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. 

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/izumi-co-ltd" target="_blank" data-smartkarma-citation="entities:13173:1" rel="noopener">Izumi Co Ltd (8273 JP)</a> is Japan’s largest retailer in the South and, at least until 2018, was the last GMS to maintain a growth trajectory. Now, with the popularity of the <a href="https://www.smartkarma.com/entities/cosmos-pharmaceutical-corp" target="_blank" data-smartkarma-citation="entities:3797:1" rel="noopener">Cosmos Pharmaceutical (3349 JP)</a>  discount food chain eating into Izumi’s profits in Kyushu and the same lack of enthusiasm for the GMS format also spreading as it has elsewhere, Izumi last month announced a wide-ranging and ambitious plan to reinvent itself over the next five years. Izumi’s alliance with <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I Holdings (3382 JP)</a> will also grow in importance.
These plans include expansion online and investment in discount retailing. The problem with the former is that there are already many more and better organised competitors and in the latte, Izumi has no experience in the kind of supply chain expertise required to build a discount retail business of any scale.
While Izumi has been one of the few well-run GMS operators in the past five years, there is increasing concern that it will fall victim to pressures from discounters on one side and e-commerce competitors on the other.

Izumi Co Ltd (8273 JP) is Japan’s largest retailer in the South and, at least until 2018, was the last GMS to maintain a growth trajectory. Now, with the popularity of the Cosmos Pharmaceutical (3349 JP)  discount food chain eating into Izumi’s profits in Kyushu and the same lack of enthusiasm for the GMS format also spreading as it has elsewhere, Izumi last month announced a wide-ranging and ambitious plan to reinvent itself over the next five years. Izumi’s alliance with Seven &amp; I Holdings (3382 JP) will also grow in importance.
These plans include expansion online and investment in discount retailing. The problem with the former is that there are already many more and better organised competitors and in the latte, Izumi has no experience in the kind of supply chain expertise required to build a discount retail business of any scale.
While Izumi has been one of the few well-run GMS operators in the past five years, there is increasing concern that it will fall victim to pressures from discounters on one side and e-commerce competitors on the other.

Izumi Focus on Food and Online Should Improve Margins

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

Renesas Electronics / Equity Capital Markets

<div>
Renesas, along with INCJ, aims to raise around US$3.4bn via selling a mix of primary and secondary shares. We covered most aspects of the deal in our earlier note, <a href="https://www.smartkarma.com/insights/renesas-placement-very-well-flagged-past-deals-have-done-well-but-large-size-warrants-correction" target="_blank" rel="noopener">Renesas Placement - Very Well Flagged, past Deals Have Done Well but Large Size Warrants Correction.</a>
In this note, I'll talk about the updates since then.
</div>


Renesas, along with INCJ, aims to raise around US$3.4bn via selling a mix of primary and secondary shares. We covered most aspects of the deal in our earlier note, Renesas Placement - Very Well Flagged, past Deals Have Done Well but Large Size Warrants Correction.
In this note, I'll talk about the updates since then.


Renesas Placement Update - Doing Much Better than Its past Deals. Could Impact Post-Deal Performance

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<a href="https://www.smartkarma.com/entities/zozo-inc" target="_blank" data-smartkarma-citation="entities:18379:1" rel="noopener">ZOZO Inc (3092 JP)</a> today announced a JPY 32bn buyback. And it announced a JPY 25bn placement. The reasoning is that the company wants to have a place in the TSE Prime market and without a higher float, the company won't meet the 35% tradable shares criteria it is supposed to have in June. While this will not get them there by end of June, companies with a "plan" to get there will be granted provisional inclusion if they meet the other criteria, and this construct has a decent chance of getting them there.The explanation by the company is a little odd though. Investors should understand the details. Big picture they don't mean much, but the convoluted nature of the situation suggests

ZOZO Inc (3092 JP) today announced a JPY 32bn buyback. And it announced a JPY 25bn placement. The reasoning is that the company wants to have a place in the TSE Prime market and without a higher float, the company won't meet the 35% tradable shares criteria it is supposed to have in June. While this will not get them there by end of June, companies with a "plan" to get there will be granted provisional inclusion if they meet the other criteria, and this construct has a decent chance of getting them there.The explanation by the company is a little odd though. Investors should understand the details. Big picture they don't mean much, but the convoluted nature of the situation suggests 

Oh No ZoZo! An Overly Complicated Buyback+Issuance To Stay Prime

Rakuten is playing catch up with Amazon in logistics and this is the primary driver behind its new collaboration with Japan Post.
The two companies will set up a new joint business in July to cover the country in new, efficient fulfilment centres. 
As a result, Rakuten will be able to save substantially on capital investment in its own logistics network, particularly the most expensive part of that: the last mile network Rakuten Express, which will now be cancelled in favour of partner services centred on Japan Post.
This will allow Rakuten to focus logistics investment on full coverage at the national level.
Rakuten is growing faster than Z Holding's in e-commerce, including in 1Q2021 and looks set to continue to do so, with the new logistics platform a key part of this, ensuring consumers receive the kind of fulfilment speed and consistency normally only associated with Amazon Japan.

Rakuten is playing catch up with Amazon in logistics and this is the primary driver behind its new collaboration with Japan Post.
The two companies will set up a new joint business in July to cover the country in new, efficient fulfilment centres. 
As a result, Rakuten will be able to save substantially on capital investment in its own logistics network, particularly the most expensive part of that: the last mile network Rakuten Express, which will now be cancelled in favour of partner services centred on Japan Post.
This will allow Rakuten to focus logistics investment on full coverage at the national level.
Rakuten is growing faster than Z Holding's in e-commerce, including in 1Q2021 and looks set to continue to do so, with the new logistics platform a key part of this, ensuring consumers receive the kind of fulfilment speed and consistency normally only associated with Amazon Japan.

Rakuten Ramps up Logistics to Increase Lead in E-Commerce

Telco/Internet specialist

Kirk Boodry

Redex Research

Thematic (Sector/Industry)

Kyodo News reports that Apple is asking the Ministry of Industry Affairs and Communications (MIC, the regulator) to allow higher subsidies for iPhones to help promote the spread of 5G services. To be clear, it is the mobile operators that would offer these subsidies which were capped last year by the regulator at ¥20,000/device even as handset/service pricing was unbundled. We thought this would be a good opportunity to highlight how Apple has grown in Japan especially compared to the mobile operators.

Kyodo News reports that Apple is asking the Ministry of Industry Affairs and Communications (MIC, the regulator) to allow higher subsidies for iPhones to help promote the spread of 5G services. To be clear, it is the mobile operators that would offer these subsidies which were capped last year by the regulator at ¥20,000/device even as handset/service pricing was unbundled. We thought this would be a good opportunity to highlight how Apple has grown in Japan especially compared to the mobile operators.

Apple (Japan) Is Asking the Regulator to Allow Higher Subsidies for IPhone

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)

Izumi Focus on Food and Online Should Improve Margins

Izumi has been one of the few decent performers among GMS retailers in the past five years but now looks under increasing pressure - despite new...

Michael Causton

Renesas Placement Update - Doing Much Better than Its past Deals. Could Impact Post-Deal Performance

Renesas and INCJ, aims to raise around US$3.4bn via selling a mix of primary and secondary shares. We covered most aspects of the deal in our...

Sumeet Singh

Oh No ZoZo! An Overly Complicated Buyback+Issuance To Stay Prime

Zozo's Buyback and Equity Commitment Line is minimally EPS accretive but creates a flow overhang. I expect the ToSTNeT-3 to go differently than the...

Travis Lundy

Rakuten Ramps up Logistics to Increase Lead in E-Commerce

Rakuten's lead in e-commerce is strengthening against Z Holdings and its deal with Japan Post will ensure it is far, far ahead on fulfilment...

Michael Causton

Apple (Japan) Is Asking the Regulator to Allow Higher Subsidies for IPhone

Apple Japan is asking the regulator to allow higher smartphone subsidies so it can sell more handsets. That's after 49% growth in Q4 and where it...

Kirk Boodry

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