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>After raising full-year guidance in 3QFY22 due to stronger than expected performance in the overseas business, Seven &amp; I is scheduled to release the fourth-quarter results on 7th April 2022.</li>
<li>Domestic performance has been relatively stable, but 7-Eleven Inc should outperform expectations in the US through the yen depreciation and rising fuel retail margins.</li>
<li>Thus, we would buy <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> leading up to earnings expecting substantial upside on a potentially large earnings beat.</li>
</ul>


After raising full-year guidance in 3QFY22 due to stronger than expected performance in the overseas business, Seven &amp; I is scheduled to release the fourth-quarter results on 7th April 2022.
Domestic performance has been relatively stable, but 7-Eleven Inc should outperform expectations in the US through the yen depreciation and rising fuel retail margins.
Thus, we would buy Seven &amp; I Holdings (3382 JP) leading up to earnings expecting substantial upside on a potentially large earnings beat.


Seven & I: Going Strong in Overseas, Another Beat On the Cards

Event-Driven

<ul>
<li>
<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> announced last week that it had agreed to buy the 7-Eleven convenience store chain in Australia for A$1.71bn ($1.1bn).</li>
<li>The acquisition may not immediately impact Seven &amp; I's stock price like Speedway did, given its smaller scale, lack of synergies, and less favorable macroeconomic conditions.</li>
<li>The main positive takeaway from this news is that the acquisition price for 7-Eleven Australia is not as extravagant as the amount Seven &amp; I paid for the Speedway acquisition.</li>
</ul>



Seven &amp; I Holdings (3382 JP) announced last week that it had agreed to buy the 7-Eleven convenience store chain in Australia for A$1.71bn ($1.1bn).
The acquisition may not immediately impact Seven &amp; I's stock price like Speedway did, given its smaller scale, lack of synergies, and less favorable macroeconomic conditions.
The main positive takeaway from this news is that the acquisition price for 7-Eleven Australia is not as extravagant as the amount Seven &amp; I paid for the Speedway acquisition.


Seven & I Ventures Down Under with 7-Eleven Australia Acquisition

<ul>
<li>
<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>'s FQ2 OP exceeded consensus by ¥2.0bn (1.3%), but with FH2 revenue guidance lowered by ¥95bn, the overall outlook appears discouraging.</li>
<li>The company's shares fell by 5%, underperforming Topix by 3.8%, indicating investor concern about US growth and departing from activist proposals despite a ¥2.0bn earnings outperformance.</li>
<li>If overseas investors who supported ValueAct's proposals begin to exit, Seven &amp; I could face substantial downside risks in the near term.</li>
</ul>



Seven &amp; I Holdings (3382 JP)'s FQ2 OP exceeded consensus by ¥2.0bn (1.3%), but with FH2 revenue guidance lowered by ¥95bn, the overall outlook appears discouraging.
The company's shares fell by 5%, underperforming Topix by 3.8%, indicating investor concern about US growth and departing from activist proposals despite a ¥2.0bn earnings outperformance.
If overseas investors who supported ValueAct's proposals begin to exit, Seven &amp; I could face substantial downside risks in the near term.


Seven & I: Unimpressive Results & Potential Investor Exodus Amidst Superstore Transformation

<ul>
<li>
<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>'s share price has remained below ¥6,600 since the end of its bull run in March 2023.</li>
<li>Short-Term optimism hinges on a substantial earnings beat, but the US business challenges make it unlikely.</li>
<li>Seven &amp; I faces valuation risks, trading near peak multiples with diminishing growth prospects.</li>
</ul>



Seven &amp; I Holdings (3382 JP)'s share price has remained below ¥6,600 since the end of its bull run in March 2023.
Short-Term optimism hinges on a substantial earnings beat, but the US business challenges make it unlikely.
Seven &amp; I faces valuation risks, trading near peak multiples with diminishing growth prospects.


Seven & I: Challenging Guidance, The US Business Needs to Fire on All Cylinders

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. 

<ul>
<li>Seven &amp; I has finally sold Sogo Seibu to Fortress Investments.</li>
<li>It will be pleased to have offloaded a loss-making format it never really understood but at a cost – it will write off more than ¥90 billion in loans.</li>
<li>Fortress will immediately sell the land under Seibu Ikebukuro and some other assets to Yodobashi with suggestions of major redevelopment of both Ikebukuro and Shibuya.</li>
</ul>


Seven &amp; I has finally sold Sogo Seibu to Fortress Investments.
It will be pleased to have offloaded a loss-making format it never really understood but at a cost – it will write off more than ¥90 billion in loans.
Fortress will immediately sell the land under Seibu Ikebukuro and some other assets to Yodobashi with suggestions of major redevelopment of both Ikebukuro and Shibuya.


Bargain Sale at Sogo Seibu as Seven & I Finally Capitulates

Japan

AEON CO., LTD. operates general merchandise stores, supermarkets, and convenience stores throughout Japan. The Company is also engaged in women's and casual clothing store business, development business of commercial property, and financing service through the subsidiaries.

LAWSON, INC. operates a chain of convenience stores in Japan. The Company sells a variety of products including fast food, beverages, snacks, magazines, newspapers, and sundry goods.

KOBE BUSSAN CO., LTD. is a supermarket franchise store operator which mainly deals in foods stuffs.  The Company also has direct-run stores.

COSMOS Pharmaceutical Corporation operates drug stores based in Kyushu. The Company sells daily necessities such as drug medicines, foodstuffs, and alcoholic beverages.

SUGI HOLDINGS CO., LTD. operates a chain of drug stores located mainly in Aichi Prefecture.  The Company sells prescription and nonprescription medicine, cosmetics, health foods, and general merchandise.

TSURUHA HOLDINGS INC. is a holding company which manages subsidiaries that operate drug stores in Hokkaido and the Tohoku area.  The Company's product line includes drugs, cosmetics, and household utensils.

SUNDRUG CO., LTD. operates an outlet drug store chain primarily in the Tokyo area.  The Company sells mainly medicines, cosmetics, baby care products, and household utensils.  Sundrug supplies merchandise to franchise stores.  The Company also operates a real estate business.

WELCIA HOLDINGS CO.,LTD. is a holding company established through a merger of Welcia Kanto and Takada Pharmacy.  The Group mainly operates drug chain stores which sell medicines, health foods, cosmetics, nursery items and daily necessity goods.

Yaoko Co., Ltd. operates local supermarkets in the Saitama Prefecture. The Company handles fresh food products, daily-use sundry products, and other various goods in local area.

Kusuri no Aoki Holdings Co., Ltd. operates as a holding company. The Company, through its subsidiaries, provides medicines, cosmetics, health foods, beauty care, and household products. Kusuri no Aoki Holdings serves customers in Japan.

Woolworths Limited operates supermarkets, specialty and discount department stores, liquor and electronics stores throughout Australia.  Woolworths also manufactures processed foods, exports and wholesales food and offers petrol retailing.  The Company also operates hotels which includes pubs, food, accommodation, and gaming operations.

CP ALL PCL operates convenience store chains in Thailand and China.  The Company also owns and operates the a department store chain located primarily in Shanghai city and Chonqing city of China.

Sysco Corporation distributes food and related products primarily to the foodservice industry.  The Company also distributes personal care guest amenities, housekeeping supplies, room accessories, and textiles to the lodging industry.

The Kroger Co. operates supermarkets and convenience stores in the United States.  The Company also manufactures and processes some of the foods that its supermarkets sell.

George Weston Limited operates as a super market. The Company processes and distributes food and pharmacy products to grocer wholesalers, warehouses, and independent accounts, as well as provides real estate services. George Weston serves customers in Canada.

Loblaw Companies Limited is a retail and wholesale food distributor with operations across Canada.  The Company's operations include both company and franchisee operated stores, warehouses, and cash and carry outlets.

Coles Group Limited owns and operates a chain of supermarkets and department stores. The Company offers apparels, liquor, office supplies, groceries, and household products. Coles Group serves customers throughout Australia and New Zealand.

Tesco PLC, through its subsidiaries, operates as a food retailer. The Company offers online retailing, brick and mortar supermarkets, and a private-label brand of products. Tesco provides its services primarily throughout Europe, with additional activities in Asia.

Walgreens Boots Alliance, Inc., operates retail drugstores that offer a wide variety of prescription and non-prescription drugs as well as general goods. Walgreens' also offers health services, including primary and acute care, wellness, pharmacy and disease management services and health and fitness.

CP Axtra Public Company Limited operates a retail discount store chain. The Company sells food and consumer products to its registered customers including wholesalers, retailers, small businesses, caterers, and private individuals who hold its member cards. CP Axtra serves customers in Thailand.

Seven & i Holdings Co., Ltd. is a holding company which was established through the merger of Ito-Yokado Co., Seven Eleven Japan Co., and Denny's Japan. The Company plans, manages, and operates mainly convenience stores, supermarkets, and department stores.

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Seven & I Holdings (3382 JP)

Seven & I: Going Strong in Overseas, Another Beat On the Cards

7-Eleven Inc should outperform market expectations as the business benefited from the Yen depreciation and rising fuel prices. We would buy Seven &...

Oshadhi Kumarasiri

Seven & I Ventures Down Under with 7-Eleven Australia Acquisition

Seven & I has agreed to acquire the 7-Eleven convenience store chain in Australia for $1.1bn, with the acquisition price being less extravagant...

Oshadhi Kumarasiri

Seven & I: Unimpressive Results & Potential Investor Exodus Amidst Superstore Transformation

Seven & I Holdings' FQ2 OP beat expectations, but lowered revenue guidance for FH2 is concerning. Shares fell 5% as investors worry about US...

Oshadhi Kumarasiri

Seven & I: Challenging Guidance, The US Business Needs to Fire on All Cylinders

Seven & I Holdings' share price has struggled since March 2023, with short-term optimism unlikely due to US business challenges and valuation risks.

Oshadhi Kumarasiri

Bargain Sale at Sogo Seibu as Seven & I Finally Capitulates

Seven & I sells Sogo Seibu to Fortress Investments, but has to forgive ¥90 billion in debt. Fortress plans to sell the Ikebukuro land and other...

Michael Causton

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Seven & I: Going Strong in Overseas, Another Beat On the Cards

7-Eleven Inc should outperform market expectations as the business benefited from the Yen depreciation and rising fuel prices. We would buy Seven &...

Oshadhi Kumarasiri

Seven & I Ventures Down Under with 7-Eleven Australia Acquisition

​Seven & I has agreed to acquire the 7-Eleven convenience store chain in Australia for $1.1bn, with the acquisition price being less extravagant...

Oshadhi Kumarasiri

Seven & I: Unimpressive Results & Potential Investor Exodus Amidst Superstore Transformation

​Seven & I Holdings' FQ2 OP beat expectations, but lowered revenue guidance for FH2 is concerning. Shares fell 5% as investors worry about US...

Oshadhi Kumarasiri

Seven & I: Challenging Guidance, The US Business Needs to Fire on All Cylinders

​Seven & I Holdings' share price has struggled since March 2023, with short-term optimism unlikely due to US business challenges and valuation risks.

Oshadhi Kumarasiri

Bargain Sale at Sogo Seibu as Seven & I Finally Capitulates

​Seven & I sells Sogo Seibu to Fortress Investments, but has to forgive ¥90 billion in debt. Fortress plans to sell the Ikebukuro land and other...

Michael Causton

Seven & I has agreed to acquire the 7-Eleven convenience store chain in Australia for $1.1bn, with the acquisition price being less extravagant...

Seven & I Holdings' FQ2 OP beat expectations, but lowered revenue guidance for FH2 is concerning. Shares fell 5% as investors worry about US...

Seven & I Holdings' share price has struggled since March 2023, with short-term optimism unlikely due to US business challenges and valuation risks.

Seven & I sells Sogo Seibu to Fortress Investments, but has to forgive ¥90 billion in debt. Fortress plans to sell the Ikebukuro land and other...