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>The awaited closure of the Speedway acquisition was announced on 26th June 2021, after clearance was received from the FTC. Before this, there were question marks regarding <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 Speedway acquisition, as the acting chairperson Rebecca Kelly Slaughter and Commissioner Rohit Chopra of the US Federal Trade Commission issued a statement on the FTC website on May 14th, 2021, saying that this transaction is illegal as it could impact competition and cause prices to soar at gas stations and convenience stores across the US.</li>
<li>As promised during the previous quarterly results release, Seven &amp; I published its new medium term plan for 2021-25 on the 1st of July 2021, after the closure of the Speedway acquisition.</li>
<li>We think the new medium term plan provides plenty of surprises to the upside, providing sufficient support to break the previous all-time high of ¥5,906 per share in the immediate future.</li>
<li>Nonetheless, the ¥5,900-6,000 per share range could offer some resistance for a short while, but we remain bullish on Seven &amp; I and maintain our previous target of an additional 50% upside to the current price, as we think that there is still plenty of room for multiple expansion alongside impending earnings upgrades.</li>
</ul>


The awaited closure of the Speedway acquisition was announced on 26th June 2021, after clearance was received from the FTC. Before this, there were question marks regarding Seven &amp; I Holdings (3382 JP)’s Speedway acquisition, as the acting chairperson Rebecca Kelly Slaughter and Commissioner Rohit Chopra of the US Federal Trade Commission issued a statement on the FTC website on May 14th, 2021, saying that this transaction is illegal as it could impact competition and cause prices to soar at gas stations and convenience stores across the US.
As promised during the previous quarterly results release, Seven &amp; I published its new medium term plan for 2021-25 on the 1st of July 2021, after the closure of the Speedway acquisition.
We think the new medium term plan provides plenty of surprises to the upside, providing sufficient support to break the previous all-time high of ¥5,906 per share in the immediate future.
Nonetheless, the ¥5,900-6,000 per share range could offer some resistance for a short while, but we remain bullish on Seven &amp; I and maintain our previous target of an additional 50% upside to the current price, as we think that there is still plenty of room for multiple expansion alongside impending earnings upgrades.


2021 High Conviction Update: Raises Speedway Synergies, But Leaves Enough Room For Future Upside

<ul>
<li>Gaining around 62% since our high conviction note last year, <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 is closing in on the all-time high level. News flow was not particularly impressive for Seven &amp; I over the last three months but the share price marched on at a slower pace.</li>
<li>With the news flow seemingly turning positive alongside the closure of the Speedway acquisition, we expect Seven &amp; I to break the previous all-time high of ¥5,906 per share in the immediate future.</li>
</ul>


Gaining around 62% since our high conviction note last year, Seven &amp; I Holdings (3382 JP)’s share price is closing in on the all-time high level. News flow was not particularly impressive for Seven &amp; I over the last three months but the share price marched on at a slower pace.
With the news flow seemingly turning positive alongside the closure of the Speedway acquisition, we expect Seven &amp; I to break the previous all-time high of ¥5,906 per share in the immediate future.


2021 High Conviction Update: Seven & I Has More Room (Perhaps, Another 50%) To the Upside

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)

Momentum was building for fashion EC well before 2020 but the situation last year brought an overwhelming response from both consumers and merchants. As a result, market share for the online channel has spiralled upwards and, although there will be a correction once shoppers return to stores, the medium-term trajectory is clear.
The big malls continue to dominate – as Zozo’s 21.5% growth in 2020 attests – but retailers and brands are investing much more in their own online stores, creating a level of dynamism and competition not seen in other fashion retail channels.
The following is an in-depth review of the fashion e-commerce market covering:
<ul>
<li>Market Size and market growth</li>
<li>Winners and losers in the last two years</li>
<li>Ranking of the top vendors online by sales</li>
<li>Ranking of fastest growing e-commerce fashion retailers</li>
<li>Strengths and weaknesses in leading firms</li>
<li>Ranking of firms with highest ratio of online sales to offline</li>
<li>Ranking of firms with highest share of direct online sales vs 3rd party malls.</li>
<li>Review of market share of major malls vs direct sales by retailers and the momentum behind each.</li>
</ul>

Momentum was building for fashion EC well before 2020 but the situation last year brought an overwhelming response from both consumers and merchants. As a result, market share for the online channel has spiralled upwards and, although there will be a correction once shoppers return to stores, the medium-term trajectory is clear.
The big malls continue to dominate – as Zozo’s 21.5% growth in 2020 attests – but retailers and brands are investing much more in their own online stores, creating a level of dynamism and competition not seen in other fashion retail channels.
The following is an in-depth review of the fashion e-commerce market covering:

Market Size and market growth
Winners and losers in the last two years
Ranking of the top vendors online by sales
Ranking of fastest growing e-commerce fashion retailers
Strengths and weaknesses in leading firms
Ranking of firms with highest ratio of online sales to offline
Ranking of firms with highest share of direct online sales vs 3rd party malls.
Review of market share of major malls vs direct sales by retailers and the momentum behind each.


Fashion E-Commerce Has Watershed Year in 2020

<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

Latest News from the World’s Leading Innovators

Granite Bay Capital

An innovation focussed investment company

Granite Bay Capital is an innovation focussed investment company with a deep focus on the companies at the leading edge of innovation across major themes such as AI, ubiquitous computing, sustainability, automation and longevity.

Headline Developments It’s a big edition this week, so settle in! Elon Musk’s Boring Company (private) broke ground this week, shooting Tesla (TSLA) passengers through a high-speed tunnel under Las Vegas.  The loop comprises 2.7km of tunnels, built 30 feet under the Las Vegas Convention Center.

Headline Developments It’s a big edition this week, so settle in! Elon Musk’s Boring Company (private) broke ground this week, shooting Tesla (TSLA) passengers through a high-speed tunnel under Las Vegas.  The loop comprises 2.7km of tunnels, built 30 feet under the Las Vegas Convention Center.

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)

2021 High Conviction Update: Raises Speedway Synergies, But Leaves Enough Room For Future Upside

We remain bullish on Seven & I and maintain our previous target of an additional 50% upside to the current price, as we think that there is still...

Oshadhi Kumarasiri

2021 High Conviction Update: Seven & I Has More Room (Perhaps, Another 50%) To the Upside

We think Seven & I has more room to the upside and potentially generate another 50% during the second half of the year. Therefore, we would be...

Oshadhi Kumarasiri

Fashion E-Commerce Has Watershed Year in 2020

A complete review of the fashion e-commerce market in Japan, including rankings by sales, fastest growing, winners and losers and reviews of the...

Michael Causton

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

Weekly Innovation Review (WIRE) #35

Headline Developments It’s a big edition this week, so settle in!Elon Musk’s Boring Company (private) broke ground this week,...

Granite Bay Capital

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