'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)

<div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/145/930/original/2020-07-14_08-06-05.png?1594681580" class="editor-image img-responsive" data-smartkarma-image-id="145930"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/145/928/original/2020-07-14_07-58-53.png?1594681168" class="editor-image img-responsive" data-smartkarma-image-id="145928"></figure><div class="content-caption">Source • Japan Analytics</div>
<a href="https://www.smartkarma.com/entities/create-sd-holdings-co" target="_blank" data-smartkarma-citation="entities:12945:1" rel="noopener">Create SD (3148 JP)</a> - Of the larger-cap companies reporting yesterday, drugstore Create SD had the best overall Results Score, although the company is forecasting lower profits and operating margins for the current year. The zero market-implied long-term growth rate is overly conservative, and the shares have yet to reach a new Relative Price Score high, suggesting further upside.   
DAILY STATS
</div><hr><div>51 Quarterly Results</div><div><ul>
<li>
Results Score: 14 Positive / 3 Neutral / 34 Negative</li>
<li>
Average Results Score Change: -4.7</li>
<li>
Average % Change in Revenue: -14.9% Quarter YoY / -2.2% Rolling TTM YoY</li>
<li>
Average Operating Profit Margin Change: -1.6ppt</li>
<li>
Percentage Making Quarterly Losses: 37%</li>
</ul></div><hr><div> 22 Annual • 8 Interim Forecasts/Revisions</div><div><ul>
<li>
Annual Forecast/Revision Score: 5 Positive / 3 Neutral / 14 Negative</li>
<li>
Interim Forecast/Revision Score Change: 4 Positive / 0 Neutral / 4 Negative</li>
<li>
Average Forecast/Revision Score Change: -7.7</li>
</ul></div>


Source • Japan Analytics
Create SD (3148 JP) - Of the larger-cap companies reporting yesterday, drugstore Create SD had the best overall Results Score, although the company is forecasting lower profits and operating margins for the current year. The zero market-implied long-term growth rate is overly conservative, and the shares have yet to reach a new Relative Price Score high, suggesting further upside.   
DAILY STATS
51 Quarterly Results

Results Score: 14 Positive / 3 Neutral / 34 Negative

Average Results Score Change: -4.7

Average % Change in Revenue: -14.9% Quarter YoY / -2.2% Rolling TTM YoY

Average Operating Profit Margin Change: -1.6ppt

Percentage Making Quarterly Losses: 37%
 22 Annual • 8 Interim Forecasts/Revisions

Annual Forecast/Revision Score: 5 Positive / 3 Neutral / 14 Negative

Interim Forecast/Revision Score Change: 4 Positive / 0 Neutral / 4 Negative

Average Forecast/Revision Score Change: -7.7


🇯🇵 JAPAN • Results & Revisions 13th July

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/126/826/original/File%202020-04-06%2014%2031%2044.jpeg?1586211571" class="editor-image img-responsive" data-smartkarma-image-id="126826"></figure><div class="content-caption">Source • Financial Times</div>ABE ROLLS THE DICE - Japan's solution to the recent alarming rise in COVID-19 infections is to adopt a middle way between those adopted by Sweden and the lockdown countries. The full details will emerge later today but will include constraints on social gatherings in certain major cities as well as a stimulus package equivalent to 20% of GDP. In a tacit acknowledgement that Japanese non-consumer facing businesses cannot function from home, companies will be requested to comply with the principle of 'stay-at-home' as much as possible; however, public transportation systems will operate as usual with no reduction in capacity. The measures will be in place until the end of the extended Golden Week holiday period that ends on 6th March. In effect, Japan will be in semi-social-distancing mode for the next three weeks. After that, should the R0 be below 1, Japan reverts to business-as-usual.BIFURCATION - The implications of these policies for the market should be considered positive and when combined with the stimulus package reduced the risk of a two-stage decline as noted in our market update <a href="https://www.smartkarma.com/insights/japan-market-update-5th-april-2020-overshoot" target="_blank" data-smartkarma-citation="insights:38114" rel="noopener"> Overshoot</a>. Domestically-orientated non-consumer facing businesses are relatively well-placed in this post-COVID world. Globally-exposed businesses will still suffer, and some will be dependent on government support to survive. We would look to add to oversold stocks in the former group while waiting for selling or shorting opportunities as sentiment towards the latter recovers before the inevitable comprise in earnings. Accordingly, this Insight is BULLISH.In the DETAIL below, we shall review the Revision and Results announced yesterday. The following quotation is a good summation of the philosophy behind "The Japan Experiment':-<blockquote>"The Japanese system is a set of equations optimizing for minimal pressure for institutional change by maximising leadership wiggle room, subject to the constraint of providing the entire populace a minimally acceptable quality of life for a rich nation." - Richard Hostetter </blockquote>

Source • Financial TimesABE ROLLS THE DICE - Japan's solution to the recent alarming rise in COVID-19 infections is to adopt a middle way between those adopted by Sweden and the lockdown countries. The full details will emerge later today but will include constraints on social gatherings in certain major cities as well as a stimulus package equivalent to 20% of GDP. In a tacit acknowledgement that Japanese non-consumer facing businesses cannot function from home, companies will be requested to comply with the principle of 'stay-at-home' as much as possible; however, public transportation systems will operate as usual with no reduction in capacity. The measures will be in place until the end of the extended Golden Week holiday period that ends on 6th March. In effect, Japan will be in semi-social-distancing mode for the next three weeks. After that, should the R0 be below 1, Japan reverts to business-as-usual.BIFURCATION - The implications of these policies for the market should be considered positive and when combined with the stimulus package reduced the risk of a two-stage decline as noted in our market update  Overshoot. Domestically-orientated non-consumer facing businesses are relatively well-placed in this post-COVID world. Globally-exposed businesses will still suffer, and some will be dependent on government support to survive. We would look to add to oversold stocks in the former group while waiting for selling or shorting opportunities as sentiment towards the latter recovers before the inevitable comprise in earnings. Accordingly, this Insight is BULLISH.In the DETAIL below, we shall review the Revision and Results announced yesterday. The following quotation is a good summation of the philosophy behind "The Japan Experiment':-"The Japanese system is a set of equations optimizing for minimal pressure for institutional change by maximising leadership wiggle room, subject to the constraint of providing the entire populace a minimally acceptable quality of life for a rich nation." - Richard Hostetter 

🇯🇵 JAPAN • Revisions & Results Update 6th April - The Japanese Experiment

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. 

The following provides a snapshot guide to the performance of all the main retail sectors in Japan in 2018-19 sector by sector including winners and losers. <a href="https://www.smartkarma.com/insights/japan-retail-review-and-ranking-2018-19-profit-growth-slowing-as-competition-increases" target="_blank" rel="noopener">In an accompanying Insight, we provide an overview of retail performance for the entire sector in 2018-19 by sales, profits and margins.</a>

The following provides a snapshot guide to the performance of all the main retail sectors in Japan in 2018-19 sector by sector including winners and losers. In an accompanying Insight, we provide an overview of retail performance for the entire sector in 2018-19 by sales, profits and margins.

Japan Retail Highlights 2018-19: Sector by Sector and Winners in Each Sector

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

A couple of minutes before the AM session close yesterday, the Nikkei Inc released a <a href="https://www.nikkei.com/article/DGXMZO48537880U9A810C1I00000/" target="_blank" rel="noopener">story</a> saying that the Special Committee formed to help <a href="https://www.smartkarma.com/entities/cocokara-fine-inc" target="_blank" data-smartkarma-citation="entities:15447:1" rel="noopener">cocokara Fine (3098 JP)</a> management decide whether to enter merger talks with <a href="https://www.smartkarma.com/entities/matsumotokiyoshi-holdings-co" target="_blank" data-smartkarma-citation="entities:2259:1" rel="noopener">Matsumotokiyoshi Holdings Co (3088 JP)</a> (commonly known as "MatsuKiyo") or with <a href="https://www.smartkarma.com/entities/sugi-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:9255:1" rel="noopener">Sugi Holdings (7649 JP)</a> has decided to go with MatsuKiyo. The cocokara Board of Directors looked at the same information and inputs, and they agreed with the panel that the synergy effect was greater if they joined with MatsumotoKiyoshi. cocokara shares immediately popped 9.5% before settling +6.9% at lunch. MatsuKiyo popped as well.  <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/095/696/original/Screenshot%202019-08-14%20at%205.16.51%20PM.png?1565774282" class="editor-image img-responsive" data-smartkarma-image-id="95696"></figure><div class="content-caption">source: tradingview.com, Quiddity</div>Over the lunch break, cocokara fine released a <a href="https://corp.cocokarafine.co.jp/news/pdf/20190814_TD01.pdf" target="_blank" rel="noopener">statement</a> (Japanese only for now; English will be in the Discussion Posts below if it comes) saying similar, and that they would enter exclusive negotiations with Matsumoto Kiyoshi on joining, with an eye to concluding a basic agreement, followed by a final agreement. When the market opened in the afternoon, both fell, then both slowly rose back into the end of the day. cocokara ended up 1.3%; Matsukiyo fell 2.2% on the day. The share price ratio closed at 1.689.The panel convened in mid-June to study the matter looked at product policy, store opening areas, the organizational structure of the two enterprises, and decided that the synergy effects with MatsuKiyo were significant. Apparently MatsuKiyo submitted two proposals - capital tie-up as first envisaged earlier in April and "management integration" (which means a full joining (merger or holdco)).On a pro-forma basis (using end-March numbers), the combination would run 3,008 stores and have almost ¥1 trillion in sales (¥976.4bn in FY18) against the current number one and number two <a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1" rel="noopener">Welcia Holdings (3141 JP)</a> and <a href="https://www.smartkarma.com/entities/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">Tsuruha Holdings (3391 JP)</a> with ¥670-695 billion in segment sales each this past year. This comes as something of a surprise. I thought Sugi would end up being the preferred partner for reasons of culture, overlap (lack thereof), and Cocokara's desire to get into healthcare services, where Sugi already has a tie-up with <a href="https://www.smartkarma.com/entities/medpeer-inc" target="_blank" data-smartkarma-citation="entities:4090:1" rel="noopener">Medpeer Inc (6095 JP)</a>. I also figured Sugi might offer better terms. I would note that this is still not a done deal. Usually, two firms will talk informally, then the boards will decide management teams should talk formally after the ground has been broken. In this case the informal talks to understand synergy and culture appear not to have been completed before we got to the Independent Committee so in this case the parents have decided which potential spouse is better before the kids have done the speed dating.A full discussion is below the fold.<hr> For more on this subject, see my previous piece <a href="https://www.smartkarma.com/insights/cocokara-fine-cocokara" target="_blank" data-smartkarma-citation="insights:30197" rel="noopener">Cocokara Fine は Cocokara いいね*</a> and <a href="https://www.smartkarma.com/profiles/michael-causton" target="_blank" data-smartkarma-citation="accounts:2415" rel="noopener">Michael Causton</a>'s excellent and informative pieces on the deal and the sector <a href="https://www.smartkarma.com/insights/matsukiyo-and-cocokara-fine-tie-to-shake-up-drugstore-sector" target="_blank" data-smartkarma-citation="insights:29890" rel="noopener">Matsukiyo and Cocokara Fine Tie to Shake up Drugstore Sector</a>, <a href="https://www.smartkarma.com/insights/japan-drugstores-set-to-expand-further" target="_blank" data-smartkarma-citation="insights:28119" rel="noopener">Japan Drugstores Set to Expand Further</a>, and <a href="https://www.smartkarma.com/insights/drug-fuelled-marriages-and-macho-shachos-in-japan" target="_blank" data-smartkarma-citation="insights:30346" rel="noopener">Drug-Fuelled Marriages and Macho Shachos* in Japan</a>. Furthermore, two of his recent big picture pieces <a href="https://www.smartkarma.com/insights/japanese-retailing-the-big-disruption-and-opportunity-in-the-next-5-years" target="_blank" data-smartkarma-citation="insights:30770" rel="noopener">Japanese Retailing: The Big Disruption – and Opportunity – in the Next 5 Years</a> and <a href="https://www.smartkarma.com/insights/winners-and-losers-in-japanese-retailing-in-the-next-5-10-years" target="_blank" data-smartkarma-citation="insights:30771" rel="noopener">Winners and Losers in Japanese Retailing in the Next 5-10 Years</a> are excellent backdrop, with the latter providing the SWOTs for the sector.For more information on Japanese Tender Offers and M&amp;A - how they work and how they unfold - please refer to the <a href="https://www.smartkarma.com/insights/quiddity-japan-m-a-guide-2019" target="_blank" rel="noopener">Quiddity Japan M&amp;A Guide</a>.

A couple of minutes before the AM session close yesterday, the Nikkei Inc released a story saying that the Special Committee formed to help cocokara Fine (3098 JP) management decide whether to enter merger talks with Matsumotokiyoshi Holdings Co (3088 JP) (commonly known as "MatsuKiyo") or with Sugi Holdings (7649 JP) has decided to go with MatsuKiyo. The cocokara Board of Directors looked at the same information and inputs, and they agreed with the panel that the synergy effect was greater if they joined with MatsumotoKiyoshi. cocokara shares immediately popped 9.5% before settling +6.9% at lunch. MatsuKiyo popped as well.  source: tradingview.com, QuiddityOver the lunch break, cocokara fine released a statement (Japanese only for now; English will be in the Discussion Posts below if it comes) saying similar, and that they would enter exclusive negotiations with Matsumoto Kiyoshi on joining, with an eye to concluding a basic agreement, followed by a final agreement. When the market opened in the afternoon, both fell, then both slowly rose back into the end of the day. cocokara ended up 1.3%; Matsukiyo fell 2.2% on the day. The share price ratio closed at 1.689.The panel convened in mid-June to study the matter looked at product policy, store opening areas, the organizational structure of the two enterprises, and decided that the synergy effects with MatsuKiyo were significant. Apparently MatsuKiyo submitted two proposals - capital tie-up as first envisaged earlier in April and "management integration" (which means a full joining (merger or holdco)).On a pro-forma basis (using end-March numbers), the combination would run 3,008 stores and have almost ¥1 trillion in sales (¥976.4bn in FY18) against the current number one and number two Welcia Holdings (3141 JP) and Tsuruha Holdings (3391 JP) with ¥670-695 billion in segment sales each this past year. This comes as something of a surprise. I thought Sugi would end up being the preferred partner for reasons of culture, overlap (lack thereof), and Cocokara's desire to get into healthcare services, where Sugi already has a tie-up with Medpeer Inc (6095 JP). I also figured Sugi might offer better terms. I would note that this is still not a done deal. Usually, two firms will talk informally, then the boards will decide management teams should talk formally after the ground has been broken. In this case the informal talks to understand synergy and culture appear not to have been completed before we got to the Independent Committee so in this case the parents have decided which potential spouse is better before the kids have done the speed dating.A full discussion is below the fold. For more on this subject, see my previous piece Cocokara Fine は Cocokara いいね* and Michael Causton's excellent and informative pieces on the deal and the sector Matsukiyo and Cocokara Fine Tie to Shake up Drugstore Sector, Japan Drugstores Set to Expand Further, and Drug-Fuelled Marriages and Macho Shachos* in Japan. Furthermore, two of his recent big picture pieces Japanese Retailing: The Big Disruption – and Opportunity – in the Next 5 Years and Winners and Losers in Japanese Retailing in the Next 5-10 Years are excellent backdrop, with the latter providing the SWOTs for the sector.For more information on Japanese Tender Offers and M&amp;A - how they work and how they unfold - please refer to the Quiddity Japan M&amp;A Guide.

Cocokara (3098) Going With MatsuKiyo (3088) But Ratio Overextended

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. 

Quantitative Analysis

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/001/original/2019-07-13_16-16-31.png?1563002212" class="editor-image img-responsive" data-smartkarma-image-id="93001"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/005/original/2019-07-13_16-25-24.png?1563002742" class="editor-image img-responsive" data-smartkarma-image-id="93005"></figure>Source: Japan Analytics
</div>MOVING AVERAGE BREAKOUT - Japanese equities have now risen by 5.1% since the low of 4th June and, since July 1st, the Total Market Value has exceeded the 50-Day Moving Average for the first time since 26th April. Over the last two weeks, the Total Market Value has gained 1.7% in both Yen and US dollar times. For the previous twelve months, the equity market has moved in line with the US dollar/Japanese Yen exchange rate. It remains to be seen how the 'gap' that has opened up in the last month will be closed. Any further strength in the Yen from current levels will likely see the market slip below the 50-Day Moving Average again.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/020/original/2019-07-14_06-28-16.png?1563053334" class="editor-image img-responsive" data-smartkarma-image-id="93020"></figure><div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/024/original/2019-07-14_06-45-29.png?1563054338" class="editor-image img-responsive" data-smartkarma-image-id="93024"></figure> Source: Japan Analytics</div>VALUE TRADED RATIO - The Value Traded Ratio (Value Traded/Total Market Value) has seen two new eighteen-month lows. If the three days around Christmas are excluded, the current apathy towards Japanese equities is the most extreme since 2012 and is confirmed by recent BAML investor surveys. In the past, such periods of inactivity (marked"▲"above)  have preceded changes in market direction, more often upwards rather than downwards and suggest the current rally has more 'legs'. <div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/025/original/2019-07-14_06-47-40.png?1563054585" class="editor-image img-responsive" data-smartkarma-image-id="93025"></figure> Source: Japan Analytics</div>TORAKU INDEX - Conversely, the Toraku advance/decline index is suggesting a degree of caution having breached the 120 'overbought' line for only the third time in eighteen months. Combining this analysis with the Value Traded Ratio, there is scope for a short-term upward move akin to that of October 2018 to be followed by a sharper downward trend into the autumn.  <div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/026/original/2019-07-14_06-54-51.png?1563054906" class="editor-image img-responsive" data-smartkarma-image-id="93026"></figure> Source: Japan Analytics</div>VOLUME SCORE TIMELINE - The lull in market turnover is confirmed in the greener 'bias' in our Sector volume timeline. The Retail and Restaurant Sectors are hot as we are in the middle of the quarterly results announcements for February/May/August/November year-end companies. REITs remain the 'go-to' defensive Sector while the Information Technology and Internet Sectors are the 'tema-du-jour' - to mix language metaphors. The 'untouchables' are Metals, Banks, UtilitiesTransportation,  and Multi-Industry.<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/028/original/2019-07-14_07-31-40.png?1563057109" class="editor-image img-responsive" data-smartkarma-image-id="93028"></figure> Source: Japan Analytics</div>3-MONTH SECTOR CONTRIBUTION - Over the last three months, a long Telcos/short Autos strategy would have yielded 82 basis points of performance. The Retail Sector has responded well to the results released so far led by drugstores <a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1" rel="noopener">Welcia (3141 JP)</a> and <a href="https://www.smartkarma.com/entities/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">Tsuruha (3391 JP), </a><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/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">, and </a><a href="https://www.smartkarma.com/entities/lawson-inc" target="_blank" data-smartkarma-citation="entities:1040:1" rel="noopener">Lawson (2651 JP)</a>. Electrical Equipment has suffered from weakness in component stocks <a href="https://www.smartkarma.com/entities/alps-alpine-co-ltd" target="_blank" data-smartkarma-citation="entities:12001:1" rel="noopener">Alps Alpine (6770 JP)</a> (-38% over one year), <a href="https://www.smartkarma.com/entities/murata-manufacturing-co-ltd" target="_blank" data-smartkarma-citation="entities:11649:1" rel="noopener">Murata (6981 JP)</a> (see <a href="https://www.smartkarma.com/profiles/scott-foster" target="_blank" data-smartkarma-citation="accounts:1134" rel="noopener">Scott Foster</a>'s <a href="https://www.smartkarma.com/insights/murata-mfg-6981-jp-buy-on-decline-for-the-long-term" target="_blank" data-smartkarma-citation="insights:30919" rel="noopener">(Buy on Decline for the Long Term</a>), and <a href="https://www.smartkarma.com/entities/taiyo-yuden-co-ltd" target="_blank" data-smartkarma-citation="entities:9924:1" rel="noopener">Taiyo Yuden (6976 JP)</a>, while <a href="https://www.smartkarma.com/entities/smc-corp" target="_blank" data-smartkarma-citation="entities:20866:1" rel="noopener">SMC (6273 JP)</a>, <a href="https://www.smartkarma.com/entities/fanuc-corp" target="_blank" data-smartkarma-citation="entities:752:1" rel="noopener">Fanuc (6954 JP)</a>, and <a href="https://www.smartkarma.com/entities/komatsu-ltd" target="_blank" data-smartkarma-citation="entities:8416:1" rel="noopener">Komatsu (6301 JP)</a> have weighed on the Machinery Sector.<div class="content-caption">
<figure class="editor-figure mceNonEditable"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/093/031/original/2019-07-14_07-44-47.png?1563057897" class="editor-image img-responsive" data-smartkarma-image-id="93031"></figure></figure> Source: Japan Analytics</div>SECTOR SCORE MATRIX - Arranging our cap-weighted Sector Relative Price Scores and Results &amp; Revisions Scores in a four-quadrant matrix whose extremes are Contrarian Sell, Contrarian Buy, Unrequited Growth, and Ex-Growth suggest profit-taking in Information Technology (<a href="https://www.smartkarma.com/entities/obic-co-ltd" target="_blank" data-smartkarma-citation="entities:1273:1" rel="noopener">OBIC (4684 JP)</a>, Other Commerical Products (<a href="https://www.smartkarma.com/entities/hoya-corp" target="_blank" data-smartkarma-citation="entities:8990:1" rel="noopener">Hoya Corp (7741 JP)</a>, and Commercial Services (<a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit 6098 JP).</a> We are not contrarian enough to fall into the banking 'trap', however, the Metals Sector may offer some 'crumbs' of comfort for those in need of a deep value 'fix' (<a href="https://www.smartkarma.com/entities/nippon-steel-sumitomo-metal-corp" target="_blank" data-smartkarma-citation="entities:961:1" rel="noopener">Nippon Steel &amp; Sumitomo Metal (5401 JP)</a>) <div class="content-highlight">In the DETAIL section below, we will review Sector performance, scores and valuation in more detail, as well as Company Results &amp; Revisions and individual stock performance over the previous two weeks, as well as adding some brief comments on <a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1" rel="noopener">Welcia (3141 JP)</a>, <a href="https://www.smartkarma.com/entities/daiseki-co-ltd" target="_blank" data-smartkarma-citation="entities:2330:1" rel="noopener">Daiseki (9793 JP), </a><a href="https://www.smartkarma.com/entities/yaskawa-electric-corp" target="_blank" data-smartkarma-citation="entities:2458:1" rel="noopener">Yaskawa Electric (6506 JP), </a><a href="https://www.smartkarma.com/entities/pola-orbis-holdings-inc" target="_blank" data-smartkarma-citation="entities:2287:1" rel="noopener">Pola Orbis (4927 JP)</a>, <a href="https://www.smartkarma.com/entities/sekisui-house-ltd" target="_blank" data-smartkarma-citation="entities:4508:1" rel="noopener">Sekisui House (1928 JP)</a>, <a href="https://www.smartkarma.com/entities/keyence-corp" target="_blank" data-smartkarma-citation="entities:3077:1" rel="noopener">Keyence (6861 JP)</a>, <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>, and <a href="https://www.smartkarma.com/entities/obic-co-ltd" target="_blank" data-smartkarma-citation="entities:1273:1" rel="noopener">Obic (4684 JP)</a>.</div>


Source: Japan Analytics
MOVING AVERAGE BREAKOUT - Japanese equities have now risen by 5.1% since the low of 4th June and, since July 1st, the Total Market Value has exceeded the 50-Day Moving Average for the first time since 26th April. Over the last two weeks, the Total Market Value has gained 1.7% in both Yen and US dollar times. For the previous twelve months, the equity market has moved in line with the US dollar/Japanese Yen exchange rate. It remains to be seen how the 'gap' that has opened up in the last month will be closed. Any further strength in the Yen from current levels will likely see the market slip below the 50-Day Moving Average again.
 Source: Japan AnalyticsVALUE TRADED RATIO - The Value Traded Ratio (Value Traded/Total Market Value) has seen two new eighteen-month lows. If the three days around Christmas are excluded, the current apathy towards Japanese equities is the most extreme since 2012 and is confirmed by recent BAML investor surveys. In the past, such periods of inactivity (marked"▲"above)  have preceded changes in market direction, more often upwards rather than downwards and suggest the current rally has more 'legs'. 
 Source: Japan AnalyticsTORAKU INDEX - Conversely, the Toraku advance/decline index is suggesting a degree of caution having breached the 120 'overbought' line for only the third time in eighteen months. Combining this analysis with the Value Traded Ratio, there is scope for a short-term upward move akin to that of October 2018 to be followed by a sharper downward trend into the autumn.  
 Source: Japan AnalyticsVOLUME SCORE TIMELINE - The lull in market turnover is confirmed in the greener 'bias' in our Sector volume timeline. The Retail and Restaurant Sectors are hot as we are in the middle of the quarterly results announcements for February/May/August/November year-end companies. REITs remain the 'go-to' defensive Sector while the Information Technology and Internet Sectors are the 'tema-du-jour' - to mix language metaphors. The 'untouchables' are Metals, Banks, UtilitiesTransportation,  and Multi-Industry.
 Source: Japan Analytics3-MONTH SECTOR CONTRIBUTION - Over the last three months, a long Telcos/short Autos strategy would have yielded 82 basis points of performance. The Retail Sector has responded well to the results released so far led by drugstores Welcia (3141 JP) and Tsuruha (3391 JP), Fast Retailing (9983 JP), and Lawson (2651 JP). Electrical Equipment has suffered from weakness in component stocks Alps Alpine (6770 JP) (-38% over one year), Murata (6981 JP) (see Scott Foster's (Buy on Decline for the Long Term), and Taiyo Yuden (6976 JP), while SMC (6273 JP), Fanuc (6954 JP), and Komatsu (6301 JP) have weighed on the Machinery Sector.
 Source: Japan AnalyticsSECTOR SCORE MATRIX - Arranging our cap-weighted Sector Relative Price Scores and Results &amp; Revisions Scores in a four-quadrant matrix whose extremes are Contrarian Sell, Contrarian Buy, Unrequited Growth, and Ex-Growth suggest profit-taking in Information Technology (OBIC (4684 JP), Other Commerical Products (Hoya Corp (7741 JP), and Commercial Services (Recruit 6098 JP). We are not contrarian enough to fall into the banking 'trap', however, the Metals Sector may offer some 'crumbs' of comfort for those in need of a deep value 'fix' (Nippon Steel &amp; Sumitomo Metal (5401 JP)) In the DETAIL section below, we will review Sector performance, scores and valuation in more detail, as well as Company Results &amp; Revisions and individual stock performance over the previous two weeks, as well as adding some brief comments on Welcia (3141 JP), Daiseki (9793 JP), Yaskawa Electric (6506 JP), Pola Orbis (4927 JP), Sekisui House (1928 JP), Keyence (6861 JP), Japan Post Insurance (7181 JP), and Obic (4684 JP).

🇯🇵 JAPAN • Market Update - Levitating on Thin Air

Japan

CREATE SD HOLDINGS Co Ltd operates a chain of drug stores based in Kanagawa. The Company sells medical supplies, cosmetics, foodstuff, baby products and daily goods. CREATE SD HOLDINGS also sells prescription medicine.

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Create Sd Holdings Co (3148 JP)

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