Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

Z Holdings closed FY19 with financial results slightly ahead of company estimates that had been firmed up last quarter.  The company did not provide any financial or dividend guidance - as with DoCoMo earlier this week, it said it will wait until it can provide reasonable estimates.  There were however some encouraging signs in the data as usage growth and ad revenue growth hit three-year highs whilst eCommerce platform sales continue to grow the mid-teens organically (pre-Zozo). There has been some downside (primarily lower O2O and related fintech), but it does appears Z Holdings is in good shape to weather the storm.

Z Holdings closed FY19 with financial results slightly ahead of company estimates that had been firmed up last quarter.  The company did not provide any financial or dividend guidance - as with DoCoMo earlier this week, it said it will wait until it can provide reasonable estimates.  There were however some encouraging signs in the data as usage growth and ad revenue growth hit three-year highs whilst eCommerce platform sales continue to grow the mid-teens organically (pre-Zozo). There has been some downside (primarily lower O2O and related fintech), but it does appears Z Holdings is in good shape to weather the storm. 

Z Holdings: FY19 Results Slightly Ahead of Guidance Range as Ad Revenue Growth Hits Three-Year High

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.

We have been unabashedly negative on Zozo for closing in on two years and the stock is down 50% in that time. We remain negative. 4Q numbers improved slightly compared to the disastrous 3Q but this appears to have been driven by COVID and PayPay Mall and we do not consider these factors to be capable of sustaining significant growth. Active member growth was just 0.57% QoQ and we believe the underlying numbers support our stance that Zozo has hit the saturation wall.

We have been unabashedly negative on Zozo for closing in on two years and the stock is down 50% in that time. We remain negative. 4Q numbers improved slightly compared to the disastrous 3Q but this appears to have been driven by COVID and PayPay Mall and we do not consider these factors to be capable of sustaining significant growth. Active member growth was just 0.57% QoQ and we believe the underlying numbers support our stance that Zozo has hit the saturation wall.

Zozo – 6% Revenue Growth Does Not Justify 15x EV/OP

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Thematic (Sector/Industry)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/130/266/original/2020-04-24_08-07-36.png?1588109848" class="editor-image img-responsive" data-smartkarma-image-id="130266"></figure><div class="content-caption">Source • Japan Analytics</div>29TH APRIL - In the DETAIL below, we shall review Tuesday's large-cap results, revisions and initial forecast announcements.  The positive/neutral/negative balance for the 117 results was 52:3:62; and for the 76 revisions or initial forecasts, the split was 22:2:52. Of the 82 companies announcing annual results, only 22 made forecasts for the current year, while <a href="https://www.smartkarma.com/entities/shimano-inc" target="_blank" data-smartkarma-citation="entities:3777:1" rel="noopener">Shimano (7309 JP)</a> withdrew its FY2020 forecast. Our Sector Score chart is now showing some dramatic changes. Consumer Services is now the lowest-scoring Sector following <a href="https://www.smartkarma.com/entities/oriental-land-co-ltd" target="_blank" data-smartkarma-citation="entities:13517:1" rel="noopener">Oriental Land (4661 JP)</a>'s poor full-year results. In comparison, significant declines have been seen in Transportation &amp; Logistics (<a href="https://www.smartkarma.com/entities/east-japan-railway-co" target="_blank" data-smartkarma-citation="entities:14271:1" rel="noopener">East Japan Railway Co (9020 JP)</a> and Utilities (<a href="https://www.smartkarma.com/entities/tokyo-gas-co-ltd" target="_blank" data-smartkarma-citation="entities:2332:1" rel="noopener">Tokyo Gas (9531 JP))</a>.  The Internet Content &amp; Services (<a href="https://www.smartkarma.com/entities/zozo-inc" target="_blank" data-smartkarma-citation="entities:18379:1" rel="noopener">ZOZO (3092 JP)</a>) and Chemicals ( <a href="https://www.smartkarma.com/entities/shin-etsu-chemical-co-ltd" target="_blank" data-smartkarma-citation="entities:4481:1" rel="noopener">Shin Etsu Chemical (4063 JP)</a>) Sectors are the largest gainers.

Source • Japan Analytics29TH APRIL - In the DETAIL below, we shall review Tuesday's large-cap results, revisions and initial forecast announcements.  The positive/neutral/negative balance for the 117 results was 52:3:62; and for the 76 revisions or initial forecasts, the split was 22:2:52. Of the 82 companies announcing annual results, only 22 made forecasts for the current year, while Shimano (7309 JP) withdrew its FY2020 forecast. Our Sector Score chart is now showing some dramatic changes. Consumer Services is now the lowest-scoring Sector following Oriental Land (4661 JP)'s poor full-year results. In comparison, significant declines have been seen in Transportation &amp; Logistics (East Japan Railway Co (9020 JP) and Utilities (Tokyo Gas (9531 JP)).  The Internet Content &amp; Services (ZOZO (3092 JP)) and Chemicals ( Shin Etsu Chemical (4063 JP)) Sectors are the largest gainers. 

🇯🇵 JAPAN • Results & Revisions Update 29th April - Mit.Chem, TKC, Keyence, ZOZO, Shimano. Or.Land

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. 

It has taken <a href="https://www.smartkarma.com/entities/z-holdings-corp" target="_blank" data-smartkarma-citation="entities:19603:1" rel="noopener">Z Holdings (4689 JP)</a> just six months to transform from owners of just the third-largest e-commerce mall to become a potential leader in online ecosystems.With online demand increasing during the health crisis, last month Z Holdings announced the accelerated introduction of a new logistics and fulfilment system offered in conjunction with Yamato Transport.The new system will primarily support PayPay Mall and Yahoo! Shopping vendors, but will soon be available as a SAAS solution for other e-commerce providers.This is a smart move by Z Holdings in the battle with Rakuten to catch up with Amazon Japan on fulfilment capability and slick customer service.

It has taken Z Holdings (4689 JP) just six months to transform from owners of just the third-largest e-commerce mall to become a potential leader in online ecosystems.With online demand increasing during the health crisis, last month Z Holdings announced the accelerated introduction of a new logistics and fulfilment system offered in conjunction with Yamato Transport.The new system will primarily support PayPay Mall and Yahoo! Shopping vendors, but will soon be available as a SAAS solution for other e-commerce providers.This is a smart move by Z Holdings in the battle with Rakuten to catch up with Amazon Japan on fulfilment capability and slick customer service.

Z Holdings and Yamato Create Fulfilment Service for All to Rival Rakuten and Amazon

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/129/213/original/File%202020-04-23%205%2019%2052.jpeg?1587587091" class="editor-image img-responsive" data-smartkarma-image-id="129213"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/129/215/original/File%202020-04-23%205%2019%2008.jpeg?1587587183" class="editor-image img-responsive" data-smartkarma-image-id="129215"></figure><div class="content-caption">Source • Marco Piani</div>TIMELINES - The excellent timelines prepared by @Marco_Piani provide a novel interpretation of Japan's 'rank' in the progression of COVID-19 on terms of both cases and deaths. The data confirms that Japan is 'lagging' the World in both respects. Also of note are the 'second waves' that are appearing in several countries, including South Africa, Argentina, Poland and the Philippines. <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/129/216/original/2020-04-23_05-29-31.png?1587587408" class="editor-image img-responsive" data-smartkarma-image-id="129216"></figure><div class="content-caption">Source • Arbor Data Science</div>GOING-OUT RELATED - As the hospital system overflows, the government is becoming more strident in its attempts to have greater compliance with the current 'suggestions' on social distancing and working from home diverting attention from their failure to anticipate the breakdown of the medical system.  PM Abe has resorted to pleading with citizens not to make their traditional home-town visits over Golden Week, while the still-crowded supermarkets may be required to limit the number of shoppers at any one time. As is evident from the Google search data above, Japan (and Singapore and latterly Indonesia) are on diverging 'paths' from most European countries, and it is premature to consider any exit strategies. We conclude that the current states of emergency across all Japanese prefectures will be extended beyond the end of Golden Week on 6th May, probably to the end of next month.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/129/259/original/2020-04-23_07-06-14.png?1587593194" class="editor-image img-responsive" data-smartkarma-image-id="129259"></figure><div class="content-caption">Source • Japan Analytics</div>IMPENDING PEAK - The first of the March year-end company results were announced yesterday and will become a deluge over the eight trading days either side of the Golden Week holidays. As many companies are now avoiding interim and annual forecasts, the absolute number of data points will be reduced. In the DETAIL below, we shall review the results, revisions and initial forecast announcements made yesterday.  The positive/neutral/negative balance for the nine results was 5:0:4; and for the 23 revisions/forecasts, the split was 10:1:12. Of the six companies reporting annual results, only one made a forecast for the current year. Dry cleaner <a href="https://www.smartkarma.com/entities/hakuyosha-company-ltd" target="_blank" data-smartkarma-citation="entities:4492:1" rel="noopener">Hakuyosha (9731 JP)</a> withdrew its December year-end forecasts. Three companies cut their dividends; two increased. <blockquote>Everybody talks as if they know what is going to happen - nobody knows what is going to happen - Charlie Munger</blockquote>

Source • Marco PianiTIMELINES - The excellent timelines prepared by @Marco_Piani provide a novel interpretation of Japan's 'rank' in the progression of COVID-19 on terms of both cases and deaths. The data confirms that Japan is 'lagging' the World in both respects. Also of note are the 'second waves' that are appearing in several countries, including South Africa, Argentina, Poland and the Philippines. Source • Arbor Data ScienceGOING-OUT RELATED - As the hospital system overflows, the government is becoming more strident in its attempts to have greater compliance with the current 'suggestions' on social distancing and working from home diverting attention from their failure to anticipate the breakdown of the medical system.  PM Abe has resorted to pleading with citizens not to make their traditional home-town visits over Golden Week, while the still-crowded supermarkets may be required to limit the number of shoppers at any one time. As is evident from the Google search data above, Japan (and Singapore and latterly Indonesia) are on diverging 'paths' from most European countries, and it is premature to consider any exit strategies. We conclude that the current states of emergency across all Japanese prefectures will be extended beyond the end of Golden Week on 6th May, probably to the end of next month.Source • Japan AnalyticsIMPENDING PEAK - The first of the March year-end company results were announced yesterday and will become a deluge over the eight trading days either side of the Golden Week holidays. As many companies are now avoiding interim and annual forecasts, the absolute number of data points will be reduced. In the DETAIL below, we shall review the results, revisions and initial forecast announcements made yesterday.  The positive/neutral/negative balance for the nine results was 5:0:4; and for the 23 revisions/forecasts, the split was 10:1:12. Of the six companies reporting annual results, only one made a forecast for the current year. Dry cleaner Hakuyosha (9731 JP) withdrew its December year-end forecasts. Three companies cut their dividends; two increased. Everybody talks as if they know what is going to happen - nobody knows what is going to happen - Charlie Munger

🇯🇵 JAPAN • Revisions & Results 22nd April - Timelines + JAL/ZOZO/Mizuno/CyberAgent

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)

Z Holdings: FY19 Results Slightly Ahead of Guidance Range as Ad Revenue Growth Hits Three-Year High

Z Holdings closed FY19 with financial results slightly ahead of company estimates that had been firmed up last quarter. The company did not...

Kirk Boodry

Zozo – 6% Revenue Growth Does Not Justify 15x EV/OP

We have been unabashedly negative on Zozo for closing in on two years and the stock is down 50% in that time. We remain negative. 4Q numbers...

Mio Kato

🇯🇵 JAPAN • Results & Revisions Update 29th April - Mit.Chem, TKC, Keyence, ZOZO, Shimano. Or.Land

29TH APRIL - In the DETAIL below, we shall review Tuesday's large-cap results, revisions and initial forecast announcements. The...

Campbell Gunn

Z Holdings and Yamato Create Fulfilment Service for All to Rival Rakuten and Amazon

It has taken Z Holdings (4689 JP) just six months to transform from owners of just the third-largest e-commerce mall to become a potential leader...

Michael Causton

🇯🇵 JAPAN • Revisions & Results 22nd April - Timelines + JAL/ZOZO/Mizuno/CyberAgent

TIMELINES - The excellent timelines prepared by @Marco_Piani provide a novel interpretation of Japan's 'rank' in the progression of COVID-19 on...

Campbell Gunn

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