Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

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.

Equity Bottom-Up

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<li>
<a href="https://www.smartkarma.com/entities/premier-anti-aging-co-ltd" target="_blank" data-smartkarma-citation="entities:34292:1" rel="noopener">Premier Anti-Aging (4934 JP)</a> is a relatively small Japanese cosmetics company with a limited number of brands focusing on the skin cleansing segment. The company’s shares rose more than 350% from the IPO price during its first year on the mothers section of the Tokyo Stock Exchange. However, valuation multiples remain towards the low side compared to peer multiples.</li>
<li>We think Premier Anti-Aging could re-rate towards the peer average multiples over the medium term. The downside risk is rather low for Premier Anti-Ageing but the share price momentum currently remains unsupportive. Thus, we would wait till a shift in the price momentum before considering a long position.</li>
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Premier Anti-Aging (4934 JP) is a relatively small Japanese cosmetics company with a limited number of brands focusing on the skin cleansing segment. The company’s shares rose more than 350% from the IPO price during its first year on the mothers section of the Tokyo Stock Exchange. However, valuation multiples remain towards the low side compared to peer multiples.
We think Premier Anti-Aging could re-rate towards the peer average multiples over the medium term. The downside risk is rather low for Premier Anti-Ageing but the share price momentum currently remains unsupportive. Thus, we would wait till a shift in the price momentum before considering a long position.


Premier Anti-Aging: Up More than 300%, But Remains Undervalued on Fundamentals

<a href="https://www.smartkarma.com/entities/premier-anti-aging-co-ltd" target="_blank" data-smartkarma-citation="entities:34292:1" rel="noopener">Premier Anti-Aging (4934 JP)</a> is a relatively small Japanese cosmetics company with a limited number of brands focusing on the skin cleansing segment. The company’s shares rose more than 350% from the IPO price during its first year on the mothers section of the Tokyo Stock Exchange. This was mainly driven by the excellent performance of Premier Anti-Aging’s main brand “Duo”, whose average monthly sales doubled from the pre-COVID level.Having previously analysed the growth prospects of the “Duo” brand; <a href="https://www.smartkarma.com/insights/premier-anti-aging-company-s-duo-black-taking-the-market-by-storm" target="_blank" rel="noopener">Premier Anti-Aging Company’s Duo Black Taking the Market by Storm</a>, this insight takes a look at Premier Anti-Aging’s three supporting brands, which together generated around 15% of the company total revenue in 4QFY21.

Premier Anti-Aging (4934 JP) is a relatively small Japanese cosmetics company with a limited number of brands focusing on the skin cleansing segment. The company’s shares rose more than 350% from the IPO price during its first year on the mothers section of the Tokyo Stock Exchange. This was mainly driven by the excellent performance of Premier Anti-Aging’s main brand “Duo”, whose average monthly sales doubled from the pre-COVID level.Having previously analysed the growth prospects of the “Duo” brand; Premier Anti-Aging Company’s Duo Black Taking the Market by Storm, this insight takes a look at Premier Anti-Aging’s three supporting brands, which together generated around 15% of the company total revenue in 4QFY21.

Premier Anti-Aging Company: Sitrana & Canadel Can Become Strong Second-Tier Brands

Event-Driven

<a href="https://www.smartkarma.com/entities/shiseido-co-ltd" target="_blank" data-smartkarma-citation="entities:5718:1" rel="noopener">Shiseido Company (4911 JP)</a>, Japan’s biggest cosmetics company with annual revenue of around ¥1,000bn, said that they agreed to sell its bareMinerals, BUXOM and Laura Mercier brands along with their related assets to the PE firm Advent International for US$700.0m. The transaction is expected to close on or before 31st December 2021. The sale comes as a part of Shiseido’s “Win 2023 and Beyond” transformation plan which targets a 15% operating margin (an increase of 5 percentage points from the 2019 level) by 2023 and global leadership in skincare by 2030.

Shiseido Company (4911 JP), Japan’s biggest cosmetics company with annual revenue of around ¥1,000bn, said that they agreed to sell its bareMinerals, BUXOM and Laura Mercier brands along with their related assets to the PE firm Advent International for US$700.0m. The transaction is expected to close on or before 31st December 2021. The sale comes as a part of Shiseido’s “Win 2023 and Beyond” transformation plan which targets a 15% operating margin (an increase of 5 percentage points from the 2019 level) by 2023 and global leadership in skincare by 2030.

Shiseido: Offloads BareMinerals, BUXOM and Laura Mercier at a Bargain But Future Looks Bright

<a href="https://www.smartkarma.com/entities/fancl-corp" target="_blank" data-smartkarma-citation="entities:15862:1" rel="noopener">Fancl Corp (4921 JP)</a> shares rose 7.3% upon delivering strong 1QFY22 results, which saw operating profit increase by 23.1% YoY to ¥3.0bn (consensus ¥2.3bn). The company’s revenue rose 3.2% YoY to ¥25.2bn (consensus ¥25.4bn). We think the lack of upward revision to guidance is a sign of conservatism by the management due to uncertain business conditions resulting from the spread of the delta variant of the COVID-19 virus. Nevertheless, FANCL cosmetics and nutritional supplements could continue to boost earnings and generate a substantial earnings beat in FY22.

Fancl Corp (4921 JP) shares rose 7.3% upon delivering strong 1QFY22 results, which saw operating profit increase by 23.1% YoY to ¥3.0bn (consensus ¥2.3bn). The company’s revenue rose 3.2% YoY to ¥25.2bn (consensus ¥25.4bn). We think the lack of upward revision to guidance is a sign of conservatism by the management due to uncertain business conditions resulting from the spread of the delta variant of the COVID-19 virus. Nevertheless, FANCL cosmetics and nutritional supplements could continue to boost earnings and generate a substantial earnings beat in FY22.

<a href="https://www.smartkarma.com/entities/kose-corp" target="_blank" data-smartkarma-citation="entities:18009:1" rel="noopener">Kose Corp (4922 JP)</a>’s share price dropped 12.2% today after a disappointing 2Q21 results release on 30th July 2021 (aftermarket) with revenue and OP growth of 2.7% and 210.5% respectively from the same period of the COVID affected previous year.
Quarterly revenue was down 21.9% on a QoQ basis. Yet, the OP increased 57.5% QoQ on cost controls.  Even though there is an impact from seasonality, the entire QoQ revenue decline is not accounted for by seasonal changes (Kose’s 1H21 revenue declined 1.4% YoY).
The company has shifted to a December year-end and therefore quarterly consensus estimates are unavailable. However, the company has maintained its guidance for the 9 months from April-December 2021 at ¥230bn in revenue and ¥20bn in OP, which implies a full-year revenue and OP of ¥313.3bn and ¥22.2bn respectively in CY2021 compared to ¥282.8bn and ¥13.5bn in the COVID affected previous calendar year.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/221/684/original/image_8875511821627900294641.png?1627900295" class="editor-image img-responsive" data-smartkarma-image-id="221684"></figure>

Kose Corp (4922 JP)’s share price dropped 12.2% today after a disappointing 2Q21 results release on 30th July 2021 (aftermarket) with revenue and OP growth of 2.7% and 210.5% respectively from the same period of the COVID affected previous year.
Quarterly revenue was down 21.9% on a QoQ basis. Yet, the OP increased 57.5% QoQ on cost controls.  Even though there is an impact from seasonality, the entire QoQ revenue decline is not accounted for by seasonal changes (Kose’s 1H21 revenue declined 1.4% YoY).
The company has shifted to a December year-end and therefore quarterly consensus estimates are unavailable. However, the company has maintained its guidance for the 9 months from April-December 2021 at ¥230bn in revenue and ¥20bn in OP, which implies a full-year revenue and OP of ¥313.3bn and ¥22.2bn respectively in CY2021 compared to ¥282.8bn and ¥13.5bn in the COVID affected previous calendar year.


Asia Growth Hits The Breaks, KOSE Tumbles 12.2%

Japan

KOSE Corporation manufactures, retails, and exports cosmetics including make up, skin care, and hair care products.  The Company sells its products in Hong Kong, China, Singapore, and Malaysia.

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Kose Corp (4922 JP)

Premier Anti-Aging: Up More than 300%, But Remains Undervalued on Fundamentals

Despite its smaller size, we think Premier Anti-Ageing deserves to trade in line with its peers due to its superior growth prospects.

Oshadhi Kumarasiri

Premier Anti-Aging Company: Sitrana & Canadel Can Become Strong Second-Tier Brands

We think Premier Anti-Aging’s Duo brand is there or thereabout being as successful as Kose's DECORTE and Pola Orbis' POLA brands. The company’s...

Oshadhi Kumarasiri

Shiseido: Offloads BareMinerals, BUXOM and Laura Mercier at a Bargain But Future Looks Bright

Shiseido, Japan’s biggest cosmetics company with annual revenue of around ¥1,000bn, said that they agreed to sell its bareMinerals & Laura Mercier...

Oshadhi Kumarasiri

FANCL: Downplaying Its Success

It seems like FANCL is trying to play down its earnings potential by keeping the FY22 guidance unchanged amidst uncertain business conditions.

Oshadhi Kumarasiri

Asia Growth Hits The Breaks, KOSE Tumbles 12.2%

Kose's share price dropped 12.2% today after a disappointing 2Q21 results release on 30th July 2021 (aftermarket) with revenue and OP growth of...

Oshadhi Kumarasiri

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