Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

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

Recruit Holdings Co. Ltd. operates information providing services in human resource, housing, bridal, travel, restaurants, beauty, automobiles, and education and more. The company also operate staffing services and advertising business.

<ul>
<li>It is time we review our 2022 high conviction call. Our conviction short Recruit has fallen 41.5% since we made our call on the stock on 01st December 2022.</li>
<li>Though Staffing and Matching &amp; Solutions businesses have bounced back post-Covid, HR Tech biz’s earnings have started to fall with weakening of labour markets.</li>
<li>With global recruitment markets facing challenges with weakening of global economies, we think <a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a> 's shares have further room to fall in 2023E.</li>
</ul>


It is time we review our 2022 high conviction call. Our conviction short Recruit has fallen 41.5% since we made our call on the stock on 01st December 2022.
Though Staffing and Matching &amp; Solutions businesses have bounced back post-Covid, HR Tech biz’s earnings have started to fall with weakening of labour markets.
With global recruitment markets facing challenges with weakening of global economies, we think Recruit Holdings (6098 JP) 's shares have further room to fall in 2023E.


2022 High Conviction Recruit: More Room for Shares to Fall

Oshadhi Kumarasiri

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>As the year draws to a close, we took time to assess the effectiveness of our high-conviction calls made during the past two years.</li>
<li>With further dividend hikes looking increasingly possible, our 2022 high-conviction call, <a href="https://www.smartkarma.com/entities/japan-tobacco-inc" target="_blank" data-smartkarma-citation="entities:13498:1" rel="noopener">Japan Tobacco (2914 JP)</a> has more room to run this year.</li>
<li>However, it’s probably the right time to take profits from our 2021 high-conviction trade, <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> as the US gas-stations profitability maxed-out in the last quarter.</li>
</ul>


As the year draws to a close, we took time to assess the effectiveness of our high-conviction calls made during the past two years.
With further dividend hikes looking increasingly possible, our 2022 high-conviction call, Japan Tobacco (2914 JP) has more room to run this year.
However, it’s probably the right time to take profits from our 2021 high-conviction trade, Seven &amp; I Holdings (3382 JP) as the US gas-stations profitability maxed-out in the last quarter.


2021 & 2022 High Conviction Review: Time’s Up For Seven & I But Japan Tobacco Has More Room to Run

<ul>
<li>
<a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a> shares have declined 44.35% YTD as the company’s earnings have started normalising following easing off of Covid-19 conditions.</li>
<li>4QFY03/2022 results showed that the strong growth in earnings that the company experienced in FY03/2022 has started to weaken with normalisation of recruitment and staffing markets.</li>
<li>With weakening earnings, we think there is further downside and Recruit will be a good short over the next few weeks.</li>
</ul>



Recruit Holdings (6098 JP) shares have declined 44.35% YTD as the company’s earnings have started normalising following easing off of Covid-19 conditions.
4QFY03/2022 results showed that the strong growth in earnings that the company experienced in FY03/2022 has started to weaken with normalisation of recruitment and staffing markets.
With weakening earnings, we think there is further downside and Recruit will be a good short over the next few weeks.


2022 High Conviction - Recruit: More Downside Ahead with Normalisation of Recruitment Markets

Global Healthcare Analyst

Tina Banerjee

Abbott Laboratories discovers, develops, manufactures, and sells a broad and diversified line of health care products and services. The Company's products include pharmaceuticals, nutritional, diagnostics, and vascular products. Abbott markets its products worldwide through affiliates and distributors.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/abbott-laboratories" target="_blank" data-smartkarma-citation="entities:11987:1" rel="noopener">Abbott Laboratories (ABT US)</a> reported better-than-expected Q1 revenue and earnings, due to higher diagnostic revenue led by strong COVID-19 testing revenue. 2022 adjusted EPS guidance remains unchanged.</li>
<li>In Q1, global COVID-19 testing-related sales reached to a record high of $3.3 billion, representing 28% of total revenue. COVID-19 testing revenue guidance was raised to $4.5 billion for 2022.</li>
<li>Medical devices business reported double-digit organic revenue growth in the U.S. as well as international market, showing continued recovery in the elective procedures.</li>
</ul>



Abbott Laboratories (ABT US) reported better-than-expected Q1 revenue and earnings, due to higher diagnostic revenue led by strong COVID-19 testing revenue. 2022 adjusted EPS guidance remains unchanged.
In Q1, global COVID-19 testing-related sales reached to a record high of $3.3 billion, representing 28% of total revenue. COVID-19 testing revenue guidance was raised to $4.5 billion for 2022.
Medical devices business reported double-digit organic revenue growth in the U.S. as well as international market, showing continued recovery in the elective procedures.


Abbott Laboratories (ABT US): 2022 High Conviction Idea 1Q22 Review- COVID Testing Bonanza Continues

Japan Tobacco, Inc. operates as an tobacco product company. The Company manufactures, markets and sells cigarettes and other tobacco products internationally. Japan Tobacco is also engaged in pharmaceutical and food businesses.

<ul>
<li>It seems investors are starting to move past the fears of Japan Tobacco’s exposure to Russia and Ukraine with shares rising 6% following a steep decline alongside Russia’s Ukraine invasion.</li>
<li>Meanwhile, we expect the company’s OP to continue trending upwards with the weakening yen helping the International Tobacco segment and price hikes benefiting the Domestic business.</li>
<li>If OP reaches the 2014 level, we think <a href="https://www.smartkarma.com/entities/japan-tobacco-inc" target="_blank" data-smartkarma-citation="entities:13498:1" rel="noopener">Japan Tobacco (2914 JP)</a> shares could go up around 90% to ¥4,000 per share over the next 12 months.</li>
</ul>


It seems investors are starting to move past the fears of Japan Tobacco’s exposure to Russia and Ukraine with shares rising 6% following a steep decline alongside Russia’s Ukraine invasion.
Meanwhile, we expect the company’s OP to continue trending upwards with the weakening yen helping the International Tobacco segment and price hikes benefiting the Domestic business.
If OP reaches the 2014 level, we think Japan Tobacco (2914 JP) shares could go up around 90% to ¥4,000 per share over the next 12 months.


Japan Tobacco 2022 High Conviction Update: Time to Double Down