Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>JPX-Nikkei 400 is composed of common stocks listed in the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents. </li>
<li>A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. </li>
<li>Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-November 2021.</li>
</ul>


JPX-Nikkei 400 is composed of common stocks listed in the Tokyo Stock Exchange. It is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents. 
A periodic review is conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. 
Below is a look at potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-November 2021.


JPX-Nikkei 400 Rebalance 2022: Leaderboard End-Nov 2021

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>
<a href="https://www.smartkarma.com/entities/kose-corp" target="_blank" data-smartkarma-citation="entities:18009:1" rel="noopener">Kose Corp (4922 JP)</a>’s share price is up 5.1% today compared to 3.6%, 4.9%, 4.2%, 2.8% and 2.2% for <a href="https://www.smartkarma.com/entities/shiseido-co-ltd" target="_blank" data-smartkarma-citation="entities:5718:1" rel="noopener">Shiseido Company (4911 JP)</a>, <a href="https://www.smartkarma.com/entities/pola-orbis-holdings-inc" target="_blank" data-smartkarma-citation="entities:2287:1" rel="noopener">Pola Orbis Holdings (4927 JP)</a>, <a href="https://www.smartkarma.com/entities/fancl-corp" target="_blank" data-smartkarma-citation="entities:15862:1" rel="noopener">Fancl Corp (4921 JP)</a>, <a href="https://www.smartkarma.com/entities/kao-corp" target="_blank" data-smartkarma-citation="entities:12933:1" rel="noopener">Kao Corp (4452 JP)</a> and the Topix Index respectively despite an underwhelming quarter ending September 2021 results release on 29th October 2021 (aftermarket) with revenue declining 1.7% (adjusted for changes in accounting standards) from the same period of the previous year.</li>
<li>Quarterly revenue increased 9.2% (adjusted) on a QoQ basis. The OP increased 86.2% YoY and 54.3% QoQ (adjusted) on cost controls.</li>
<li>In addition, the company has lowered its revenue and OP guidance for the 9 months from April-December 2021 by ¥14.0bn (5.9%) and ¥4.0bn (20%) respectively to ¥224.0bn revenue and ¥16.0bn OP, which implies a full-year revenue of ¥299.3bn and an OP of ¥18.2bn in CY2021 compared to ¥282.8bn revenue and ¥13.5bn OP in CY2020.</li>
</ul>



Kose Corp (4922 JP)’s share price is up 5.1% today compared to 3.6%, 4.9%, 4.2%, 2.8% and 2.2% for Shiseido Company (4911 JP), Pola Orbis Holdings (4927 JP), Fancl Corp (4921 JP), Kao Corp (4452 JP) and the Topix Index respectively despite an underwhelming quarter ending September 2021 results release on 29th October 2021 (aftermarket) with revenue declining 1.7% (adjusted for changes in accounting standards) from the same period of the previous year.
Quarterly revenue increased 9.2% (adjusted) on a QoQ basis. The OP increased 86.2% YoY and 54.3% QoQ (adjusted) on cost controls.
In addition, the company has lowered its revenue and OP guidance for the 9 months from April-December 2021 by ¥14.0bn (5.9%) and ¥4.0bn (20%) respectively to ¥224.0bn revenue and ¥16.0bn OP, which implies a full-year revenue of ¥299.3bn and an OP of ¥18.2bn in CY2021 compared to ¥282.8bn revenue and ¥13.5bn OP in CY2020.


Further Downside Is Possible As Kose Keeps Losing Ground in Japan

<a href="https://www.smartkarma.com/entities/shiseido-co-ltd" target="_blank" data-smartkarma-citation="entities:5718:1" rel="noopener">Shiseido Company (4911 JP)</a>’s CEO, Masahiko Uotani has met with several reporters to discuss the company’s view on the cosmetics industry at a time Shiseido’s share price has underperformed the Topix and Nikkei indices by more than 8%.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/236/665/original/image_43531005321634807122546.png?1634807123" class="editor-image img-responsive" data-smartkarma-image-id="236665"></figure><div class="content-caption">Source: Cap IQ</div>Uotani is expecting a sharp recovery in inbound revenue over the course of the next year. Even though Uotani says that he is less concerned about signs of an economic slowdown and concerns of tighter regulation in China, he is planning on hedging the China slowdown risk through acquisitions in the US and Europe.

Shiseido Company (4911 JP)’s CEO, Masahiko Uotani has met with several reporters to discuss the company’s view on the cosmetics industry at a time Shiseido’s share price has underperformed the Topix and Nikkei indices by more than 8%.Source: Cap IQUotani is expecting a sharp recovery in inbound revenue over the course of the next year. Even though Uotani says that he is less concerned about signs of an economic slowdown and concerns of tighter regulation in China, he is planning on hedging the China slowdown risk through acquisitions in the US and Europe.

Shiseido: Inbound Demand Could Rebound During The Next Twelve Months

<ul>
<li>
<a href="https://www.smartkarma.com/entities/premier-anti-aging-co-ltd" target="_blank" data-smartkarma-citation="entities:34292:1" rel="noopener">Premier Anti-Aging (4934 JP)</a> is a relatively small Japanese cosmetics company with a limited number of brands focusing on the skin cleansing segment. The company’s shares rose more than 350% from the IPO price during its first year on the mothers section of the Tokyo Stock Exchange. However, valuation multiples remain towards the low side compared to peer multiples.</li>
<li>We think Premier Anti-Aging could re-rate towards the peer average multiples over the medium term. The downside risk is rather low for Premier Anti-Ageing but the share price momentum currently remains unsupportive. Thus, we would wait till a shift in the price momentum before considering a long position.</li>
</ul>



Premier Anti-Aging (4934 JP) is a relatively small Japanese cosmetics company with a limited number of brands focusing on the skin cleansing segment. The company’s shares rose more than 350% from the IPO price during its first year on the mothers section of the Tokyo Stock Exchange. However, valuation multiples remain towards the low side compared to peer multiples.
We think Premier Anti-Aging could re-rate towards the peer average multiples over the medium term. The downside risk is rather low for Premier Anti-Ageing but the share price momentum currently remains unsupportive. Thus, we would wait till a shift in the price momentum before considering a long position.


Premier Anti-Aging: Up More than 300%, But Remains Undervalued on Fundamentals

<a href="https://www.smartkarma.com/entities/premier-anti-aging-co-ltd" target="_blank" data-smartkarma-citation="entities:34292:1" rel="noopener">Premier Anti-Aging (4934 JP)</a> is a relatively small Japanese cosmetics company with a limited number of brands focusing on the skin cleansing segment. The company’s shares rose more than 350% from the IPO price during its first year on the mothers section of the Tokyo Stock Exchange. This was mainly driven by the excellent performance of Premier Anti-Aging’s main brand “Duo”, whose average monthly sales doubled from the pre-COVID level.Having previously analysed the growth prospects of the “Duo” brand; <a href="https://www.smartkarma.com/insights/premier-anti-aging-company-s-duo-black-taking-the-market-by-storm" target="_blank" rel="noopener">Premier Anti-Aging Company’s Duo Black Taking the Market by Storm</a>, this insight takes a look at Premier Anti-Aging’s three supporting brands, which together generated around 15% of the company total revenue in 4QFY21.

Premier Anti-Aging (4934 JP) is a relatively small Japanese cosmetics company with a limited number of brands focusing on the skin cleansing segment. The company’s shares rose more than 350% from the IPO price during its first year on the mothers section of the Tokyo Stock Exchange. This was mainly driven by the excellent performance of Premier Anti-Aging’s main brand “Duo”, whose average monthly sales doubled from the pre-COVID level.Having previously analysed the growth prospects of the “Duo” brand; Premier Anti-Aging Company’s Duo Black Taking the Market by Storm, this insight takes a look at Premier Anti-Aging’s three supporting brands, which together generated around 15% of the company total revenue in 4QFY21.

Premier Anti-Aging Company: Sitrana & Canadel Can Become Strong Second-Tier Brands

Japan

POLA ORBIS HOLDINGS INC. develops, manufactures and markets cosmetic products, centering in skincare  products. Under its multi-brand strategy, the Company holds nine cosmetic brands including POLA, prestige skincare brand, ORBIS, oil-free skincare brand, H2O PLUS and Jurlique.

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Pola Orbis Holdings (4927 JP)

JPX-Nikkei 400 Rebalance 2022: Leaderboard End-Nov 2021

A discussion on potential Inclusions and Removals for the JPX-Nikkei 400 Rebalance to come in August 2022 based on trading data as of end-November...

Janaghan Jeyakumar, CFA

Further Downside Is Possible As Kose Keeps Losing Ground in Japan

The share price and valuation multiples have come down by around 25% and 35% respectively over the last three months as the market started reacting...

Oshadhi Kumarasiri

Shiseido: Inbound Demand Could Rebound During The Next Twelve Months

Inbound demand is an extremely important portion of Shiseido’s domestic revenue as it contributed around ¥70.0-80.0bn (around 18% of domestic...

Oshadhi Kumarasiri

Premier Anti-Aging: Up More than 300%, But Remains Undervalued on Fundamentals

Despite its smaller size, we think Premier Anti-Ageing deserves to trade in line with its peers due to its superior growth prospects.

Oshadhi Kumarasiri

Premier Anti-Aging Company: Sitrana & Canadel Can Become Strong Second-Tier Brands

We think Premier Anti-Aging’s Duo brand is there or thereabout being as successful as Kose's DECORTE and Pola Orbis' POLA brands. The company’s...

Oshadhi Kumarasiri

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