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

<ul>
<li>Following a strong third quarter the company has raised the full year revenue and OP outlook by 3.0% and 7.3% respectively due to stronger than expected overseas convenience store performance.</li>
<li>Moreover, the company continues to raise the Speedway synergies with the new medium-term plan expecting <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I Holdings (3382 JP)</a> to double the EBITDA and EPS through 2020-25.</li>
<li>After rallying 65% in 1H21, shares took a breather during the last seven months. We think the timing is right to start the second half of Seven &amp; I’s rally.</li>
</ul>


Following a strong third quarter the company has raised the full year revenue and OP outlook by 3.0% and 7.3% respectively due to stronger than expected overseas convenience store performance.
Moreover, the company continues to raise the Speedway synergies with the new medium-term plan expecting Seven &amp; I Holdings (3382 JP) to double the EBITDA and EPS through 2020-25.
After rallying 65% in 1H21, shares took a breather during the last seven months. We think the timing is right to start the second half of Seven &amp; I’s rally.


Time to Get Back Into Our 2021 High Conviction Call Seven & I

<ul>
<li>
<a href="https://www.smartkarma.com/entities/lawson-inc" target="_blank" data-smartkarma-citation="entities:1040:1" rel="noopener">Lawson Inc (2651 JP)</a> released rather disappointing 3QFY22 results last week with revenue and OP falling short of consensus by 4.5% and 22.2% respectively.</li>
<li>Lower than expected profitability is driven by Lawson’s heavy upfront investments on future growth.</li>
<li>With consensus unjustly penalising Lawson for growth investments, we think that there’s around ¥10.0bn upside to FY+2 consensus OP of Lawson.</li>
</ul>



Lawson Inc (2651 JP) released rather disappointing 3QFY22 results last week with revenue and OP falling short of consensus by 4.5% and 22.2% respectively.
Lower than expected profitability is driven by Lawson’s heavy upfront investments on future growth.
With consensus unjustly penalising Lawson for growth investments, we think that there’s around ¥10.0bn upside to FY+2 consensus OP of Lawson.


<ul>
<li>Considering the geopolitical relationship over the last 100 years, it doesn’t take much for Chinese people to start developing an anti-Japan sentiment.</li>
<li>The relationship between the two countries was already reaching nervy levels, before Tokyo’s decision to snub the 2022 Winter Olympics.</li>
<li>We think the Japanese government’s decision to not send a government delegation to the Winter Olympics could be all that is needed to spark an anti-Japan sentiment among Chinese consumers.</li>
</ul>


Considering the geopolitical relationship over the last 100 years, it doesn’t take much for Chinese people to start developing an anti-Japan sentiment.
The relationship between the two countries was already reaching nervy levels, before Tokyo’s decision to snub the 2022 Winter Olympics.
We think the Japanese government’s decision to not send a government delegation to the Winter Olympics could be all that is needed to spark an anti-Japan sentiment among Chinese consumers.


Japan’s Boycott of Winter Olympics Could Be the Tipping Point

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. 

<ul>
<li>Familymart is fast becoming the leading retailer for unmanned stores.</li>
<li>It has a target of 1,000 unmanned stores by 2024 and is rolling out new shops regularly, although most remain experimental as it searches for the best model.</li>
<li>Other convenience stores are catching up too although have much less ambitious targets.</li>
</ul>


Familymart is fast becoming the leading retailer for unmanned stores.
It has a target of 1,000 unmanned stores by 2024 and is rolling out new shops regularly, although most remain experimental as it searches for the best model.
Other convenience stores are catching up too although have much less ambitious targets.


Familymart Taking the Lead in Developing Unmanned Conbini

<ul>
<li>We think <a href="https://www.smartkarma.com/entities/lawson-inc" target="_blank" data-smartkarma-citation="entities:1040:1" rel="noopener">Lawson Inc (2651 JP)</a>’s management is being overly conservative with FY22 guidance as they have lowered the domestic convenience store revenue and OP by ¥40.0bn and ¥3.0bn respectively.</li>
<li>Meanwhile, the Chinese convenience store business is starting to turn profitable with an operating profit of ¥1.1bn in 1HFY22.</li>
<li>We think that the company could increase its consolidated FY22 OP estimate by around ¥10.0bn during the next two quarters.</li>
</ul>


We think Lawson Inc (2651 JP)’s management is being overly conservative with FY22 guidance as they have lowered the domestic convenience store revenue and OP by ¥40.0bn and ¥3.0bn respectively.
Meanwhile, the Chinese convenience store business is starting to turn profitable with an operating profit of ¥1.1bn in 1HFY22.
We think that the company could increase its consolidated FY22 OP estimate by around ¥10.0bn during the next two quarters.


Japan

LAWSON, INC. operates a chain of convenience stores in Japan. The Company sells a variety of products including fast food, beverages, snacks, magazines, newspapers, and sundry goods.

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Lawson Inc (2651 JP)

Time to Get Back Into Our 2021 High Conviction Call Seven & I

After trading range bound for almost seven months, we are expecting a breakout with Seven & I’s revised FY22 guidance which suggests that there...

Oshadhi Kumarasiri

Lawson: Fuelled up and Ready To Go

With around 40% upside to Lawson’s domestic convenience store OP and around ¥10.0-15.0bn OP from the China business, the company’s consolidated...

Oshadhi Kumarasiri

Japan’s Boycott of Winter Olympics Could Be the Tipping Point

The relationship between the two countries was already reaching nervy levels, before Tokyo’s decision to snub the 2022 Winter Olympics. With the...

Oshadhi Kumarasiri

Familymart Taking the Lead in Developing Unmanned Conbini

A labour shortage has pushed Japanese convenience store retailers to invest in technologies to reduce staff requirements and are now beginning to...

Michael Causton

Lawson: OP Beat Incoming

We think Lawson's management is being overly conservative with FY22 guidance as they have lowered the domestic convenience store revenue and OP by...

Oshadhi Kumarasiri

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