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>Early last year as COVID was breaking and the BOJ doubled its ETF purchases shifting to TOPIX ETFs from Nikkei ETFs we brought up this trade. </li>
<li>With a long weekend adding to the mix conditions were abnormal but our suggested trades generated 10-12% pure alpha within four trading days. </li>
<li>This trade is starting to look interesting to us again though returns are likely to be less explosive but more persistent this time.</li>
</ul>


Early last year as COVID was breaking and the BOJ doubled its ETF purchases shifting to TOPIX ETFs from Nikkei ETFs we brought up this trade. 
With a long weekend adding to the mix conditions were abnormal but our suggested trades generated 10-12% pure alpha within four trading days. 
This trade is starting to look interesting to us again though returns are likely to be less explosive but more persistent this time.


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. 

Thematic (Sector/Industry)

<ul>
<li>Half-Year results are coming in for the largest retailers showing that fundamentals are more important than ever. Aeon demonstrated improvements after a tough 2020.</li>
<li>Seven &amp; I reported a jump in revenues, thanks to its recent acquisition in the USA. The group may consider finally selling less successful parts of its business at home.</li>
<li>Life, the largest supermarket, recorded flat revenues but is planning a big investment in stores and systems in preparation for anticipated changes to shopping behaviour.</li>
</ul>


Half-Year results are coming in for the largest retailers showing that fundamentals are more important than ever. Aeon demonstrated improvements after a tough 2020.
Seven &amp; I reported a jump in revenues, thanks to its recent acquisition in the USA. The group may consider finally selling less successful parts of its business at home.
Life, the largest supermarket, recorded flat revenues but is planning a big investment in stores and systems in preparation for anticipated changes to shopping behaviour.


Ups and Downs in Japanese Big Retail a Year After Covid Hit

Convenience store (CVS) retailing remains the most dynamic and innovative physical store sector. It is now 50 years since the first Seven Eleven opened and the sector wide drop in sales in 2020 was the first in its history.Whereas department stores also took a battering last year and are likely to struggle to recover, convenience stores should bounce back quickly, including implementing lessons learned in last year’s crisis.That does not mean the format faces no problems, with labour shortages, overly strict operating procedures and an ageing population of store owners (many are now reaching retirement age with no succession in place) all issues that need solutions, but its willingness and ability to adopt new technologies and adapt to the market will continue to keep CVS strong.The following is an annual in-depth review of the entire CVS sector providing context for investors in any of the big CVS retailers (and their competing formats) as well as reviews of each major firm's KPIs.

Convenience store (CVS) retailing remains the most dynamic and innovative physical store sector. It is now 50 years since the first Seven Eleven opened and the sector wide drop in sales in 2020 was the first in its history.Whereas department stores also took a battering last year and are likely to struggle to recover, convenience stores should bounce back quickly, including implementing lessons learned in last year’s crisis.That does not mean the format faces no problems, with labour shortages, overly strict operating procedures and an ageing population of store owners (many are now reaching retirement age with no succession in place) all issues that need solutions, but its willingness and ability to adopt new technologies and adapt to the market will continue to keep CVS strong.The following is an annual in-depth review of the entire CVS sector providing context for investors in any of the big CVS retailers (and their competing formats) as well as reviews of each major firm's KPIs.

Convenience Stores: First Decline in 50 Years

Equity Bottom-Up

Aeon is aiming high in e-commerce. It has Ocado technology coming online in 2023 and says it will spend ¥450 billion in new investment. Last month, it introduced iAeon, a new app that combines access to services across its entire group with an existing database of some 120 million users and more than one billion customer visits a year. In 2019, e-commerce accounted for an estimated 2% of Aeon’s total sales. Its medium term plan calls for an ‘Accelerated and Evolved Digital Shift’ by 2025 with e-commerce sales of ¥1 trillion or around 10-15% of total turnover.

Aeon is aiming high in e-commerce. It has Ocado technology coming online in 2023 and says it will spend ¥450 billion in new investment. Last month, it introduced iAeon, a new app that combines access to services across its entire group with an existing database of some 120 million users and more than one billion customer visits a year. In 2019, e-commerce accounted for an estimated 2% of Aeon’s total sales. Its medium term plan calls for an ‘Accelerated and Evolved Digital Shift’ by 2025 with e-commerce sales of ¥1 trillion or around 10-15% of total turnover.

Aeon: Investing Online, but GMS Struggles

Seven &amp; I announced a new mid-term plan this summer with a switch in emphasis from domestic to international operations. This reflects the growing saturation in convenience stores at home and the need to show a return on its ¥2 trillion investment in the Speedway chain in the USA. Seven Eleven Japan will become even more important as the company’s profit engine but the question is how stable is that, until now, perennial gift?

Seven &amp; I announced a new mid-term plan this summer with a switch in emphasis from domestic to international operations. This reflects the growing saturation in convenience stores at home and the need to show a return on its ¥2 trillion investment in the Speedway chain in the USA. Seven Eleven Japan will become even more important as the company’s profit engine but the question is how stable is that, until now, perennial gift?

Seven & I Looks: The Only Growth Is Overseas

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)

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Early last year we suggested trading this skew which would have generated 10-12% pure alpha within four trading days. This trade is starting to...

Mio Kato

Ups and Downs in Japanese Big Retail a Year After Covid Hit

Big retail in Japan showed improving results in 1H2021 as both Aeon and Seven & I boosted revenues although for very different reasons. Both remain...

Michael Causton

Convenience Stores: First Decline in 50 Years

For any investor in Japan's consumer staples sector, the convenience store sector is a key component. The following is an in-depth analysis of the...

Michael Causton

Aeon: Investing Online, but GMS Struggles

Aeon was far behind in e-commerce, just like its rival for the top spot in Japanese retailing, Seven & I. Unlike Seven & I it has a long-term plan...

Michael Causton

Seven & I Looks: The Only Growth Is Overseas

Many are excited about Seven & I's international expansion over the medium-term. The problem is the domestic business. Only Seven Eleven delivers...

Michael Causton

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