'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Thematic (Sector/Industry)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/106/452/original/2019-11-17_11-54-09.png?1573959284" class="editor-image img-responsive" data-smartkarma-image-id="106452"></figure><div class="content-caption">Source: Japan Analytics</div>4TH DOWN AND A FEW MORE TO GO - The latest quarterly results are now, with the exception of three large insurance companies are currently in the market and, to loosely paraphrase the under-rated Jesse Winchester's second album title, this is the fourth straight 'down' quarter with the prospect a few more to come. Operating Income has declined by 7.8% and Net Income by 18.8%, taking margins to 6.9% and 4.6%, respectively - declines of 84bps and 122bps. The market has celebrated these new two-year lows by rising to new two-year highs, leaving some to wonder what they are missing, other than yet more central bank liquidity. The trailing-twelve-month (TTM) price-earnings ratio is now 17 times, the highest since 5th February 2018, ten trading days after the long-term market peak.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/106/458/original/2019-11-17_12-49-55.png?1573962614" class="editor-image img-responsive" data-smartkarma-image-id="106458"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/106/459/original/2019-11-17_13-10-47.png?1573963867" class="editor-image img-responsive" data-smartkarma-image-id="106459"></figure><div class="content-caption">Source: Japan Analytics</div>THE EARNINGS CYCLE HAS YET TO BOTTOM -  Our Results &amp; Forecast/Revision Score data series cover the last sixteen years of quarterly earnings and eleven years of forecasts and revisions and measure both results and forecasts but also their momentum, providing a better correlation with the market direction than past earnings.   The Forecast/Revision Score leads the Results Score by several months, and the market leads or lags depending on monetary and liquidity conditions. Although both Scores recovered in the last five days of results announcements, the Forecast/Revision Score of 0.45 reached on 8th November is the lowest such score in ten years and is suggesting that earnings have yet to bottom.<div class="content-highlight">WISHFUL THINKING? - The 'gap' between market expectations and actual and forecast earnings momentum is now wider than at any time since late 2014, shortly before the market peak of May 2015. Is this foresight or just wishful thinking? We tend to the latter interpretation.</div>In the DETAIL section below, we shall provide a full breakdown of the results and revisions announcements by Sector, Peer Group and company and offer brief comments on several recommended buys and sells.

Source: Japan Analytics4TH DOWN AND A FEW MORE TO GO - The latest quarterly results are now, with the exception of three large insurance companies are currently in the market and, to loosely paraphrase the under-rated Jesse Winchester's second album title, this is the fourth straight 'down' quarter with the prospect a few more to come. Operating Income has declined by 7.8% and Net Income by 18.8%, taking margins to 6.9% and 4.6%, respectively - declines of 84bps and 122bps. The market has celebrated these new two-year lows by rising to new two-year highs, leaving some to wonder what they are missing, other than yet more central bank liquidity. The trailing-twelve-month (TTM) price-earnings ratio is now 17 times, the highest since 5th February 2018, ten trading days after the long-term market peak.Source: Japan AnalyticsTHE EARNINGS CYCLE HAS YET TO BOTTOM -  Our Results &amp; Forecast/Revision Score data series cover the last sixteen years of quarterly earnings and eleven years of forecasts and revisions and measure both results and forecasts but also their momentum, providing a better correlation with the market direction than past earnings.   The Forecast/Revision Score leads the Results Score by several months, and the market leads or lags depending on monetary and liquidity conditions. Although both Scores recovered in the last five days of results announcements, the Forecast/Revision Score of 0.45 reached on 8th November is the lowest such score in ten years and is suggesting that earnings have yet to bottom.WISHFUL THINKING? - The 'gap' between market expectations and actual and forecast earnings momentum is now wider than at any time since late 2014, shortly before the market peak of May 2015. Is this foresight or just wishful thinking? We tend to the latter interpretation.In the DETAIL section below, we shall provide a full breakdown of the results and revisions announcements by Sector, Peer Group and company and offer brief comments on several recommended buys and sells.

🇯🇵 Japan • Results & Revisions Review - Wishful Thinking

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. 

As shown in Part I of our review, the apparel and fashion market contracted slightly last year and no single format was immune to the tougher trading environment – even the online channel.
However, retailers with fresh ideas and strong marketing to back them up continue to outperform, a reminder that the Japanese fashion market is perennially dynamic and adapts to new market realities. The winners include <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><a href="https://www.smartkarma.com/entities/ryohin-keikaku-co-ltd" target="_blank" data-smartkarma-citation="entities:2765:1" rel="noopener">Ryohin Keikaku (7453 JP)</a> and Baycrews.
This is Part II of a 2-part review of Japan's apparel and fashion markets. <a href="https://www.smartkarma.com/insights/japan-fashion-market-review-2019-part-i-a-stable-market-but-tougher-trading-all-round" target="_blank" rel="noopener">Part I of our review is here</a> and has a macro review of retailers by format in 2018-19 as well as sales rankings of the top 100 apparel retailers, market share trends by format and profitability rankings.

As shown in Part I of our review, the apparel and fashion market contracted slightly last year and no single format was immune to the tougher trading environment – even the online channel.
However, retailers with fresh ideas and strong marketing to back them up continue to outperform, a reminder that the Japanese fashion market is perennially dynamic and adapts to new market realities. The winners include Workman Co Ltd (7564 JP),Ryohin Keikaku (7453 JP) and Baycrews.
This is Part II of a 2-part review of Japan's apparel and fashion markets. Part I of our review is here and has a macro review of retailers by format in 2018-19 as well as sales rankings of the top 100 apparel retailers, market share trends by format and profitability rankings.

Japan Fashion Market Review 2019 Part II: Winners & Losers and Key Business Trends

The apparel and fashion market contracted slightly last year and no single format was immune to the tougher trading environment – even the online channel.
The large store formats suffered the worst but a number of major specialty chains also posted lower sales. In e-commerce, even <a href="https://www.smartkarma.com/entities/zozo-inc" target="_blank" data-smartkarma-citation="entities:18379:1" rel="noopener">ZOZO Inc (3092 JP)</a> suffered its lowest sales growth in several years.
The reasons are clear: consumption of apparel fell again last year while other categories like home interiors, food and communications rose.
At the same time, the leading specialty retailers face saturation in some product categories and territories. As a result, e-commerce share continues to grow as does that of the biggest firms – the top 10 apparel retailers saw their share increase 3 points in a year to 30%.
This is Part I of a 2-part review of Japan's apparel and fashion markets. <a href="https://www.smartkarma.com/insights/winners-losers-and-key-business-trends-in-japanese-fashion-retailing-2018-19" target="_blank" rel="noopener">Part II of our review is here</a> and has profiles of the winners in 2018-19 and key trends impacting performance now and going forward.

The apparel and fashion market contracted slightly last year and no single format was immune to the tougher trading environment – even the online channel.
The large store formats suffered the worst but a number of major specialty chains also posted lower sales. In e-commerce, even ZOZO Inc (3092 JP) suffered its lowest sales growth in several years.
The reasons are clear: consumption of apparel fell again last year while other categories like home interiors, food and communications rose.
At the same time, the leading specialty retailers face saturation in some product categories and territories. As a result, e-commerce share continues to grow as does that of the biggest firms – the top 10 apparel retailers saw their share increase 3 points in a year to 30%.
This is Part I of a 2-part review of Japan's apparel and fashion markets. Part II of our review is here and has profiles of the winners in 2018-19 and key trends impacting performance now and going forward.

Japan Fashion Market Review 2019 Part I: A Stable Market but Tougher Trading All Round

Equity Bottom-Up

The outdoor market is one of the few really bright spots in the Japanese discretionary consumer economy.For the last five years, it has expanded quickly as consumers buy into the outdoor lifestyle both in the countryside and on the streets of Aoyama in Tokyo.While big names like The North Face continue to benefit, there is a new battle going on at the value end of the market and <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> the former retailer of workwear, is determined to win it.Workman is a workwear retailer but late last year launched a new format for the consumer called Workman Plus. It will have more than 160 stores open by March next year – and existing franchisees are queueing up to convert their Workman stores thanks to the huge jump in sales densities.

The outdoor market is one of the few really bright spots in the Japanese discretionary consumer economy.For the last five years, it has expanded quickly as consumers buy into the outdoor lifestyle both in the countryside and on the streets of Aoyama in Tokyo.While big names like The North Face continue to benefit, there is a new battle going on at the value end of the market and Workman Co Ltd (7564 JP), the former retailer of workwear, is determined to win it.Workman is a workwear retailer but late last year launched a new format for the consumer called Workman Plus. It will have more than 160 stores open by March next year – and existing franchisees are queueing up to convert their Workman stores thanks to the huge jump in sales densities.

Japanese Step Outside: Outdoor Market Jumps 7.5% as Workman Aims for Leadership

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.

Fast Retailing is Japan’s largest apparel retailer and they are also the world’s 3rd largest manufacturer and retailer of private brand retailing after Inditex and H&amp;M. We recently started looking at the company in a more detailed and a granular manner. Our previous insight; <a href="https://www.smartkarma.com/insights/fast-retailing-unique-value-proposition-of-uniqlo-combining-two-sets-of-customers" target="_blank" rel="noopener">Fast Retailing: Unique Value Proposition of Uniqlo Combining Two Sets of Customers</a> was a coverage initiation style report and there we focused on the company’s long term potential in all its markets, operating profit outlook and also the valuation.We also published another insight; <a href="https://www.smartkarma.com/insights/fast-retailing-korea-boycott-an-opportunity-for-investors" target="_blank" rel="noopener">Fast Retailing: Korea Boycott, an Opportunity for Investors</a> a few weeks ago to talk about the impact of the Korea boycott on Fast Retailing and a possible short term trading opportunity arising from the company being able to beat consensus in the upcoming earnings season. This insight focuses on trends in the market where it all started for Uniqlo and Fast Retailing.This insight will focus on following aspects of Uniqlo Japan’s Performance<ul>
<li>Seasonality of revenue per store trends and the outlook</li>
<li>Relationship between revenue per store and OP and how it could change in the future</li>
</ul>

Fast Retailing is Japan’s largest apparel retailer and they are also the world’s 3rd largest manufacturer and retailer of private brand retailing after Inditex and H&amp;M. We recently started looking at the company in a more detailed and a granular manner. Our previous insight; Fast Retailing: Unique Value Proposition of Uniqlo Combining Two Sets of Customers was a coverage initiation style report and there we focused on the company’s long term potential in all its markets, operating profit outlook and also the valuation.We also published another insight; Fast Retailing: Korea Boycott, an Opportunity for Investors a few weeks ago to talk about the impact of the Korea boycott on Fast Retailing and a possible short term trading opportunity arising from the company being able to beat consensus in the upcoming earnings season. This insight focuses on trends in the market where it all started for Uniqlo and Fast Retailing.This insight will focus on following aspects of Uniqlo Japan’s Performance
Seasonality of revenue per store trends and the outlook
Relationship between revenue per store and OP and how it could change in the future


Fast Retailing: A Deep Dive into Uniqlo’s Domestic Market Focusing Mainly on the Numbers

Japan

WORKMAN CO., LTD. designs, produces, and retails work uniforms and related goods including work gloves and safety shoes.  The Company operates its own stores and franchise stores located throughout eastern Japan.

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Workman Co Ltd (7564 JP)

🇯🇵 Japan • Results & Revisions Review - Wishful Thinking

4TH DOWN AND A FEW MORE TO GO - The latest quarterly results are now, with the exception of three large insurance companies are currently in the...

Campbell Gunn

Japan Fashion Market Review 2019 Part II: Winners & Losers and Key Business Trends

As shown in Part I of our review, the apparel and fashion market contracted slightly last year and no single format was immune to the tougher...

Michael Causton

Japan Fashion Market Review 2019 Part I: A Stable Market but Tougher Trading All Round

The apparel and fashion market contracted slightly last year and no single format was immune to the tougher trading environment – even the online...

Michael Causton

Japanese Step Outside: Outdoor Market Jumps 7.5% as Workman Aims for Leadership

The outdoor market is one of the few really bright spots in the Japanese discretionary consumer economy.For the last five years, it has expanded...

Michael Causton

Fast Retailing: A Deep Dive into Uniqlo’s Domestic Market Focusing Mainly on the Numbers

Fast Retailing is Japan’s largest apparel retailer and they are also the world’s 3rd largest manufacturer and retailer of private brand retailing...

Oshadhi Kumarasiri

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)