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>Driven by a sharp rise in revenue and profitability over the last three quarters, <a href="https://www.smartkarma.com/entities/yonex-co-ltd" target="_blank" data-smartkarma-citation="entities:9037:1" rel="noopener">Yonex Co Ltd (7906 JP)</a> shares continue to go up in relatively choppy overall market conditions.</li>
<li>We expect this strong growth momentum to continue over the medium term while Yonex builds popularity in new markets and new sports categories.</li>
<li>We think there could be around 100% upside to Yonex alongside improving confidence about sustainability of Yonex’s current performance.</li>
</ul>


Driven by a sharp rise in revenue and profitability over the last three quarters, Yonex Co Ltd (7906 JP) shares continue to go up in relatively choppy overall market conditions.
We expect this strong growth momentum to continue over the medium term while Yonex builds popularity in new markets and new sports categories.
We think there could be around 100% upside to Yonex alongside improving confidence about sustainability of Yonex’s current performance.


Yonex: Rising Through the Ranks in New Markets

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Most of the way through the HK trading day on the 11th (but after the European open) a headline flashed across traders' screens which said "China's Anta said to Mull Bid for $4B Finnish Rival Amer Sports". Finland-listed sports brand amalgamator (Wilson, Salomon, Atomic (skis), Mavic (bicycle rims), Precor (gym equipment), Arc'teryx (outdoor wear/accessories), Suunto (fitness sensors/watches), Louisville Slugger (baseball bats) and other) Amer Sports management <a href="https://www.amersports.com/2018/09/amer-sports-confirms-receipt-of-an-indication-of-interest-from-a-consortium-including-anta-sports-products/" target="_blank">confirmed</a> that it had received a non-binding preliminary indication of interest from a consortium including <a href="https://www.smartkarma.com/entities/10261" target="_blank" data-smartkarma-citation="entities:10261:1">ANTA Sports Products (2020 HK)</a> and Asian private equity firm FountainVest Partners and also <a href="https://www.amersports.com/2018/09/amer-sports-confirms-price-indication-included-in-the-indication-of-interest/" target="_blank">confirmed</a> a price indication of a bid at €40/share to take Amer private.  The bid would be "subject to a number of conditions, including conducting a due diligence investigation, approval of the Board of Directors of ANTA and the Investment Committee of FountainVest, availability of financing from identified financing sources and receipt of a recommendation from the Board of Directors of Amer Sports. Completion of any such cash tender offer would in turn be subject to further conditions, including approval by shareholders holding at least 90% of the shares of Amer Sports and receipt of all necessary regulatory approvals."<a href="https://www.smartkarma.com/entities/10261" target="_blank" data-smartkarma-citation="entities:10261:1">ANTA Sports Products (2020 HK)</a><a href="http://www.hkexnews.hk/listedco/listconews/SEHK/2018/0912/LTN20180912023.pdf" target="_blank">confirmed</a> the morning of the 12th to the HKEx that it had submitted the proposal in question with FountainVest but that there was as yet no deal.<a href="https://www.smartkarma.com/entities/21751" target="_blank" data-smartkarma-citation="entities:21751:1">Amer Sports Oyj (AMEAS FH)</a> shares had been trading around €32/share, were suspended quickly and then reopened 14% higher at ~€36.50 popped briefly then settled down into a long session of profit-taking which saw trading close at €34.20. Some 2.5% of float traded, which was 6-8x normal. Amer had said on the 11th that it had not engaged in negotiations.<h2>Where We Stand</h2><ul>
<li>ANTA shares were down 8 days in a row through the day after the announcement, falling a little in the afternoon after the news came out in Europe, then fell 9+% the following day. Despite rebounding 7+% the last two days, ANTA Sports shares are still down 17.5% in the first two weeks of the month. The shares are now at 20x 2019e PER.</li>
<li>Amer announced on September 5th a <a href="https://www.amersports.com/2018/09/amer-sports-updates-its-strategy/" target="_blank">Strategy Update</a>. Amer Sports President and CEO Heikki Takala said “We prioritize acceleration in soft goods, B2C, China, United States, and digitalization,” and the review was said to include an "integration" of PeakPerformance brand and a strategic review of the Mavic brand. In the presentation he also mentioned the Enve (bicycles) brand, noting that the entire bicycle business was not producing the growth they wanted, and offering the idea that the assets might be better held by someone else.</li>
<li>At a 26x PER multiple and probably ~15x EV/EBITDA, Amer is "expensive" but not outrageously so. At a prospective EV/revenue multiple of 1.5x, it is in the range of stocks like <a href="https://www.smartkarma.com/entities/10699" target="_blank" data-smartkarma-citation="entities:10699:1">Fila Korea Ltd (081660 KS)</a> and <a href="https://www.smartkarma.com/entities/23708" target="_blank" data-smartkarma-citation="entities:23708:1">Acushnet Holdings (GOLF US)</a> while lower than <a href="https://www.smartkarma.com/entities/3777" target="_blank" data-smartkarma-citation="entities:3777:1">Shimano Inc (7309 JP)</a> and <a href="https://www.smartkarma.com/entities/22505" target="_blank" data-smartkarma-citation="entities:22505:1">Thule Group Ab (THULE SS)</a>. </li>
</ul>

Most of the way through the HK trading day on the 11th (but after the European open) a headline flashed across traders' screens which said "China's Anta said to Mull Bid for $4B Finnish Rival Amer Sports". Finland-listed sports brand amalgamator (Wilson, Salomon, Atomic (skis), Mavic (bicycle rims), Precor (gym equipment), Arc'teryx (outdoor wear/accessories), Suunto (fitness sensors/watches), Louisville Slugger (baseball bats) and other) Amer Sports management confirmed that it had received a non-binding preliminary indication of interest from a consortium including ANTA Sports Products (2020 HK) and Asian private equity firm FountainVest Partners and also confirmed a price indication of a bid at €40/share to take Amer private.  The bid would be "subject to a number of conditions, including conducting a due diligence investigation, approval of the Board of Directors of ANTA and the Investment Committee of FountainVest, availability of financing from identified financing sources and receipt of a recommendation from the Board of Directors of Amer Sports. Completion of any such cash tender offer would in turn be subject to further conditions, including approval by shareholders holding at least 90% of the shares of Amer Sports and receipt of all necessary regulatory approvals."ANTA Sports Products (2020 HK)confirmed the morning of the 12th to the HKEx that it had submitted the proposal in question with FountainVest but that there was as yet no deal.Amer Sports Oyj (AMEAS FH) shares had been trading around €32/share, were suspended quickly and then reopened 14% higher at ~€36.50 popped briefly then settled down into a long session of profit-taking which saw trading close at €34.20. Some 2.5% of float traded, which was 6-8x normal. Amer had said on the 11th that it had not engaged in negotiations.Where We Stand
ANTA shares were down 8 days in a row through the day after the announcement, falling a little in the afternoon after the news came out in Europe, then fell 9+% the following day. Despite rebounding 7+% the last two days, ANTA Sports shares are still down 17.5% in the first two weeks of the month. The shares are now at 20x 2019e PER.
Amer announced on September 5th a Strategy Update. Amer Sports President and CEO Heikki Takala said “We prioritize acceleration in soft goods, B2C, China, United States, and digitalization,” and the review was said to include an "integration" of PeakPerformance brand and a strategic review of the Mavic brand. In the presentation he also mentioned the Enve (bicycles) brand, noting that the entire bicycle business was not producing the growth they wanted, and offering the idea that the assets might be better held by someone else.
At a 26x PER multiple and probably ~15x EV/EBITDA, Amer is "expensive" but not outrageously so. At a prospective EV/revenue multiple of 1.5x, it is in the range of stocks like Fila Korea Ltd (081660 KS) and Acushnet Holdings (GOLF US) while lower than Shimano Inc (7309 JP) and Thule Group Ab (THULE SS). 


ANTA (2020 HK) Lobs Possible €40/Share Bid for Amer

Japan

YONEX CO., LTD. produces and sells sporting goods.  The Company's main products include goods and equipment for badminton, golf, tennis, and softball.  Yonex also produces sportswear and sports shoes.

Yonex: Rising Through the Ranks in New Markets

We think there could be around 100% upside to Yonex alongside improving confidence about the sustainability of Yonex’s current performance.

Oshadhi Kumarasiri

ANTA (2020 HK) Lobs Possible €40/Share Bid for Amer

Most of the way through the HK trading day on the 11th (but after the European open) a headline flashed across traders' screens which said "China's...

Travis Lundy