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.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/kirin-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:16977:1" rel="noopener">Kirin Holdings (2503 JP)</a> reported its 1Q21 results last week, with revenue and operating profit falling broadly in line with consensus estimates.</li>
<li>The company’s revenue declined by 3.6% YoY to ¥409.3bn, compared to 2.3%, 9.6%, 4.1% and 2.7% YoY in 1Q20, 2Q20, 3Q20, and 4Q20 respectively.</li>
<li>The operating profit increased by 7.5% YoY to ¥28.1bn, compared to ¥26.1bn, ¥23.4bn, ¥54.9bn, and ¥-1.4bn in 1Q20, 2Q20, 3QY20, and 4Q20 respectively. This was mainly due to lower SG&amp;A and other operating expenses.</li>
<li>The full year revenue and profit guidance remained unchanged at a revenue of ¥1,880bn and an operating profit of ¥151bn compared to consensus revenue and OP of ¥1,856bn and ¥151.4bn respectively. However, the company is still evaluating options regarding its Myanmar JV, which could lead to a significant impact on Kirin’s 2021 guidance.</li>
</ul>



Kirin Holdings (2503 JP) reported its 1Q21 results last week, with revenue and operating profit falling broadly in line with consensus estimates.
The company’s revenue declined by 3.6% YoY to ¥409.3bn, compared to 2.3%, 9.6%, 4.1% and 2.7% YoY in 1Q20, 2Q20, 3Q20, and 4Q20 respectively.
The operating profit increased by 7.5% YoY to ¥28.1bn, compared to ¥26.1bn, ¥23.4bn, ¥54.9bn, and ¥-1.4bn in 1Q20, 2Q20, 3QY20, and 4Q20 respectively. This was mainly due to lower SG&amp;A and other operating expenses.
The full year revenue and profit guidance remained unchanged at a revenue of ¥1,880bn and an operating profit of ¥151bn compared to consensus revenue and OP of ¥1,856bn and ¥151.4bn respectively. However, the company is still evaluating options regarding its Myanmar JV, which could lead to a significant impact on Kirin’s 2021 guidance.


Kirin Seems Enticing from a Holdco Perspective, but Myanmar JV Still Poses Reputational & ESG Risks

<p>Tokyo Stock Exchange is expected to restructure its market structure in April 2022, with new guidelines encouraging companies to sell down cross holdings. <a href="https://www.smartkarma.com/entities/kirin-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:16977:1" rel="noopener">Kirin Holdings (2503 JP)</a>, <a href="https://www.smartkarma.com/entities/asahi-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:10482:1" rel="noopener">Asahi Group Holdings (2502 JP)</a> and <a href="https://www.smartkarma.com/entities/sapporo-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14085:1" rel="noopener">Sapporo Holdings (2501 JP)</a> have capital tie-ups with a number of popular restaurants chains in Japan. We believe the upcoming TSE restructure and the dislike among institutional investors of crossholdings could force these beer companies to sell their shareholdings in Japanese restaurants.</p>

Tokyo Stock Exchange is expected to restructure its market structure in April 2022, with new guidelines encouraging companies to sell down cross holdings. Kirin Holdings (2503 JP), Asahi Group Holdings (2502 JP) and Sapporo Holdings (2501 JP) have capital tie-ups with a number of popular restaurants chains in Japan. We believe the upcoming TSE restructure and the dislike among institutional investors of crossholdings could force these beer companies to sell their shareholdings in Japanese restaurants.

TSE Restructure Might Force Japanese Beer to Break Their Capital Tie-Ups with Restaurant Chains

<p><a target="_blank">Norges Bank </a>manages the Norwegian sovereign fund, which is the world’s largest sovereign wealth funds, with AUM of around $1.3 trillion. The fund is the 12<sup>th</sup> largest shareholder of the Japanese beverage company <a href="https://www.smartkarma.com/entities/kirin-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:16977:1" rel="noopener">Kirin Holdings (2503 JP)</a> with an ownership of 1.4% of Kirin’s share capital.</p><p>Yesterday, the Norwegian central bank said that it had put Kirin on a watchlist for possible exclusion from the sovereign wealth fund over Kirin’s ties with Myanmar Economic Holdings (MEHL).</p>

Norges Bank manages the Norwegian sovereign fund, which is the world’s largest sovereign wealth funds, with AUM of around $1.3 trillion. The fund is the 12th largest shareholder of the Japanese beverage company Kirin Holdings (2503 JP) with an ownership of 1.4% of Kirin’s share capital.Yesterday, the Norwegian central bank said that it had put Kirin on a watchlist for possible exclusion from the sovereign wealth fund over Kirin’s ties with Myanmar Economic Holdings (MEHL).

Norges Bank Puts Kirin On a Watchlist Over Ties with Myanmar Military Linked JV

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.

Equity Capital Markets

<p>BeerCo consists of <a href="https://www.smartkarma.com/entities/thai-beverage-pcl" target="_blank" data-smartkarma-citation="entities:3656:1" rel="noopener">Thai Beverage (THBEV SP)</a>'s beer business and operations except for the sale of Thai beer products outside Thailand. ThaiBev aims to conduct a public offering of up to 20% of the total number of issued ordinary shares of BeerCo through an SGX IPO. The IPO could raise as much as $2 billion, according to press reports. </p><p>In <a href="https://www.smartkarma.com/insights/thaibev-s-beerco-ipo-first-look" target="_blank" data-smartkarma-citation="insights:47885" rel="noopener">ThaiBev’s BeerCo IPO: First Look</a>, we noted that BeerCo has attractive fundamentals as it will return to growth driven by the recovery in on-premise consumption as the effect of the COVID-19 pandemic wanes. In <a href="https://www.smartkarma.com/insights/thaibev-s-beerco-ipo-valuation-first-look" target="_blank" data-smartkarma-citation="insights:47927" rel="noopener">ThaiBev’s BeerCo IPO: Valuation First Look</a>, we opined that BeerCo's rumoured valuation of $10 billion can be justified. </p><div class="content-highlight"><p>In this note, we take a close look at the BeerCo's 1QFY2021 results released alongside ThaiBev's 1QFY2021 results. BeerCo’s 1QFY2021 results are mixed as the top-line decline driven by largely one-off factors was accompanied by ongoing margin progression and cash generation. We continue to believe that BeerCo is well-placed to return to growth as the year unfolds due to a gradual recovery in on-premise consumption and undemanding comparable periods. </p></div>

BeerCo consists of Thai Beverage (THBEV SP)'s beer business and operations except for the sale of Thai beer products outside Thailand. ThaiBev aims to conduct a public offering of up to 20% of the total number of issued ordinary shares of BeerCo through an SGX IPO. The IPO could raise as much as $2 billion, according to press reports. In ThaiBev’s BeerCo IPO: First Look, we noted that BeerCo has attractive fundamentals as it will return to growth driven by the recovery in on-premise consumption as the effect of the COVID-19 pandemic wanes. In ThaiBev’s BeerCo IPO: Valuation First Look, we opined that BeerCo's rumoured valuation of $10 billion can be justified. In this note, we take a close look at the BeerCo's 1QFY2021 results released alongside ThaiBev's 1QFY2021 results. BeerCo’s 1QFY2021 results are mixed as the top-line decline driven by largely one-off factors was accompanied by ongoing margin progression and cash generation. We continue to believe that BeerCo is well-placed to return to growth as the year unfolds due to a gradual recovery in on-premise consumption and undemanding comparable periods. 

ThaiBev’s BeerCo Limited IPO: 1Q Results

<div><p>BeerCo consists of <a href="https://www.smartkarma.com/entities/thai-beverage-pcl" target="_blank" data-smartkarma-citation="entities:3656:1" rel="noopener">Thai Beverage (THBEV SP)</a>'s beer business and operations except for the sale of Thai beer products outside Thailand. ThaiBev aims to raise $2 billion and seek up to a $10 billion valuation for BeerCo, according to press reports.</p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/thaibev-s-beerco-ipo-first-look" target="_blank" data-smartkarma-citation="insights:47885" rel="noopener">ThaiBev’s BeerCo IPO: First Look</a>, we opined that BeerCo has attractive fundamentals as it will return to growth driven by the recovery in on-premise consumption as the effect of the COVID-19 pandemic wanes. Consequently, BeerCo warrants a closer look. Our first-look valuation analysis suggests that BeerCo's rumoured valuation of $10 billion can be justified. </p></div></div></div>

BeerCo consists of Thai Beverage (THBEV SP)'s beer business and operations except for the sale of Thai beer products outside Thailand. ThaiBev aims to raise $2 billion and seek up to a $10 billion valuation for BeerCo, according to press reports.In ThaiBev’s BeerCo IPO: First Look, we opined that BeerCo has attractive fundamentals as it will return to growth driven by the recovery in on-premise consumption as the effect of the COVID-19 pandemic wanes. Consequently, BeerCo warrants a closer look. Our first-look valuation analysis suggests that BeerCo's rumoured valuation of $10 billion can be justified. 

ThaiBev’s BeerCo IPO: Valuation First Look

Japan

Sapporo Holdings Ltd produces and sells alcoholic and non-alcoholic beverages.  The Company's products include beer, wine, brandy, whiskey, imported beer, soft drinks, juice, coffee, and tea.  SAPPORO HOLDINGS also operates real estate businesses.

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Sapporo Holdings (2501 JP)

Kirin Seems Enticing from a Holdco Perspective, but Myanmar JV Still Poses Reputational & ESG Risks

We think the market has already overreacted to Myanmar’s JV troubles, but with the Myanmar coup still in the news, there is a chance that Kirin...

Oshadhi Kumarasiri

TSE Restructure Might Force Japanese Beer to Break Their Capital Tie-Ups with Restaurant Chains

We expect the Japanese restaurants sector to remain oversold over medium term driven by the sell down of cross holdings by Japanese beer companies....

Oshadhi Kumarasiri

Norges Bank Puts Kirin On a Watchlist Over Ties with Myanmar Military Linked JV

We believe the market has already factored in the worst-case scenario for Kirin. That said, The Norges Bank putting Kirin on a watchlist could...

Oshadhi Kumarasiri

ThaiBev’s BeerCo Limited IPO: 1Q Results

BeerCo's 1QFY2021 results suggest that it is well-placed to return to growth as the year unfolds due to a gradual recovery in on-premise...

Arun George

ThaiBev’s BeerCo IPO: Valuation First Look

ThaiBev aims to raise $2bn and seek up to a $10bn valuation for BeerCo, according to press reports. Our first-look valuation analysis suggests that...

Arun George

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