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. 

Event-Driven

<p>It is almost a year since <a href="https://www.smartkarma.com/entities/yamada-denki-co-ltd" target="_blank" data-smartkarma-citation="entities:641:1" rel="noopener">Yamada Denki (9831 JP)</a> stepped in to save <a href="https://www.smartkarma.com/entities/otsuka-kagu-ltd" target="_blank" data-smartkarma-citation="entities:5139:1" rel="noopener">Otsuka Kagu Ltd (8186 JP)</a> from a choice of bankruptcy or acquisition by a major furniture rival. Yamada has made some improvement, but things have not gone nearly as well as hoped.</p><p>As a result, Kumiko Otsuka will step down as CEO this month, ending the founding family’s direct involvement with the chain, and Yamada will probably delist the company and make it a wholly owned subsidiary.</p><p>Then the real work begins as Otsuka will need an entirely new competitive position if it is to survive but should help Yamada take on <a href="https://www.smartkarma.com/entities/nitori-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20386:1" rel="noopener">Nitori Holdings (9843 JP)</a> in the core furniture market.</p>

It is almost a year since Yamada Denki (9831 JP) stepped in to save Otsuka Kagu Ltd (8186 JP) from a choice of bankruptcy or acquisition by a major furniture rival. Yamada has made some improvement, but things have not gone nearly as well as hoped.As a result, Kumiko Otsuka will step down as CEO this month, ending the founding family’s direct involvement with the chain, and Yamada will probably delist the company and make it a wholly owned subsidiary.Then the real work begins as Otsuka will need an entirely new competitive position if it is to survive but should help Yamada take on Nitori Holdings (9843 JP) in the core furniture market.

Otsuka Kagu to Be Absorbed by Yamada Denki as Family CEO Departs

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

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.

Thematic (Sector/Industry)

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/175/082/original/2020-11-30_05-30-46.png?1606681863" class="editor-image img-responsive" data-smartkarma-image-id="175082"></figure></section><div class="content-caption">Source for all charts &amp; tables: Japan Analytics </div><p><strong>FOUR QUADRANTS</strong> - By combining our two scoring methodologies - the Relative Price Score (RPS) and the Results &amp; Revision Score (RRS), we can assign companies into four quadrants:-</p><ul style="list-style-type: disc;">
<li>
<strong>CONTRARIAN BUYS </strong>- Companies with low Results &amp; Revision and Relative Price Scores</li>
<li>
<strong>CONTRARIAN SELLS</strong> - Companies with high Results &amp; Revision and Relative Price Scores</li>
<li>
<strong>TURNAROUNDS</strong> - Companies with high Results &amp; Revision Scores &amp; low Relative Price Scores</li>
<li>
<strong>EX-GROWTH</strong> - Companies with low Results &amp; Revision Scores &amp; high Relative Price Scores</li>
</ul><p>In the two Contrarian quadrants and especially for Contrarian Sells, companies can remain outliers for extended periods; however profitable Contrarian Sells in the last year have been <a href="https://www.smartkarma.com/entities/taiyo-nippon-sanso-corp" target="_blank" data-smartkarma-citation="entities:15756:1" rel="noopener">Nippon Sanso (4091 JP)</a> and <a href="https://www.smartkarma.com/entities/sekisui-house-ltd" target="_blank" data-smartkarma-citation="entities:4508:1" rel="noopener">Sekisui House (1928 JP)</a>. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/174/185/original/2020-11-26_08-13-23.png?1606346017" class="editor-image img-responsive" data-smartkarma-image-id="174185"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/174/187/original/2020-11-26_08-18-21.png?1606346313" class="editor-image img-responsive" data-smartkarma-image-id="174187"></figure></section><p><strong><a href="https://www.dropbox.com/s/7b61jl02dh0pzno/2020-11-25_12-43-55.png?dl=0" target="_blank" rel="noopener">CONTRARIAN SELLS</a></strong>- In the<strong> DETAIL</strong> below, we shall review the current 'crop' of Contrarian Sells for potential opportunities. Subsequent Insights in this mini-series will look at the Turnarounds and Ex-Growth quadrants before concluding with one '2021 High Conviction' recommendation. The first Insight in the Series can be found here - <a href="https://www.smartkarma.com/insights/japan-four-quadrants-contrarian-buys" target="_blank" data-smartkarma-citation="insights:45688" rel="noopener">Contrarian Buys</a>.</p>

Source for all charts &amp; tables: Japan Analytics FOUR QUADRANTS - By combining our two scoring methodologies - the Relative Price Score (RPS) and the Results &amp; Revision Score (RRS), we can assign companies into four quadrants:-

CONTRARIAN BUYS - Companies with low Results &amp; Revision and Relative Price Scores

CONTRARIAN SELLS - Companies with high Results &amp; Revision and Relative Price Scores

TURNAROUNDS - Companies with high Results &amp; Revision Scores &amp; low Relative Price Scores

EX-GROWTH - Companies with low Results &amp; Revision Scores &amp; high Relative Price Scores
In the two Contrarian quadrants and especially for Contrarian Sells, companies can remain outliers for extended periods; however profitable Contrarian Sells in the last year have been Nippon Sanso (4091 JP) and Sekisui House (1928 JP). CONTRARIAN SELLS- In the DETAIL below, we shall review the current 'crop' of Contrarian Sells for potential opportunities. Subsequent Insights in this mini-series will look at the Turnarounds and Ex-Growth quadrants before concluding with one '2021 High Conviction' recommendation. The first Insight in the Series can be found here - Contrarian Buys.

🇯🇵 JAPAN • Four Quadrants - Contrarian Sells

Equity Bottom-Up

Pan Pacific International Holdings / Equity Bottom-Up

<p>Japan’s Ministry of Agriculture wants to expand food exports from ¥1 trillion to more than ¥5 trillion over the next 10 years, and <a href="https://www.smartkarma.com/entities/pan-pacific-international-holdings-corporation" target="_blank" data-smartkarma-citation="entities:13475:1" rel="noopener">Pan Pacific International Holdings (7532 JP)</a> is keen to help. As part of its mission, PPI hopes to change the general perception of Japanese food products as expensive treats by selling them to Asia’s mass market.</p><p><strong>With a parallel target of 500 stores overseas by 2030</strong>, PPI could also provide enough retail demand to account for a major chunk of the total food exports out of Japan.</p>

Japan’s Ministry of Agriculture wants to expand food exports from ¥1 trillion to more than ¥5 trillion over the next 10 years, and Pan Pacific International Holdings (7532 JP) is keen to help. As part of its mission, PPI hopes to change the general perception of Japanese food products as expensive treats by selling them to Asia’s mass market.With a parallel target of 500 stores overseas by 2030, PPI could also provide enough retail demand to account for a major chunk of the total food exports out of Japan.

Donki in Asia: ‘PPIC’ the New Food Export Club Propelling PPIH to 500 Stores Outside Japan

<p>Muji’s US bankruptcy and poor trading in Europe, along with weaker sales at home, led to <a href="https://www.smartkarma.com/entities/ryohin-keikaku-co-ltd" target="_blank" data-smartkarma-citation="entities:2765:1" rel="noopener">Ryohin Keikaku (7453 JP)</a>’s first revenue decline in a decade and the first loss in 19 years. Growth in Asia and the promise of significant growth in the food category – an idea we are very bullish about – suggest hope for a rebound next year.</p>

Muji’s US bankruptcy and poor trading in Europe, along with weaker sales at home, led to Ryohin Keikaku (7453 JP)’s first revenue decline in a decade and the first loss in 19 years. Growth in Asia and the promise of significant growth in the food category – an idea we are very bullish about – suggest hope for a rebound next year.

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<p>Overnight it became clear in a Nikkei <a href="https://asia.nikkei.com/Business/Business-deals/Japan-s-Nitori-wins-over-Shimachu-with-2bn-takeover-bid" target="_blank" rel="noopener">article</a> that <a href="https://www.smartkarma.com/entities/shimachu-co-ltd" target="_blank" data-smartkarma-citation="entities:5235:1" rel="noopener">Shimachu Co Ltd (8184 JP)</a> was going to succumb to the charms of bidder <a href="https://www.smartkarma.com/entities/nitori-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20386:1" rel="noopener">Nitori Holdings (9843 JP)</a> and accept its proposal of a takeover at ¥5500. Shimachu had heretofore officially supported a bid by <a href="https://www.smartkarma.com/entities/dcm-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:13042:1" rel="noopener">DCM Holdings (3050 JP)</a> at ¥4200/share, but acceptance of Nitori means that its bid will not be officially "hostile."</p><p>After the close, Shimachu and Nitori defined that support in a set of documents and the comment in the media from Shimachu was that DCM had not responded. </p><p>DCM's Tender Offer (discussed in <a href="https://www.smartkarma.com/insights/dcm-does-a-full-takeover-of-shimachu-looks-like-a-strong-price-look-again" target="_blank" data-smartkarma-citation="insights:43806" rel="noopener">DCM Does a Full Takeover of Shimachu - Looks Like a Strong Price. Look Again.</a>) ends on 16 November, the same day Nitori's starts. </p><p>DCM can still respond by a) extending the time period at the same price, b) raising the price and creating an automatic extension, or c) doing nothing. At the very least, I expect DCM to extend by 10 business days because doing so would extend their own Tender Offer past the JFTC Phase 1 response deadline to the Nitori application (Nitori will launch without having received official approval). </p><p>More below.</p><hr><p><em>The list of insights in this series (on this particular event) are as below:</em></p><table class="table table-striped"><tbody>
<tr><td colspan="2" style="width: 724.8px;"><h3>Previous Insights on the DCM (3050) and Nitori (9843) Approaches to Shimachu (8184)</h3></td></tr>
<tr>
<td style="width: 88.8px;"><strong>Date</strong></td>
<td style="width: 615.2px;"><strong>Insight Title</strong></td>
</tr>
<tr>
<td style="width: 88.8px;">21 Sep 2020</td>
<td style="width: 615.2px;">
<a href="https://www.smartkarma.com/insights/dcm-partial-offer-for-shimachu-coming" target="_blank" data-smartkarma-citation="insights:43444" rel="noopener">DCM Partial Offer for Shimachu Coming?</a> </td>
</tr>
<tr>
<td style="width: 88.8px;">4 Oct 2020</td>
<td style="width: 615.2px;">
<a href="https://www.smartkarma.com/insights/dcm-does-a-full-takeover-of-shimachu-looks-like-a-strong-price-look-again" target="_blank" data-smartkarma-citation="insights:43806" rel="noopener">DCM Does a Full Takeover of Shimachu - Looks Like a Strong Price. Look Again.</a> </td>
</tr>
<tr>
<td style="width: 88.8px;">21 Oct 2020</td>
<td style="width: 615.2px;">
<a href="https://www.smartkarma.com/insights/nitori-to-make-a-rival-bid-for-shimachu-more-fun-to-go" target="_blank" data-smartkarma-citation="insights:44353" rel="noopener">Nitori To Make a Rival Bid for Shimachu? More Fun To Go</a> </td>
</tr>
<tr>
<td style="width: 88.8px;">28 Oct 2020</td>
<td style="width: 615.2px;">
<a href="https://www.smartkarma.com/insights/gaming-out-a-nitori-bid-for-shimachu" target="_blank" data-smartkarma-citation="insights:44636" rel="noopener">Gaming Out a Nitori Bid for Shimachu</a> </td>
</tr>
<tr>
<td style="width: 88.8px;">29 Oct 2020</td>
<td style="width: 615.2px;">
<a href="https://www.smartkarma.com/insights/nitori-bids-up-for-shimachu-now-things-slow-down" target="_blank" data-smartkarma-citation="insights:44679" rel="noopener">Nitori Bids UP For Shimachu - Now Things Slow Down</a> </td>
</tr>
</tbody></table>

Overnight it became clear in a Nikkei article that Shimachu Co Ltd (8184 JP) was going to succumb to the charms of bidder Nitori Holdings (9843 JP) and accept its proposal of a takeover at ¥5500. Shimachu had heretofore officially supported a bid by DCM Holdings (3050 JP) at ¥4200/share, but acceptance of Nitori means that its bid will not be officially "hostile."After the close, Shimachu and Nitori defined that support in a set of documents and the comment in the media from Shimachu was that DCM had not responded. DCM's Tender Offer (discussed in DCM Does a Full Takeover of Shimachu - Looks Like a Strong Price. Look Again.) ends on 16 November, the same day Nitori's starts. DCM can still respond by a) extending the time period at the same price, b) raising the price and creating an automatic extension, or c) doing nothing. At the very least, I expect DCM to extend by 10 business days because doing so would extend their own Tender Offer past the JFTC Phase 1 response deadline to the Nitori application (Nitori will launch without having received official approval). More below.The list of insights in this series (on this particular event) are as below:
Previous Insights on the DCM (3050) and Nitori (9843) Approaches to Shimachu (8184)

Date
Insight Title


21 Sep 2020

DCM Partial Offer for Shimachu Coming? 


4 Oct 2020

DCM Does a Full Takeover of Shimachu - Looks Like a Strong Price. Look Again. 


21 Oct 2020

Nitori To Make a Rival Bid for Shimachu? More Fun To Go 


28 Oct 2020

Gaming Out a Nitori Bid for Shimachu 


29 Oct 2020

Nitori Bids UP For Shimachu - Now Things Slow Down 



Nitori's Bid for Shimachu Goes Friendly as Shimachu Dumps DCM

Japan

Nitori Holdings Co., Ltd., is based in Hokkaido and operates a furniture retail chain.  The Company sells living room furniture, storage furniture, dining furniture, office furniture, beds, and interior goods.  Nitori Holdings also sells original brand merchandise and imported merchandise.

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Nitori Holdings (9843 JP)

Otsuka Kagu to Be Absorbed by Yamada Denki as Family CEO Departs

It makes sense that Yamada Denki is taking control of furniture retailer. Yamada is building a rival to Nitori and Otsuka will help with that. The...

Michael Causton

🇯🇵 JAPAN • Four Quadrants - Contrarian Sells

CONTRARIAN SELLS - In the DETAIL below, we shall review the current 'crop' of Contrarian Sells for potential opportunities.

Campbell Gunn

Donki in Asia: ‘PPIC’ the New Food Export Club Propelling PPIH to 500 Stores Outside Japan

Don Don Donki stores are popular in Asia offering Japanese foods at low prices. PPIH is now working with the Japanese government to boost exports...

Michael Causton

Muji Leaks Red After Tough Summer

Ryohin Keikaku (Muji) had a tough six months from March but its plans to grow food sales from around 6% to 30% of sales along with expansion in...

Michael Causton

Nitori's Bid for Shimachu Goes Friendly as Shimachu Dumps DCM

Nitori and Shimachu signed a deal to make Nitori's JPY 5500/share friendly. The Tender Offer starts 16 Nov the same day as DCM's JPY 4200/share bid...

Travis Lundy

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