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)

Penetration (the share of total retail sales) of e-commerce in Japan increased sharply in the past few years but still varies significantly by category.
The following insight looks at each consumer product category and how penetration has grown in the last few years and provides estimates of trends to 2025.
Even with these relatively cautious rates of growth, penetration rates are set to expand significantly in apparel, household &amp; interior, books &amp; media, and stationery but only retailers with form in successful online marketing will benefit from this with major negative implications for the many retailers that have failed to tackle the threat from online. This includes even major retailers like <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> which lags behind <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><a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Inc (4755 JP)</a><a href="https://www.smartkarma.com/entities/aeon-co-ltd" target="_blank" data-smartkarma-citation="entities:3:1" rel="noopener">  and </a><a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon.com Inc (AMZN US)</a> in the race to lead the battle for leadership in online food retailing.

Penetration (the share of total retail sales) of e-commerce in Japan increased sharply in the past few years but still varies significantly by category.
The following insight looks at each consumer product category and how penetration has grown in the last few years and provides estimates of trends to 2025.
Even with these relatively cautious rates of growth, penetration rates are set to expand significantly in apparel, household &amp; interior, books &amp; media, and stationery but only retailers with form in successful online marketing will benefit from this with major negative implications for the many retailers that have failed to tackle the threat from online. This includes even major retailers like Seven &amp; I Holdings (3382 JP) which lags behind Aeon Co Ltd (8267 JP), Rakuten Inc (4755 JP)  and Amazon.com Inc (AMZN US) in the race to lead the battle for leadership in online food retailing.

E-Commerce Penetration Increasing in All Retail Categories

Equity Bottom-Up

Zozo promised significant category expansion 18 months ago and it has delivered.Last year, the online mall added a dedicated footwear section complete with measuring tool and then a new section offering a large line up of DtoC brands.This Spring it will add cosmetics alongside yet another data collection tool, this time for skin analysis, as well as a new premium and luxury section with 70 brands.Zozo expects to become the biggest online cosmetics store within a year, a realistic goal (Zozo customers spend ¥82,200 a year on cosmetics, 2.2 times the average for Japan as a whole).In the meantime, GMVs and OP are improving strongly – while Zozo still has some headwinds in the form of competition and falling shipment values, the strong impetus from the consumer shift to digital, a decent management team, and its category and territory expansion bode well for the immediate future.

Zozo promised significant category expansion 18 months ago and it has delivered.Last year, the online mall added a dedicated footwear section complete with measuring tool and then a new section offering a large line up of DtoC brands.This Spring it will add cosmetics alongside yet another data collection tool, this time for skin analysis, as well as a new premium and luxury section with 70 brands.Zozo expects to become the biggest online cosmetics store within a year, a realistic goal (Zozo customers spend ¥82,200 a year on cosmetics, 2.2 times the average for Japan as a whole).In the meantime, GMVs and OP are improving strongly – while Zozo still has some headwinds in the form of competition and falling shipment values, the strong impetus from the consumer shift to digital, a decent management team, and its category and territory expansion bode well for the immediate future.

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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.

Zozo’s 3Q results on the 29th of Jan surprised to the upside and have driven the stock up 23.5% since then. Both revenue (¥42.0bn vs. consensus ¥38.8bn) and OP (¥13.9bn vs. consensus ¥9.8bn) beat significantly and the company also raised OP guidance from ¥39.5bn to ¥41.5bn, also touting expansion into luxury goods and cosmetics. The strong results and big stock price rise mirrors our other two conviction calls which just reported (Sony and Mazda), with the rather large caveat that Zozo was a conviction SHORT call. Nevertheless, we believe Zozo’s new, new initiatives will join their old, new initiatives as failures and we believe the strength of results are purely a function of pandemic inflated demand and a marketing push at PayPay Mall by Z Holdings. As such we remain undeterred and consider Zozo to be an extremely attractive short play that should lose well over 50% of its value over two to three years.

Zozo’s 3Q results on the 29th of Jan surprised to the upside and have driven the stock up 23.5% since then. Both revenue (¥42.0bn vs. consensus ¥38.8bn) and OP (¥13.9bn vs. consensus ¥9.8bn) beat significantly and the company also raised OP guidance from ¥39.5bn to ¥41.5bn, also touting expansion into luxury goods and cosmetics. The strong results and big stock price rise mirrors our other two conviction calls which just reported (Sony and Mazda), with the rather large caveat that Zozo was a conviction SHORT call. Nevertheless, we believe Zozo’s new, new initiatives will join their old, new initiatives as failures and we believe the strength of results are purely a function of pandemic inflated demand and a marketing push at PayPay Mall by Z Holdings. As such we remain undeterred and consider Zozo to be an extremely attractive short play that should lose well over 50% of its value over two to three years.

ZOZO – Getting Gamestopped on This 2021 Conviction Call

Telco/Internet specialist

Kirk Boodry

Redex Research

Z Holdings posted mix results for Q3 20 with a modest beat to revenue and operating profit expectations but a very strong message that revenue growth would slow in Q4 even as higher spending on new initiatives and one-off LINE merger costs would keep full-year results close to what markets considered conservative guidance. Operationally, advertising revenue was better than expected whilst the positive impact of the popular GoTo Travel campaign boosted O2O sales. The disappointing message on higher spending could be offset by positive messages on merger synergies with LINE (briefing in March) and the announcement of the FY21 outlook with year-end results (late April).

Z Holdings posted mix results for Q3 20 with a modest beat to revenue and operating profit expectations but a very strong message that revenue growth would slow in Q4 even as higher spending on new initiatives and one-off LINE merger costs would keep full-year results close to what markets considered conservative guidance. Operationally, advertising revenue was better than expected whilst the positive impact of the popular GoTo Travel campaign boosted O2O sales. The disappointing message on higher spending could be offset by positive messages on merger synergies with LINE (briefing in March) and the announcement of the FY21 outlook with year-end results (late April).  

Z Holdings Q3 20 Results: Robust Reiteration of FY20 Guidance Deflates Share Price Rally

APAC IPOs & Placements

Zhen Zhou, Toh

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.

Equity Capital Markets

Nippon Prologis Reit / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/nippon-prologis-reit-inc" target="_blank" data-smartkarma-citation="entities:15683:1" rel="noopener">Nippon Prologis Reit (3283 JP)</a> is looking to raise US$329m in its global follow-on offering to acquire three logistics properties.
We have covered the REIT's past placements in:
<div>
<ul>
<li>
<a href="https://www.smartkarma.com/insights/nippon-prologis-reit-placement-dpu-accretive-despite-lower-noi-yield-than-past-deals" target="_blank" data-smartkarma-citation="insights:35943" rel="noopener">Nippon Prologis REIT Placement: DPU Accretive Despite Lower NOI Yield than past Deals</a> in Jan 20</li>
<li>
<a href="https://www.smartkarma.com/insights/nippon-prologis-reit-placement-about-time-for-a-placement" target="_blank" rel="noopener">Nippon Prologis REIT Placement - About Time for a Placement </a> in June 2019</li>
<li>
<a href="https://www.smartkarma.com/insights/nippon-prologis-reit-placement-compares-well-with-prior-placements" target="_blank" data-smartkarma-citation="insights:18084" rel="noopener">Nippon Prologis REIT Placement - Compares Well with Prior Placements</a> in Feb 2018</li>
<li>
<a href="https://www.smartkarma.com/insights/nippon-prologis-placement-an-accretive-deal-in-a-stable-market" target="_blank" rel="noopener">Nippon Prologis Placement - An Accretive Deal in a Stable Market</a> in July 2017</li>
<li>
<a href="https://www.smartkarma.com/insights/nippon-prologis-reit-second-raise-this-year-smaller-size-and-lower-accretion" target="_blank" rel="noopener">Nippon Prologis REIT - Second Raise This Year; Smaller Size and Lower Accretion</a> in Dec 2016</li>
<li>
<a href="https://www.smartkarma.com/insights/nippon-prologis-reit-accretive-acquisition-and-good-past-deal-performance" target="_blank" rel="noopener">Nippon Prologis REIT - Accretive Acquisition and Good past Deal Performance</a> in Mar 2016</li>
</ul>
</div>

Nippon Prologis Reit (3283 JP) is looking to raise US$329m in its global follow-on offering to acquire three logistics properties.
We have covered the REIT's past placements in:



Nippon Prologis REIT Placement: DPU Accretive Despite Lower NOI Yield than past Deals in Jan 20

Nippon Prologis REIT Placement - About Time for a Placement  in June 2019

Nippon Prologis REIT Placement - Compares Well with Prior Placements in Feb 2018

Nippon Prologis Placement - An Accretive Deal in a Stable Market in July 2017

Nippon Prologis REIT - Second Raise This Year; Smaller Size and Lower Accretion in Dec 2016

Nippon Prologis REIT - Accretive Acquisition and Good past Deal Performance in Mar 2016



Nippon Prologis REIT Placement - It's that Time of the Year

Japan

ZOZO Inc operates internet shopping sites for apparel.  The Company also provides communication services relating to apparel such as blogs by fashion moguls and internet chat room for users.

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ZOZO Inc (3092 JP)

E-Commerce Penetration Increasing in All Retail Categories

A review of online market share in all key consumer categories in Japan, with forecasts for e-commerce market share to 2025 –the sharp growth will...

Michael Causton

Zozo on the March Again

Zozo is back with a stronger, more cohesive and collegiate management team, clear focus and the backing of Softbank to make it happen. The future...

Michael Causton

ZOZO – Getting Gamestopped on This 2021 Conviction Call

Zozo posted strong 3Q results driving a sharp rally in the stock, however, we believe the company's new initiatives are ill thought out and that...

Mio Kato

Nippon Prologis REIT Placement - It's that Time of the Year

Nippon Prologis REIT (NPR) is acquiring three new logistics properties from its parent company ProLogis K.K. (Prologis Inc (PLD US)).

Zhen Zhou, Toh

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52-week Range

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E-Commerce Penetration Increasing in All Retail Categories

A review of online market share in all key consumer categories in Japan, with forecasts for e-commerce market share to 2025 –the sharp growth will...

Michael Causton

Zozo on the March Again

Zozo is back with a stronger, more cohesive and collegiate management team, clear focus and the backing of Softbank to make it happen. The future...

Michael Causton

ZOZO – Getting Gamestopped on This 2021 Conviction Call

Zozo posted strong 3Q results driving a sharp rally in the stock, however, we believe the company's new initiatives are ill thought out and that...

Mio Kato

Z Holdings Q3 20 Results: Robust Reiteration of FY20 Guidance Deflates Share Price Rally

Z Holdings Q3 20 results were mixed and a firm message that conservative guidance on FY20 profits would not change threw cold water on the recent...

Kirk Boodry

Nippon Prologis REIT Placement - It's that Time of the Year

Nippon Prologis REIT (NPR) is acquiring three new logistics properties from its parent company ProLogis K.K. (Prologis Inc (PLD US)).

Zhen Zhou, Toh