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 Capital Markets

Cainiao Smart Logistics / Equity Capital Markets

Cainiao Smart Logistics Network Ltd. operates as an investment company. The Company provides equity investments, investment management, and other services. Cainiao Smart Logistics Network is located in Hong Kong.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba (ADR) (BABA US)</a>'s logistics arm, <a href="https://www.smartkarma.com/entities/cainiao-smart-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:36859:1" rel="noopener">Cainiao Smart Logistics (1437124D HK)</a>, filed for an IPO with HKEX yesterday, aiming to raise $1bn to $2bn.</li>
<li>Although efficient, Cainiao may face business challenges, as the majority of logistics costs and revenues stem from services outsourced to logistics partners.</li>
<li>Despite the proposed IPO, we believe that Cainiao will always operate in the shadow of Alibaba's primary e-commerce business.</li>
</ul>



Alibaba (ADR) (BABA US)'s logistics arm, Cainiao Smart Logistics (1437124D HK), filed for an IPO with HKEX yesterday, aiming to raise $1bn to $2bn.
Although efficient, Cainiao may face business challenges, as the majority of logistics costs and revenues stem from services outsourced to logistics partners.
Despite the proposed IPO, we believe that Cainiao will always operate in the shadow of Alibaba's primary e-commerce business.


Cainiao Smart Logistics IPO: Lacks Viability as a Standalone Business

Equity Bottom-Up

YAKULT HONSHA CO., LTD produces and sells fermented milk products, soft drinks and food products.  The Company also manufactures pharmaceutical and cosmetic products.  Through its subsidiary, the professional baseball team, Tokyo Yakult Swallows is owned and managed.

<ul>
<li>Japanese inflation, which peaked at 4.3% in January 2023, gradually decreased to 3.5%, 3.2%, 3.3%, 3.3%, and 3.2% in the subsequent months of 2023.</li>
<li>Inflation rates remained stable for most items, excluding Fuel, Electricity, Water, and fresh vegetables, indicating the persistence of cost-push inflation.</li>
<li>In this insight, we analyze the recent quarterly performance of Yakult, Nissin, and Seven &amp; I, Japanese Consumer Staples companies discussed in our prior Smartkarma Original.</li>
</ul>


Japanese inflation, which peaked at 4.3% in January 2023, gradually decreased to 3.5%, 3.2%, 3.3%, 3.3%, and 3.2% in the subsequent months of 2023.
Inflation rates remained stable for most items, excluding Fuel, Electricity, Water, and fresh vegetables, indicating the persistence of cost-push inflation.
In this insight, we analyze the recent quarterly performance of Yakult, Nissin, and Seven &amp; I, Japanese Consumer Staples companies discussed in our prior Smartkarma Original.


Japan Consumer Staples Update: Inflation Looks a Blessing in Disguise for Those with Pricing Power

YAMAZAKI BAKING CO., LTD. produces baking foods including bread, pastry, and cake.  The Company operates nationwide sales network.  YAMAZAKI BAKING also operates franchised cafeterias and convenience stores.

<ul>
<li>While <a href="https://www.smartkarma.com/entities/yamazaki-baking-co-ltd" target="_blank" data-smartkarma-citation="entities:7658:1" rel="noopener">Yamazaki Baking (2212 JP)</a>'s recent surge has been impressive, consensus expectations are high for the upcoming quarter, despite yet another price hike in July 2023.</li>
<li>From a valuation perspective, we expect limited upside potential even if Yamazaki Baking surpasses consensus expectations.</li>
<li>Therefore, we believe that the risk-reward profile for maintaining a long position in Yamazaki Baking is currently not particularly attractive.</li>
</ul>


While Yamazaki Baking (2212 JP)'s recent surge has been impressive, consensus expectations are high for the upcoming quarter, despite yet another price hike in July 2023.
From a valuation perspective, we expect limited upside potential even if Yamazaki Baking surpasses consensus expectations.
Therefore, we believe that the risk-reward profile for maintaining a long position in Yamazaki Baking is currently not particularly attractive.


Yamazaki Baking: Breads & Buns Buonce But Valuation Is a Stalemate

Seven & i Holdings Co., Ltd. is a holding company which was established through the merger of Ito-Yokado Co., Seven Eleven Japan Co., and Denny's Japan. The Company plans, manages, and operates mainly convenience stores, supermarkets, and department stores.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I Holdings (3382 JP)</a>'s share price has remained below ¥6,600 since the end of its bull run in March 2023.</li>
<li>Short-Term optimism hinges on a substantial earnings beat, but the US business challenges make it unlikely.</li>
<li>Seven &amp; I faces valuation risks, trading near peak multiples with diminishing growth prospects.</li>
</ul>



Seven &amp; I Holdings (3382 JP)'s share price has remained below ¥6,600 since the end of its bull run in March 2023.
Short-Term optimism hinges on a substantial earnings beat, but the US business challenges make it unlikely.
Seven &amp; I faces valuation risks, trading near peak multiples with diminishing growth prospects.


Seven & I: Challenging Guidance, The US Business Needs to Fire on All Cylinders

RYOHIN KEIKAKU CO., LTD. is a retailer and wholesaler of Mujirushi Ryohin brand products, which were originally a generic private-brand product.  The Company's product line includes knitwear, food, and household items

<ul>
<li>
<a href="https://www.smartkarma.com/entities/ryohin-keikaku-co-ltd" target="_blank" data-smartkarma-citation="entities:2765:1" rel="noopener">Ryohin Keikaku (7453 JP)</a> experienced a 45% leap in its share price since its last earnings announcement, primarily fueled by a positive OP surprise of nearly ¥3.0bn.</li>
<li>Our analysis indicates the potential for another big earnings beat in FQ4, primarily because the consensus remains conservative in its cost assumptions.</li>
<li>Additionally, we anticipate that the company will provide FY24 OP guidance in the range of ¥45-50bn. This would constitute a significant upside surprise compared to the current FY24 consensus.</li>
</ul>



Ryohin Keikaku (7453 JP) experienced a 45% leap in its share price since its last earnings announcement, primarily fueled by a positive OP surprise of nearly ¥3.0bn.
Our analysis indicates the potential for another big earnings beat in FQ4, primarily because the consensus remains conservative in its cost assumptions.
Additionally, we anticipate that the company will provide FY24 OP guidance in the range of ¥45-50bn. This would constitute a significant upside surprise compared to the current FY24 consensus.


Ryohin Keikaku: Big Moves Ahead with Strong FY24 Guidance

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.

Oshadhi Kumarasiri
Equity Analyst
• LightStream Research

Cainiao Smart Logistics IPO: Lacks Viability as a Standalone Business

Alibaba's logistics arm, Cainiao Smart Logistics, files for IPO to raise $1-2bn, but may face challenges due to reliance on outsourced services....

Oshadhi Kumarasiri

Japan Consumer Staples Update: Inflation Looks a Blessing in Disguise for Those with Pricing Power

Japanese inflation peaked at 4.3% in January 2023 but decreased to 3.5%, 3.2%, 3.3%, 3.3%, and 3.2% in the following months. For most items except...

Oshadhi Kumarasiri

Yamazaki Baking: Breads & Buns Buonce But Valuation Is a Stalemate

Yamazaki Baking's surging stock faces high expectations in 3Q23. With limited valuation upside, the risk-reward balance has tilted unfavorably for...

Oshadhi Kumarasiri

Seven & I: Challenging Guidance, The US Business Needs to Fire on All Cylinders

Seven & I Holdings' share price has struggled since March 2023, with short-term optimism unlikely due to US business challenges and valuation risks.

Oshadhi Kumarasiri

Ryohin Keikaku: Big Moves Ahead with Strong FY24 Guidance

Ryohin Keikaku's stock surged 45% after an earnings surprise. Anticipating another strong quarter and potentially higher FY24 guidance.

Oshadhi Kumarasiri

Cainiao Smart Logistics IPO: Lacks Viability as a Standalone Business

​Alibaba's logistics arm, Cainiao Smart Logistics, files for IPO to raise $1-2bn, but may face challenges due to reliance on outsourced services....

Oshadhi Kumarasiri

Japan Consumer Staples Update: Inflation Looks a Blessing in Disguise for Those with Pricing Power

Japanese inflation peaked at 4.3% in January 2023 but decreased to 3.5%, 3.2%, 3.3%, 3.3%, and 3.2% in the following months. For most items except...

Oshadhi Kumarasiri

Yamazaki Baking: Breads & Buns Buonce But Valuation Is a Stalemate

Yamazaki Baking's surging stock faces high expectations in 3Q23. With limited valuation upside, the risk-reward balance has tilted unfavorably for...

Oshadhi Kumarasiri

Seven & I: Challenging Guidance, The US Business Needs to Fire on All Cylinders

​Seven & I Holdings' share price has struggled since March 2023, with short-term optimism unlikely due to US business challenges and valuation risks.

Oshadhi Kumarasiri

Ryohin Keikaku: Big Moves Ahead with Strong FY24 Guidance

​Ryohin Keikaku's stock surged 45% after an earnings surprise. Anticipating another strong quarter and potentially higher FY24 guidance.

Oshadhi Kumarasiri

Alibaba's logistics arm, Cainiao Smart Logistics, files for IPO to raise $1-2bn, but may face challenges due to reliance on outsourced services....

Seven & I Holdings' share price has struggled since March 2023, with short-term optimism unlikely due to US business challenges and valuation risks.

Ryohin Keikaku's stock surged 45% after an earnings surprise. Anticipating another strong quarter and potentially higher FY24 guidance.