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)

<p>E-commerce is set to account for 15% of retail sales in 2025, double the size of any other channel, and become the biggest channel for physical merchandise by 2023.</p>
<p>However, recent research, which considers online sales in a store context, suggests that already in 2016-17, 35.3% of all retail sales were at least partly a result of online interactions through an omnichannel process.</p>
<p>By 2024, total EC sales including omnichannel transactions are expected to hit 44.6% of all retail sales or approximately ¥76.4 trillion.</p>

E-commerce is set to account for 15% of retail sales in 2025, double the size of any other channel, and become the biggest channel for physical merchandise by 2023.
However, recent research, which considers online sales in a store context, suggests that already in 2016-17, 35.3% of all retail sales were at least partly a result of online interactions through an omnichannel process.
By 2024, total EC sales including omnichannel transactions are expected to hit 44.6% of all retail sales or approximately ¥76.4 trillion.

Japan E-Commerce: Digital to Influence 45% of All Retail Sales by 2025

Equity analyst UK & Europe, UK Long Short

Peter Toeman

Equity analyst UK & Europe

Accelerating Tomorrow’s Independent Research

Boost Research

Boost Research Ltd is an appointed representative of Messels Ltd which is authorised and regulated by the FCA of the UK. 

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This document is provided for information purposes only and should not be regarded as an offer, solicitation, invitation, inducement or recommendation relating to the subscription, purchase or sale of any security or other financial instrument.  This document does not constitute, and should not be interpreted as, investment advice.  It is accordingly recommended that you should seek independent advice from a suitably qualified professional advisor before taking any decisions in relation to the investments detailed herein. All expressions of opinions and estimates constitute a judgement and, unless otherwise stated, are those of the author and the research department of Boost Research only, and are subject to change without notice. Boost Research is under no obligation to update the information contained herein. Whilst Boost Research has taken all reasonable care to ensure that the information contained in this document is not untrue or misleading at the time of publication, Boost Research cannot guarantee its accuracy or completeness, and you should not act on it without first independently verifying its contents. This document is not guaranteed to be a complete statement or summary of any securities, markets, reports or developments referred to herein. No representation or warranty either expressed or implied is made, nor responsibility of any kind is accepted, by Boost Research or any of its respective directors, officers, employees or analysts either as to the accuracy or completeness of any information contained in this document nor should it be relied on as such. No liability whatsoever is accepted by Boost Research or any of its respective directors, officers, employees or analysts for any loss, whether direct or consequential, arising whether directly or indirectly as a result of the recipient acting on the content of this document, including, without limitation, lost profits arising from the use of this document or any of its contents.

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Boost Research and its respective analysts are remunerated for providing investment research to professional investors, corporations, other research institutions and consultancy houses. Boost Research, or its respective directors, officers, employees and clients may have or take positions in the securities or entities mentioned in this document.  Any of these circumstances could create, or be perceived as creating, conflicts of interest. Boost Research’ analysts are not censored in any way and are free to express their personal opinions. As a result, Boost Research may have issued other documents that are inconsistent with and reach different conclusions from, the information contained in this document. Those documents reflect the different assumptions, views and analytical methods of their authors. No director, officer or employee of Boost Research is on the board of directors of any company referenced herein and no one at any such referenced company is on the board of directors of Boost Research.

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<p><strong>With just two weeks left before the UK is set to leave the EU, the shape of the arrangements with country's largest trading partners is still to be decided. Imminent political developments will determine whether Brexit is hard, soft, deferred, or aborted</strong>.</p>
<p><strong>The UK's principal share index the FTSE 100 is virtually unchanged since we established our Long/Short portfolio a month ago. Results from Lloyds and Centrica have lead to useful outperformance and underperformance respectively. The M&amp;S joint venture with Ocado is judged by investors to have added a lot more value to the latter than the former. We have been wrong-footed by Melrose Industries, but heck, there is always one.</strong></p>
<p><strong>Remembering that no one ever got poor from taking  profits,  we have closed out our long position in Lloyds Banking.  </strong></p>
<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/081/949/original/Capture%201.PNG?1552520300" class="editor-image img-responsive" data-smartkarma-image-id="81949"></figure>
<div class="content-caption">S&amp;P Capital IQ</div>
</div>

With just two weeks left before the UK is set to leave the EU, the shape of the arrangements with country's largest trading partners is still to be decided. Imminent political developments will determine whether Brexit is hard, soft, deferred, or aborted.
The UK's principal share index the FTSE 100 is virtually unchanged since we established our Long/Short portfolio a month ago. Results from Lloyds and Centrica have lead to useful outperformance and underperformance respectively. The M&amp;S joint venture with Ocado is judged by investors to have added a lot more value to the latter than the former. We have been wrong-footed by Melrose Industries, but heck, there is always one.
Remembering that no one ever got poor from taking  profits,  we have closed out our long position in Lloyds Banking.  


S&amp;P Capital IQ


Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<p>The market’s bounce off of the December, 2018 low was a swift “V” reversal. While we often see a retest of such events, our outlook since that time has repeatedly suggested that a retest may not occur. We continue to believe the market remains healthy with overall and leadership remaining centered in the cyclical Sectors, mainly Technology.  In this publication we provide an overview of our U.S. equity strategy, and examine attractive opportunities in each of our 12 Sectors, beginning with Technology - our favorite.</p>

The market’s bounce off of the December, 2018 low was a swift “V” reversal. While we often see a retest of such events, our outlook since that time has repeatedly suggested that a retest may not occur. We continue to believe the market remains healthy with overall and leadership remaining centered in the cyclical Sectors, mainly Technology.  In this publication we provide an overview of our U.S. equity strategy, and examine attractive opportunities in each of our 12 Sectors, beginning with Technology - our favorite.

U.S. Equity Strategy: Positive Outlook Intact; Cyclicals Leading; Opportunities in Tech Sector

<p>Astonishing as it may seem but 80% of all retail transactions in Japan are made with cash and 88% if you include the cash stored in so-called 'smart wallets' – essentially cash stored in plastic.</p><p>Just like much of Japan's service sector, payments is a classic example of the sector's capacity to resist change, resist still more and finally, with much knocking of heads in Kasumigaseki, race to modernise in a very short period of time.</p><p>That Japan will switch to cashless payments in the next three years is not in doubt – not least because of Japan's fear of Chinese payments systems gaining too much share – but with so many competing payments services available and still being launched, the big question is who will win. Given their deep data, consumer loyalty and brand names, it is likely that the current kings of loyalty points will take the biggest share alongside some of the biggest retailers meaning <a href="https://www.smartkarma.com/entities/31" target="_blank" data-smartkarma-citation="entities:31:1">Rakuten (4755 JP)</a>, <a href="https://www.smartkarma.com/entities/27445" target="_blank" data-smartkarma-citation="entities:27445:1">Softbank (9434 JP)</a>, <a href="https://www.smartkarma.com/entities/1089" target="_blank" data-smartkarma-citation="entities:1089:1">NTT Docomo (9437 JP)</a> and the three convenience store schemes backed by banks.</p><p>While the use of cash may decline, households still keep an average of ¥830,000 in cash (8% of GDP in total) under the futon and are unlikely to change that particular habit given the frequency of earthquakes and other natural disasters.</p>

Astonishing as it may seem but 80% of all retail transactions in Japan are made with cash and 88% if you include the cash stored in so-called 'smart wallets' – essentially cash stored in plastic.Just like much of Japan's service sector, payments is a classic example of the sector's capacity to resist change, resist still more and finally, with much knocking of heads in Kasumigaseki, race to modernise in a very short period of time.That Japan will switch to cashless payments in the next three years is not in doubt – not least because of Japan's fear of Chinese payments systems gaining too much share – but with so many competing payments services available and still being launched, the big question is who will win. Given their deep data, consumer loyalty and brand names, it is likely that the current kings of loyalty points will take the biggest share alongside some of the biggest retailers meaning Rakuten (4755 JP), Softbank (9434 JP), NTT Docomo (9437 JP) and the three convenience store schemes backed by banks.While the use of cash may decline, households still keep an average of ¥830,000 in cash (8% of GDP in total) under the futon and are unlikely to change that particular habit given the frequency of earthquakes and other natural disasters.

Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

Doubledragon Properties / Equity Bottom-Up

<figure class="editor-figure mceNonEditable"><img class="editor-image img-responsive" src="https://static-prod.smartkarma.com/images/media/000/079/789/original/Orphan%20Stock%20Banner%20DoubleDragon%20Properties.png?1550800272" data-smartkarma-image-id="79789"></figure>
<p><em>This Insight was written by <a href="https://www.smartkarma.com/profiles/1208" target="_blank" data-smartkarma-citation="accounts:1208">Nicolas Van Broekhoven</a> and <a href="https://www.smartkarma.com/profiles/1763" target="_blank" data-smartkarma-citation="accounts:1763">Lloyd Moffatt.</a></em></p>
<h2><strong>What is an Orphan Stock?</strong></h2>
<p>An attractively valued company with a minimum market cap of USD $1 billion but no sell-side coverage.<strong><a href="https://www.smartkarma.com/entities/23011" target="_blank" data-smartkarma-citation="entities:23011:1">Doubledragon Properties (DD PM)</a> meets those criteria.</strong></p>
<h2><strong>Why Read This Report?</strong></h2>
<p>Learn about the Philippines youngest self-made billionaire*, Edgar ‘Injap’ Sia,  how he created one of the largest fast-food chains (<a href="https://www.manginasal.com/" target="_blank">Mang Inasal</a>) in the country and successfully sold it to <a href="https://www.smartkarma.com/entities/987" target="_blank" data-smartkarma-citation="entities:987:1">Jollibee Foods (JFC PM)</a> for over USD$100 M.</p>
<p>After selling Mang Inasal in 2010, Sia started building DoubleDragon (DD) as he joined hands with Tony Tan (founder of <a href="https://www.smartkarma.com/entities/987" target="_blank" data-smartkarma-citation="entities:987:1">Jollibee Foods (JFC PM)</a> ). DD was listed in 2014 at a market value of USD$85 M (PHP2/share) and reached a market cap of over USD$3 B USD two years after listing (PHP70/share).</p>
<p><strong>DD’s valuation mid-2016 was overhyped and overvalued.</strong></p>
<p>From mid-2016 to late 2018 the share price fell by approximately 75%. Last year the stock bottomed at PHP17.2 despite fundamentals improving drastically between 2016 and 2018.</p>
<div class="content-highlight">
<p><strong>This has created a unique opportunity to invest in a diversified property company whose main earnings contributor will come from building neighborhood malls in suburban communities outside Metro Manila. It is forecast that 90% of its revenues would be recurring in nature by FY20.</strong></p>
</div>
<p><strong>We value DD on a blended a) P/E multiple and b) Cap Rate basis.</strong></p>
<p>DD recently traded around PHP 22/share and is currently valued at 9.5x FY20 P/E, a steep discount to its industry peers. Assuming the company achieves PHP10.8 B in recurring revenues by FY20 the market is currently valuing the company at a 21% Cap Rate vs 7% for its primary peer <a href="https://www.smartkarma.com/entities/89" target="_blank" data-smartkarma-citation="entities:89:1">Sm Prime Holdings (SMPH PM)</a>. DD should trade at a discount to SM (long track record, higher liquidity, included in PSE index) but the gap is too wide.</p>
<p>We argue DD should trade at a) 15x P/E and b) 10% cap rate. <strong>Combining the two valuation methods we arrive at a blended Fair Value of PHP 40.31/share, or 83% upside from current levels.</strong></p>
<table class="table table-striped">
<tbody>
<tr>
<td>Assumptions</td>
<td style="text-align: center;">Fair Value</td>
</tr>
<tr>
<td>15x 2020 P/E</td>
<td style="text-align: center;">PHP 35</td>
</tr>
<tr>
<td>10% Cap Rate</td>
<td style="text-align: center;">PHP 45.63</td>
</tr>
<tr>
<td><strong>BLENDED FAIR VALUE</strong></td>
<td style="text-align: center;"><strong>40.31 PHP</strong></td>
</tr>
</tbody>
</table>
<p>The founders control 70% of the company and expect to grow the current USD$1.2B market cap exponentially the coming 3-5 years. <strong>DoubleDragon is a potential multi-bagger in the making.</strong></p>
<div class="content-highlight">
<p><strong>Catalysts to unlock value at DoubleDragon would be:</strong></p>
</div>
<ol>
<li>
<div class="content-highlight">FY18 results publication by early April 2019</div>
</li>
<li>
<div class="content-highlight">Delivery of 100 operating CityMalls by FY20</div>
</li>
<li>
<div class="content-highlight">The passing of workable REIT law</div>
</li>
<li>
<div class="content-highlight">Delivery of PHP5.5B FY20 profit target</div>
</li>
<li>
<div class="content-highlight">FCF inflection point coming closer in FY20</div>
</li>
<li>
<div class="content-highlight">Re-discovery by sell-side firms as index inclusion looms</div>
</li>
<li>
<div class="content-highlight">Visibility into FY21-FY25 dividend potential</div>
</li>
</ol>
<p><em>Footnote: *Injap was reported as having USD$1 B in assets by Forbes in 2017, as the share price of DD has fallen we estimate this has dropped to approximately USD$ 400-500 M, which would still rank him among the top-25 wealthiest individuals in the Philippines.</em></p>


This Insight was written by Nicolas Van Broekhoven and Lloyd Moffatt.
What is an Orphan Stock?
An attractively valued company with a minimum market cap of USD $1 billion but no sell-side coverage.Doubledragon Properties (DD PM) meets those criteria.
Why Read This Report?
Learn about the Philippines youngest self-made billionaire*, Edgar ‘Injap’ Sia,  how he created one of the largest fast-food chains (Mang Inasal) in the country and successfully sold it to Jollibee Foods (JFC PM) for over USD$100 M.
After selling Mang Inasal in 2010, Sia started building DoubleDragon (DD) as he joined hands with Tony Tan (founder of Jollibee Foods (JFC PM) ). DD was listed in 2014 at a market value of USD$85 M (PHP2/share) and reached a market cap of over USD$3 B USD two years after listing (PHP70/share).
DD’s valuation mid-2016 was overhyped and overvalued.
From mid-2016 to late 2018 the share price fell by approximately 75%. Last year the stock bottomed at PHP17.2 despite fundamentals improving drastically between 2016 and 2018.

This has created a unique opportunity to invest in a diversified property company whose main earnings contributor will come from building neighborhood malls in suburban communities outside Metro Manila. It is forecast that 90% of its revenues would be recurring in nature by FY20.

We value DD on a blended a) P/E multiple and b) Cap Rate basis.
DD recently traded around PHP 22/share and is currently valued at 9.5x FY20 P/E, a steep discount to its industry peers. Assuming the company achieves PHP10.8 B in recurring revenues by FY20 the market is currently valuing the company at a 21% Cap Rate vs 7% for its primary peer Sm Prime Holdings (SMPH PM). DD should trade at a discount to SM (long track record, higher liquidity, included in PSE index) but the gap is too wide.
We argue DD should trade at a) 15x P/E and b) 10% cap rate. Combining the two valuation methods we arrive at a blended Fair Value of PHP 40.31/share, or 83% upside from current levels.



Assumptions
Fair Value


15x 2020 P/E
PHP 35


10% Cap Rate
PHP 45.63


BLENDED FAIR VALUE
40.31 PHP



The founders control 70% of the company and expect to grow the current USD$1.2B market cap exponentially the coming 3-5 years. DoubleDragon is a potential multi-bagger in the making.

Catalysts to unlock value at DoubleDragon would be:



FY18 results publication by early April 2019


Delivery of 100 operating CityMalls by FY20


The passing of workable REIT law


Delivery of PHP5.5B FY20 profit target


FCF inflection point coming closer in FY20


Re-discovery by sell-side firms as index inclusion looms


Visibility into FY21-FY25 dividend potential


Footnote: *Injap was reported as having USD$1 B in assets by Forbes in 2017, as the share price of DD has fallen we estimate this has dropped to approximately USD$ 400-500 M, which would still rank him among the top-25 wealthiest individuals in the Philippines.

DoubleDragon Properties (DD PM): From Overhyped to Undervalued; Multi-Bagger in the Making?

United States

Amazon.com, Inc. is an online retailer that offers a wide range of products. The Company's products include books, music, videotapes, computers, electronics, home and garden, and numerous other products.  Amazon offers personalized shopping services, Web-based credit card payment, and direct shipping to customers.

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Amazon.com Inc (AMZN US)

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This Insight was written by Nicolas Van Broekhoven and Lloyd Moffatt. What is an Orphan Stock? An attractively valued company with a minimum...

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