'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. 

Thematic (Sector/Industry)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/124/787/original/2020-03-26_05-50-57.png?1585169482" class="editor-image img-responsive" data-smartkarma-image-id="124787"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>EARLY WARNINGS</strong> - This Insight is the second is a series of posts that will provide a 'real-time' update of the damage to corporate Japan's revenues and profits from the unfolding Covid-19 recession. Tuesday saw twenty-one forecast revisions by twenty companies and one withdrawal of forecasts and dividend cancellation by noodle restaurant <a href="https://www.smartkarma.com/entities/gourmet-kineya-co-ltd" target="_blank" data-smartkarma-citation="entities:11937:1" rel="noopener">Gourmet Kineya (9850 JP)</a>. Jewellery retailer <a href="https://www.smartkarma.com/entities/happiness-and-d-co-ltd" target="_blank" data-smartkarma-citation="entities:1246:1" rel="noopener">Happiness and D (3174 JP)</a> also reported interim results. The most significant revision was from <a href="https://www.smartkarma.com/entities/tdk-corp" target="_blank" data-smartkarma-citation="entities:18847:1" rel="noopener">TDK (6762 JP)</a> shown above.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/124/792/original/File%202020-03-26%204%2009%2018.jpeg?1585171207" class="editor-image img-responsive" data-smartkarma-image-id="124792"></figure><div class="content-caption">Source • covid19japan.com</div><p><strong>COVID-19</strong> - As we discussed in an earlier <a href="https://www.smartkarma.com/insights/japan-market-update-hit-the-boj-bid-and-wait-for-the-absolute-value-opportunity" target="_blank" data-smartkarma-citation="insights:37670" rel="noopener">Insight</a>, Japan's 'softly-softly' approach to the virus was likely to be 'tested' as the country was being encouraged to operate as close to normal last weekend. Yesterday saw the largest jump in new cases in one day since the outbreak Japan - 97 and 2 more deaths bringing the totals to 1,299 confirmed cases and 44 deaths from 23,521 people tested. Tokyo is now the epicentre with 220 cases which has prompted Governor Koike to recommend that people work from home as much as possible and avoid leaving home at this weekend as well as eating and drinking in groups - so no <em>hanami</em> parties! Despite the Governor's preference for cancellation and her scathing comments about an event in Saitama last weekend, another K-1 event to be held at Korakuen will go ahead behind closed doors. The Olympic torch relays have been cancelled. It remains to be seen if these persuasive measures will slow the spread. <strong>The rational assumption would be that Tokyo is now on the same path as London and New York.</strong></p>

Source • Japan AnalyticsEARLY WARNINGS - This Insight is the second is a series of posts that will provide a 'real-time' update of the damage to corporate Japan's revenues and profits from the unfolding Covid-19 recession. Tuesday saw twenty-one forecast revisions by twenty companies and one withdrawal of forecasts and dividend cancellation by noodle restaurant Gourmet Kineya (9850 JP). Jewellery retailer Happiness and D (3174 JP) also reported interim results. The most significant revision was from TDK (6762 JP) shown above.Source • covid19japan.comCOVID-19 - As we discussed in an earlier Insight, Japan's 'softly-softly' approach to the virus was likely to be 'tested' as the country was being encouraged to operate as close to normal last weekend. Yesterday saw the largest jump in new cases in one day since the outbreak Japan - 97 and 2 more deaths bringing the totals to 1,299 confirmed cases and 44 deaths from 23,521 people tested. Tokyo is now the epicentre with 220 cases which has prompted Governor Koike to recommend that people work from home as much as possible and avoid leaving home at this weekend as well as eating and drinking in groups - so no hanami parties! Despite the Governor's preference for cancellation and her scathing comments about an event in Saitama last weekend, another K-1 event to be held at Korakuen will go ahead behind closed doors. The Olympic torch relays have been cancelled. It remains to be seen if these persuasive measures will slow the spread. The rational assumption would be that Tokyo is now on the same path as London and New York.

🇯🇵 JAPAN • Revisions Early Warning System (EWS) 25th March

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/116/531/original/2020-02-06_03-39-10.png?1580933731" class="editor-image img-responsive" data-smartkarma-image-id="116531"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>5TH FEBRUARY ROUNDUP</strong> - Wednesday saw 171 Results and 65 Forecast/Revision announcements. The Results Score set another new three-year low losing 16bps to reach 0.35, while the Forecast/Revision Score shed 7bps to reach 0.08. The sogo shosha trading company results were weak, with the exception of <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" data-smartkarma-citation="entities:18448:1" rel="noopener">Itochu (8001 JP)</a>. Amongst large caps, <a href="https://www.smartkarma.com/entities/marubeni-corp" target="_blank" data-smartkarma-citation="entities:7463:1" rel="noopener">Marubeni (8002 JP)</a> and <a href="https://www.smartkarma.com/entities/dena-co-ltd" target="_blank" data-smartkarma-citation="entities:747:1" rel="noopener">DeNA(2432 JP)</a> had Operating Losses, while <a href="https://www.smartkarma.com/entities/mazda-motor-corp" target="_blank" data-smartkarma-citation="entities:20528:1" rel="noopener">Mazda Motor (7261 JP)</a>, <a href="https://www.smartkarma.com/entities/fujikura-ltd" target="_blank" data-smartkarma-citation="entities:10768:1" rel="noopener">Fujikura (5803 JP)</a>, <a href="https://www.smartkarma.com/entities/daicel-corp" target="_blank" data-smartkarma-citation="entities:10533:1" rel="noopener">Daicel (4202 JP)</a>, and <a href="https://www.smartkarma.com/entities/furukawa-electric-co-ltd" target="_blank" data-smartkarma-citation="entities:5193:1" rel="noopener">Furukawa Electric (5801 JP)</a> saw steep quarterly year-on-year OP declines. Amongst the 'winners' were <a href="https://www.smartkarma.com/entities/square-enix-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15003:1" rel="noopener">Square Enix (9684 JP)</a>, and <a href="https://www.smartkarma.com/entities/rengo-co-ltd" target="_blank" data-smartkarma-citation="entities:20278:1" rel="noopener">Rengo (3941 JP)</a>.</p><hr><p style="text-align: center;"><strong>• SECTOR TIMELINE •</strong></p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/116/532/original/2020-02-06_03-42-28.png?1580934310" class="editor-image img-responsive" data-smartkarma-image-id="116532"></figure><div class="content-caption">Source • Japan Analytics</div><p><strong>SECTOR TIMELINE</strong> - The <strong>Wholesale</strong> Sector was the largest loser yesterday with <a href="https://www.smartkarma.com/entities/mitsubishi-corp" target="_blank" data-smartkarma-citation="entities:20668:1" rel="noopener">Mitsubishi (8058 JP)</a> and <a href="https://www.smartkarma.com/entities/kanematsu-corp" target="_blank" data-smartkarma-citation="entities:5810:1" rel="noopener">Kanematsu (8020 JP)</a> joining Marubeni in posting poor results. <a href="https://www.smartkarma.com/entities/taiyo-nippon-sanso-corp" target="_blank" data-smartkarma-citation="entities:15756:1" rel="noopener">Taiyo Nippon Sanso (4091 JP)</a> slowing momentum and downward revision saw the <strong>Chemical</strong> Sector move lower again. <a href="https://www.smartkarma.com/entities/agc-inc" target="_blank" data-smartkarma-citation="entities:2167:1" rel="noopener">AGC (5201 JP)</a> initial forecast for FY2020 helped the <strong>Other Materials</strong> Sector recover some ground. </p>

Source • Japan Analytics5TH FEBRUARY ROUNDUP - Wednesday saw 171 Results and 65 Forecast/Revision announcements. The Results Score set another new three-year low losing 16bps to reach 0.35, while the Forecast/Revision Score shed 7bps to reach 0.08. The sogo shosha trading company results were weak, with the exception of Itochu (8001 JP). Amongst large caps, Marubeni (8002 JP) and DeNA(2432 JP) had Operating Losses, while Mazda Motor (7261 JP), Fujikura (5803 JP), Daicel (4202 JP), and Furukawa Electric (5801 JP) saw steep quarterly year-on-year OP declines. Amongst the 'winners' were Square Enix (9684 JP), and Rengo (3941 JP).• SECTOR TIMELINE •Source • Japan AnalyticsSECTOR TIMELINE - The Wholesale Sector was the largest loser yesterday with Mitsubishi (8058 JP) and Kanematsu (8020 JP) joining Marubeni in posting poor results. Taiyo Nippon Sanso (4091 JP) slowing momentum and downward revision saw the Chemical Sector move lower again. AGC (5201 JP) initial forecast for FY2020 helped the Other Materials Sector recover some ground. 

🇯🇵 JAPAN • Results & Revisions Daily Roundup - 5th February ▲5201 4202 6269 ▼4091 9987 6869

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>On October 24th, US-based aircraft leasing company <a href="https://www.smartkarma.com/entities/aircastle-ltd" target="_blank" data-smartkarma-citation="entities:1642:1" rel="noopener">Aircastle Ltd (AYR US)</a><a href="https://investors.aircastle.com/news-releases/news-release-details/aircastle-announces-review-strategic-alternatives" target="_blank" rel="noopener">announced</a> a review of strategic alternatives stating that they had received "<em>non-binding expressions of interest from multiple third parties</em>" and that they were in preliminary discussion regarding a sale of the company. </p><p>Aircastle <a href="https://sec.report/Document/0001104659-19-061158/" target="_blank" rel="noopener">announced on 6th November</a> that they had reached an agreement with 28.8%-shareholder <a href="https://www.smartkarma.com/entities/marubeni-corp" target="_blank" data-smartkarma-citation="entities:7463:1" rel="noopener">Marubeni Corp (8002 JP)</a> to acquire the remaining 71.2% of Aircastle shares in an all-cash deal valuing the company at a market cap of US$2.4bn.</p><p>The Deal, which is expected close in the first half of 2020, is conditional on receiving approval from Aircastle's Shareholders and approval from the regulatory authorities. Marubeni will vote its 28.8% in favor of the Deal. </p><p>The Offer Price of US$32.00 per share comes at a healthy premium of 34.1% to the undisturbed closing price on October 23rd, the day before Aircastle's announcement of the strategic review. </p><p>Although Aircastle's shares are currently trading above the Offer Price, Aircastle is expected to continue paying its quarterly dividends until the deal closes.</p>

On October 24th, US-based aircraft leasing company Aircastle Ltd (AYR US)announced a review of strategic alternatives stating that they had received "non-binding expressions of interest from multiple third parties" and that they were in preliminary discussion regarding a sale of the company. Aircastle announced on 6th November that they had reached an agreement with 28.8%-shareholder Marubeni Corp (8002 JP) to acquire the remaining 71.2% of Aircastle shares in an all-cash deal valuing the company at a market cap of US$2.4bn.The Deal, which is expected close in the first half of 2020, is conditional on receiving approval from Aircastle's Shareholders and approval from the regulatory authorities. Marubeni will vote its 28.8% in favor of the Deal. The Offer Price of US$32.00 per share comes at a healthy premium of 34.1% to the undisturbed closing price on October 23rd, the day before Aircastle's announcement of the strategic review. Although Aircastle's shares are currently trading above the Offer Price, Aircastle is expected to continue paying its quarterly dividends until the deal closes.

Aircastle Takeover - Still Trading at a Premium But Good To Go At Terms

<p>Today, along with an earnings <a href="https://www.mitsubishicorp.com/jp/en/ir/event/meetings/190513.html" target="_blank">announcement</a> and a <a href="https://www.mitsubishicorp.com/jp/en/pr/archive/2019/files/0000037409_file1.pdf" target="_blank">plan</a> to inject significant capital into <a href="https://www.smartkarma.com/entities/6232" target="_blank" data-smartkarma-citation="entities:6232:1">Chiyoda Corp (6366 JP)</a> (which on Tuesday announced a significant downgrade to FY guidance as discussed by <a href="https://www.smartkarma.com/profiles/713" target="_blank" data-smartkarma-citation="accounts:713">Mio Kato, CFA</a> in <a href="https://www.smartkarma.com/insights/chiyoda-explanatory-call-on-downgrade-reinforces-impression-of-extreme-conservatism" target="_blank" data-smartkarma-citation="insights:29653">Chiyoda: Explanatory Call on Downgrade Reinforces Impression of Extreme Conservatism</a>, also announced a share buyback. </p><p>The buyback plan <a href="https://www.mitsubishicorp.com/jp/en/pr/archive/2019/html/0000037402.html" target="_blank">announced</a> is to spend up to but not more than ¥300 billion to purchase up to but not more than 120 million of its own shares between 10 May 2019 and 8 May 2020, purchasing shares on the Tokyo Stock Exchange. At today's closing price,  ¥300 billion only buys 100mm shares so the repurchase would only be 6.25%, but that is enough to lift EPS over the year well-beyond forecast growth, which is minimal.</p><p>As always, there are interesting details.</p>

Today, along with an earnings announcement and a plan to inject significant capital into Chiyoda Corp (6366 JP) (which on Tuesday announced a significant downgrade to FY guidance as discussed by Mio Kato, CFA in Chiyoda: Explanatory Call on Downgrade Reinforces Impression of Extreme Conservatism, also announced a share buyback. The buyback plan announced is to spend up to but not more than ¥300 billion to purchase up to but not more than 120 million of its own shares between 10 May 2019 and 8 May 2020, purchasing shares on the Tokyo Stock Exchange. At today's closing price,  ¥300 billion only buys 100mm shares so the repurchase would only be 6.25%, but that is enough to lift EPS over the year well-beyond forecast growth, which is minimal.As always, there are interesting details.

Mitsubishi Corp Buyback - Bigger Than It Appears

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. 

<p>Below are several recent updates on Japanese retail and consumer markets that, while not meriting in-depth Insights of their own, are important trends impacting retail stocks.</p>
<h2><strong>TPP: profit and loss for Japan</strong></h2>
<p>The Trans-Pacific Partnership trade deal came into effect in late December, immediately cutting import tariffs across much of Southeast Asia. Despite some claims that this will help consumers, the cuts are most likely to benefit trading firms and leading food wholesalers like <a href="https://www.smartkarma.com/entities/19778" target="_blank" data-smartkarma-citation="entities:19778:1">Mitsubishi Shokuhin (7451 JP)</a> and <a href="https://www.smartkarma.com/entities/14985" target="_blank" data-smartkarma-citation="entities:14985:1">Itochu Shokuhin (2692 JP)</a> rather than result in lower retail prices.</p>
<h2><strong>Mash and Jun to start premium online lifestyle mall in October</strong></h2>
<p>Two leading lifestyle and fashion firms, Mash Holdings and Jun, will together launch a new challenger in the fashion and lifestyle online market in October. This is a threat to the premium end of <a href="https://www.smartkarma.com/entities/18379" target="_blank" data-smartkarma-citation="entities:18379:1">ZOZO's (3092 JP)</a> marketplace as well as the nascent Stripe Department, a joint venture between <a href="https://www.smartkarma.com/entities/27445" target="_blank" data-smartkarma-citation="entities:27445:1">Softbank (9434 JP)</a> and Stripe International, an unlisted fashion retailer.</p>
<h2><strong>A flat fashion market</strong></h2>
<p>A comprehensive recent survey of fashion industry managers suggests they are less optimistic about the outlook for 2019 compared to a year ago, weighed down with worries about depopulation, global trade, and changing consumer sentiment. More optimistically, many are investing in e-commerce as well as preparing to expand overseas.</p>
<h2><strong>Organic foods growing in popularity</strong></h2>
<p>After something of a false start back in the 1990s, organic fresh food is now moving out of a limited niche and into the mainstream, benefiting <a href="https://www.smartkarma.com/entities/10145" target="_blank" data-smartkarma-citation="entities:10145:1">Oisix Ra Daichi (3182 JP)</a> in particular.</p>
<h2><strong>Muji really is no name in China</strong></h2>
<p><a href="https://www.smartkarma.com/entities/2765" target="_blank" data-smartkarma-citation="entities:2765:1">Ryohin Keikaku's (7453 JP)</a> Muji is popular in China, but trademark conflicts, easy replication, as well as new emulator brands, all mean the "no brand" brand is not assured of continued success in the market.</p>

Below are several recent updates on Japanese retail and consumer markets that, while not meriting in-depth Insights of their own, are important trends impacting retail stocks.
TPP: profit and loss for Japan
The Trans-Pacific Partnership trade deal came into effect in late December, immediately cutting import tariffs across much of Southeast Asia. Despite some claims that this will help consumers, the cuts are most likely to benefit trading firms and leading food wholesalers like Mitsubishi Shokuhin (7451 JP) and Itochu Shokuhin (2692 JP) rather than result in lower retail prices.
Mash and Jun to start premium online lifestyle mall in October
Two leading lifestyle and fashion firms, Mash Holdings and Jun, will together launch a new challenger in the fashion and lifestyle online market in October. This is a threat to the premium end of ZOZO's (3092 JP) marketplace as well as the nascent Stripe Department, a joint venture between Softbank (9434 JP) and Stripe International, an unlisted fashion retailer.
A flat fashion market
A comprehensive recent survey of fashion industry managers suggests they are less optimistic about the outlook for 2019 compared to a year ago, weighed down with worries about depopulation, global trade, and changing consumer sentiment. More optimistically, many are investing in e-commerce as well as preparing to expand overseas.
Organic foods growing in popularity
After something of a false start back in the 1990s, organic fresh food is now moving out of a limited niche and into the mainstream, benefiting Oisix Ra Daichi (3182 JP) in particular.
Muji really is no name in China
Ryohin Keikaku's (7453 JP) Muji is popular in China, but trademark conflicts, easy replication, as well as new emulator brands, all mean the "no brand" brand is not assured of continued success in the market.

Also in the News: Updates from Japanese Retail Markets

Japan

Marubeni Corporation is a trading company with business divisions in iron & steel, information technology, utility & infrastructure, energy, food, metals & mineral resources, development & construction, and chemicals.  The Company markets its products globally through a network of sales offices and representative firms.

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Marubeni Corp (8002 JP)

🇯🇵 JAPAN • Revisions Early Warning System (EWS) 25th March

EARLY WARNINGS - This Insight is the second is a series of posts that will provide a 'real-time' update of the damage to corporate Japan's revenues...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions Daily Roundup - 5th February ▲5201 4202 6269 ▼4091 9987 6869

5TH FEBRUARY ROUNDUP - Wednesday saw 171 Results and 65 Forecast/Revision announcements. The Results Score set another new three-year low losing...

Campbell Gunn

Aircastle Takeover - Still Trading at a Premium But Good To Go At Terms

On October 24th, US-based aircraft leasing company Aircastle Ltd (AYR US)announced a review of strategic alternatives stating that they had...

Travis Lundy

Mitsubishi Corp Buyback - Bigger Than It Appears

Today, along with an earnings announcement and a plan to inject significant capital into Chiyoda Corp (6366 JP) (which on Tuesday announced a...

Travis Lundy

Also in the News: Updates from Japanese Retail Markets

Below are several recent updates on Japanese retail and consumer markets that, while not meriting in-depth Insights of their own, are important...

Michael Causton

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