Telco/Internet specialist

Kirk Boodry

Redex Research

Thematic (Sector/Industry)

<p>Google is reportedly close to acquiring smartphone settlements company Pring for ¥20-30bn which would open the door for it to offer a mobile payments service in Japan directly linked to bank accounts. And that is the appeal of Pring which is a relative minnow in the Japanese payments market with &lt;1mn users but has relationships with a wide range of Japanese financial institutions. Google is not a global fintech player but it has had some success in a few markets like the US and India whilst it has started to expand in Europe, and now apparently, Japan. Competitively, the major domestic players with vast consumer ecosystems are formidable competition but Google connects to half of all smartphone users through Android and has merchant relationships through its Internet advertising business.</p>

Google is reportedly close to acquiring smartphone settlements company Pring for ¥20-30bn which would open the door for it to offer a mobile payments service in Japan directly linked to bank accounts. And that is the appeal of Pring which is a relative minnow in the Japanese payments market with &lt;1mn users but has relationships with a wide range of Japanese financial institutions. Google is not a global fintech player but it has had some success in a few markets like the US and India whilst it has started to expand in Europe, and now apparently, Japan. Competitively, the major domestic players with vast consumer ecosystems are formidable competition but Google connects to half of all smartphone users through Android and has merchant relationships through its Internet advertising business.

Japan Fintech - Google Push into Mobile Payments Could Raise Competitive Intensity

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>Japan’s retail and distribution sector has long been seen as fragmented, even to the point of being accused of inefficiency. On the surface, concentration levels do remain low, but scratch that surface and a very different picture emerges.</p>
<p>By format and by category sector, larger companies are taking increasing share and, over the past five years, this trend has accelerated.</p>
<p>Now, given the pressures of Covid, there is ample opportunity for stronger players to gain ground by buying out weaker ones, while some mid-level companies are joining together, hoping to become a fish too big to swallow.</p>
<p>Business tie-ups are also increasing in number, particularly as physical retailers seek to bring in and learn skills necessary to succeed in e-commerce and to build omnichannel models.</p>
<p>The following is a detailed review of how concentration has increased along with a map of who own who in retailing today.</p>
<p>There is a strong possibility that we could see some really big deals, even ones that span format and geographical borders, as many mid-sized retailers recognise that independent survival is getting hard. Acquirers will use the current environment to diversify into new areas, expand volumes and market share, or simply acquire more retail property for long-term development.</p>

Japan’s retail and distribution sector has long been seen as fragmented, even to the point of being accused of inefficiency. On the surface, concentration levels do remain low, but scratch that surface and a very different picture emerges.
By format and by category sector, larger companies are taking increasing share and, over the past five years, this trend has accelerated.
Now, given the pressures of Covid, there is ample opportunity for stronger players to gain ground by buying out weaker ones, while some mid-level companies are joining together, hoping to become a fish too big to swallow.
Business tie-ups are also increasing in number, particularly as physical retailers seek to bring in and learn skills necessary to succeed in e-commerce and to build omnichannel models.
The following is a detailed review of how concentration has increased along with a map of who own who in retailing today.
There is a strong possibility that we could see some really big deals, even ones that span format and geographical borders, as many mid-sized retailers recognise that independent survival is getting hard. Acquirers will use the current environment to diversify into new areas, expand volumes and market share, or simply acquire more retail property for long-term development.

Who Owns Who: Concentration Levels Accelerate in Japan Retail, with More M&A to Come

Equity Bottom-Up

<p>By year-end we expect there will be two newly minted public fintech companies in Asia as IPOs for Kakao Pay (August) and PayTM (Q4-ish) move ahead. These are both potential comparables for Softbank Group’s PayPay of which Z Holdings is the leading shareholder. Comparatively, proposed valuations for Kakao Pay ($7-11bn) and PayTM ($24-25bn) are much higher but these are also later stage businesses with established track records and offer some insight into what PayPay can turn into over time. We currently value PayPay at its carry value of $500mn but as monetization starts, we expect management aspirations for a unicorn valuation can be reached. This report includes forecasts updated for Q4 results, guidance, and the acquisition of Yahoo trademark rights from Verizon.</p>

By year-end we expect there will be two newly minted public fintech companies in Asia as IPOs for Kakao Pay (August) and PayTM (Q4-ish) move ahead. These are both potential comparables for Softbank Group’s PayPay of which Z Holdings is the leading shareholder. Comparatively, proposed valuations for Kakao Pay ($7-11bn) and PayTM ($24-25bn) are much higher but these are also later stage businesses with established track records and offer some insight into what PayPay can turn into over time. We currently value PayPay at its carry value of $500mn but as monetization starts, we expect management aspirations for a unicorn valuation can be reached. This report includes forecasts updated for Q4 results, guidance, and the acquisition of Yahoo trademark rights from Verizon.

Z Holdings (Buy) - Asian Fintech App IPOs Highlight Potential PayPay Upside

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong short data will be published after market close on 6 July due to the issuance of Black Rainstorm signal on 28 June and the public holiday on 1 July.</p></div><div><p>In Japan, stocks increased on <a href="https://www.smartkarma.com/entities/sharp-corp" target="_blank" data-smartkarma-citation="entities:391:1" rel="noopener">Sharp Corp (6753 JP)</a>, <a href="https://www.smartkarma.com/entities/plus-alpha-consulting-co-ltd" target="_blank" data-smartkarma-citation="entities:33441:1" rel="noopener">Plus Alpha Consulting (4071 JP)</a>, <a href="https://www.smartkarma.com/entities/mitsubishi-corp" target="_blank" data-smartkarma-citation="entities:20668:1" rel="noopener">Mitsubishi Corp (8058 JP)</a>, <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> and <a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Inc (4755 JP)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/frontier-real-estate-invest" target="_blank" data-smartkarma-citation="entities:13526:1" rel="noopener">Frontier Real Estate Invest (8964 JP)</a>, <a href="https://www.smartkarma.com/entities/monex-group-inc" target="_blank" data-smartkarma-citation="entities:14211:1" rel="noopener">Monex Group Inc (8698 JP)</a>, <a href="https://www.smartkarma.com/entities/anritsu-corp" target="_blank" data-smartkarma-citation="entities:3700:1" rel="noopener">Anritsu Corp (6754 JP)</a>, <a href="https://www.smartkarma.com/entities/harmonic-drive-systems-inc" target="_blank" data-smartkarma-citation="entities:10238:1" rel="noopener">Harmonic Drive Systems (6324 JP)</a> and <a href="https://www.smartkarma.com/entities/park24-co-ltd" target="_blank" data-smartkarma-citation="entities:5622:1" rel="noopener">Park24 Co Ltd (4666 JP)</a>. Shorts increased the most in the Consumer Discretionary, Industrials and Consumer Staples sectors.</p></div><div><p>In Korea, shorts increased on <a href="https://www.smartkarma.com/entities/doosan-heavy-industries-construction" target="_blank" data-smartkarma-citation="entities:7389:1" rel="noopener">Doosan Heavy Industries &amp; Construction (034020 KS)</a>, <a href="https://www.smartkarma.com/entities/hanwha-solutions" target="_blank" data-smartkarma-citation="entities:8656:1" rel="noopener">Hanwha Solutions (009830 KS)</a>, <a href="https://www.smartkarma.com/entities/celltrion-inc" target="_blank" data-smartkarma-citation="entities:991:1" rel="noopener">Celltrion Inc (068270 KS)</a>, <a href="https://www.smartkarma.com/entities/shinpoong-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:7296:1" rel="noopener">Shinpoong Pharmaceutical (019170 KS)</a> and <a href="https://www.smartkarma.com/entities/hmm-co-ltd" target="_blank" data-smartkarma-citation="entities:13494:1" rel="noopener">HMM Co., Ltd. (011200 KS)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a>, <a href="https://www.smartkarma.com/entities/doosan-infracore-co-ltd" target="_blank" data-smartkarma-citation="entities:3982:1" rel="noopener">Doosan Infracore (042670 KS)</a>, <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a>, <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a> and <a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem Ltd (051910 KS)</a>.</p></div><div><p>In Taiwan, shorts increased on <a href="https://www.smartkarma.com/entities/au-optronics-corp" target="_blank" data-smartkarma-citation="entities:6704:1" rel="noopener">AU Optronics (2409 TT)</a>, <a href="https://www.smartkarma.com/entities/micro-star-international-co" target="_blank" data-smartkarma-citation="entities:8871:1" rel="noopener">Micro Star International Co (2377 TT)</a>, <a href="https://www.smartkarma.com/entities/walsin-technology-corp" target="_blank" data-smartkarma-citation="entities:11084:1" rel="noopener">Walsin Technology (2492 TT)</a>, <a href="https://www.smartkarma.com/entities/asustek-computer-inc" target="_blank" data-smartkarma-citation="entities:13002:1" rel="noopener">Asustek Computer (2357 TT)</a> and <a href="https://www.smartkarma.com/entities/ta-chen-stainless-pipe-co-ltd" target="_blank" data-smartkarma-citation="entities:2519:1" rel="noopener">TA Chen Stainless Pipe (2027 TT)</a> while shorts covered on <a href="https://www.smartkarma.com/entities/formosa-laboratories-inc" target="_blank" data-smartkarma-citation="entities:17658:1" rel="noopener">Formosa Laboratories (4746 TT)</a>, <a href="https://www.smartkarma.com/entities/china-steel-corp" target="_blank" data-smartkarma-citation="entities:962:1" rel="noopener">China Steel (2002 TT)</a>, <a href="https://www.smartkarma.com/entities/yang-ming-marine-transport" target="_blank" data-smartkarma-citation="entities:8502:1" rel="noopener">Yang Ming Marine Transport (2609 TT)</a>, <a href="https://www.smartkarma.com/entities/taiwan-cement" target="_blank" data-smartkarma-citation="entities:19736:1" rel="noopener">Taiwan Cement (1101 TT)</a> and <a href="https://www.smartkarma.com/entities/largan-precision-co-ltd" target="_blank" data-smartkarma-citation="entities:9126:1" rel="noopener">Largan Precision (3008 TT)</a>. </p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong short data will be published after market close on 6 July due to the issuance of Black Rainstorm signal on 28 June and the public holiday on 1 July.In Japan, stocks increased on Sharp Corp (6753 JP), Plus Alpha Consulting (4071 JP), Mitsubishi Corp (8058 JP), Cocokara Fine (3098 JP) and Rakuten Inc (4755 JP) while there was short covering on Frontier Real Estate Invest (8964 JP), Monex Group Inc (8698 JP), Anritsu Corp (6754 JP), Harmonic Drive Systems (6324 JP) and Park24 Co Ltd (4666 JP). Shorts increased the most in the Consumer Discretionary, Industrials and Consumer Staples sectors.In Korea, shorts increased on Doosan Heavy Industries &amp; Construction (034020 KS), Hanwha Solutions (009830 KS), Celltrion Inc (068270 KS), Shinpoong Pharmaceutical (019170 KS) and HMM Co., Ltd. (011200 KS) while shorts were covered on SK Hynix (000660 KS), Doosan Infracore (042670 KS), Naver Corp (035420 KS), Samsung Electronics (005930 KS) and LG Chem Ltd (051910 KS).In Taiwan, shorts increased on AU Optronics (2409 TT), Micro Star International Co (2377 TT), Walsin Technology (2492 TT), Asustek Computer (2357 TT) and TA Chen Stainless Pipe (2027 TT) while shorts covered on Formosa Laboratories (4746 TT), China Steel (2002 TT), Yang Ming Marine Transport (2609 TT), Taiwan Cement (1101 TT) and Largan Precision (3008 TT). 

Asia Shorts: Sharp, Cocokara, Rakuten, Park24, Doosan, HMM, Hynix, LG Chem, AUO, Yang Ming, Largan

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/glp-j-reit" target="_blank" data-smartkarma-citation="entities:11009:1" rel="noopener">GLP J-REIT (3281 JP) </a>is looking to raise  around US$230m in its placement to acquire four assets located in Tokyo and Osaka. This is the third fund raising by the company in a little over a year. All of the past deals have done well.</p></div><div><p>Links to our coverage of previous placements done by GLP J-REIT:</p></div><div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/glp-j-reit-placement-accretive-acquisition-past-deals-have-done-well" target="_blank" rel="noopener">GLP J-REIT Placement - Accretive Acquisition, past Deals Have Done Well</a></li>
<li><a href="https://www.smartkarma.com/insights/glp-j-reit-placement-a-large-but-accretive-acquisition" target="_blank" rel="noopener">GLP J-REIT Placement - A Large but Accretive Acquisition</a></li>
<li>
<a href="https://www.smartkarma.com/insights/glp-j-reit-placement-setting-a-new-trend-for-jreits" target="_blank" data-smartkarma-citation="insights:40622" rel="noopener">GLP J-REIT Placement - Setting a New Trend for JREITs</a> </li>
<li><a href="https://www.smartkarma.com/insights/glp-j-reit-placement-already-back-for-more-but-still-getting-good-accretion" target="_blank" rel="noopener">GLP J-REIT Placement - Already Back for More but Still Getting Good Accretion</a></li>
</ul></div><p>In this note, we'll run the deal through our ECM framework and comment on deal dynamics.</p>

GLP J-REIT (3281 JP) is looking to raise  around US$230m in its placement to acquire four assets located in Tokyo and Osaka. This is the third fund raising by the company in a little over a year. All of the past deals have done well.Links to our coverage of previous placements done by GLP J-REIT:
GLP J-REIT Placement - Accretive Acquisition, past Deals Have Done Well
GLP J-REIT Placement - A Large but Accretive Acquisition

GLP J-REIT Placement - Setting a New Trend for JREITs 
GLP J-REIT Placement - Already Back for More but Still Getting Good Accretion
In this note, we'll run the deal through our ECM framework and comment on deal dynamics.

GLP J-REIT Placement - Almost All the past Deals Have Done Well but Shares Are at an All Time High

Japan

Rakuten Group, Inc. provides Internet services. The Company offers Internet finance services which including "Rakuten Card" and "Rakuten Bank". Rakuten Group also provides digital content services including electronic book services.

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Rakuten (4755 JP)

Japan Fintech - Google Push into Mobile Payments Could Raise Competitive Intensity

Google is considering an acquisition that would allow it to compete directly in JP mobile payments. It lacks a direct consumer business but Android...

Kirk Boodry

Who Owns Who: Concentration Levels Accelerate in Japan Retail, with More M&A to Come

Japanese retail is in the process of extensive concentration and market consolidation through M&A, organic expansion and tie-ups. Numerous...

Michael Causton

Z Holdings (Buy) - Asian Fintech App IPOs Highlight Potential PayPay Upside

Upcoming IPOs for two Asian fintech companies provide some insight on what Z Holdings PayPay can become once it starts to monetize its business....

Kirk Boodry

Asia Shorts: Sharp, Cocokara, Rakuten, Park24, Doosan, HMM, Hynix, LG Chem, AUO, Yang Ming, Largan

The Insight looks at large short interest movements across HK, Japan, Korea and Taiwan stocks and highlights large increases/decreases in shorts to...

Brian Freitas

GLP J-REIT Placement - Almost All the past Deals Have Done Well but Shares Are at an All Time High

GLP J-REIT (3281 JP) is looking to raise around US$230m in its placement to acquire four assets located in Tokyo and Osaka. This is the third fund...

Sumeet Singh

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