Daily BriefsJapan

Japan: NTT (Nippon Telegraph & Telephone), Japan Airport Terminal Co, Life Corp, Takashimaya, Tokyo Stock Exchange Tokyo Price Index Topix, Shiseido Company and more

In today’s briefing:

  • TOPIX Rebalance: Flows at the Close
  • Japan Airport (9706): Not the Best Proxy for Japan Reopening.
  • Life Opens Supermarket 4.0: A Hybrid Online-Offline Store
  • Takashimaya to Close Tachikawa
  • About an Article on ESG Investors
  • Shiseido (4911 JP) | Q2 Results Will Make Analysts Blush

TOPIX Rebalance: Flows at the Close

By Brian Freitas

  • The second tranche of the FFW methodology change for the Tokyo Stock Exchange Tokyo Price Index Topix (TPX INDEX) will be implemented at the close of trading today.
  • One way flow is ~JPY 745bn and will be spread across ~2170 stocks. The largest inflow will be on NTT (9432 JP) and the largest outflow on Toyota Motor (7203).
  • The stocks with the largest inflows have outperformed the stocks with the largest outflows over the last month and the outperformance could continue going into the last tranche in June.

Japan Airport (9706): Not the Best Proxy for Japan Reopening.

By Henry Soediarko

  • Japan’s reopening has started and pre-departure and on arrival tests for vaccinated tourists have also been abolished. 
  • The beneficiary of this theme is less obvious for Japan Airport Terminal Co (9706 JP) while it is very obvious for Keisei Electric Railway Co (9009 JP)
  • Japan Airport is trading at a PBR premium to Keisei while the former has a higher debt than the latter. 

Life Opens Supermarket 4.0: A Hybrid Online-Offline Store

By Michael Causton

  • Life opened a new, upscale supermarket last month in central Tokyo that is designed to process online orders as easily as serving in-store customers.
  • The new store, replacing Mitsukoshi in Ebisu Garden Place, includes a backroom that acts as a dark store for online orders.
  • This frees up space in the store for higher margin items like deli foods and is a sign of the supermarket’s intentions going forward.

Takashimaya to Close Tachikawa

By Michael Causton

  • Takashimaya will close its store in Tachikawa early next year.
  • This can be seen as a further sign of an improving outlook for a smaller department store sector. 
  • More closures will rid the sector of excess capacity and solidify positioning as a genuinely upscale format for the affluent.

About an Article on ESG Investors

By Aki Matsumoto

  • I will discuss the Nikkei article, “Shareholder proposals on ESG issues may increase in Japan, but the road to their passage will not be easy and should be watched closely.”
  • Japanese asset management companies have begun to move toward ESG compliance. However, a survey conducted by FSA indicated that many asset management companies don’t have personnel specializing in ESG issues.
  • The key to getting shareholder proposals on ESG passed or for a company to become more active in ESG initiatives is for foreign shareholder ratio to be in 30% range.

Shiseido (4911 JP) | Q2 Results Will Make Analysts Blush

By Mark Chadwick

  • Chinese lockdowns are taking their toll on Q2 sales. We expect the upcoming report to be much worse than the last 
  • Estee Lauder’s recent results suggest that travel retail will be a negative shock too 
  • We believe there is one large downgrade to full-year guidance and consensus numbers. Too early turn bullish 

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