'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

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.

Thematic (Sector/Industry)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/158/693/original/2020-09-14_09-50-37.png?1600044664" class="editor-image img-responsive" data-smartkarma-image-id="158693"></figure><div class="content-caption">Source for all charts &amp; tables except as stated: Japan Analytics</div><p><strong>EQUITY-DRIVEN</strong> - Japan's aggregate Shareholders' Equity has appreciated by 45% since 2014 - an annual rate of 5.5% and has been one of the key achievements of the 'Abe era'. For the five years before 2012, Shareholders Equity was unchanged, buffeted by the 2008/9 financial crisis and the 3/11.  Although the equity market has responded well to the change in reserves, Japan's PBR has remained within a range of 1.05 to 1.38 over the last decade and is unchanged compared to 2010. In prior post-bubble 'lost' decades, the average PBR was 1.8 times. In other markets, the rise of intangible assets has called the use of Book/Price as a metric and the S&amp;P 500 PBR is now almost three times that of the Japan aggregate having bottomed at 1.78 in March 2009.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/158/694/original/File%202020-09-14%2010%2007%2037.jpeg?1600045681" class="editor-image img-responsive" data-smartkarma-image-id="158694"></figure><div class="content-caption">Source: multpl.com</div><p><strong>BOOK VALUE PER SHARE </strong>- In this Insight, we shall look at Japan's larger-cap companies (current market value &gt;¥100 billion) through the 'lens' of book value per share. Our focus will be less on the 'winners' and 'losers' than on those companies that have seen the least change in 'BVPS' over the last seven years. Our share count excludes treasury shares which is to the benefit of companies such as <a href="https://www.smartkarma.com/entities/nippon-telegraph-telephone-corporation" target="_blank" data-smartkarma-citation="entities:623:1" rel="noopener">NTT (9432 JP)</a> which has seen a 20% reduction in Net Shares Outstanding, but only a 9% increase in Shareholders' Equity. A BVPS growth metric does, however, flatter serial issuers of equity with declining share prices, such as <a href="https://www.smartkarma.com/entities/sosei-group-corp" target="_blank" data-smartkarma-citation="entities:770:1" rel="noopener">Sosei (4565 JP)</a>.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/158/696/original/2020-09-14_10-26-48.png?1600046818" class="editor-image img-responsive" data-smartkarma-image-id="158696"></figure><p><strong>WINNERS</strong> - As many may ask and for the record, our 'winning' thirty companies contains many of Japan's best-performing businesses and 'priciest 'stocks, such as <a href="https://www.smartkarma.com/entities/monotaro-co-ltd" target="_blank" data-smartkarma-citation="entities:15441:1" rel="noopener">Monotaro (3064 JP)</a>, <a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener">M3 (2413 JP)</a>, <a href="https://www.smartkarma.com/entities/gmo-payment-gateway-inc" target="_blank" data-smartkarma-citation="entities:1492:1" rel="noopener">GMO Payment Gateway (3769 JP)</a>, and <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>. Some of the more surprising entries are <a href="https://www.smartkarma.com/entities/mixi-inc" target="_blank" data-smartkarma-citation="entities:602:1" rel="noopener">mixi (2121 JP)</a> and <a href="https://www.smartkarma.com/entities/tokyo-electric-power-co-inc" target="_blank" data-smartkarma-citation="entities:15457:1" rel="noopener">Tokyo Electric Power (9501 JP)</a>.  As an equally-weighted portfolio, this group has outperformed by 30% over one year and by 11% over the last three months.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/158/697/original/2020-09-14_10-33-13.png?1600047204" class="editor-image img-responsive" data-smartkarma-image-id="158697"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/158/698/original/2020-09-14_10-33-41.png?1600047231" class="editor-image img-responsive" data-smartkarma-image-id="158698"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/158/701/original/2020-09-14_10-47-56.png?1600048087" class="editor-image img-responsive" data-smartkarma-image-id="158701"></figure><p><strong>LOSERS</strong> - Our list of losers, who have collectively underperformed by 9% over one year, have many of Japan's weaker business models (shipping, oil &amp; gas, paper, copiers, gaming machines. The list also features some of the less-astute management 'teams' (<a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba (6502 JP)</a>, <a href="https://www.smartkarma.com/entities/nissan-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:72:1" rel="noopener">Nissan (7201 JP)</a>, <a href="https://www.smartkarma.com/entities/kirin-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:16977:1" rel="noopener">Kirin (2503 JP)</a>, <a href="https://www.smartkarma.com/entities/lixil-group-corp" target="_blank" data-smartkarma-citation="entities:454:1" rel="noopener">Lixil (5938 JP)</a>, and <a href="https://www.smartkarma.com/entities/aeon-co-ltd" target="_blank" data-smartkarma-citation="entities:3:1" rel="noopener">Aeon (8267 JP)</a>).  Also among the latter are two medical-related business - the now remained <a href="https://www.smartkarma.com/entities/h-u-group-holdings-inc" target="_blank" data-smartkarma-citation="entities:16580:1" rel="noopener">H.U. Group (4544 JP)</a> (formerly Miraca) and recent Bain PE target <a href="https://www.smartkarma.com/entities/nichii-gakkan-co" target="_blank" data-smartkarma-citation="entities:6790:1" rel="noopener">Nichii Gakkan (9792 JP)</a>.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/158/706/original/2020-09-14_10-57-45.png?1600048692" class="editor-image img-responsive" data-smartkarma-image-id="158706"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/158/707/original/2020-09-14_10-59-22.png?1600048774" class="editor-image img-responsive" data-smartkarma-image-id="158707"></figure><p>In the <strong>DETAIL</strong> section below, we all review the large companies that have seen the least change in BVPS over the last seven years and those with the lowest BVPS volatility over the same period. Our lists contain quite a few surprises.</p>

Source for all charts &amp; tables except as stated: Japan AnalyticsEQUITY-DRIVEN - Japan's aggregate Shareholders' Equity has appreciated by 45% since 2014 - an annual rate of 5.5% and has been one of the key achievements of the 'Abe era'. For the five years before 2012, Shareholders Equity was unchanged, buffeted by the 2008/9 financial crisis and the 3/11.  Although the equity market has responded well to the change in reserves, Japan's PBR has remained within a range of 1.05 to 1.38 over the last decade and is unchanged compared to 2010. In prior post-bubble 'lost' decades, the average PBR was 1.8 times. In other markets, the rise of intangible assets has called the use of Book/Price as a metric and the S&amp;P 500 PBR is now almost three times that of the Japan aggregate having bottomed at 1.78 in March 2009.Source: multpl.comBOOK VALUE PER SHARE - In this Insight, we shall look at Japan's larger-cap companies (current market value &gt;¥100 billion) through the 'lens' of book value per share. Our focus will be less on the 'winners' and 'losers' than on those companies that have seen the least change in 'BVPS' over the last seven years. Our share count excludes treasury shares which is to the benefit of companies such as NTT (9432 JP) which has seen a 20% reduction in Net Shares Outstanding, but only a 9% increase in Shareholders' Equity. A BVPS growth metric does, however, flatter serial issuers of equity with declining share prices, such as Sosei (4565 JP).WINNERS - As many may ask and for the record, our 'winning' thirty companies contains many of Japan's best-performing businesses and 'priciest 'stocks, such as Monotaro (3064 JP), M3 (2413 JP), GMO Payment Gateway (3769 JP), and Kobe Bussan (3038 JP). Some of the more surprising entries are mixi (2121 JP) and Tokyo Electric Power (9501 JP).  As an equally-weighted portfolio, this group has outperformed by 30% over one year and by 11% over the last three months.LOSERS - Our list of losers, who have collectively underperformed by 9% over one year, have many of Japan's weaker business models (shipping, oil &amp; gas, paper, copiers, gaming machines. The list also features some of the less-astute management 'teams' (Toshiba (6502 JP), Nissan (7201 JP), Kirin (2503 JP), Lixil (5938 JP), and Aeon (8267 JP)).  Also among the latter are two medical-related business - the now remained H.U. Group (4544 JP) (formerly Miraca) and recent Bain PE target Nichii Gakkan (9792 JP).In the DETAIL section below, we all review the large companies that have seen the least change in BVPS over the last seven years and those with the lowest BVPS volatility over the same period. Our lists contain quite a few surprises.

🇯🇵 Japan • Every Shareholder Left Behind - The Book Value Per Share Metric

Equity Capital Markets

Asahi Group Holdings / Equity Capital Markets

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/157/615/original/2020-09-08_07-30-08.png?1599517826" class="editor-image img-responsive" data-smartkarma-image-id="157615"></figure><div class="content-caption">Source for all charts: Japan Analytics</div><p><strong><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></strong>- Following AGH's successful share placement to finance the CUB acquisition, this Insight provides new and long-suffering shareholders with an evaluation of the company's performance and valuation. Where relevant, we shall compare AGH with its domestic rival <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>.  The thirty-year correlation between the two company's share prices is 0.89.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/157/623/original/2020-09-08_10-09-47.png?1599527397" class="editor-image img-responsive" data-smartkarma-image-id="157623"></figure>

Source for all charts: Japan AnalyticsAsahi Group Holdings (2502 JP)- Following AGH's successful share placement to finance the CUB acquisition, this Insight provides new and long-suffering shareholders with an evaluation of the company's performance and valuation. Where relevant, we shall compare AGH with its domestic rival Kirin Holdings (2503 JP).  The thirty-year correlation between the two company's share prices is 0.89.

🇯🇵 Japan • Asahi Group Holdings (2502 JP) - A Return & Valuation Perspective

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Equity Bottom-Up

<p>After the Australian government blocked Kirin’s proposed sale of Lion Dairy &amp; Drinks (LDD) to <a href="https://www.smartkarma.com/entities/china-mengniu-dairy-co" target="_blank" data-smartkarma-citation="entities:354:1" rel="noopener">China Mengniu Dairy Co (2319 HK)</a> in late August, <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> announced that it has terminated the agreed-upon contract with China Mengniu Dairy and is reassessing its plans for the Lion Dairy and Drinks business.</p><p>Last week, Blomberg reported, citing unnamed sources, that Kirin is restarting conversations with those who previously conveyed interest in buying the business.</p>

After the Australian government blocked Kirin’s proposed sale of Lion Dairy &amp; Drinks (LDD) to China Mengniu Dairy Co (2319 HK) in late August, Kirin Holdings (2503 JP) announced that it has terminated the agreed-upon contract with China Mengniu Dairy and is reassessing its plans for the Lion Dairy and Drinks business.Last week, Blomberg reported, citing unnamed sources, that Kirin is restarting conversations with those who previously conveyed interest in buying the business.

Kirin Restarts LDD Sale After China Mengniu Deal Falls Through

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<div>
<p><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> announced its plans to raise around US$1.6bn (JPY172bn) to fund the acquisition of CUB on 25th Aug 2020, you can read my thoughts on the deal in <a href="https://www.smartkarma.com/insights/asahi-group-placement-finally-it-s-time-to-lift-the-overhang-trade-ideas-from-past-large-deals" target="_blank" rel="noopener">Asahi Group Placement - Finally, It’s Time to Lift the Overhang! Trade Ideas from past Large Deals.</a></p>
<p>Despite the company issuing new and treasury share worth nearly 10% of its existing shares, the shares have held up remarkably well. </p>
<p>In this insight, I'll compare the shares performance versus how past large deals have traded in Japan.</p>
</div><div><p>Previous insights on the deal:</p></div><div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/trade-idea-asahi-group-usd2bn-placement-overhang" target="_blank" rel="noopener">Trade Idea: Asahi Group - USD2bn Placement Overhang</a></li>
<li><a href="https://www.smartkarma.com/insights/placement-trade-idea-asahi-group-accc-approval-makes-us-2bn-placement-just-a-matter-of-time" target="_blank" rel="noopener">Placement/​Trade Idea: Asahi Group - ACCC Approval Makes US$2bn Placement Just a Matter of Time</a></li>
<li><a href="https://www.smartkarma.com/insights/placement-trade-idea-asahi-group-wants-to-delay-the-inevitable-us-2bn-block" target="_blank" rel="noopener">Placement/​​Trade Idea: Asahi Group - Wants to Delay the Inevitable US$2bn Block</a></li>
<li><a href="https://www.smartkarma.com/insights/asahi-group-placement-tracker-no-signs-of-a-placement-even-though-net-debt-to-ebitda-is-at-8-2x" target="_blank" rel="noopener">Asahi Group Placement Tracker - No Signs of a Placement Even Though Net Debt to EBITDA Is at 8.2x</a></li>
</ul></div>


Asahi Group Holdings (2502 JP) announced its plans to raise around US$1.6bn (JPY172bn) to fund the acquisition of CUB on 25th Aug 2020, you can read my thoughts on the deal in Asahi Group Placement - Finally, It’s Time to Lift the Overhang! Trade Ideas from past Large Deals.
Despite the company issuing new and treasury share worth nearly 10% of its existing shares, the shares have held up remarkably well. 
In this insight, I'll compare the shares performance versus how past large deals have traded in Japan.
Previous insights on the deal:
Trade Idea: Asahi Group - USD2bn Placement Overhang
Placement/​Trade Idea: Asahi Group - ACCC Approval Makes US$2bn Placement Just a Matter of Time
Placement/​​Trade Idea: Asahi Group - Wants to Delay the Inevitable US$2bn Block
Asahi Group Placement Tracker - No Signs of a Placement Even Though Net Debt to EBITDA Is at 8.2x


Asahi Group Placement - Quick Note - Needs to Correct Some More or Offer a Bigger Discount

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. 

<p><a href="https://www.smartkarma.com/entities/lawson-inc" target="_blank" data-smartkarma-citation="entities:1040:1" rel="noopener">Lawson Inc (2651 JP)</a>  has begun the rollout of a completely updated private brand, along with new ranges of regional gourmet foods. The move brings Lawson back into the race against Seven &amp; I's preeminent private brand, Seven Premium and adds to other new initiatives like its new partnership with Muji and Lawson Bank which should provide new sources of income and higher margins in the next two years.</p>

Lawson Inc (2651 JP)  has begun the rollout of a completely updated private brand, along with new ranges of regional gourmet foods. The move brings Lawson back into the race against Seven &amp; I's preeminent private brand, Seven Premium and adds to other new initiatives like its new partnership with Muji and Lawson Bank which should provide new sources of income and higher margins in the next two years.

Japan

Kirin Holdings Company, Limited produces beer, soft drinks, food products, whisky, and pharmaceuticals.  The Company sells its products in Japan and overseas.

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Kirin Holdings (2503 JP)

🇯🇵 Japan • Asahi Group Holdings (2502 JP) - A Return & Valuation Perspective

Asahi Group Holdings (2502 JP)

Campbell Gunn

Kirin Restarts LDD Sale After China Mengniu Deal Falls Through

After the Australian government blocked Kirin’s proposed sale of Lion Diary & Drinks (LDD) to China Mengniu Dairy in late August, Kirin...

Oshadhi Kumarasiri

Asahi Group Placement - Quick Note - Needs to Correct Some More or Offer a Bigger Discount

Asahi Group Holdings (2502 JP) announced its plans to raise around US$1.6bn (JPY172bn) to fund the acquisition of CUB on 25th Aug. The acquisition...

Sumeet Singh

Lawson Relaunches Private Brand

Lawson Inc (2651 JP) has begun the rollout of a completely updated private brand, along with new ranges of regional gourmet foods. The move brings...

Michael Causton

Price Gauge

52-week Range

Market Cap (USDm)

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🇯🇵 Japan • Every Shareholder Left Behind - The Book Value Per Share Metric

EQUITY-DRIVEN - Japans

Campbell Gunn

🇯🇵 Japan • Asahi Group Holdings (2502 JP) - A Return & Valuation Perspective

Asahi Group Holdings (2502 JP)

Campbell Gunn

Kirin Restarts LDD Sale After China Mengniu Deal Falls Through

After the Australian government blocked Kirin’s proposed sale of Lion Diary & Drinks (LDD) to China Mengniu Dairy in late August, Kirin...

Oshadhi Kumarasiri

Asahi Group Placement - Quick Note - Needs to Correct Some More or Offer a Bigger Discount

Asahi Group Holdings (2502 JP) announced its plans to raise around US$1.6bn (JPY172bn) to fund the acquisition of CUB on 25th Aug. The acquisition...

Sumeet Singh

Lawson Relaunches Private Brand

Lawson Inc (2651 JP) has begun the rollout of a completely updated private brand, along with new ranges of regional gourmet foods. The move brings...

Michael Causton