IPO and L/S equity, 2015 Starmine top stock picker, Global Equity Research Ltd

Rickin Thakrar

IPO and L/S equity, 2015 Starmine top stock picker

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

Happy New Year! Below is a recap of the key event-driven research produced by the Global Equity Research team. This week we dig into the potential low-ball bid for <a href="https://www.smartkarma.com/entities/6296" target="_blank" data-smartkarma-citation="entities:6296:1" rel="noopener">Healius (HLS AU)</a> , we update our view on the messy deal between <a href="https://www.smartkarma.com/entities/320" target="_blank" data-smartkarma-citation="entities:320:1" rel="noopener">Familymart Uny Holdings (8028 JP)</a> and <a href="https://www.smartkarma.com/entities/13475" target="_blank" data-smartkarma-citation="entities:13475:1" rel="noopener">Don Quijote Holdings (7532 JP)</a> as the deal shifts to earnings dislocation. In addition, we question the economics of a material bump for <a href="https://www.smartkarma.com/entities/726" target="_blank" data-smartkarma-citation="entities:726:1" rel="noopener">Healthscope Ltd (HSO AU)</a>, assess the reduced bid (and great call by Arun) on <a href="https://www.smartkarma.com/entities/374" target="_blank" data-smartkarma-citation="entities:374:1" rel="noopener">MYOB Group Ltd (MYO AU)</a> and finally dig into the potentially risky acquisition by <a href="https://www.smartkarma.com/entities/7797" target="_blank" data-smartkarma-citation="entities:7797:1" rel="noopener">Hitachi Ltd (6501 JP)</a> of <a href="https://www.smartkarma.com/entities/22568" target="_blank" data-smartkarma-citation="entities:22568:1" rel="noopener">ABB Ltd (ABBN VX)</a>'s power grids. 
The rest of our event-driven research can be found below
Best of luck for the new week - Rickin, Venkat and Arun

Happy New Year! Below is a recap of the key event-driven research produced by the Global Equity Research team. This week we dig into the potential low-ball bid for Healius (HLS AU) , we update our view on the messy deal between Familymart Uny Holdings (8028 JP) and Don Quijote Holdings (7532 JP) as the deal shifts to earnings dislocation. In addition, we question the economics of a material bump for Healthscope Ltd (HSO AU), assess the reduced bid (and great call by Arun) on MYOB Group Ltd (MYO AU) and finally dig into the potentially risky acquisition by Hitachi Ltd (6501 JP) of ABB Ltd (ABBN VX)'s power grids. 
The rest of our event-driven research can be found below
Best of luck for the new week - Rickin, Venkat and Arun

The GER Weekly EVENTS Wrap: Healius, FamilyMart, Healthscope, Myob and Hitachi

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)

The following is an in-depth review of the big three Japanese convenience store (CVS) players, Seven Eleven (<a href="https://www.smartkarma.com/entities/1041" target="_blank" data-smartkarma-citation="entities:1041:1">Seven &amp; I Holdings (3382 JP)</a>), <a href="https://www.smartkarma.com/entities/320" target="_blank" data-smartkarma-citation="entities:320:1">Familymart (8028 JP)</a> and <a href="https://www.smartkarma.com/entities/1040" target="_blank" data-smartkarma-citation="entities:1040:1">Lawson Inc (2651 JP)</a>. This follows <a href="https://www.smartkarma.com/insights/japan-convenience-stores-still-innovating-in-a-saturated-market" target="_blank">our review of the Japanese convenience store sector overall</a>, which is best to read first.
The key operational and strategic themes relevant to investors regarding the Big Three in Japan:
<ul class="">
<li>Saturation has encouraged the top three operators to take over the remaining smaller chains while pushing into regions where they have fewer stores.</li>
<li>All are expanding new forms of retail:
<ul>
<li>Seven Eleven and Lawson have launched new e-commerce ventures that make the best use of their existing store networks and could reach national coverage quite soon.</li>
<li>Diversification: Familymart, in particular, is tying with all manner of partners to try and come up with a hit hybrid format to find new growth.</li>
</ul>
</li>
<li>While competition from drugstores and discount food retailers is a threat, convenience stores will continue to find new growth from e-commerce, hybrid stores and innovative products.</li>
</ul>

The following is an in-depth review of the big three Japanese convenience store (CVS) players, Seven Eleven (Seven &amp; I Holdings (3382 JP)), Familymart (8028 JP) and Lawson Inc (2651 JP). This follows our review of the Japanese convenience store sector overall, which is best to read first.
The key operational and strategic themes relevant to investors regarding the Big Three in Japan:

Saturation has encouraged the top three operators to take over the remaining smaller chains while pushing into regions where they have fewer stores.
All are expanding new forms of retail:

Seven Eleven and Lawson have launched new e-commerce ventures that make the best use of their existing store networks and could reach national coverage quite soon.
Diversification: Familymart, in particular, is tying with all manner of partners to try and come up with a hit hybrid format to find new growth.


While competition from drugstores and discount food retailers is a threat, convenience stores will continue to find new growth from e-commerce, hybrid stores and innovative products.


Seven Eleven, Familymart and Lawson Find New Growth Strategies in Tighter Market

The following is an in-depth review of the Japanese convenience store (CVS) sector and, in particular, the top three players, Seven Eleven (<a href="https://www.smartkarma.com/entities/1041" target="_blank" data-smartkarma-citation="entities:1041:1">Seven &amp; I Holdings (3382 JP)</a>), <a href="https://www.smartkarma.com/entities/320" target="_blank" data-smartkarma-citation="entities:320:1">Familymart (8028 JP)</a> and <a href="https://www.smartkarma.com/entities/1040" target="_blank" data-smartkarma-citation="entities:1040:1">Lawson Inc (2651 JP)</a>. Also covered are the smaller firms like <a href="https://www.smartkarma.com/entities/1043" target="_blank" data-smartkarma-citation="entities:1043:1">Ministop Co Ltd (9946 JP)</a>, <a href="https://www.smartkarma.com/entities/5762" target="_blank" data-smartkarma-citation="entities:5762:1">Poplar Co Ltd (7601 JP)</a>, Daily Yamazaki, <a href="https://www.smartkarma.com/entities/19816" target="_blank" data-smartkarma-citation="entities:19816:1">Cvs Bay Area (2687 JP)</a>, <a href="https://www.smartkarma.com/entities/11801" target="_blank" data-smartkarma-citation="entities:11801:1">Three F Co Ltd (7544 JP)</a> and <a href="http://secoma.co.jp" target="_blank">Secoma</a> which are targets for the Big Three.
The key operational and strategic themes relevant to investors in CVS in Japan:
<ul class="">
<li>The Japanese convenience store sector may have reached saturation but this has just encouraged the top three operators to speed up their quest to take over the remaining smaller chains while pushing into regions where they have fewer stores.</li>
<li>At the same time, all are looking at new forms of retailing to expand further:
<ul>
<li>All of the top three had previously failed to come up with coherent e-commerce strategies, but this year Seven Eleven and Lawson have launched new ideas that make better use of their existing store networks and could reach national coverage quite soon.</li>
<li>Diversification is another strategy to overcome saturation, and Familymart, in particular, is tying with all manner of partners to try and come up with a hit hybrid format to find new growth.</li>
</ul>
</li>
<li>While competition from drugstores and discount food retailers is a threat, convenience stores will continue to find new sources of growth from e-commerce, hybrid stores and innovative products.</li>
</ul>
This first report reviews the sector overall and the main players, <a href="https://www.smartkarma.com/insights/seven-eleven-familymart-and-lawson-find-new-growth-strategies-in-tighter-market" target="_blank">while a second report looks at the big three CVS operators – which have a combined 91% share of the market – in detail</a>.

The following is an in-depth review of the Japanese convenience store (CVS) sector and, in particular, the top three players, Seven Eleven (Seven &amp; I Holdings (3382 JP)), Familymart (8028 JP) and Lawson Inc (2651 JP). Also covered are the smaller firms like Ministop Co Ltd (9946 JP), Poplar Co Ltd (7601 JP), Daily Yamazaki, Cvs Bay Area (2687 JP), Three F Co Ltd (7544 JP) and Secoma which are targets for the Big Three.
The key operational and strategic themes relevant to investors in CVS in Japan:

The Japanese convenience store sector may have reached saturation but this has just encouraged the top three operators to speed up their quest to take over the remaining smaller chains while pushing into regions where they have fewer stores.
At the same time, all are looking at new forms of retailing to expand further:

All of the top three had previously failed to come up with coherent e-commerce strategies, but this year Seven Eleven and Lawson have launched new ideas that make better use of their existing store networks and could reach national coverage quite soon.
Diversification is another strategy to overcome saturation, and Familymart, in particular, is tying with all manner of partners to try and come up with a hit hybrid format to find new growth.


While competition from drugstores and discount food retailers is a threat, convenience stores will continue to find new sources of growth from e-commerce, hybrid stores and innovative products.

This first report reviews the sector overall and the main players, while a second report looks at the big three CVS operators – which have a combined 91% share of the market – in detail.

Japan Convenience Stores Still Innovating in a Saturated Market

'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. 

Quantitative Analysis

MARKET COMPOSITE<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/073/799/original/2018-12-22_16-48-37.png?1545464931" class="editor-image img-responsive" data-smartkarma-image-id="73799"></figure><div class="content-caption">Source: Japan Analytics</div>TRADING ZONE - As of last Friday, the Japan All Market Composite has now entered a bear market, having declined by 20% from the January 23rd high if Y757t. At the close, only 8% by number and 11% by value of Japanese stocks were trading above their weighted composite of 5, 20, 60, 120, and 240-day moving averages. These were the lowest closing values since February 2016 when the All Market Composite reached a low of Y475tand  offer an entry point for a short-term trade for those happy to hold over the extended New Year Holiday period.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/073/800/original/2018-12-22_16-49-53.png?1545465006" class="editor-image img-responsive" data-smartkarma-image-id="73800"></figure><div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/073/801/original/2018-12-22_16-52-17.png?1545465147" class="editor-image img-responsive" data-smartkarma-image-id="73801"></figure> Source: Japan Analytics</div>BREAKOUTS -  The 'Breaking Bad' percentage reached 11% on December 4th, the tenth-lowest reading in three years bu thas yet to fall below '-15-.  Adding the Breaking Above and Breaking Below percentages together provides a more straightforward view of the 15% threshold that has marked previous short and medium-term turning points, and which again we have yet to reach.<hr> SECTORS<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/073/804/original/2018-12-22_18-10-04.png?1545469815" class="editor-image img-responsive" data-smartkarma-image-id="73804"></figure><div style="text-align: left;" class="content-caption">LEGEND: The 'sparklines' show the three-year trend in the weighted percentage above moving average relative to the Market Composite and the 'STDev' column is a measure of the variability of that relative measure. The table also provides averages for the breaks above and breaks below and the positive and negative 'crossovers'.</div>SECTOR BREAKDOWN - The top six sectors measured by the percentage above the weighted average of 5-240 Days are all, predictably, domestic and defensive -  Food, Beverages &amp; Tobacco, REITs, Information Technology, Internet, Media and Utilities. Equally predictable are the bottom half-dozen - Banks, Non-Bank Finance, Autos, Metals, Electrical Equipment and Chemicals. <hr>COMPANIESCOMPANY MOVING AVERAGE OUTLIERS - As with the market and sectors, out moving average outlier indicator uses a weighted sum of the share price relative to its 5-day, 20-day, 60-day, 120 day and 240-day moving averages. Extreme values are weighted sums greater than 100% and less than -100%. We would caution that this indicator is best used for timing shorter-term reversals and, in many cases, higher highs and lower lows will be seen. <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/073/816/original/2018-12-23_15-00-13.png?1545544826" class="editor-image img-responsive" data-smartkarma-image-id="73816"></figure><div class="content-caption">Source: Japan Analytics</div>THE 100% CLUB - As of Friday 21st, there were 16 extreme positive outliers and 622 extreme negative outliers. The number of extreme negative outliers suggests we are a short-term bottom.<div class="content-highlight">In the DETAIL section below, we highlight the current top and bottom twenty-five larger capitalisation outliers as well as those companies that have seen the most significant positive and negative changes in their outlier percentage in the last two weeks and provide short comments on companies of particular note. </div>

MARKET COMPOSITESource: Japan AnalyticsTRADING ZONE - As of last Friday, the Japan All Market Composite has now entered a bear market, having declined by 20% from the January 23rd high if Y757t. At the close, only 8% by number and 11% by value of Japanese stocks were trading above their weighted composite of 5, 20, 60, 120, and 240-day moving averages. These were the lowest closing values since February 2016 when the All Market Composite reached a low of Y475tand  offer an entry point for a short-term trade for those happy to hold over the extended New Year Holiday period.
 Source: Japan AnalyticsBREAKOUTS -  The 'Breaking Bad' percentage reached 11% on December 4th, the tenth-lowest reading in three years bu thas yet to fall below '-15-.  Adding the Breaking Above and Breaking Below percentages together provides a more straightforward view of the 15% threshold that has marked previous short and medium-term turning points, and which again we have yet to reach. SECTORSLEGEND: The 'sparklines' show the three-year trend in the weighted percentage above moving average relative to the Market Composite and the 'STDev' column is a measure of the variability of that relative measure. The table also provides averages for the breaks above and breaks below and the positive and negative 'crossovers'.SECTOR BREAKDOWN - The top six sectors measured by the percentage above the weighted average of 5-240 Days are all, predictably, domestic and defensive -  Food, Beverages &amp; Tobacco, REITs, Information Technology, Internet, Media and Utilities. Equally predictable are the bottom half-dozen - Banks, Non-Bank Finance, Autos, Metals, Electrical Equipment and Chemicals. COMPANIESCOMPANY MOVING AVERAGE OUTLIERS - As with the market and sectors, out moving average outlier indicator uses a weighted sum of the share price relative to its 5-day, 20-day, 60-day, 120 day and 240-day moving averages. Extreme values are weighted sums greater than 100% and less than -100%. We would caution that this indicator is best used for timing shorter-term reversals and, in many cases, higher highs and lower lows will be seen. Source: Japan AnalyticsTHE 100% CLUB - As of Friday 21st, there were 16 extreme positive outliers and 622 extreme negative outliers. The number of extreme negative outliers suggests we are a short-term bottom.In the DETAIL section below, we highlight the current top and bottom twenty-five larger capitalisation outliers as well as those companies that have seen the most significant positive and negative changes in their outlier percentage in the last two weeks and provide short comments on companies of particular note. 

Japan: Moving Average Outliers - Year-End Blues

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Last Week in Event SPACE: Familymart, Takeda, Harbin Electric, Motherson, Young Poong, NTT

Japan

FamilyMart Co., Ltd. operates convenience store chains. The Company provides rice balls, hot snacks, stews, beverages, and other products. FamilyMart conducts businesses in China, Taiwan, South Korea, Thailand, and other countries and regions.

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FamilyMart Co Ltd (8028 JP)

The GER Weekly EVENTS Wrap: Healius, FamilyMart, Healthscope, Myob and Hitachi

Happy New Year! Below is a recap of the key event-driven research produced by the Global Equity Research team. This week we dig into the potential...

Rickin Thakrar

Seven Eleven, Familymart and Lawson Find New Growth Strategies in Tighter Market

The following is an in-depth review of the big three Japanese convenience store (CVS) players, Seven Eleven (Seven & I Holdings (3382 JP)),...

Michael Causton

Japan Convenience Stores Still Innovating in a Saturated Market

The following is an in-depth review of the Japanese convenience store (CVS) sector and, in particular, the top three players, Seven Eleven (Seven...

Michael Causton

Japan: Moving Average Outliers - Year-End Blues

MARKET COMPOSITETRADING ZONE - As of last Friday, the Japan All Market Composite has now entered a bear market, having declined by 20% from the...

Campbell Gunn

Last Week in Event SPACE: Familymart, Takeda, Harbin Electric, Motherson, Young Poong, NTT

Last Week in Event SPACE ... Bad banker analysis as Familymart Uny Holdings (8028 JP)'s tender for Don Quijote Holdings (7532 JP) doesn't even get...

David Blennerhassett

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