Japanese Turnaround Situations, Short-Ideas, Azabu Research

Michael Allen

Japanese Turnaround Situations, Short-Ideas

Azabu Research

Azabu Research is a publishing and consulting firm focused on distressed equities in the Japanese market. We specialize in turnaround strategies, corporate combinations, divestitures, and restructuring.

Publisher of the Tokyo Turnaround Letter, which conducts the most thorough research possible of publicly available information, including forensic tests for fraudulent overstatement of assets and understatement of liabilities, as well as rigorous market and industry analysis to assess the underlying strengths of the company’s products or services, the appropriateness of the company’s turnaround strategy, and the skill of its current management team. The average length of a report exceeds 25 pages of text and tables, excluding any disclosures or executive summaries.

We have more than 30 years of experience in applying this process to distressed equities in Japan. Additionally, subscribers have free access to detailed, yet easily navigated earnings models for the target company as well as the top five comparable companies, and unlimited access to the analyst for follow-up questions.

Azabu Research also conducts be-spoke research on a project basis, and provides consulting services to companies looking to restructure, divest, make acquisitions, go public, or improve investor sentiment toward their stock.

Independent Research and Consulting Firm

Equity Bottom-Up

<ul>
<li>Kobe Bussan continues to hit new lows relative to the median Japanese retailer, as cheaper alternatives continue to rebound.</li>
<li>Kobe was one of the greatest beneficiaries in Japan of the Pandemic, but it is stuck at 10% growth which is no longer unusual. </li>
<li>Kobe's wholesale model makes it difficult to benefit from food price inflation like other food retailers. Kobe Bussan could drop another 50% before reaching fair value.</li>
</ul>


Kobe Bussan continues to hit new lows relative to the median Japanese retailer, as cheaper alternatives continue to rebound.
Kobe was one of the greatest beneficiaries in Japan of the Pandemic, but it is stuck at 10% growth which is no longer unusual. 
Kobe's wholesale model makes it difficult to benefit from food price inflation like other food retailers. Kobe Bussan could drop another 50% before reaching fair value.


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)

<ul>
<li>The following is an in-depth review of the Japanese retail sector in 2021-22 and is designed to provide a complete overview for any investor in Japanese retail/consumer markets.</li>
<li>FY2021-22 proved a rebound year for retailers at the sector level. But on a company by company basis, there has been radical divergence between the best and the rest. </li>
<li>We look at the reasons for this divergence and the implications for Japanese retail and consumer firms in the years ahead.</li>
</ul>


The following is an in-depth review of the Japanese retail sector in 2021-22 and is designed to provide a complete overview for any investor in Japanese retail/consumer markets.
FY2021-22 proved a rebound year for retailers at the sector level. But on a company by company basis, there has been radical divergence between the best and the rest. 
We look at the reasons for this divergence and the implications for Japanese retail and consumer firms in the years ahead.


Japanese Retailing 2021-22: What's Really Going on and What's Next?

<ul>
<li>Discount cash and carry wholesaler/franchisor, Kobe Bussan, posted more record results for FY2023, a reflection of the demand for discount retailing.</li>
<li>Net profits were down due to foreign exchange costs, but the company continues to expand to meet the growing demand for discount retailing,</li>
<li>Kobe is also now building domestic factories to counter exchange rate fluctuations, and a new restaurant and food services arm with big potential to grow its wholesale business.</li>
</ul>


Discount cash and carry wholesaler/franchisor, Kobe Bussan, posted more record results for FY2023, a reflection of the demand for discount retailing.
Net profits were down due to foreign exchange costs, but the company continues to expand to meet the growing demand for discount retailing,
Kobe is also now building domestic factories to counter exchange rate fluctuations, and a new restaurant and food services arm with big potential to grow its wholesale business.


Equity Capital Markets

<ul>
<li>A lot has been said and written about Trial's IPO but much of this relates to pass performance and comparing it to supermarkets.</li>
<li>As the company's latest Trial Go store in Fukuoka shows,  Trial is a tech-based retailer and a true discounter, and discounting is where the growth is in Japanese FMCG.</li>
<li>Trial thinks its technology can reduce costs significantly, improving margins while allowing it to roll out more small format stores to compete with convenience stores. It may be right.</li>
</ul>


A lot has been said and written about Trial's IPO but much of this relates to pass performance and comparing it to supermarkets.
As the company's latest Trial Go store in Fukuoka shows,  Trial is a tech-based retailer and a true discounter, and discounting is where the growth is in Japanese FMCG.
Trial thinks its technology can reduce costs significantly, improving margins while allowing it to roll out more small format stores to compete with convenience stores. It may be right.


Trial IPO to Drive Tech Innovation Targeting Convenience Stores

<ul>
<li>Results for FY2022-23 provide a snapshot of winners and losers in Japan's retail sector.</li>
<li>The data shows a big improvement in performance for retailers with sales of ¥250 billion or more and the outlook is positive for most, particularly for profits.</li>
<li>This also means that market concentration is intensifying, particularly in sectors like drugstores but also now in supermarkets. We highlight the winners in each sector.</li>
</ul>


Results for FY2022-23 provide a snapshot of winners and losers in Japan's retail sector.
The data shows a big improvement in performance for retailers with sales of ¥250 billion or more and the outlook is positive for most, particularly for profits.
This also means that market concentration is intensifying, particularly in sectors like drugstores but also now in supermarkets. We highlight the winners in each sector.


Japan

KOBE BUSSAN CO., LTD. is a supermarket franchise store operator which mainly deals in foods stuffs.  The Company also has direct-run stores.

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Kobe Bussan (3038 JP)

Kobe Bussan (3038): The Final Cliff

The pure valuation short is working in Japan. Stocks that start to lose their premium, go on to lose all of their premium. Kobe Bussan could be...

Michael Allen

Japanese Retailing 2021-22: What's Really Going on and What's Next?

There is increasing divergence between the winners and losers in Japanese retailing and the following in-depth review looks at performance in the...

Michael Causton

Kobe Bussan: Expect More Growth

Kobe Bussan's record results in FY2023 show the demand for discount retailing. Its is expanding operations and building domestic factories as well...

Michael Causton

Trial IPO to Drive Tech Innovation Targeting Convenience Stores

Trial failed to complete an IPO and is now going again and the same fundamentals outlined in this insight apply today as it is a long-term viewpoint.

Michael Causton

Japan's Best Performing Retailers

There were strong improvements in both sales and profits for leading retailers last year and the following insight looks at the main winners and...

Michael Causton

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Kobe Bussan (3038): The Final Cliff

The pure valuation short is working in Japan. Stocks that start to lose their premium, go on to lose all of their premium. Kobe Bussan could be...

Michael Allen

Japanese Retailing 2021-22: What's Really Going on and What's Next?

There is increasing divergence between the winners and losers in Japanese retailing and the following in-depth review looks at performance in the...

Michael Causton

Kobe Bussan: Expect More Growth

​Kobe Bussan's record results in FY2023 show the demand for discount retailing. Its is expanding operations and building domestic factories as well...

Michael Causton

Trial IPO to Drive Tech Innovation Targeting Convenience Stores

Trial failed to complete an IPO and is now going again and the same fundamentals outlined in this insight apply today as it is a long-term viewpoint.

Michael Causton

Japan's Best Performing Retailers

There were strong improvements in both sales and profits for leading retailers last year and the following insight looks at the main winners and...

Michael Causton

Kobe Bussan's record results in FY2023 show the demand for discount retailing. Its is expanding operations and building domestic factories as well...