Equity Analyst, LightStream Research

Oshadhi Kumarasiri

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.

Equity Bottom-Up

Japan’s largest apparel retailer, <a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a> is scheduled to release the third quarter ended May 2021 results tomorrow, at a time 3QFY22 consensus revenue and OP were lowered for three consecutive months.We think consensus has not lowered the 3QFY21 EBIT sufficiently during the last three months and Fast Retailing could miss the consensus EBIT estimate. With the market sentiment regarding Fast Retailing on a declining trend and valuation multiples near the all-time high level, an earnings miss could have significant implications on the company’s share price.

Japan’s largest apparel retailer, Fast Retailing (9983 JP) is scheduled to release the third quarter ended May 2021 results tomorrow, at a time 3QFY22 consensus revenue and OP were lowered for three consecutive months.We think consensus has not lowered the 3QFY21 EBIT sufficiently during the last three months and Fast Retailing could miss the consensus EBIT estimate. With the market sentiment regarding Fast Retailing on a declining trend and valuation multiples near the all-time high level, an earnings miss could have significant implications on the company’s share price.

Consensus Continues to Course Correct While Fast Retailing Prepares to Report Q3

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Private Capital Markets

Shein is a monster e-commerce company based in China. Shein is the fastest growing e-commerce company in the world. The company generated nearly $10 billion in revenues in 2020, up nearly 250% YoY. Shein could realistically overtake Zara in terms of revenues by 2022. Shein's core business model is to sell clothing (mostly women's apparel) online to the younger generation consumers in the US, Europe, and other parts of the world. <a href="https://techcrunch.com/2021/06/22/why-amazon-should-pay-attention-to-shein/" target="_blank" rel="noopener">Shein</a> is especially popular among the budget conscious younger generation in the Americas, Europe, and Asia (excluding China). The following are the key competitive advantages of Shein:<ul>
<li>Superb execution of "art of trend setting" in apparel products</li>
<li>Extremely attractive pricing</li>
<li>Faster adoption of new fashion styles</li>
<li>Aggressive promotions through influencers and discount codes</li>
<li>Effective use of data analytics and technology</li>
<li>Capitalize on the tax loop holes between the US and China</li>
</ul>The tremendous growth of Shein and other pure-play fashion companies have had major negative impact on some of the largest apparel companies with signficant brick and mortar operations such as <a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a>, <a href="https://www.smartkarma.com/entities/gap-inc-the" target="_blank" data-smartkarma-citation="entities:7941:1" rel="noopener">Gap Inc/The (GPS US)</a>, and <a href="https://www.smartkarma.com/entities/industria-de-diseno-textil-sa" target="_blank" data-smartkarma-citation="entities:21278:1" rel="noopener">Industria De Diseno Textil Sa (ITX SM)</a>.

Shein is a monster e-commerce company based in China. Shein is the fastest growing e-commerce company in the world. The company generated nearly $10 billion in revenues in 2020, up nearly 250% YoY. Shein could realistically overtake Zara in terms of revenues by 2022. Shein's core business model is to sell clothing (mostly women's apparel) online to the younger generation consumers in the US, Europe, and other parts of the world. Shein is especially popular among the budget conscious younger generation in the Americas, Europe, and Asia (excluding China). The following are the key competitive advantages of Shein:
Superb execution of "art of trend setting" in apparel products
Extremely attractive pricing
Faster adoption of new fashion styles
Aggressive promotions through influencers and discount codes
Effective use of data analytics and technology
Capitalize on the tax loop holes between the US and China
The tremendous growth of Shein and other pure-play fashion companies have had major negative impact on some of the largest apparel companies with signficant brick and mortar operations such as Fast Retailing (9983 JP), Gap Inc/The (GPS US), and Industria De Diseno Textil Sa (ITX SM).

SHEIN: The Fastest Growing E-Commerce Company in the World & Ready to Overtake Zara in 2022?

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. 

Thematic (Sector/Industry)

Japan’s retail and distribution sector has long been seen as fragmented, even to the point of being accused of inefficiency. On the surface, concentration levels do remain low, but scratch that surface and a very different picture emerges.
By format and by category sector, larger companies are taking increasing share and, over the past five years, this trend has accelerated.
Now, given the pressures of Covid, there is ample opportunity for stronger players to gain ground by buying out weaker ones, while some mid-level companies are joining together, hoping to become a fish too big to swallow.
Business tie-ups are also increasing in number, particularly as physical retailers seek to bring in and learn skills necessary to succeed in e-commerce and to build omnichannel models.
The following is a detailed review of how concentration has increased along with a map of who own who in retailing today.
There is a strong possibility that we could see some really big deals, even ones that span format and geographical borders, as many mid-sized retailers recognise that independent survival is getting hard. Acquirers will use the current environment to diversify into new areas, expand volumes and market share, or simply acquire more retail property for long-term development.

Japan’s retail and distribution sector has long been seen as fragmented, even to the point of being accused of inefficiency. On the surface, concentration levels do remain low, but scratch that surface and a very different picture emerges.
By format and by category sector, larger companies are taking increasing share and, over the past five years, this trend has accelerated.
Now, given the pressures of Covid, there is ample opportunity for stronger players to gain ground by buying out weaker ones, while some mid-level companies are joining together, hoping to become a fish too big to swallow.
Business tie-ups are also increasing in number, particularly as physical retailers seek to bring in and learn skills necessary to succeed in e-commerce and to build omnichannel models.
The following is a detailed review of how concentration has increased along with a map of who own who in retailing today.
There is a strong possibility that we could see some really big deals, even ones that span format and geographical borders, as many mid-sized retailers recognise that independent survival is getting hard. Acquirers will use the current environment to diversify into new areas, expand volumes and market share, or simply acquire more retail property for long-term development.

Who Owns Who: Concentration Levels Accelerate in Japan Retail, with More M&A to Come

Momentum was building for fashion EC well before 2020 but the situation last year brought an overwhelming response from both consumers and merchants. As a result, market share for the online channel has spiralled upwards and, although there will be a correction once shoppers return to stores, the medium-term trajectory is clear.
The big malls continue to dominate – as Zozo’s 21.5% growth in 2020 attests – but retailers and brands are investing much more in their own online stores, creating a level of dynamism and competition not seen in other fashion retail channels.
The following is an in-depth review of the fashion e-commerce market covering:
<ul>
<li>Market Size and market growth</li>
<li>Winners and losers in the last two years</li>
<li>Ranking of the top vendors online by sales</li>
<li>Ranking of fastest growing e-commerce fashion retailers</li>
<li>Strengths and weaknesses in leading firms</li>
<li>Ranking of firms with highest ratio of online sales to offline</li>
<li>Ranking of firms with highest share of direct online sales vs 3rd party malls.</li>
<li>Review of market share of major malls vs direct sales by retailers and the momentum behind each.</li>
</ul>

Momentum was building for fashion EC well before 2020 but the situation last year brought an overwhelming response from both consumers and merchants. As a result, market share for the online channel has spiralled upwards and, although there will be a correction once shoppers return to stores, the medium-term trajectory is clear.
The big malls continue to dominate – as Zozo’s 21.5% growth in 2020 attests – but retailers and brands are investing much more in their own online stores, creating a level of dynamism and competition not seen in other fashion retail channels.
The following is an in-depth review of the fashion e-commerce market covering:

Market Size and market growth
Winners and losers in the last two years
Ranking of the top vendors online by sales
Ranking of fastest growing e-commerce fashion retailers
Strengths and weaknesses in leading firms
Ranking of firms with highest ratio of online sales to offline
Ranking of firms with highest share of direct online sales vs 3rd party malls.
Review of market share of major malls vs direct sales by retailers and the momentum behind each.


Fashion E-Commerce Has Watershed Year in 2020

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

Renesas Electronics / Equity Capital Markets

<div>
Renesas, along with INCJ, aims to raise around US$3.4bn via selling a mix of primary and secondary shares. We covered most aspects of the deal in our earlier note, <a href="https://www.smartkarma.com/insights/renesas-placement-very-well-flagged-past-deals-have-done-well-but-large-size-warrants-correction" target="_blank" rel="noopener">Renesas Placement - Very Well Flagged, past Deals Have Done Well but Large Size Warrants Correction.</a>
In this note, I'll talk about the updates since then.
</div>


Renesas, along with INCJ, aims to raise around US$3.4bn via selling a mix of primary and secondary shares. We covered most aspects of the deal in our earlier note, Renesas Placement - Very Well Flagged, past Deals Have Done Well but Large Size Warrants Correction.
In this note, I'll talk about the updates since then.


Renesas Placement Update - Doing Much Better than Its past Deals. Could Impact Post-Deal Performance

Japan

FAST RETAILING CO., LTD. operates a chain of clothing stores, UNIQLO, throughout Japan and in other markets overseas including UK, China, Hong Kong, South Korea, US, France, Singapore and Russia.  The Company designs, manufactures, and retails its own line of casual clothing.

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Fast Retailing (9983 JP)

Consensus Continues to Course Correct While Fast Retailing Prepares to Report Q3

Fast Retailing is scheduled to release the third quarter ended May 2021 results tomorrow, at a time 3QFY22 consensus revenue and OP were lowered...

Oshadhi Kumarasiri

SHEIN: The Fastest Growing E-Commerce Company in the World & Ready to Overtake Zara in 2022?

Shein is the fastest growing e-commerce company in the world. The company generated nearly $10 billion in revenues in 2020, up nearly 250% YoY....

Douglas Kim

Who Owns Who: Concentration Levels Accelerate in Japan Retail, with More M&A to Come

Japanese retail is in the process of extensive concentration and market consolidation through M&A, organic expansion and tie-ups. Numerous...

Michael Causton

Fashion E-Commerce Has Watershed Year in 2020

A complete review of the fashion e-commerce market in Japan, including rankings by sales, fastest growing, winners and losers and reviews of the...

Michael Causton

Renesas Placement Update - Doing Much Better than Its past Deals. Could Impact Post-Deal Performance

Renesas and INCJ, aims to raise around US$3.4bn via selling a mix of primary and secondary shares. We covered most aspects of the deal in our...

Sumeet Singh

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