Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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.

Event-Driven

<ul>
<li>A positive earnings surprise for Fast Retailing and Microsoft’s acquisition of Activision Blizzard hitting Sony have hurt the performance of our skew trade. </li>
<li>Despite this, the dramatic fall in the Nikkei means it is now outperforming the Nikkei since we first suggested the trade. </li>
<li>Looking forward we expect recent volatility to be absorbed over time and we retain conviction on our picks.</li>
</ul>


A positive earnings surprise for Fast Retailing and Microsoft’s acquisition of Activision Blizzard hitting Sony have hurt the performance of our skew trade. 
Despite this, the dramatic fall in the Nikkei means it is now outperforming the Nikkei since we first suggested the trade. 
Looking forward we expect recent volatility to be absorbed over time and we retain conviction on our picks.


TOPIX-Nikkei Skew Trade Hit by Sony and Fast Retailing but Outperforming Nikkei

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. 

Private Capital Markets

Nitori Holdings / Private Capital Markets

<ul>
<li>Iconic retail chain, Tokyu Hands, is to be acquired by Cainz, Japan’s leading home centre retailer. </li>
<li>Tokyu Hands remains as popular as ever thanks to its unique merchandising, but it has struggled to be profitable for a long time.</li>
<li>Cainz should be able to fix this and Hands will be part of Cainz’s plans to become the <a href="https://www.smartkarma.com/entities/workman-co-ltd" target="_blank" data-smartkarma-citation="entities:8467:1" rel="noopener">Workman Co Ltd (7564 JP)</a> of home retailing – bringing competition to Nitori.</li>
</ul>


Iconic retail chain, Tokyu Hands, is to be acquired by Cainz, Japan’s leading home centre retailer. 
Tokyu Hands remains as popular as ever thanks to its unique merchandising, but it has struggled to be profitable for a long time.
Cainz should be able to fix this and Hands will be part of Cainz’s plans to become the Workman Co Ltd (7564 JP) of home retailing – bringing competition to Nitori.


Cainz Takes on Nitori with Tokyu Hands Takeover

Thematic (Sector/Industry)

<ul>
<li>2020-21 was the second year in a row to see a net fall in the number of SCs in Japan. Sales levels also fell to an unprecedented degree.</li>
<li>The good news is that 2021 has been better, with even city centre malls reducing sales falls by 20 points. But the crisis has exacerbated underlying pressures. </li>
<li>A significant clear out of the SC sector is now occurring as more uneconomic properties close.</li>
</ul>


2020-21 was the second year in a row to see a net fall in the number of SCs in Japan. Sales levels also fell to an unprecedented degree.
The good news is that 2021 has been better, with even city centre malls reducing sales falls by 20 points. But the crisis has exacerbated underlying pressures. 
A significant clear out of the SC sector is now occurring as more uneconomic properties close.


Japan Shopping Centres 2020-21 Review: A Shocking Year

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Equity Bottom-Up

<ul>
<li>Following a strong third quarter the company has raised the full year revenue and OP outlook by 3.0% and 7.3% respectively due to stronger than expected overseas convenience store performance.</li>
<li>Moreover, the company continues to raise the Speedway synergies with the new medium-term plan expecting <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> to double the EBITDA and EPS through 2020-25.</li>
<li>After rallying 65% in 1H21, shares took a breather during the last seven months. We think the timing is right to start the second half of Seven &amp; I’s rally.</li>
</ul>


Following a strong third quarter the company has raised the full year revenue and OP outlook by 3.0% and 7.3% respectively due to stronger than expected overseas convenience store performance.
Moreover, the company continues to raise the Speedway synergies with the new medium-term plan expecting Seven &amp; I Holdings (3382 JP) to double the EBITDA and EPS through 2020-25.
After rallying 65% in 1H21, shares took a breather during the last seven months. We think the timing is right to start the second half of Seven &amp; I’s rally.


Time to Get Back Into Our 2021 High Conviction Call Seven & I

<ul>
<li>We update on our TOPIX-Nikkei Skew Trade again as we head into the end of the year with markets remaining choppy.</li>
<li>Given likely drops in liquidity but continued choppiness in markets we feel that liquidity risk will be important over the next 2-3 weeks. </li>
<li>Given that, we quite like the risk-reward skew on offer here.</li>
</ul>


We update on our TOPIX-Nikkei Skew Trade again as we head into the end of the year with markets remaining choppy.
Given likely drops in liquidity but continued choppiness in markets we feel that liquidity risk will be important over the next 2-3 weeks. 
Given that, we quite like the risk-reward skew on offer here.


We Like the TOPIX-Nikkei Skew Trade Into End of Year Liquidity Drops

Japan

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)

TOPIX-Nikkei Skew Trade Hit by Sony and Fast Retailing but Outperforming Nikkei

Volatility in Fast Retailing and Sony have hurt the performance of our skew trade but looking forward we expect recent volatility to be absorbed...

Mio Kato

Cainz Takes on Nitori with Tokyu Hands Takeover

Nitori and Muji have pretty much had the interiors market to themselves until now thanks to IKEA's slow rollout but new competition is coming from...

Michael Causton

Japan Shopping Centres 2020-21 Review: A Shocking Year

A good window into Japanese retail performance is the performance of shopping malls. This is an in-depth review, including rankings of the best...

Michael Causton

Time to Get Back Into Our 2021 High Conviction Call Seven & I

After trading range bound for almost seven months, we are expecting a breakout with Seven & I’s revised FY22 guidance which suggests that there...

Oshadhi Kumarasiri

We Like the TOPIX-Nikkei Skew Trade Into End of Year Liquidity Drops

Given likely drops in liquidity but continued choppiness in markets we feel that liquidity risk will be important over the next 2-3 weeks. Given...

Mio Kato

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