Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

<p>Softbank has lifted its full-year guidance for revenue and operating profit after a second consecutive solid quarter, driven by growth in sales to enterprise customers and a smaller budget for coronavirus-related expenses. Looking past Q4, the outlook for FY21 appears positive despite anticipated revenue erosion from reductions in consumer mobile pricing. <a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank Corp (9434 JP)</a>  shares trade at a premium to the sector thanks to heavier Internet exposure from Z Holdings but this year it is delivering leading financial momentum too.  </p>

Softbank has lifted its full-year guidance for revenue and operating profit after a second consecutive solid quarter, driven by growth in sales to enterprise customers and a smaller budget for coronavirus-related expenses. Looking past Q4, the outlook for FY21 appears positive despite anticipated revenue erosion from reductions in consumer mobile pricing. Softbank Corp (9434 JP)  shares trade at a premium to the sector thanks to heavier Internet exposure from Z Holdings but this year it is delivering leading financial momentum too.  

Softbank Corp. Q3 20 Results: Full-Year Guidance up After Second Clear Financial Beat

<p>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).  </p>

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

'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)

<p style="text-align: center;"><strong>• RESULTS &amp; REVISIONS SUMMARY - 3rd FEBRUARY •</strong></p><div><p>Of Wednesday's 100 results announcements, 78% scored positively for earnings momentum despite trailing revenues falling by 5.7% on average and a 2.1 percentage point decline in operating margins. Only 8% of companies were in the red for the quarter.  64% of the 53 annual forecasts/revision announcements scored positively, and the average Forecast/Revision score was +1.2 points.</p></div><div>
<p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p>
<p style="text-align: left;">Wednesday's 'best' large-cap announcements came from <a href="https://www.smartkarma.com/entities/hirose-electric-co-ltd" target="_blank" data-smartkarma-citation="entities:13513:1" rel="noopener">Hirose Electric (6806 JP)</a>, <a href="https://www.smartkarma.com/entities/brother-industries-ltd" target="_blank" data-smartkarma-citation="entities:6114:1" rel="noopener">Brother Industries (6448 JP)</a>, and <a href="https://www.smartkarma.com/entities/sony-corp" target="_blank" data-smartkarma-citation="entities:563:1" rel="noopener">Sony (6758 JP)</a>. The 'worst' were from <a href="https://www.smartkarma.com/entities/eisai-co-ltd" target="_blank" data-smartkarma-citation="entities:21001:1" rel="noopener">Eisai (4523 JP)</a>, <a href="https://www.smartkarma.com/entities/square-enix-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15003:1" rel="noopener">Square Enix (9684 JP)</a>, and <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>.  We would also note the relatively modest improvement in the trading companies.</p>
</div><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/604/original/2021-02-04_04-53-07.png?1612382019" class="editor-image img-responsive" data-smartkarma-image-id="186604"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/605/original/2021-02-04_04-54-02.png?1612382054" class="editor-image img-responsive" data-smartkarma-image-id="186605"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/606/original/2021-02-04_04-54-35.png?1612382089" class="editor-image img-responsive" data-smartkarma-image-id="186606"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/607/original/2021-02-04_04-55-18.png?1612382134" class="editor-image img-responsive" data-smartkarma-image-id="186607"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/608/original/2021-02-04_04-56-09.png?1612382183" class="editor-image img-responsive" data-smartkarma-image-id="186608"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/609/original/2021-02-04_04-56-48.png?1612382221" class="editor-image img-responsive" data-smartkarma-image-id="186609"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/610/original/2021-02-04_04-57-14.png?1612382245" class="editor-image img-responsive" data-smartkarma-image-id="186610"></figure></section><div style="text-align: center;" class="content-caption">     Source for all charts &amp; tables: Japan Analytics</div>

• RESULTS &amp; REVISIONS SUMMARY - 3rd FEBRUARY •Of Wednesday's 100 results announcements, 78% scored positively for earnings momentum despite trailing revenues falling by 5.7% on average and a 2.1 percentage point decline in operating margins. Only 8% of companies were in the red for the quarter.  64% of the 53 annual forecasts/revision announcements scored positively, and the average Forecast/Revision score was +1.2 points.
• BEST &amp; WORST •
Wednesday's 'best' large-cap announcements came from Hirose Electric (6806 JP), Brother Industries (6448 JP), and Sony (6758 JP). The 'worst' were from Eisai (4523 JP), Square Enix (9684 JP), and Z Holdings (4689 JP).  We would also note the relatively modest improvement in the trading companies.
     Source for all charts &amp; tables: Japan Analytics

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​02/​​​​​​​​​​​​​​​03 Hirose, Eisai..

<p style="text-align: center;"><strong>• RELATIVE PRICE SCORE OUTLIERS •</strong></p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/304/original/2021-01-18_07-21-17.png?1611015356" class="editor-image img-responsive" data-smartkarma-image-id="183304"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/305/original/2021-01-19_09-18-35.png?1611015525" class="editor-image img-responsive" data-smartkarma-image-id="183305"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div></section><p><strong>POLES APART</strong><strong>&amp; ECHOES OF 2000</strong>- As the Japanese equity market continues to rise the 'spread' between the percentage of listed companies that are OverSold (Relative Price Score &lt;-2.0) and those that are OverBought (RPS &gt; 4.0) remains at extreme levels as does the spread in terms of market weight. 7.2% of listed companies are Oversold; while 2.2% are OverBought, but the latter account for 13.7% of market value; the former just 5.4%. The last time both pairs of metrics were at these levels was the 2000 technology bubble.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/321/original/2021-01-19_10-25-51.png?1611019564" class="editor-image img-responsive" data-smartkarma-image-id="183321"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/323/original/2021-01-19_10-27-10.png?1611019660" class="editor-image img-responsive" data-smartkarma-image-id="183323"></figure></section><p><strong>BLOW OUT</strong> - As was the case in 2000, the total number of Sectors either OverBought or Oversold is also at an extreme level having peaked at 13 in December. This number has been exceeded only twice in the last fifty years  - in December 1999 (16) and February 2000 (14).   </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/363/original/2021-01-19_12-45-46.png?1611027961" class="editor-image img-responsive" data-smartkarma-image-id="183363"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/183/367/original/2021-01-19_13-09-06.png?1611029374" class="editor-image img-responsive" data-smartkarma-image-id="183367"></figure></section><div><p>In the<strong> DETAIL</strong> section below, we provide an update on  Sector, Peer Group and individual company Relative Price Score trends and outliers and make some stock-specific recommendations.</p></div><div><div><div class="content-highlight"><p><strong>THE JAPAN ANALYTICS RELATIVE PRICE SCORE</strong> -  The Relative Price Score (RPS) is a measure of price performance relative to TOPIX calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices over the last 28 years and 24 months, respectively. As all companies on a comparable scale, 'Overbought' and 'Oversold' outliers and short-term changes in scoring can offer some trading opportunities. The data for all 3,919 currently-listed Companies is cap-weight-aggregated into Relative Price Scores for our 328 Peer Groups and 30 Sectors. The Overbought and Oversold outlier 'thresholds are set' at +4 &amp; -2 for Companies, +3 &amp; -1.5 for Peer Groups and +2 and -1 for Sectors, respectively. These thresholds equate with the top and bottom percentiles of over 3.2 million observations.</p></div></div></div>

• RELATIVE PRICE SCORE OUTLIERS •Source for all charts &amp; tables: Japan AnalyticsPOLES APART&amp; ECHOES OF 2000- As the Japanese equity market continues to rise the 'spread' between the percentage of listed companies that are OverSold (Relative Price Score &lt;-2.0) and those that are OverBought (RPS &gt; 4.0) remains at extreme levels as does the spread in terms of market weight. 7.2% of listed companies are Oversold; while 2.2% are OverBought, but the latter account for 13.7% of market value; the former just 5.4%. The last time both pairs of metrics were at these levels was the 2000 technology bubble.BLOW OUT - As was the case in 2000, the total number of Sectors either OverBought or Oversold is also at an extreme level having peaked at 13 in December. This number has been exceeded only twice in the last fifty years  - in December 1999 (16) and February 2000 (14).   In the DETAIL section below, we provide an update on  Sector, Peer Group and individual company Relative Price Score trends and outliers and make some stock-specific recommendations.THE JAPAN ANALYTICS RELATIVE PRICE SCORE -  The Relative Price Score (RPS) is a measure of price performance relative to TOPIX calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices over the last 28 years and 24 months, respectively. As all companies on a comparable scale, 'Overbought' and 'Oversold' outliers and short-term changes in scoring can offer some trading opportunities. The data for all 3,919 currently-listed Companies is cap-weight-aggregated into Relative Price Scores for our 328 Peer Groups and 30 Sectors. The Overbought and Oversold outlier 'thresholds are set' at +4 &amp; -2 for Companies, +3 &amp; -1.5 for Peer Groups and +2 and -1 for Sectors, respectively. These thresholds equate with the top and bottom percentiles of over 3.2 million observations.

🇯🇵 JAPAN • January Relative Price Scores -  Actionable Mean Reversion Trades

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. 

Event-Driven

<p>Walmart’s 18-year attempt to build a business in Japan ended last month when the US retailer announced it would sell 85% of its stake in Seiyu to KKR and Rakuten.</p><p>Seiyu has been transformed under Walmart’s leadership although it is much smaller than when Walmart arrived.</p><p>Now, with <a href="https://www.smartkarma.com/entities/kkr-co-inc" target="_blank" data-smartkarma-citation="entities:27333:1" rel="noopener">KKR &amp; Co Inc (KKR US)</a> and <a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Inc (4755 JP)</a> taking over, the hope is Seiyu could re-emerge as a leader in food e-commerce under Rakuten.</p><p><strong>The Seiyu chain could transform Rakuten’s logistics capability, allowing it to offer a comprehensive click &amp; collect service as well as use redundant store space for dark store fulfilment.</strong></p><p>What the new partners cannot afford to do is dither. Japan may well have room for more than one major online food retailer but just a couple of leaders will command the lion’s share.  </p><p><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>’s partnership with <a href="https://www.smartkarma.com/entities/life-corp" target="_blank" data-smartkarma-citation="entities:1743:1" rel="noopener">Life Corp (8194 JP)</a>, <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>’s Lohaco, <a href="https://www.smartkarma.com/entities/oisix-ra-daichi-inc" target="_blank" data-smartkarma-citation="entities:10145:1" rel="noopener">Oisix ra daichi (3182 JP)</a>, and, at some point, <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/ocado-group-plc" target="_blank" data-smartkarma-citation="entities:22067:1" rel="noopener">Ocado Group PLC (OCDO LN)</a> are the ones to beat.</p><p>Already the deal is causing a significant upset in supermarket and GMS retailing.</p>

Walmart’s 18-year attempt to build a business in Japan ended last month when the US retailer announced it would sell 85% of its stake in Seiyu to KKR and Rakuten.Seiyu has been transformed under Walmart’s leadership although it is much smaller than when Walmart arrived.Now, with KKR &amp; Co Inc (KKR US) and Rakuten Inc (4755 JP) taking over, the hope is Seiyu could re-emerge as a leader in food e-commerce under Rakuten.The Seiyu chain could transform Rakuten’s logistics capability, allowing it to offer a comprehensive click &amp; collect service as well as use redundant store space for dark store fulfilment.What the new partners cannot afford to do is dither. Japan may well have room for more than one major online food retailer but just a couple of leaders will command the lion’s share.  Amazon.com Inc (AMZN US)’s partnership with Life Corp (8194 JP), Z Holdings (4689 JP)’s Lohaco, Oisix ra daichi (3182 JP), and, at some point, Aeon Co Ltd (8267 JP)/Ocado Group PLC (OCDO LN) are the ones to beat.Already the deal is causing a significant upset in supermarket and GMS retailing.

KKR & Rakuten Ignite Online Food Battle with Seiyu Purchase

Japan

LY Corporation operates as an internet search engine "Yahoo! JAPAN". The Company provides electronic commerce and settlement finance services for small medium enterprises and individuals. LY also operates media business including search linked advertising and display advertising services.

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LY (4689 JP)

Softbank Corp. Q3 20 Results: Full-Year Guidance up After Second Clear Financial Beat

Softbank has lifted its full-year guidance for revenue and operating profit after a second consecutive solid quarter and appears optimistic on the...

Kirk Boodry

🇯🇵 JAPAN • Results & Revisions 02/03 Hirose, Eisai..

Of Wednesday's 100 results announcements, 78% scored positively for earnings momentum despite trailing revenues falling by 5.7% on average and a...

Campbell Gunn

🇯🇵 JAPAN • January Relative Price Scores - Actionable Mean Reversion Trades

As the Japanese equity market continues to rise the 'spread' between the percentage of listed companies that are OverSold and those that are...

Campbell Gunn

KKR & Rakuten Ignite Online Food Battle with Seiyu Purchase

E-commerce has less than 3% share of Japanese food retailing. This will change dramatically in the next 3 years, led by Amazon but also by Rakuten...

Michael Causton

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52-week Range

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Softbank Corp. Q3 20 Results: Full-Year Guidance up After Second Clear Financial Beat

Softbank has lifted its full-year guidance for revenue and operating profit after a second consecutive solid quarter and appears optimistic on the...

Kirk Boodry

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

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​02/​​​​​​​​​​​​​​​03 Hirose, Eisai..

Of Wednesday's 100 results announcements, 78% scored positively for earnings momentum despite trailing revenues falling by 5.7% on average and a...

Campbell Gunn

🇯🇵 JAPAN • January Relative Price Scores - Actionable Mean Reversion Trades

As the Japanese equity market continues to rise the 'spread' between the percentage of listed companies that are OverSold and those that are...

Campbell Gunn

KKR & Rakuten Ignite Online Food Battle with Seiyu Purchase

E-commerce has less than 3% share of Japanese food retailing. This will change dramatically in the next 3 years, led by Amazon but also by Rakuten...

Michael Causton

🇯🇵 JAPAN • Results & Revisions 02/03 Hirose, Eisai..