Equity Analyst, LightStream Research

Oshadhi Kumarasiri

An equity research analyst with over 7 years of experience in multiple sectors. Previously worked for one of the world's largest asset managers with about USD2.5trn in AUM, covering small and micro-cap companies in the consumer sphere across Europe and developed Asia. Also experienced in covering multiple industries including banking, insurance and asset management, retail, tech, telco and REIT.

Equity Analyst

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Izumi and Seven & I Join Forces to Foil Aeon

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

<a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1">Seven &amp; I Holdings (3382 JP)</a>, the parent company behind the famous convenience store chain Seven Eleven is one of the largest companies in the Japanese retail sector. Its main operations are in Japan, but it has operations worldwide including the USA, China and in the rest of Asia.
<ul>
<li>
Japan’s convenience store dynamics are forcing changes in the business models of major players
<ul>
<li>Rising part-time hourly pay rate owing to the labour shortage</li>
<li>Minimum hourly wages growth picking up speed as supply is not enough to meet demand</li>
<li>Labour shortage: drives automation and adoption of new technologies</li>
<li>Lower profitability causing franchisees to shift away from convenience store business</li>
<li>Backlash from franchisees: forcing change in franchisers rigid stance on the convenience store business model</li>
<li>Change overdue for Seven Eleven Japan convenience store business</li>
<li>Change is key for Seven Eleven Japan’s growth as new store openings expected to slow down</li>
<li>New layout introduction to help reduce the drop in sales per store</li>
</ul>
</li>
<li>
E-commerce and switch to EV: Grim outlook for US convenience store business
<ul>
<li>Seven Eleven trying to consolidate the fragmented us convenience store space</li>
<li>Less than half of Seven Eleven US stores sell gasoline</li>
</ul>
</li>
<li>
Improving profitability across all segments – key factor in our thesis 
<ul>
<li>Ito-Yokado: plans underway to get things on track</li>
<li>Sogo &amp; Seibu Co: struggle will continue despite proposed measures to turn things around</li>
</ul>
</li>
<li>
Valuation
<ul>
<li>Seven &amp; I multiples never quite recovered after the FY2016-17 drop</li>
<li>Seven &amp; I should trade at least on par with peers</li>
</ul>
</li>
</ul>

Seven &amp; I Holdings (3382 JP), the parent company behind the famous convenience store chain Seven Eleven is one of the largest companies in the Japanese retail sector. Its main operations are in Japan, but it has operations worldwide including the USA, China and in the rest of Asia.


Japan’s convenience store dynamics are forcing changes in the business models of major players

Rising part-time hourly pay rate owing to the labour shortage
Minimum hourly wages growth picking up speed as supply is not enough to meet demand
Labour shortage: drives automation and adoption of new technologies
Lower profitability causing franchisees to shift away from convenience store business
Backlash from franchisees: forcing change in franchisers rigid stance on the convenience store business model
Change overdue for Seven Eleven Japan convenience store business
Change is key for Seven Eleven Japan’s growth as new store openings expected to slow down
New layout introduction to help reduce the drop in sales per store



E-commerce and switch to EV: Grim outlook for US convenience store business

Seven Eleven trying to consolidate the fragmented us convenience store space
Less than half of Seven Eleven US stores sell gasoline



Improving profitability across all segments – key factor in our thesis 

Ito-Yokado: plans underway to get things on track
Sogo &amp; Seibu Co: struggle will continue despite proposed measures to turn things around



Valuation

Seven &amp; I multiples never quite recovered after the FY2016-17 drop
Seven &amp; I should trade at least on par with peers




Pan Pacific International Holdings (7532 JP)

セブン＆アイ・ホールディングス：遅くてもやらないよりはまし