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>Aeon has become the Japanese partner to Ocado, one of the best online supermarket and systems providers for food and FMCG retailing in the world.</p><p>Ocado works with only one company per country, so Aeon has stolen a lead on its rivals by gaining access to Ocado’s deep experience and world-class technology.</p><p>The potential is there but to make it work, Aeon has to force its hundreds of subsidiary CEOs and suppliers into line and invest heavily in the necessary systems.</p>

Aeon has become the Japanese partner to Ocado, one of the best online supermarket and systems providers for food and FMCG retailing in the world.Ocado works with only one company per country, so Aeon has stolen a lead on its rivals by gaining access to Ocado’s deep experience and world-class technology.The potential is there but to make it work, Aeon has to force its hundreds of subsidiary CEOs and suppliers into line and invest heavily in the necessary systems.

Aeon's Tie with UK’s Ocado: A Chance for Online Food Leadership – but Not for a While

Mark Artherton, CFA

Inteqres

Alibaba Group Holding  / Equity Bottom-Up

<p>We kick off our GEM and Asia large-cap initiations with Alibaba.  We see Alibaba as having a strong underlying demand from investors - for both disappointingly technical reasons and for fundamental reasons.  However, we advise caution given the high level of valuations and volatility of the stock.  </p>
<p>We see a solid underlying story, though the increase in assets needed for the next stage of growth will dilute returns.  There is plenty of optionality in the name and any resolution of trade tensions with the US would lead to a rally.  However, we currently believe that these catalysts are a little too far away for us to be buying Alibaba now.</p>
<p>These notes aim to be short and to the point so please ask us to elaborate further if you have any questions.</p>

We kick off our GEM and Asia large-cap initiations with Alibaba.  We see Alibaba as having a strong underlying demand from investors - for both disappointingly technical reasons and for fundamental reasons.  However, we advise caution given the high level of valuations and volatility of the stock.  
We see a solid underlying story, though the increase in assets needed for the next stage of growth will dilute returns.  There is plenty of optionality in the name and any resolution of trade tensions with the US would lead to a rally.  However, we currently believe that these catalysts are a little too far away for us to be buying Alibaba now.
These notes aim to be short and to the point so please ask us to elaborate further if you have any questions.

Alibaba Initiation - Tactical Use Whilst We Wait - Inteqres Practical Views

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<p><a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank Corp (9434 JP)</a> plans to merge <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> (ZHD) with messaging app operator <a href="https://www.smartkarma.com/entities/line-corp" target="_blank" data-smartkarma-citation="entities:22772:1" rel="noopener">LINE Corp (3938 JP)</a> to create a $30 billion tech giant. The merger agreement is expected to be signed by the end of January 2020 and completed in October 2020. </p><div class="content-highlight"><p>The merger makes sense due to material synergies from connecting LINE’s communication platform with the services of ZHD, particularly the e-commerce service. However, the proposed terms of the merger seem to be attractive for all the stakeholders apart from ZHD minorities.</p></div>

Softbank Corp (9434 JP) plans to merge Z Holdings (4689 JP) (ZHD) with messaging app operator LINE Corp (3938 JP) to create a $30 billion tech giant. The merger agreement is expected to be signed by the end of January 2020 and completed in October 2020. The merger makes sense due to material synergies from connecting LINE’s communication platform with the services of ZHD, particularly the e-commerce service. However, the proposed terms of the merger seem to be attractive for all the stakeholders apart from ZHD minorities.

Z Holdings Merger with LINE: Unequal Spirit

Equity Analyst, LightStream Research

Supun Walpola

Equity Analyst

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>This is the THIRD of a series of reports on <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba Group Holding (BABA US)</a>. In our previous notes, <a href="https://www.smartkarma.com/insights/alibaba-baba-us-domestic-e-commerce-business-show-early-signs-of-slowing-down-quantamental" target="_blank" data-smartkarma-citation="insights:34086" rel="noopener">Alibaba (BABA US): Domestic E-Commerce Business Show Early Signs of Slowing Down – Quantamental</a> and <a href="https://www.smartkarma.com/insights/alibaba-baba-us-a-deep-dive-into-alibaba-cloud" target="_blank" data-smartkarma-citation="insights:32465" rel="noopener">Alibaba (BABA US): A Deep Dive into Alibaba Cloud</a> we were taking a closer look at the fundamentals of the company's main business pillars. We are skipping our detailed analyses on Digital Media and Entertainment and Innovation Initiatives segments for the moment to present our thoughts on Alibaba's valuation ahead of the company's HK listing which is due this week.  </p>

This is the THIRD of a series of reports on Alibaba Group Holding (BABA US). In our previous notes, Alibaba (BABA US): Domestic E-Commerce Business Show Early Signs of Slowing Down – Quantamental and Alibaba (BABA US): A Deep Dive into Alibaba Cloud we were taking a closer look at the fundamentals of the company's main business pillars. We are skipping our detailed analyses on Digital Media and Entertainment and Innovation Initiatives segments for the moment to present our thoughts on Alibaba's valuation ahead of the company's HK listing which is due this week.  

Alibaba (BABA US): Thoughts on Valuation Ahead of the HK Listing

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Thematic (Sector/Industry)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/106/452/original/2019-11-17_11-54-09.png?1573959284" class="editor-image img-responsive" data-smartkarma-image-id="106452"></figure><div class="content-caption">Source: Japan Analytics</div><p><strong>4TH DOWN AND A FEW MORE TO GO</strong> - The latest quarterly results are now, with the exception of three large insurance companies are currently in the market and, to loosely paraphrase the under-rated Jesse Winchester's second album title, this is the fourth straight 'down' quarter with the prospect a few more to come. Operating Income has declined by 7.8% and Net Income by 18.8%, taking margins to 6.9% and 4.6%, respectively - declines of 84bps and 122bps. The market has celebrated these new two-year lows by rising to new two-year highs, leaving some to wonder what they are missing, other than yet more central bank liquidity. The trailing-twelve-month (TTM) price-earnings ratio is now 17 times, the highest since 5th February 2018, ten trading days after the long-term market peak.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/106/458/original/2019-11-17_12-49-55.png?1573962614" class="editor-image img-responsive" data-smartkarma-image-id="106458"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/106/459/original/2019-11-17_13-10-47.png?1573963867" class="editor-image img-responsive" data-smartkarma-image-id="106459"></figure><div class="content-caption">Source: Japan Analytics</div><p><strong>THE EARNINGS CYCLE HAS YET TO BOTTOM</strong> -  Our Results &amp; Forecast/Revision Score data series cover the last sixteen years of quarterly earnings and eleven years of forecasts and revisions and measure both results and forecasts but also their momentum, providing a better correlation with the market direction than past earnings.   The Forecast/Revision Score leads the Results Score by several months, and the market leads or lags depending on monetary and liquidity conditions. Although both Scores recovered in the last five days of results announcements, the Forecast/Revision Score of 0.45 reached on 8th November is the lowest such score in ten years and is suggesting that earnings have yet to bottom.</p><div class="content-highlight"><p><strong>WISHFUL THINKING? - The 'gap' between market expectations and actual and forecast earnings momentum is now wider than at any time since late 2014, shortly before the market peak of May 2015. Is this foresight or just wishful thinking? We tend to the latter interpretation.</strong></p></div><p><strong>In the DETAIL section below, we shall provide a full breakdown of the results and revisions announcements by Sector, Peer Group and company and offer brief comments on several recommended buys and sells.</strong></p>

Source: Japan Analytics4TH DOWN AND A FEW MORE TO GO - The latest quarterly results are now, with the exception of three large insurance companies are currently in the market and, to loosely paraphrase the under-rated Jesse Winchester's second album title, this is the fourth straight 'down' quarter with the prospect a few more to come. Operating Income has declined by 7.8% and Net Income by 18.8%, taking margins to 6.9% and 4.6%, respectively - declines of 84bps and 122bps. The market has celebrated these new two-year lows by rising to new two-year highs, leaving some to wonder what they are missing, other than yet more central bank liquidity. The trailing-twelve-month (TTM) price-earnings ratio is now 17 times, the highest since 5th February 2018, ten trading days after the long-term market peak.Source: Japan AnalyticsTHE EARNINGS CYCLE HAS YET TO BOTTOM -  Our Results &amp; Forecast/Revision Score data series cover the last sixteen years of quarterly earnings and eleven years of forecasts and revisions and measure both results and forecasts but also their momentum, providing a better correlation with the market direction than past earnings.   The Forecast/Revision Score leads the Results Score by several months, and the market leads or lags depending on monetary and liquidity conditions. Although both Scores recovered in the last five days of results announcements, the Forecast/Revision Score of 0.45 reached on 8th November is the lowest such score in ten years and is suggesting that earnings have yet to bottom.WISHFUL THINKING? - The 'gap' between market expectations and actual and forecast earnings momentum is now wider than at any time since late 2014, shortly before the market peak of May 2015. Is this foresight or just wishful thinking? We tend to the latter interpretation.In the DETAIL section below, we shall provide a full breakdown of the results and revisions announcements by Sector, Peer Group and company and offer brief comments on several recommended buys and sells.

🇯🇵 Japan • Results & Revisions Review - Wishful Thinking

Japan

Rakuten Group, Inc. provides Internet services. The Company offers Internet finance services which including "Rakuten Card" and "Rakuten Bank". Rakuten Group also provides digital content services including electronic book services.

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Rakuten (4755 JP)

Aeon's Tie with UK’s Ocado: A Chance for Online Food Leadership – but Not for a While

Aeon has become the Japanese partner to Ocado, one of the best online supermarket and systems providers for food and FMCG retailing in the...

Michael Causton

Alibaba Initiation - Tactical Use Whilst We Wait - Inteqres Practical Views

We kick off our GEM and Asia large-cap initiations with Alibaba. We see Alibaba as having a strong underlying demand from investors - for both...

Mark Artherton, CFA

Z Holdings Merger with LINE: Unequal Spirit

Softbank Corp (9434 JP) plans to merge Z Holdings (4689 JP) (ZHD) with messaging app operator LINE Corp (3938 JP) to create a $30 billion tech...

Arun George

Alibaba (BABA US): Thoughts on Valuation Ahead of the HK Listing

This is the THIRD of a series of reports on Alibaba Group Holding (BABA US). In our previous notes, Alibaba (BABA US): Domestic E-Commerce Business...

Supun Walpola

🇯🇵 Japan • Results & Revisions Review - Wishful Thinking

4TH DOWN AND A FEW MORE TO GO - The latest quarterly results are now, with the exception of three large insurance companies are currently in the...

Campbell Gunn

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