'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)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/139/255/original/2020-06-11_08-36-54.png?1591832240" class="editor-image img-responsive" data-smartkarma-image-id="139255"></figure><div class="content-caption">Source: Japan Analytics</div>STRESS TESTS - This Insight is the first in a series that will use a variety of standard and less-frequently used 'stress-tests' to look through the current euphoria and assess where business risk is concentrated among larger Japanese companies. According to Tokyo Shoko Research, 171 listed Japanese firms have raised nearly ¥10 trillion in new funds to weather COVID-19.ALTMAN Z-SCORES - The first Insight will update our earlier Who's<a href="https://www.smartkarma.com/insights/japan-who-s-swimming-naked-part-2-altman-z-score" target="_blank" data-smartkarma-citation="insights:37316" rel="noopener"> Swimming Naked?</a> Insight and focus on the Altman Z-Score as updated for the most recent quarterly results for both manufacturing and non-manufacturing companies.  In each category, ee will look at both the companies that are below Altman's 'distress' levels and those companies that have the most significant negative deviation from their seven-year average score. Only six of the bottom-thirty manufacturing and five of the bottom-thirty manufacturing companies have outperformed over one year. Many are already Oversold and offer potential value opportunities -as with <a href="https://www.smartkarma.com/entities/nissan-motor-co-ltd" target="_blank" data-smartkarma-citation="entities:72:1" rel="noopener">Nissan Motor (7201 JP)</a> which is now as distressed as when Carlos Ghosn first arrived.  QUASI-FINANCIAL FIRMS - The Z-Score methodology does not work for financial firms. Accordingly, five non-financial companies which have significant financial subsidiaries -  <a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten (4755 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/japan-post-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:359:1" rel="noopener">Japan Post (6178 JP)</a>, <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank Group (9984 JP)</a> and <a href="https://www.smartkarma.com/entities/sony-corp" target="_blank" data-smartkarma-citation="entities:563:1" rel="noopener">Sony (6758 JP)</a>- have been excluded from this analysis.

Source: Japan AnalyticsSTRESS TESTS - This Insight is the first in a series that will use a variety of standard and less-frequently used 'stress-tests' to look through the current euphoria and assess where business risk is concentrated among larger Japanese companies. According to Tokyo Shoko Research, 171 listed Japanese firms have raised nearly ¥10 trillion in new funds to weather COVID-19.ALTMAN Z-SCORES - The first Insight will update our earlier Who's Swimming Naked? Insight and focus on the Altman Z-Score as updated for the most recent quarterly results for both manufacturing and non-manufacturing companies.  In each category, ee will look at both the companies that are below Altman's 'distress' levels and those companies that have the most significant negative deviation from their seven-year average score. Only six of the bottom-thirty manufacturing and five of the bottom-thirty manufacturing companies have outperformed over one year. Many are already Oversold and offer potential value opportunities -as with Nissan Motor (7201 JP) which is now as distressed as when Carlos Ghosn first arrived.  QUASI-FINANCIAL FIRMS - The Z-Score methodology does not work for financial firms. Accordingly, five non-financial companies which have significant financial subsidiaries -  Rakuten (4755 JP), Z Holdings (4689 JP), Japan Post (6178 JP), Softbank Group (9984 JP) and Sony (6758 JP)- have been excluded from this analysis. 

🇯🇵 JAPAN - Stress Tests Part 1 - Altman Z-Scores

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. 

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/oisix-ra-daichi-inc" target="_blank" data-smartkarma-citation="entities:10145:1" rel="noopener">Oisix ra daichi (3182 JP)</a> is one of Japan’s leading online food sellers and by the time you read this should have completed its move to the First Section of the TSE, a testament to its consistent growth over the past few years and its maturing and leading role within food distribution.Oisix has seen demand surge with the current health crisis. So much so that in late April it temporarily stopped accepting new member registrations. It now faces the prospect of even greater demand and the need to balance this with limited supply capacity. It has an opportunity to expand but faces the threat of upsetting existing, loyal customers if things go wrong. Fortunately it was already investing in new fulfilment centres to meet demand.Although the stock isn't cheap, there are good reasons to expect the business to continue to grow overall and in terms of market share, in particular, because of its proven capability in handling product that requires ambient logistics, a highly complex skill that not many competitors can claim to have.For now, the company is forecasting a further solid increase in sales and subscribers this year. While net profit dropped sharply in FY2019, this was partly related to the current crisis, in particular at affiliate Welcome which operates Dean &amp; Deluca and tax offsets in 2018.

Oisix ra daichi (3182 JP) is one of Japan’s leading online food sellers and by the time you read this should have completed its move to the First Section of the TSE, a testament to its consistent growth over the past few years and its maturing and leading role within food distribution.Oisix has seen demand surge with the current health crisis. So much so that in late April it temporarily stopped accepting new member registrations. It now faces the prospect of even greater demand and the need to balance this with limited supply capacity. It has an opportunity to expand but faces the threat of upsetting existing, loyal customers if things go wrong. Fortunately it was already investing in new fulfilment centres to meet demand.Although the stock isn't cheap, there are good reasons to expect the business to continue to grow overall and in terms of market share, in particular, because of its proven capability in handling product that requires ambient logistics, a highly complex skill that not many competitors can claim to have.For now, the company is forecasting a further solid increase in sales and subscribers this year. While net profit dropped sharply in FY2019, this was partly related to the current crisis, in particular at affiliate Welcome which operates Dean &amp; Deluca and tax offsets in 2018.

Oisix Ra Daichi: The Fastest Online Grocery Shopping

With shoppers staying away in March and April, department stores are suddenly the most vulnerable sector of all.Some department stores have improved in the past 20 years and, in the past five, the big players have poured investment into more modernisation. This has brought some success to the top firms, especially from wealthy consumers, but no one could have seen the virus crisis coming.A major cull of stores was already expected, but those cuts are now likely to go much deeper. A sector that once had 313 stores and is now already down to 205 may only have capacity for 100.A few chains will survive and thrive, however.

With shoppers staying away in March and April, department stores are suddenly the most vulnerable sector of all.Some department stores have improved in the past 20 years and, in the past five, the big players have poured investment into more modernisation. This has brought some success to the top firms, especially from wealthy consumers, but no one could have seen the virus crisis coming.A major cull of stores was already expected, but those cuts are now likely to go much deeper. A sector that once had 313 stores and is now already down to 205 may only have capacity for 100.A few chains will survive and thrive, however.

Japan's Department Stores: The Most to Lose but Also the Hardest Hit

Top department stores generally performed well in the 12 months to December 2019, but compared to five years ago, most stores and most regions are well down as the sector continues to shrink.There are exceptions however with Hankyu's Umeda store up 17% in five years and Kintetsu Abeno up by 10%. Among the top chains,  <a href="https://www.smartkarma.com/entities/takashimaya-co-ltd" target="_blank" data-smartkarma-citation="entities:370:1" rel="noopener">Takashimaya (8233 JP)</a> is currently driving what growth there is, with sales up a remarkable 14% in the last five years, proving that there really is potential in these traditional old buildings.Over the next three years, the sector will decline yet further but a few chains will prosper.

Top department stores generally performed well in the 12 months to December 2019, but compared to five years ago, most stores and most regions are well down as the sector continues to shrink.There are exceptions however with Hankyu's Umeda store up 17% in five years and Kintetsu Abeno up by 10%. Among the top chains,  Takashimaya (8233 JP) is currently driving what growth there is, with sales up a remarkable 14% in the last five years, proving that there really is potential in these traditional old buildings.Over the next three years, the sector will decline yet further but a few chains will prosper.

Growth in the Declining Japanese Department Store Sector: Some Stores and Chains Show the Way

Japan is suffering as much as anywhere from the current coronavirus crisis. At least until March, the biggest issue was the country’s huge reliance on China as a supply base for everything from car parts to baby supplies, but as the government gave up hopes of running Abe’s Olympics in 2020, there is now an even greater sense of concern as parts of Japan enters a state of emergency and likely into long or short-term lockdown.This will continue to benefit retailers of FMCG and food, but it spells disaster for the travel and discretionary goods sectors.Apparel/footwear retailers suffered in March, <a href="https://www.smartkarma.com/entities/united-arrows-ltd" target="_blank" data-smartkarma-citation="entities:4887:1" rel="noopener">United Arrows (7606 JP)</a> dropped 25%, <a href="https://www.smartkarma.com/entities/right-on-co-ltd" target="_blank" data-smartkarma-citation="entities:16044:1" rel="noopener">Right On Co Ltd (7445 JP)</a> 40%, <a href="https://www.smartkarma.com/entities/abc-mart-inc" target="_blank" data-smartkarma-citation="entities:3213:1" rel="noopener">Abc Mart Inc (2670 JP)</a> 31% and <a href="https://www.smartkarma.com/entities/adastria-co-ltd" target="_blank" data-smartkarma-citation="entities:11895:1" rel="noopener">Adastria Co Ltd (2685 JP)</a> 24% – <a href="https://www.smartkarma.com/entities/workman-co-ltd" target="_blank" data-smartkarma-citation="entities:8467:1" rel="noopener">Workman Co Ltd (7564 JP)</a>  though bucked the trend with a 23% rise.<a href="https://www.smartkarma.com/entities/isetan-mitsukoshi-holdings-l" target="_blank" data-smartkarma-citation="entities:18871:1" rel="noopener">Isetan Mitsukoshi Holdings L (3099 JP)</a> saw sales down 35% in February with falls in traffic at all its major stores. Apparel sales were particularly poor, although food sales remained flat. In March, sales fell another 39.8%, with Mitsukoshi Ginza down 55.1%. <a href="https://www.smartkarma.com/entities/j-front-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:8947:1" rel="noopener">J Front Retailing's (3086 JP)</a> Daimaru Matsuzakaya’s sales fell 43% in February (duty-free sales were down 97%) and then 40.9% in March, while <a href="https://www.smartkarma.com/entities/hankyu-hanshin-holdings-inc" target="_blank" data-smartkarma-citation="entities:13058:1" rel="noopener">Hankyu Hanshin Holdings (9042 JP)</a> was down 28.1% in February and 38.1% in March. <a href="https://www.smartkarma.com/entities/takashimaya-co-ltd" target="_blank" data-smartkarma-citation="entities:370:1" rel="noopener">Takashimaya's (8233 JP)</a> sales fell 35.1% and 36.2% and Sogo Seibu 32% in both months.Japan’s government will certainly offer financial support, but this might not be enough for some long-ailing companies.

Japan is suffering as much as anywhere from the current coronavirus crisis. At least until March, the biggest issue was the country’s huge reliance on China as a supply base for everything from car parts to baby supplies, but as the government gave up hopes of running Abe’s Olympics in 2020, there is now an even greater sense of concern as parts of Japan enters a state of emergency and likely into long or short-term lockdown.This will continue to benefit retailers of FMCG and food, but it spells disaster for the travel and discretionary goods sectors.Apparel/footwear retailers suffered in March, United Arrows (7606 JP) dropped 25%, Right On Co Ltd (7445 JP) 40%, Abc Mart Inc (2670 JP) 31% and Adastria Co Ltd (2685 JP) 24% – Workman Co Ltd (7564 JP)  though bucked the trend with a 23% rise.Isetan Mitsukoshi Holdings L (3099 JP) saw sales down 35% in February with falls in traffic at all its major stores. Apparel sales were particularly poor, although food sales remained flat. In March, sales fell another 39.8%, with Mitsukoshi Ginza down 55.1%. J Front Retailing's (3086 JP) Daimaru Matsuzakaya’s sales fell 43% in February (duty-free sales were down 97%) and then 40.9% in March, while Hankyu Hanshin Holdings (9042 JP) was down 28.1% in February and 38.1% in March. Takashimaya's (8233 JP) sales fell 35.1% and 36.2% and Sogo Seibu 32% in both months.Japan’s government will certainly offer financial support, but this might not be enough for some long-ailing companies.

JAPAN Retail & Covid-19: FMCG Gain Amid Nationwide Retail Pain

Japan

Isetan Mitsukoshi Holdings Ltd. is a holding company established through a merger of Mitsukoshi and Isetan. The group operates department stores nationwide, selling clothing, foods, household goods, cosmetics and general merchandise.

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Isetan Mitsukoshi Holdings Ltd (3099 JP)

🇯🇵 JAPAN - Stress Tests Part 1 - Altman Z-Scores

STRESS TESTS - This Insight is the first in a series that will use a variety of standard and less-frequently used 'stress-tests' to look through...

Campbell Gunn

Oisix Ra Daichi: The Fastest Online Grocery Shopping

Oisix ra daichi (3182 JP) is one of Japan’s leading online food sellers and by the time you read this should have completed its move to the First...

Michael Causton

Japan's Department Stores: The Most to Lose but Also the Hardest Hit

With shoppers staying away in March and April, department stores are suddenly the most vulnerable sector of all.Some department stores have...

Michael Causton

Growth in the Declining Japanese Department Store Sector: Some Stores and Chains Show the Way

Top department stores generally performed well in the 12 months to December 2019, but compared to five years ago, most stores and most regions are...

Michael Causton

JAPAN Retail & Covid-19: FMCG Gain Amid Nationwide Retail Pain

Japan is suffering as much as anywhere from the current coronavirus crisis. At least until March, the biggest issue was the country’s huge reliance...

Michael Causton

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