'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)

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:-<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>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:<ol>
<li>Market Cap, ex Treasury Stock,&gt; ¥100 billion (672 companies)</li>
<li> Last Quarter Payable Days &gt; -100 (93 companies)</li>
<li>1-Year change in Average Days Payable &gt; -25 (7 companies)</li>
</ol>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 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.<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

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. 

With people staying at home, deliveries for e-commerce orders have a better chance of succeeding, helping failed delivery rates fall from 25% to just 11% in only five years. No wonder e-commerce and transport companies are posting higher profits.

With people staying at home, deliveries for e-commerce orders have a better chance of succeeding, helping failed delivery rates fall from 25% to just 11% in only five years. No wonder e-commerce and transport companies are posting higher profits.

E-Commerce Efficiency Marches on in Japan

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE: OFAC's Humdinger, China Mobile, NTT, Car Inc, Pressance, Tianneng Power

Travis Lundy

In December, it was reported that <a href="https://www.smartkarma.com/entities/japan-post-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:840:1" rel="noopener">Japan Post Insurance (7181 JP)</a> was considering an enormous buyback of its own shares from <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> so that JPI can get JPH under 50% ownership.
I wrote about it VERY bullishly in <a href="https://www.smartkarma.com/insights/huge-japan-post-insurance-buyback-mooted-decks-cleared-time-to-buy" target="_blank" data-smartkarma-citation="insights:46429" rel="noopener">Huge Japan Post Insurance Buyback Mooted - Decks Cleared. Time To Buy</a>.
A couple of days later on the 25th of December, <a href="https://www.bloomberg.co.jp/news/articles/2020-12-24/QLVAS5T0AFB901" target="_blank" rel="noopener">news emerged</a> that the JPI Board of Directors had decided to postpone the consideration/decision of buying back shares from "by year end" to a later date because of the market reaction to the news leak. 
The key here is that apparently, if the stake held by Japan Post Holdings drops below 50%, new product launches move from an "Approval System" to an "Advance Notification System" under the complex rules which govern the Japan Post Insurance product offering suite, the Japan Post Holding post-privatisation management by regulators, and the insurance business in general. 
The shares, which had popped 10% on the original news, fell back somewhat. Those who contacted me about this situation know that I have continued to be bullish. The shares are up 6.2% from the close of that first day's news.
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/181/430/original/Screenshot+2021-01-08+at+10.00.35+AM.png?1610071249" class="editor-image img-responsive" data-smartkarma-image-id="181430"></figure>

</section>
I think it was a mistake for JPI to not decide to buy back the shares as of their 23 December board meeting. 
There are other dynamics at play.

In December, it was reported that Japan Post Insurance (7181 JP) was considering an enormous buyback of its own shares from Japan Post Holdings (6178 JP) so that JPI can get JPH under 50% ownership.
I wrote about it VERY bullishly in Huge Japan Post Insurance Buyback Mooted - Decks Cleared. Time To Buy.
A couple of days later on the 25th of December, news emerged that the JPI Board of Directors had decided to postpone the consideration/decision of buying back shares from "by year end" to a later date because of the market reaction to the news leak. 
The key here is that apparently, if the stake held by Japan Post Holdings drops below 50%, new product launches move from an "Approval System" to an "Advance Notification System" under the complex rules which govern the Japan Post Insurance product offering suite, the Japan Post Holding post-privatisation management by regulators, and the insurance business in general. 
The shares, which had popped 10% on the original news, fell back somewhat. Those who contacted me about this situation know that I have continued to be bullish. The shares are up 6.2% from the close of that first day's news.




I think it was a mistake for JPI to not decide to buy back the shares as of their 23 December board meeting. 
There are other dynamics at play.

Japan Post Insurance Update - Three Reasons To Buy. Any Overhang Slightly Higher

That's it. It has started. The story and long-term look-through reason why it was not a bad idea to buy the last offering from <a href="https://www.smartkarma.com/entities/japan-post-insurance-co-ltd" target="_blank" data-smartkarma-citation="entities:840:1" rel="noopener">Japan Post Insurance (7181 JP)</a> when <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> in April 2019 has now come into the clear. Clearly, the METHOD of the buyback in April 2019 combined with the Really Quite Awful And Very Bad Investor Placement by Daiwa in that offering combined to deliver a shocking placing aftermath, but the willingness of Japan post Insurance to issue subordinated debt at a low interest rate to raise cash to buy back stock and the CEO's comment that they had capacity to do much more was a good reason to expect the news which has just come out. <h3>What News?  JPI Is On the Road to Emancipation</h3>Various media reports (I got the news first from <a href="https://www.bloomberg.com/news/articles/2020-12-16/japan-post-insurer-plans-2-9-billion-buyback-to-cut-owner-stake" target="_blank" rel="noopener">Bloomberg</a> and JPI had an official <a href="https://pdf.irpocket.com/C7181/j9N9/MJ5Y/o2qZ.pdf" target="_blank" rel="noopener">comment</a> suggesting that the information did not come from them) suggested that Japan Post Insurance would have a board meeting this month to approve raising subordinated debt (to the tune of ¥100bn) and would buy back as much as ¥300bn of shares from its parent Japan Post Holdings, which currently owns 64.8% of shares out, with the goal of getting the JPH ownership level of Japan Post Insurance down below 50%. 50% is the magic level. That's the cause for excitement. From here, it gets a little complicated but the news leak suggests there is a fair bit of fire behind this smoke.

That's it. It has started. The story and long-term look-through reason why it was not a bad idea to buy the last offering from Japan Post Insurance (7181 JP) when Japan Post Holdings (6178 JP) in April 2019 has now come into the clear. Clearly, the METHOD of the buyback in April 2019 combined with the Really Quite Awful And Very Bad Investor Placement by Daiwa in that offering combined to deliver a shocking placing aftermath, but the willingness of Japan post Insurance to issue subordinated debt at a low interest rate to raise cash to buy back stock and the CEO's comment that they had capacity to do much more was a good reason to expect the news which has just come out. What News?  JPI Is On the Road to EmancipationVarious media reports (I got the news first from Bloomberg and JPI had an official comment suggesting that the information did not come from them) suggested that Japan Post Insurance would have a board meeting this month to approve raising subordinated debt (to the tune of ¥100bn) and would buy back as much as ¥300bn of shares from its parent Japan Post Holdings, which currently owns 64.8% of shares out, with the goal of getting the JPH ownership level of Japan Post Insurance down below 50%. 50% is the magic level. That's the cause for excitement. From here, it gets a little complicated but the news leak suggests there is a fair bit of fire behind this smoke.

Huge Japan Post Insurance Buyback Mooted - Decks Cleared. Time To Buy

Japan

Japan Post Holdings Co. Ltd. operates post stations, banks, and insurance business. The Company offers letters and goods transportation services, stamp sales, deposits, loans, and insurance products.

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Japan Post Holdings (6178 JP)

🇯🇵 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

E-Commerce Efficiency Marches on in Japan

Japanese e-commerce fulfilment efficiency is improving month to month, with delivery failure rates plummeting in the last year. The government and...

Michael Causton

Last Week in Event SPACE: OFAC's Humdinger, China Mobile, NTT, Car Inc, Pressance, Tianneng Power

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Japan Post Insurance Update - Three Reasons To Buy. Any Overhang Slightly Higher

Japan Post Insurance still has Three Reasons To Buy. One of them will "realize" today after the close. I would want to be long at today's price....

Travis Lundy

Huge Japan Post Insurance Buyback Mooted - Decks Cleared. Time To Buy

The possibility of a big buyback by Japan Post Insurance to get Japan Post Hldgs sub-50% is a Really Good Thing. It means EPS growth, top line...

Travis Lundy

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