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.

Event-Driven

On April 26th 2019, an announcement was made of a possible merger between <a href="https://www.smartkarma.com/entities/matsumotokiyoshi-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:2259:1" rel="noopener">Matsumotokiyoshi Holdings Co., Ltd. (3088 JP)</a> (<a target="_blank">Matsumoto</a>) and <a href="https://www.smartkarma.com/entities/cocokara-fine-inc" target="_blank" data-smartkarma-citation="entities:15447:1" rel="noopener">Cocokara Fine (3098 JP)</a> (Cocokara).As a part of this long running merger process, Matsumoto initially purchased 20.02% of Cocokara share capital for approximately ¥38bn in early 2020 to make Cocokara an affiliate of Matsumoto.Towards the end of last month, Matsumoto and Cocokara announced the details of the management integration plan, including the medium term revenue and OP margin targets, expected synergies and the share exchange ratio for the merger.The merger is expected to be effective from 1st October 2021, subjected to shareholder approval from both Matsumoto and Cocokara shareholders during their respective AGMs on 29th June 2021.On 1st October 2021, Cocokara shareholders, excluding treasury shares and Matsumoto’s 20.02% ownership, will receive 1.7 Matsumoto shares per every share of Cocokara. As a result, a total of 40.795m shares will be added to Matsumoto’s share capital following the offer.<a href="https://www.smartkarma.com/profiles/travis-lundy" target="_blank" data-smartkarma-citation="accounts:25" rel="noopener">Travis Lundy</a> has been following the developments of Matsumoto &amp; Cocokara merger from the start, and its highly recommended reading his insights to understand the background of the deal and trading opportunities from an event angle. Please find below the links to his latest insights, discussing the details of the recently announced management integration plan and his take on the fundamental valuation of the combined business. <a href="https://www.smartkarma.com/insights/matsukiyococokara-co-the-merger" target="_blank" rel="noopener">MatsukiyoCocokara &amp; Co - The Merger</a>, <a href="https://www.smartkarma.com/insights/matsukiyococokara-merger-and-implied-forward-forecasts" target="_blank" rel="noopener">MatsuKiyoCocokara Merger and Implied Forward Forecasts</a>This is the first in a series of insights, discussing our view on the combined entity’s fundamentals including revenue and OP drivers, likelihood of meeting medium term targets, the feasibility of extracting ¥30bn in synergies and the valuation.

On April 26th 2019, an announcement was made of a possible merger between Matsumotokiyoshi Holdings Co., Ltd. (3088 JP) (Matsumoto) and Cocokara Fine (3098 JP) (Cocokara).As a part of this long running merger process, Matsumoto initially purchased 20.02% of Cocokara share capital for approximately ¥38bn in early 2020 to make Cocokara an affiliate of Matsumoto.Towards the end of last month, Matsumoto and Cocokara announced the details of the management integration plan, including the medium term revenue and OP margin targets, expected synergies and the share exchange ratio for the merger.The merger is expected to be effective from 1st October 2021, subjected to shareholder approval from both Matsumoto and Cocokara shareholders during their respective AGMs on 29th June 2021.On 1st October 2021, Cocokara shareholders, excluding treasury shares and Matsumoto’s 20.02% ownership, will receive 1.7 Matsumoto shares per every share of Cocokara. As a result, a total of 40.795m shares will be added to Matsumoto’s share capital following the offer.Travis Lundy has been following the developments of Matsumoto &amp; Cocokara merger from the start, and its highly recommended reading his insights to understand the background of the deal and trading opportunities from an event angle. Please find below the links to his latest insights, discussing the details of the recently announced management integration plan and his take on the fundamental valuation of the combined business. MatsukiyoCocokara &amp; Co - The Merger, MatsuKiyoCocokara Merger and Implied Forward ForecastsThis is the first in a series of insights, discussing our view on the combined entity’s fundamentals including revenue and OP drivers, likelihood of meeting medium term targets, the feasibility of extracting ¥30bn in synergies and the valuation.

A Quick Run Through Fundamentals Before The MatsumotoKiyoshi and Cocokara Fine Merger

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Last Week in Event SPACE: China Youzan, Mcdonald's, Beijing Jingneng, Ricoh, Melco Resorts, LG Corp

Travis Lundy

Equity Bottom-Up

The <a href="https://corp.cocokarafine.co.jp/english/ir/pdf/20210226_eng_03.pdf" target="_blank" rel="noopener">presentation</a> provided by <a href="https://www.smartkarma.com/entities/matsumotokiyoshi-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:2259:1" rel="noopener">Matsumotokiyoshi Holdings Co., Ltd. (3088 JP)</a> and <a href="https://www.smartkarma.com/entities/cocokara-fine-inc" target="_blank" data-smartkarma-citation="entities:15447:1" rel="noopener">Cocokara Fine (3098 JP)</a> when they announced their Management Integration told of two major inputs to what is helping the stocks bounce today. 
There is one other which has been implicit, but people did not appear to include it in their numbers.
There is yet another which is coincidental.
One of the two inputs - expected OP synergies - is probably a bit stronger than people expected. 
The other one - the Business Objective of the Group - is obviously new, but perhaps should not be.
The initial discussion was carried in <a href="https://www.smartkarma.com/insights/matsukiyococokara-co-the-merger" target="_blank" data-smartkarma-citation="insights:48652" rel="noopener">MatsukiyoCocokara &amp; Co - The Merger</a> after a half dozen insights on the deal over the previous 18 months-plus (yes, we've been looking at this a long time).
Below, I break down how each of these inputs shows up in Revenue, OP, and NP based on consensus numbers, adjusted to NEWCO Group Totals and MatsuKiyo-equivalent Per Share Estimates, and historical seasonality to project a quarterly and running 4Q total Revenue, OP, NP, and EPS future consensus.

The presentation provided by Matsumotokiyoshi Holdings Co., Ltd. (3088 JP) and Cocokara Fine (3098 JP) when they announced their Management Integration told of two major inputs to what is helping the stocks bounce today. 
There is one other which has been implicit, but people did not appear to include it in their numbers.
There is yet another which is coincidental.
One of the two inputs - expected OP synergies - is probably a bit stronger than people expected. 
The other one - the Business Objective of the Group - is obviously new, but perhaps should not be.
The initial discussion was carried in MatsukiyoCocokara &amp; Co - The Merger after a half dozen insights on the deal over the previous 18 months-plus (yes, we've been looking at this a long time).
Below, I break down how each of these inputs shows up in Revenue, OP, and NP based on consensus numbers, adjusted to NEWCO Group Totals and MatsuKiyo-equivalent Per Share Estimates, and historical seasonality to project a quarterly and running 4Q total Revenue, OP, NP, and EPS future consensus.

MatsuKiyoCocokara Merger and Implied Forward Forecasts

On Friday after the close, <a href="https://www.smartkarma.com/entities/matsumotokiyoshi-holdings-co" target="_blank" data-smartkarma-citation="entities:2259:1" rel="noopener">Matsumotokiyoshi Holdings Co (3088 JP)</a> and <a href="https://www.smartkarma.com/entities/cocokara-fine-inc" target="_blank" data-smartkarma-citation="entities:15447:1" rel="noopener">Cocokara Fine (3098 JP)</a> announced the details of their Management Integration, including the scrip exchange ratio. Earlier in the month I had written about the possibility of this announcement coming with earnings results but they waited until the last day of the month. Since I wrote and since earnings, Cocokara has outperformed Matsukiyo - by 3.4% through Thursday and an additional 2.8% on Friday, but this late spurt was not really included in the ratio chosen by the two companies when they announced the terms at 1.0 shares of Cocokara per 1.7 share of Matsumotokiyoshi.The merger is set to go through on 1 October after the AGMs for both companies are held 29 June to approve the deal. It will eventually end up as a holding company with operating subsidiaries. There's a lot to think about here. The numbers are reasonably compelling.

On Friday after the close, Matsumotokiyoshi Holdings Co (3088 JP) and Cocokara Fine (3098 JP) announced the details of their Management Integration, including the scrip exchange ratio. Earlier in the month I had written about the possibility of this announcement coming with earnings results but they waited until the last day of the month. Since I wrote and since earnings, Cocokara has outperformed Matsukiyo - by 3.4% through Thursday and an additional 2.8% on Friday, but this late spurt was not really included in the ratio chosen by the two companies when they announced the terms at 1.0 shares of Cocokara per 1.7 share of Matsumotokiyoshi.The merger is set to go through on 1 October after the AGMs for both companies are held 29 June to approve the deal. It will eventually end up as a holding company with operating subsidiaries. There's a lot to think about here. The numbers are reasonably compelling.

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)

The following is an in-depth review of the retail sector by format with a brief overview of incomes and consumption trends and metrics before that. For any investor looking at the Japanese consumer/retail space, this insight will provide a rapid overview of all the major trends.2020 was a year to remember, although not for good reasons. While the news was overwhelmingly negative given the devastation that the pandemic caused to so many lives, for Japan as a country the experience could become a catalyst to spur positive change.No matter how much we might never wish to repeat the last 12 months, those governments and companies that learn from the experience will be better positioned whenever a new pandemic emerges.Department stores, convenience stores, and most fashion chains had a horrible year as so many people stayed away from major shopping areas, but many other retailers actually had stellar years, with further upside still to come.

The following is an in-depth review of the retail sector by format with a brief overview of incomes and consumption trends and metrics before that. For any investor looking at the Japanese consumer/retail space, this insight will provide a rapid overview of all the major trends.2020 was a year to remember, although not for good reasons. While the news was overwhelmingly negative given the devastation that the pandemic caused to so many lives, for Japan as a country the experience could become a catalyst to spur positive change.No matter how much we might never wish to repeat the last 12 months, those governments and companies that learn from the experience will be better positioned whenever a new pandemic emerges.Department stores, convenience stores, and most fashion chains had a horrible year as so many people stayed away from major shopping areas, but many other retailers actually had stellar years, with further upside still to come. 

Japan Retail Full Review 2020-2021: Some Retail Sectors Outperform in a Pandemic

Japan

MatsukiyoCocokara & Co. operates drug store chains. The Company retails medicines, cosmetics, health foods, beauty care products, and other products. MatsukiyoCocokara & also operates supermarkets and home centers.

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MatsukiyoCocokara (3088 JP)

A Quick Run Through Fundamentals Before The MatsumotoKiyoshi and Cocokara Fine Merger

Even though the ¥1,500bn revenue number looks rather daunting at first glance, if MatsukiyoCocokara is able to grow its store count at a compound...

Oshadhi Kumarasiri

Last Week in Event SPACE: China Youzan, Mcdonald's, Beijing Jingneng, Ricoh, Melco Resorts, LG Corp

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

MatsuKiyoCocokara Merger and Implied Forward Forecasts

The MatsuKiyo+Cocokara NEWCO makes for a compelling investment. One model for the breakdown of the components of forward revenue, OP, and NP, and...

Travis Lundy

MatsukiyoCocokara & Co - The Merger

The MatsuKiyo Cocokara merger NEWCO will be named MatsuKiyo Cocokara. That's boring. The details, however, are not. This stock is cheap and...

Travis Lundy

Japan Retail Full Review 2020-2021: Some Retail Sectors Outperform in a Pandemic

An in-depth update for investors in Japan's retail and consumer space on Japan's retail sector by retail type as well as a review of the impact of...

Michael Causton

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