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. 

Equity Bottom-Up

<p>The war between <a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank Corp (9434 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> and Rakuten for leadership in digital ecosystems has seen Z Holdings acquire new partners and subsidiaries, and take leadership in cashless payments and then messaging through its merger with <a href="https://www.smartkarma.com/entities/line-corp" target="_blank" data-smartkarma-citation="entities:22772:1" rel="noopener">LINE Corp (3938 JP)</a>.</p><p>Now <a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Inc (4755 JP)</a> is fighting back with a truly game changing deal with <a href="https://www.smartkarma.com/entities/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post Holdings (6178 JP)</a> that could provide the reach and finance to develop new synergies in e-commerce, logistics, cashless payments and points, banking, insurance and mobile.</p><p><strong>This is a major reset in the rivalry in digital commerce, making Rakuten almost like a state-backed enterprise – with all the benefits that implies. Z Holdings should be worried.</strong></p>

The war between Softbank Corp (9434 JP)/Z Holdings (4689 JP) and Rakuten for leadership in digital ecosystems has seen Z Holdings acquire new partners and subsidiaries, and take leadership in cashless payments and then messaging through its merger with LINE Corp (3938 JP).Now Rakuten Inc (4755 JP) is fighting back with a truly game changing deal with Japan Post Holdings (6178 JP) that could provide the reach and finance to develop new synergies in e-commerce, logistics, cashless payments and points, banking, insurance and mobile.This is a major reset in the rivalry in digital commerce, making Rakuten almost like a state-backed enterprise – with all the benefits that implies. Z Holdings should be worried.

Gamechanger: Rakuten’s Win-Win Alliance with Japan Post

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.

<p>Our sceptical position on the elevated multiples for tech stocks has been relatively consistent over time. As with all bubbles, despite valuations clearly being out of touch with reality, markets have continued to trend upwards, and in many cases the least attractive stocks have done the best. We would argue that signs of liquidity issues at Ark and the rapid implosion of Archegos herald the beginning of the end.</p>

Our sceptical position on the elevated multiples for tech stocks has been relatively consistent over time. As with all bubbles, despite valuations clearly being out of touch with reality, markets have continued to trend upwards, and in many cases the least attractive stocks have done the best. We would argue that signs of liquidity issues at Ark and the rapid implosion of Archegos herald the beginning of the end.

Softbank – Is Archegos the Bear Stearns CDO Funds in the Coalmine?

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.

Equity Capital Markets

<div>
<p><a href="https://www.smartkarma.com/entities/freee-kk" target="_blank" data-smartkarma-citation="entities:28424:1" rel="noopener">Freee (4478 JP)</a> (freee) is looking to raise around US$400m via selling a mix of primary and secondary shares. </p>
<p>We had looked at the company at the time of listing, links to our previous notes are below: </p>
</div><div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/freee-pre-ipo-has-been-growing-fast-but-missing-data-points-leave-quite-a-few-niggling-doubts" target="_blank" rel="noopener">freee K.K. pre-IPO - Has been growing fast but missing data points leave quite a few niggling doubts,</a></li>
<li><a href="https://www.smartkarma.com/insights/freee-k-k-pre-ipo-the-battle-is-far-from-over" target="_blank" rel="noopener">Freee K. K. Pre-IPO - The Battle Is Far from Over,</a></li>
<li>
<a href="https://www.smartkarma.com/insights/free-k-k-ipo-it-s-not-exactly-freee-but-looks-ok-at-the-lower-end" target="_blank" rel="noopener">Freee K.K. IPO - It’s Not Exactly Free but Looks Ok at the Lower-End</a>, and</li>
<li><a href="https://www.smartkarma.com/insights/freee-ipo-trading-priced-at-par-to-comp-it-now-boils-down-to-how-much-premium-it-can-trade-at" target="_blank" rel="noopener">Freee IPO Trading - Priced at Par to Comp, It Now Boils Down to How Much Premium It Can Trade At</a></li>
</ul></div><div><p>In this note, we'll run the deal through our ECM framework and talk about deal dynamics.</p></div>


Freee (4478 JP) (freee) is looking to raise around US$400m via selling a mix of primary and secondary shares. 
We had looked at the company at the time of listing, links to our previous notes are below: 

freee K.K. pre-IPO - Has been growing fast but missing data points leave quite a few niggling doubts,
Freee K. K. Pre-IPO - The Battle Is Far from Over,

Freee K.K. IPO - It’s Not Exactly Free but Looks Ok at the Lower-End, and
Freee IPO Trading - Priced at Par to Comp, It Now Boils Down to How Much Premium It Can Trade At
In this note, we'll run the deal through our ECM framework and talk about deal dynamics.

Freee Placement - Needs to Correct by a Whole Lot More

Telco/Internet specialist

Kirk Boodry

Redex Research

<p>Coupang’s monster IPO is very likely to be the highlight of Vision Fund 1 and provides a solid counterpoint to the WeWork debacle early in the IPO cycle but there remains a significant number of portfolio companies still to come. At Q3 results, Softbank talked about an ongoing parade of companies coming to market with 10-15 annual events but there is a push to get companies to list whilst markets are still receptive and FY21 could see up to 20 companies hit public markets.</p><p>That is positive for Softbank shares which tend to rise in anticipation of surfaced value, again assuming the IPO market remains open. It also serves to highlight the main risk for Softbank shares as a sustained tech sell-off would lower the value of the Vision Fund portfolio, increase concerns about Northstar and lower expectations for the current crop of IPO hopefuls.</p><h2><strong>Highlights</strong></h2><p><strong>Softbank Vision Fund could see up to 20 companies hitting public markets 2021 should favorable conditions continue. </strong>Vision Fund says it is encouraging companies to go public whilst conditions are still receptive and Q4 (Mar) can already boast of two listings, a SPAC merger and two more listings in process. Leading candidates to go public include Didi Chuxing and Grab</p><p><strong>Coupang upside alone doubles total returns and will boost Vision Fund to its best quarter ever.  </strong>As of mid-March, Vision Fund’s public portfolio is up $27bn versus $13bn in Q2, $8bn in Q2 and $2bn in Q1. On the aggregate, it more than doubles the Vision Fund total return </p><p><strong>There may upside in the private portfolio too as Cruise raised funds in January at a 58% premium</strong>. It is usually a mug’s game trying to figure out where private valuations will end up but the Cruise stake is large enough to outweigh a lot of smaller changes for other portfolio companies. Cruise raised $2bn in January at a $30bn valuation, a 58% premium to where Softbank invested and a possible $1.3bn unrealized gain ($2.25bn &gt; $3.55bn)</p><p><strong>Portfolio company View went public through a SPAC merger but at an apparent loss for Vision Fund</strong>.  Smart glass maker View’s SPAC merger closed 9 March, the day before the Coupang IPO but it appears Softbank’s original $1.1bn investment is worth barely half that. That is a fraction of the Coupang upside but is a reminder that valuations can go both ways. Other problem investments include Greensill, Katerra, Oyo and OakNorth</p>

Coupang’s monster IPO is very likely to be the highlight of Vision Fund 1 and provides a solid counterpoint to the WeWork debacle early in the IPO cycle but there remains a significant number of portfolio companies still to come. At Q3 results, Softbank talked about an ongoing parade of companies coming to market with 10-15 annual events but there is a push to get companies to list whilst markets are still receptive and FY21 could see up to 20 companies hit public markets.That is positive for Softbank shares which tend to rise in anticipation of surfaced value, again assuming the IPO market remains open. It also serves to highlight the main risk for Softbank shares as a sustained tech sell-off would lower the value of the Vision Fund portfolio, increase concerns about Northstar and lower expectations for the current crop of IPO hopefuls.HighlightsSoftbank Vision Fund could see up to 20 companies hitting public markets 2021 should favorable conditions continue. Vision Fund says it is encouraging companies to go public whilst conditions are still receptive and Q4 (Mar) can already boast of two listings, a SPAC merger and two more listings in process. Leading candidates to go public include Didi Chuxing and GrabCoupang upside alone doubles total returns and will boost Vision Fund to its best quarter ever.  As of mid-March, Vision Fund’s public portfolio is up $27bn versus $13bn in Q2, $8bn in Q2 and $2bn in Q1. On the aggregate, it more than doubles the Vision Fund total return There may upside in the private portfolio too as Cruise raised funds in January at a 58% premium. It is usually a mug’s game trying to figure out where private valuations will end up but the Cruise stake is large enough to outweigh a lot of smaller changes for other portfolio companies. Cruise raised $2bn in January at a $30bn valuation, a 58% premium to where Softbank invested and a possible $1.3bn unrealized gain ($2.25bn &gt; $3.55bn)Portfolio company View went public through a SPAC merger but at an apparent loss for Vision Fund.  Smart glass maker View’s SPAC merger closed 9 March, the day before the Coupang IPO but it appears Softbank’s original $1.1bn investment is worth barely half that. That is a fraction of the Coupang upside but is a reminder that valuations can go both ways. Other problem investments include Greensill, Katerra, Oyo and OakNorth

Softbank Group - Vision Fund’s Race to Liquidity

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Thematic (Sector/Industry)

<p><strong>GAMING PAYABLES</strong> - As part of the fallout from Greensill Capital's collapse, much has been made of the risks involved in supply chain finance and the accounting treatment of payables that can be used to 'flatter' balance sheets that are often overloaded with debt. As <em><strong>@matt_levine</strong></em>observed yesterday:-</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/193/505/original/2021-03-11_10-33-14.png?1615426510" class="editor-image img-responsive" data-smartkarma-image-id="193505"></figure></section><p><strong>APPLYING THE 'DUMB RULE OF THUMB' TO JAPAN</strong> - Accordingly, we have applied a simple screen to our universe of 3,689 Japanse companies with the following criteria:</p><ol>
<li><strong>Market Cap, ex Treasury Stock,&gt; ¥100 billion (672 companies)</strong></li>
<li><strong> Last Quarter Payable Days &gt; -100 (93 companies)</strong></li>
<li><strong>1-Year change in Average Days Payable &gt; -25 (7 companies)</strong></li>
</ol><p>We have excluded <a href="https://www.smartkarma.com/entities/sony-corp" target="_blank" data-smartkarma-citation="entities:563:1" rel="noopener">Sony (6758 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>, <a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten (4755 JP)</a>, and <a href="https://www.smartkarma.com/entities/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post (6178 JP)</a> from the screening due to their consolidation of financial subsidiaries. The results are in the <strong>DETAIL</strong> section below; however, the TTM Working Capital Day chart for the largest of the seven by market cap is below. It's 'owner' should be no surprise to followers of the Greensill saga.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/193/508/original/2021-03-11_11-04-24.png?1615428279" class="editor-image img-responsive" data-smartkarma-image-id="193508"></figure></section><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div>

GAMING PAYABLES - As part of the fallout from Greensill Capital's collapse, much has been made of the risks involved in supply chain finance and the accounting treatment of payables that can be used to 'flatter' balance sheets that are often overloaded with debt. As @matt_levineobserved yesterday:-APPLYING THE 'DUMB RULE OF THUMB' TO JAPAN - Accordingly, we have applied a simple screen to our universe of 3,689 Japanse companies with the following criteria:
Market Cap, ex Treasury Stock,&gt; ¥100 billion (672 companies)
 Last Quarter Payable Days &gt; -100 (93 companies)
1-Year change in Average Days Payable &gt; -25 (7 companies)
We have excluded Sony (6758 JP), Z Holdings (4689 JP), Rakuten (4755 JP), and Japan Post (6178 JP) from the screening due to their consolidation of financial subsidiaries. The results are in the DETAIL section below; however, the TTM Working Capital Day chart for the largest of the seven by market cap is below. It's 'owner' should be no surprise to followers of the Greensill saga.Source for all charts &amp; tables: Japan Analytics

🇯🇵 JAPAN • Greensill, Gaming Payables & The Seven Samurai of Supply Chain Finance

Japan

Softbank Corporation provides mobile phone telecommunication and networking services. The Company offers mobile communication opening, short messaging function opening, video function opening, and other services. Softbank also provides mobile phones.

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Softbank Corp (9434 JP)

Gamechanger: Rakuten’s Win-Win Alliance with Japan Post

Japan Post's investment in Rakuten is a genuinely seismic shift in the balance of power in digital ecosystems in Japan, bolstering Rakuten where it...

Michael Causton

Softbank – Is Archegos the Bear Stearns CDO Funds in the Coalmine?

With a lot of signs of market stress emerging following a truly bubbly run up in 2020 we examine the prospects for a stock that has traditionally...

Mio Kato

Freee Placement - Needs to Correct by a Whole Lot More

Freee (4478 JP) (freee) is looking to raise around US$400m via selling a mix of primary and secondary shares. In this note, we'll run the deal...

Sumeet Singh

Softbank Group - Vision Fund’s Race to Liquidity

Vision Fund is pushing portfolio companies to go public (up to 20 this year!) which should help the discount but also depends a lot on how tech...

Kirk Boodry

🇯🇵 JAPAN • Greensill, Gaming Payables & The Seven Samurai of Supply Chain Finance

As part of the fallout from Greensill Capital's collapse, much has been made of the risks involved in supply chain finance and the accounting...

Campbell Gunn

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