believe it's a good time to revisit the company's...

Tracking Traffic

Japanese E-Commerce Growth Continues

Japan is well-known for lagging some markets in e-commerce penetration but sales surged last year to more than 20%. Only Rakuten and Amazon seem to...

Michael Causton

The Subscription Economy: Keeping Customers Keen While Earning Recurring Revenues

Subscriptions to physical goods are rapidly becoming a popular model. In Japan, many major retailers and brands are creating subscriptions, gaining...

Michael Causton

E-Commerce Efficiency Marches on in Japan

Japanese e-commerce fulfilment efficiency is improving month to month, with delivery failure rates plummeting in the last year. The government and...

Michael Causton

🇯🇵 JAPAN • Market + Results & Revisions Update 01/29

Thursday's Vale Traded ratio was the highest year-to-date and the third-highest since the COVID-low of 13th March 2020. Down Volume reached 'Panic'...

Campbell Gunn

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