Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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

<p>Our sceptical position on the elevated multiples for tech stocks has been relatively consistent over time. As with all bubbles, despite valuations clearly being out of touch with reality, markets have continued to trend upwards, and in many cases the least attractive stocks have done the best. We would argue that signs of liquidity issues at Ark and the rapid implosion of Archegos herald the beginning of the end.</p>

Our sceptical position on the elevated multiples for tech stocks has been relatively consistent over time. As with all bubbles, despite valuations clearly being out of touch with reality, markets have continued to trend upwards, and in many cases the least attractive stocks have done the best. We would argue that signs of liquidity issues at Ark and the rapid implosion of Archegos herald the beginning of the end.

Softbank – Is Archegos the Bear Stearns CDO Funds in the Coalmine?

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>If <a href="https://www.smartkarma.com/entities/mercari-inc" target="_blank" data-smartkarma-citation="entities:27149:1" rel="noopener">Mercari Inc (4385 JP)</a> were a retailer, the CtoC platform would now be Japan’s 5th biggest vendor of apparel, symbolic of just how influential it has become and the significant role of used fashions in the wider market.</p>
<p>And it is not just fashion. Mercari is now handling all manner of household goods, even food. It is also increasingly influencing the sale of new goods thanks to new services for major retailers in data flow and marketing.</p>
<p>So big is its influence, even the Tax Office now has a Mercari department.</p>
<p>Not surprisingly, Mercari's success is attracting more competitors. <a href="https://www.smartkarma.com/entities/z-holdings-corp" target="_blank" data-smartkarma-citation="entities:19603:1" rel="noopener">Z Holdings (4689 JP)</a> launched PayPay Flea Market just over a year ago and is now doing what it does best: slashing fees and piling on incentives to try and grab share from the market leader.</p>

If Mercari Inc (4385 JP) were a retailer, the CtoC platform would now be Japan’s 5th biggest vendor of apparel, symbolic of just how influential it has become and the significant role of used fashions in the wider market.
And it is not just fashion. Mercari is now handling all manner of household goods, even food. It is also increasingly influencing the sale of new goods thanks to new services for major retailers in data flow and marketing.
So big is its influence, even the Tax Office now has a Mercari department.
Not surprisingly, Mercari's success is attracting more competitors. Z Holdings (4689 JP) launched PayPay Flea Market just over a year ago and is now doing what it does best: slashing fees and piling on incentives to try and grab share from the market leader.

Mercari’s Relentless Innovation Opens Closets

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

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<p><strong>Our base case valuation of Coupang is EV of $55.6 billion and implied market cap of $60.1 billion. </strong></p>
<p>We have used EV/GP as our primary method of valuing Coupang. We believe this is a better method than EV/S since Coupang has lower gross margins than its peers and its sales have a greater component of COGS than its peers. We used the average EV/GP of he comps (on a TTM) basis which is 19.3x. We then applied our estimated gross profit of $2.9 billion for Coupang in 2021 which resulted in an EV of $55.6 billion. Adjusting for net cash of $4.5 billion, this also suggests an implied market cap of $60.1 billion, which is over a 6-12 month view. </p>
<p><strong>First day pop</strong> - We believe there will be a first day pop for Coupang given the intensely bullish environment for high quality global tech stocks. We believe that the first day pop could lead to Coupang's <strong>market cap rising as high as</strong><strong>$81 billion</strong>, which would be 35% higher than our base case value of $60.1 billion. </p>
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Our base case valuation of Coupang is EV of $55.6 billion and implied market cap of $60.1 billion. 
We have used EV/GP as our primary method of valuing Coupang. We believe this is a better method than EV/S since Coupang has lower gross margins than its peers and its sales have a greater component of COGS than its peers. We used the average EV/GP of he comps (on a TTM) basis which is 19.3x. We then applied our estimated gross profit of $2.9 billion for Coupang in 2021 which resulted in an EV of $55.6 billion. Adjusting for net cash of $4.5 billion, this also suggests an implied market cap of $60.1 billion, which is over a 6-12 month view. 
First day pop - We believe there will be a first day pop for Coupang given the intensely bullish environment for high quality global tech stocks. We believe that the first day pop could lead to Coupang's market cap rising as high as$81 billion, which would be 35% higher than our base case value of $60.1 billion. 


<p>Part of our thesis on Toyota is that the company is going through a transformation from being just the ever-reliable auto manufacturer it has been to a much more rounded company with more appealing designs and a far stronger ability to build emotional connections with its customers. To illustrate this, we examine some of Toyota’s commercials and the communications from CEO Akio Toyoda.</p>

Part of our thesis on Toyota is that the company is going through a transformation from being just the ever-reliable auto manufacturer it has been to a much more rounded company with more appealing designs and a far stronger ability to build emotional connections with its customers. To illustrate this, we examine some of Toyota’s commercials and the communications from CEO Akio Toyoda.

Toyota – Superbowl Commercials and the Evolution of Toyota

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Thematic (Sector/Industry)

<div><p style="text-align: center;"><strong>• RESULTS &amp; REVISIONS SUMMARY - 4th FEBRUARY •</strong></p></div><div><p>Of Thursday's 151 results announcements, 69% scored positively for earnings momentum despite trailing revenues falling by 5.1% on average and a 0.8 percentage point decline in operating margins. 12% of companies were in the red for the quarter.  63% of the 64 annual forecasts/revision announcements scored positively, and the average Forecast/Revision score was +2.1 points.</p></div><div>
<p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p>
<p style="text-align: left;">Thursday's 'best' large-cap announcements were <a href="https://www.smartkarma.com/entities/ibiden-co-ltd" target="_blank" data-smartkarma-citation="entities:16630:1" rel="noopener">Ibiden (4062 JP)</a>, <a href="https://www.smartkarma.com/entities/takeda-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:11747:1" rel="noopener">Takeda Pharmaceutical (4502 JP)</a>, and <a href="https://www.smartkarma.com/entities/ntt-data-corp" target="_blank" data-smartkarma-citation="entities:11232:1" rel="noopener">NTT Data (9613 JP)</a>. The 'worst' came from <a href="https://www.smartkarma.com/entities/mitsubishi-ufj-financial-group" target="_blank" data-smartkarma-citation="entities:218:1" rel="noopener">MUFG (8306 JP)</a>, <a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank (9434 JP)</a>, and <a href="https://www.smartkarma.com/entities/mercari-inc" target="_blank" data-smartkarma-citation="entities:27149:1" rel="noopener">Mercari (4385 JP)</a>.   </p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/914/original/image?1612474282" class="editor-image img-responsive" data-smartkarma-image-id="186914"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/912/original/image?1612474282" class="editor-image img-responsive" data-smartkarma-image-id="186912"></figure></section><section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/913/original/image?1612474282" class="editor-image img-responsive" data-smartkarma-image-id="186913"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/911/original/image?1612474282" class="editor-image img-responsive" data-smartkarma-image-id="186911"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/910/original/image?1612474282" class="editor-image img-responsive" data-smartkarma-image-id="186910"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/915/original/image?1612474282" class="editor-image img-responsive" data-smartkarma-image-id="186915"></figure></section></section>
</div><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div>

• RESULTS &amp; REVISIONS SUMMARY - 4th FEBRUARY •Of Thursday's 151 results announcements, 69% scored positively for earnings momentum despite trailing revenues falling by 5.1% on average and a 0.8 percentage point decline in operating margins. 12% of companies were in the red for the quarter.  63% of the 64 annual forecasts/revision announcements scored positively, and the average Forecast/Revision score was +2.1 points.
• BEST &amp; WORST •
Thursday's 'best' large-cap announcements were Ibiden (4062 JP), Takeda Pharmaceutical (4502 JP), and NTT Data (9613 JP). The 'worst' came from MUFG (8306 JP), Softbank (9434 JP), and Mercari (4385 JP).   

Source for all charts &amp; tables: Japan Analytics

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​02/​​​​​​​​​​​​​​​​04 Ibiden, Takeda.

Japan

Mercari, Inc. operates as an electronic commercial company. The Company offers electronic commercial software, operation management, marketing planning, and other marketplace services. Mercari serves customers worldwide.

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Mercari (4385 JP)

Softbank – Is Archegos the Bear Stearns CDO Funds in the Coalmine?

With a lot of signs of market stress emerging following a truly bubbly run up in 2020 we examine the prospects for a stock that has traditionally...

Mio Kato

Mercari’s Relentless Innovation Opens Closets

Mercari now dominates CtoC trading in Japan and is so big a Tax Office department is names after it. Competitors are circling, particularly Z...

Michael Causton

Coupang - Valuation Analysis

Our base case valuation of Coupang is EV of $55.6 billion and implied market cap of $60.1 billion. We have used EV/GP as our primary method of...

Douglas Kim

Toyota – Superbowl Commercials and the Evolution of Toyota

On the day the Nikkei recovered the 30,000 level after three decades we look at the evolution of Toyota's image and character, and Japan's new...

Mio Kato

🇯🇵 JAPAN • Results & Revisions 02/04 Ibiden, Takeda.

Of Thursday's 151 results announcements, 69% scored positively for earnings momentum despite trailing revenues falling by 5.1% on average and a 0.8...

Campbell Gunn

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Softbank – Is Archegos the Bear Stearns CDO Funds in the Coalmine?

With a lot of signs of market stress emerging following a truly bubbly run up in 2020 we examine the prospects for a stock that has traditionally...

Mio Kato

Mercari’s Relentless Innovation Opens Closets

Mercari now dominates CtoC trading in Japan and is so big a Tax Office department is names after it. Competitors are circling, particularly Z...

Michael Causton

Coupang - Valuation Analysis

Our base case valuation of Coupang is EV of $55.6 billion and implied market cap of $60.1 billion. We have used EV/GP as our primary method of...

Douglas Kim

Toyota – Superbowl Commercials and the Evolution of Toyota

On the day the Nikkei recovered the 30,000 level after three decades we look at the evolution of Toyota's image and character, and Japan's new...

Mio Kato

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​02/​​​​​​​​​​​​​​​​04 Ibiden, Takeda.

Of Thursday's 151 results announcements, 69% scored positively for earnings momentum despite trailing revenues falling by 5.1% on average and a 0.8...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 02/04 Ibiden, Takeda.