Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

The Nikkei just released an <a href="https://www.nikkei.com/article/DGXMZO65246280Q0A021C2MM8000/" target="_blank" rel="noopener">article</a> suggesting that home decoration and home accessory giant <a href="https://www.smartkarma.com/entities/nitori-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20386:1" rel="noopener">Nitori Holdings (9843 JP)</a> is considering making a rival bid for homecenter and furnishing retailer <a href="https://www.smartkarma.com/entities/shimachu-co-ltd" target="_blank" data-smartkarma-citation="entities:5235:1" rel="noopener">Shimachu Co Ltd (8184 JP)</a>, which is currently under offer from homecenter industry #2 <a href="https://www.smartkarma.com/entities/dcm-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:13042:1" rel="noopener">Dcm Holdings (3050 JP)</a>.This throws the cat in amongst the pigeons.  In <a href="https://www.smartkarma.com/insights/dcm-does-a-full-takeover-of-shimachu-looks-like-a-strong-price-look-again" target="_blank" data-smartkarma-citation="insights:43806" rel="noopener">DCM Does a Full Takeover of Shimachu - Looks Like a Strong Price; Look Again</a> I argued the price offered by DCM was not as full as it could be. The attractive traits of Shimachu at the ¥4200 TOB Price included the fact that it is Tokyo-based, where average income, high population density, and the slowest demographic decay of any region make for a (relatively) attractive addressable market, and the fact that it has a relatively attractive Land/Property basket which could be sold and leased back. The TOB price was effectively the book value of that PP&amp;E basket, which meant a sale and leaseback would make the takeover "free."That meant DCM's deal for Shimachu could be vulnerable. There aren't that many Tokyo-based distribution assets in the space, which is seen as both ripe for consolidation and as a strong beneficiary of the covid WFH "nesting" phenomenon in particular and an ongoing trend to greater refurb and leisure spending in the bigger picture.I expect this pops on the open. It should stay popped. Watch for more detail from Nitori. And I expect DCM won't give up easily if Nitori comes in. More details on where this could go below the fold.

The Nikkei just released an article suggesting that home decoration and home accessory giant Nitori Holdings (9843 JP) is considering making a rival bid for homecenter and furnishing retailer Shimachu Co Ltd (8184 JP), which is currently under offer from homecenter industry #2 Dcm Holdings (3050 JP).This throws the cat in amongst the pigeons.  In DCM Does a Full Takeover of Shimachu - Looks Like a Strong Price; Look Again I argued the price offered by DCM was not as full as it could be. The attractive traits of Shimachu at the ¥4200 TOB Price included the fact that it is Tokyo-based, where average income, high population density, and the slowest demographic decay of any region make for a (relatively) attractive addressable market, and the fact that it has a relatively attractive Land/Property basket which could be sold and leased back. The TOB price was effectively the book value of that PP&amp;E basket, which meant a sale and leaseback would make the takeover "free."That meant DCM's deal for Shimachu could be vulnerable. There aren't that many Tokyo-based distribution assets in the space, which is seen as both ripe for consolidation and as a strong beneficiary of the covid WFH "nesting" phenomenon in particular and an ongoing trend to greater refurb and leisure spending in the bigger picture.I expect this pops on the open. It should stay popped. Watch for more detail from Nitori. And I expect DCM won't give up easily if Nitori comes in. More details on where this could go below the fold. 

Nitori To Make a Rival Bid for Shimachu? More Fun To Go

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

Thematic (Sector/Industry)

Lopia is a small unlisted supermarket chain but we cover this here to demonstrate the following that discount supermarkets have in Japan, pointing to further growth for listed companies in this sector such as <a href="https://www.smartkarma.com/entities/kobe-bussan-co-ltd" target="_blank" data-smartkarma-citation="entities:4701:1" rel="noopener">Kobe Bussan (3038 JP),</a> <a href="https://www.smartkarma.com/entities/pan-pacific-international-holdings-corporation" target="_blank" data-smartkarma-citation="entities:13475:1" rel="noopener">Pan Pacific International Holdings (7532 JP),</a> and <a href="https://www.smartkarma.com/entities/cosmos-pharmaceutical-corp" target="_blank" data-smartkarma-citation="entities:3797:1" rel="noopener">Cosmos Pharmaceutical (3349 JP).</a>
With average sales growth of 18% a year since 2011, Lopia is a rising star. Alongside OK Super, another unlisted chain, Lopia has proven that aggressive and consistent low prices work in Japan, and that careful cost control can provide profits even at low margins. It is a chain to watch as it is likely to list at some point, with a target of ¥1 trillion sales by the end of the next decade.
Its success is also a worry for <a href="https://www.smartkarma.com/entities/aeon-co-ltd" target="_blank" data-smartkarma-citation="entities:3:1" rel="noopener">Aeon Co Ltd (8267 JP)</a>. Aeon has seen its share of food sales in the greater Tokyo region fall from 10.8% to 9.7%, overtaken by OK Super which increased from 8% to 10.9%, a jump of 2.9 points. Lopia is half the size of OK Super but has also grown from 1.2% to 2.9% in the same period, more than doubling its effective share. Aeon is <a href="https://www.smartkarma.com/insights/new-aeon-style-format-shows-hope-for-aeon-s-core-business" target="_blank" rel="noopener">fighting back</a> but still does not compete on price.

Lopia is a small unlisted supermarket chain but we cover this here to demonstrate the following that discount supermarkets have in Japan, pointing to further growth for listed companies in this sector such as Kobe Bussan (3038 JP), Pan Pacific International Holdings (7532 JP), and Cosmos Pharmaceutical (3349 JP).
With average sales growth of 18% a year since 2011, Lopia is a rising star. Alongside OK Super, another unlisted chain, Lopia has proven that aggressive and consistent low prices work in Japan, and that careful cost control can provide profits even at low margins. It is a chain to watch as it is likely to list at some point, with a target of ¥1 trillion sales by the end of the next decade.
Its success is also a worry for Aeon Co Ltd (8267 JP). Aeon has seen its share of food sales in the greater Tokyo region fall from 10.8% to 9.7%, overtaken by OK Super which increased from 8% to 10.9%, a jump of 2.9 points. Lopia is half the size of OK Super but has also grown from 1.2% to 2.9% in the same period, more than doubling its effective share. Aeon is fighting back but still does not compete on price.

Why Discount Works in Japan: Lopia, Tokyo’s ‘Low Price Utopia’ Triples Sales Since 2011

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

<a href="https://www.smartkarma.com/entities/miniso-group-holdings" target="_blank" data-smartkarma-citation="entities:29673:1" rel="noopener">MINISO Group Holdings (MNSO US)</a> is the leading variety retailer of lifestyle products globally with an aggregate GMV of RMB 19.0 billion (US$2.7 billion) and revenue of RMB 9.0 billion (US$1.3 billion).
Last week, the company filed an updated prospectus with the SEC announcing the price range for the NYSE IPO. The price range was set at $16.50-$18.50 per ADS, which translates to $4.125-$4.625 per share.
MINISO plans to raise $502m-$562m via issuing 16.5m new ADS (122m-140m new shares). An overallotment option, if exercised, could increase the IPO by $75m-$84m (4.6m new ADS).
Previously, we discussed MINISO's business model and financials in <a href="https://www.smartkarma.com/insights/miniso-ipo-long-term-growth-prospects-secured-by-a-sustainable-competitive-advantage" target="_blank" rel="noopener">MINISO IPO: Long Term Growth Prospects Secured By a Sustainable Competitive Advantage</a> and <a href="https://www.smartkarma.com/insights/miniso-ipo-as-appealing-as-miniso-products" target="_blank" rel="noopener">MINISO IPO: As Appealing As MINISO Products</a>.
This insight will focus on valuation and assess if it is worthwhile subscribing to the IPO.

MINISO Group Holdings (MNSO US) is the leading variety retailer of lifestyle products globally with an aggregate GMV of RMB 19.0 billion (US$2.7 billion) and revenue of RMB 9.0 billion (US$1.3 billion).
Last week, the company filed an updated prospectus with the SEC announcing the price range for the NYSE IPO. The price range was set at $16.50-$18.50 per ADS, which translates to $4.125-$4.625 per share.
MINISO plans to raise $502m-$562m via issuing 16.5m new ADS (122m-140m new shares). An overallotment option, if exercised, could increase the IPO by $75m-$84m (4.6m new ADS).
Previously, we discussed MINISO's business model and financials in MINISO IPO: Long Term Growth Prospects Secured By a Sustainable Competitive Advantage and MINISO IPO: As Appealing As MINISO Products.
This insight will focus on valuation and assess if it is worthwhile subscribing to the IPO.

MINISO Valuation: Valued Like MINISO Merchandise - Bang for the Buck

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<a href="https://www.smartkarma.com/entities/miniso-group-holdings" target="_blank" data-smartkarma-citation="entities:29673:1" rel="noopener">MINISO Group Holdings (MNSO US)</a> is the largest global branded variety retailer of lifestyle products, with a 5.2% market share of the GMV of the global branded variety retail market in 2019, according to Frost &amp; Sullivan. Miniso has launched its IPO at a price range of $16.50-18.50 per ADS. At the mid-point of the IPO price range, Miniso will raise net proceeds of $504.2 million. <div><div><div class="content-highlight">In <a href="https://www.smartkarma.com/insights/miniso-group-ipo-initiation-chain-reaction" target="_blank" rel="noopener">our initiation note</a>, we stated that setting aside the short-term negative impact due to COVID-19, Miniso presents a unique opportunity to gain exposure to the global branded variety retail market which is driven by consumers’ increasing focus on product design and value for money. We opined that Miniso’s fundamentals offer more positives than negatives. Overall, our valuation analysis suggests that the IPO price range is attractive.</div></div></div>

MINISO Group Holdings (MNSO US) is the largest global branded variety retailer of lifestyle products, with a 5.2% market share of the GMV of the global branded variety retail market in 2019, according to Frost &amp; Sullivan. Miniso has launched its IPO at a price range of $16.50-18.50 per ADS. At the mid-point of the IPO price range, Miniso will raise net proceeds of $504.2 million. In our initiation note, we stated that setting aside the short-term negative impact due to COVID-19, Miniso presents a unique opportunity to gain exposure to the global branded variety retail market which is driven by consumers’ increasing focus on product design and value for money. We opined that Miniso’s fundamentals offer more positives than negatives. Overall, our valuation analysis suggests that the IPO price range is attractive.

At least until the Covid-19 crisis hit Japan in January, the majority of retailers were gearing up to announce yet another really good year of financial results for FY2019-20.Even with the crisis, results were generally better than for FY2018 – although there are big variations by sector.Those differences are more or less what we’ve come to expect, with traditional formats like department stores continuing to struggle, while those formats that have adopted modern management are doing well.The following is an in-depth review of Japan's retail sector, providing:<ul>
<li>An overview of consumer demand and retail performance</li>
<li>Format by format reviews showing growth and profit performance across all the main formats: convenience stores, supermarkets, GMS, consumer electronics, drugstores, homecentres, department stores, apparel, home and other specialty  formats.</li>
<li>Rankings: <ul>
<li>Market share and size by sector/format</li>
<li>By sales for all retailers with sales over ¥250 billion</li>
<li>By gross and operating margins, split by format and category.</li>
</ul>
</li>
</ul>As this is an in-depth insight, the review is split into two parts to make it easier to read.  This is Part I which provides a quick overview of all retailing. Part II, which provides snapshot reviews of each format/sector <a href="https://www.smartkarma.com/insights/japan-retail-review-2019-20-part-ii-a-sector-by-sector-review-of-winners-and-losers" target="_blank" rel="noopener">can be read here</a>.

At least until the Covid-19 crisis hit Japan in January, the majority of retailers were gearing up to announce yet another really good year of financial results for FY2019-20.Even with the crisis, results were generally better than for FY2018 – although there are big variations by sector.Those differences are more or less what we’ve come to expect, with traditional formats like department stores continuing to struggle, while those formats that have adopted modern management are doing well.The following is an in-depth review of Japan's retail sector, providing:
An overview of consumer demand and retail performance
Format by format reviews showing growth and profit performance across all the main formats: convenience stores, supermarkets, GMS, consumer electronics, drugstores, homecentres, department stores, apparel, home and other specialty  formats.
Rankings: 
Market share and size by sector/format
By sales for all retailers with sales over ¥250 billion
By gross and operating margins, split by format and category.


As this is an in-depth insight, the review is split into two parts to make it easier to read.  This is Part I which provides a quick overview of all retailing. Part II, which provides snapshot reviews of each format/sector can be read here.

The Japan Retail Review: Winners and Losers in Japanese Retailing (Part I)

Japan

Pan Pacific International Holdings Corporation operates discount stores which sell consumer electronics, daily necessities, groceries, watches, and sporting goods. The Company mostly operates small scale stores based in Tokyo.

Pan Pacific International Holdings (7532 JP)

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Pan Pacific International Holdings (7532 JP)

Nitori To Make a Rival Bid for Shimachu? More Fun To Go

DCM's bid for Shimachu looked good. It wasn't that good. The capital structure and location base means that the company was easily worth 30% more,...

Travis Lundy

Why Discount Works in Japan: Lopia, Tokyo’s ‘Low Price Utopia’ Triples Sales Since 2011

The low price food market is booming in Japan but still doesn't get the recognition it deserves. As well as listed firms, we highlight the unlisted...

Michael Causton

MINISO Valuation: Valued Like MINISO Merchandise - Bang for the Buck

MINISO Group Holdings is the leading variety retailer of lifestyle products globally with an aggregate GMV of RMB 19.0 billion (US$2.7 billion) and...

Oshadhi Kumarasiri

MINISO Group IPO: Valuation Insights

MINISO Group Holdings (MNSO US) is the largest global branded variety retailer of lifestyle products, with a 5.2% market share of the GMV of the...

Arun George

The Japan Retail Review: Winners and Losers in Japanese Retailing (Part I)

At least until the Covid-19 crisis hit Japan in January, the majority of retailers were gearing up to announce yet another really good year of...

Michael Causton

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