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>While <a href="https://www.smartkarma.com/entities/yamazaki-baking-co-ltd" target="_blank" data-smartkarma-citation="entities:7658:1" rel="noopener">Yamazaki Baking (2212 JP)</a>'s recent surge has been impressive, consensus expectations are high for the upcoming quarter, despite yet another price hike in July 2023.</li>
<li>From a valuation perspective, we expect limited upside potential even if Yamazaki Baking surpasses consensus expectations.</li>
<li>Therefore, we believe that the risk-reward profile for maintaining a long position in Yamazaki Baking is currently not particularly attractive.</li>
</ul>


While Yamazaki Baking (2212 JP)'s recent surge has been impressive, consensus expectations are high for the upcoming quarter, despite yet another price hike in July 2023.
From a valuation perspective, we expect limited upside potential even if Yamazaki Baking surpasses consensus expectations.
Therefore, we believe that the risk-reward profile for maintaining a long position in Yamazaki Baking is currently not particularly attractive.


Yamazaki Baking: Breads & Buns Buonce But Valuation Is a Stalemate

<ul>
<li>
<a href="https://www.smartkarma.com/entities/yamazaki-baking-co-ltd" target="_blank" data-smartkarma-citation="entities:7658:1" rel="noopener">Yamazaki Baking (2212 JP)</a>’s Q3 was mixed with revenue growing 5.6% YoY to surpass consensus by 3% but OP of ¥1.6bn was ¥650m below consensus.</li>
<li>However, this was mostly priced-in, as shares are currently trading at the bottom end of the upward trend channel.</li>
<li>With wheat prices down 23% from the peak, pressure from input price inflation should alleviate, resulting in margin upside in the fourth quarter.</li>
</ul>



Yamazaki Baking (2212 JP)’s Q3 was mixed with revenue growing 5.6% YoY to surpass consensus by 3% but OP of ¥1.6bn was ¥650m below consensus.
However, this was mostly priced-in, as shares are currently trading at the bottom end of the upward trend channel.
With wheat prices down 23% from the peak, pressure from input price inflation should alleviate, resulting in margin upside in the fourth quarter.


Yamazaki Baking: Profitability to Double Over The Next Few Years

Japan Specialist

Mark Chadwick

<ul>
<li>Strong Q1 results have pushed up the share price offering a good entry point for Shorts</li>
<li>We think that full year guidance remains a risk given input costs and ability to push through higher prices</li>
<li>Given the risks, persistently low margins and returns to equity, we remain bearish</li>
</ul>


Strong Q1 results have pushed up the share price offering a good entry point for Shorts
We think that full year guidance remains a risk given input costs and ability to push through higher prices
Given the risks, persistently low margins and returns to equity, we remain bearish


Yamazaki Baking (2212) | Price Hikes to Test Consumer Appetite

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>Convenience stores remain Japan’s largest sector. 2020 was the first and, so far, only year in the format’s 50-year history when sales declined, but performance has since bounced back.</li>
<li>Still dominated by three of the largest retail chains in the country, it remains one of the most dynamic and forward thinking retailing and marketing sectors</li>
<li>The latest initiatives look set to deliver more growth in sales as well as potentially delivering a huge new revenue stream in the form of retail media.</li>
</ul>


Convenience stores remain Japan’s largest sector. 2020 was the first and, so far, only year in the format’s 50-year history when sales declined, but performance has since bounced back.
Still dominated by three of the largest retail chains in the country, it remains one of the most dynamic and forward thinking retailing and marketing sectors
The latest initiatives look set to deliver more growth in sales as well as potentially delivering a huge new revenue stream in the form of retail media.


Japan's Convenience Stores Still Growing, Still Innovating

<ul>
<li>April, which along with October is the month when many Japanese FMCG brands adjust prices, saw far fewer price hikes this year compared to 2023. </li>
<li>Even so, numerous major brands still announced hefty price increases for later in the year.</li>
<li>Meanwhile, government subsidies for utility costs are ending and the weak Yen is an increasing concern for many consumer-facing companies. </li>
</ul>


April, which along with October is the month when many Japanese FMCG brands adjust prices, saw far fewer price hikes this year compared to 2023. 
Even so, numerous major brands still announced hefty price increases for later in the year.
Meanwhile, government subsidies for utility costs are ending and the weak Yen is an increasing concern for many consumer-facing companies. 


Fewer Price Hikes in Spring, but Prices Still Rising

Japan

YAMAZAKI BAKING CO., LTD. produces baking foods including bread, pastry, and cake.  The Company operates nationwide sales network.  YAMAZAKI BAKING also operates franchised cafeterias and convenience stores.

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Yamazaki Baking (2212 JP)

Yamazaki Baking: Breads & Buns Buonce But Valuation Is a Stalemate

Yamazaki Baking's surging stock faces high expectations in 3Q23. With limited valuation upside, the risk-reward balance has tilted unfavorably for...

Oshadhi Kumarasiri

Yamazaki Baking: Profitability to Double Over The Next Few Years

While we expect the gross margin to return to around 36% in the medium term, an improvement of around 340bps QoQ and -120bps YoY to 34% in 4Q22...

Oshadhi Kumarasiri

Yamazaki Baking (2212) | Price Hikes to Test Consumer Appetite

Yamazaki Baking is a domestic food maker. That is a problem right now given the weak yen is hurting input costs and, hence, a real chance they miss...

Mark Chadwick

Japan's Convenience Stores Still Growing, Still Innovating

Japan's convenience store sector, dominated by 3 major chains, is bouncing back after their first decline in 50 years in 2020, with innovative...

Michael Causton

Fewer Price Hikes in Spring, but Prices Still Rising

April saw fewer price hikes on the year, but major brands are still planning hefty increases soon. Government subsidies for utilities are ending...

Michael Causton

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Yamazaki Baking: Breads & Buns Buonce But Valuation Is a Stalemate

Yamazaki Baking's surging stock faces high expectations in 3Q23. With limited valuation upside, the risk-reward balance has tilted unfavorably for...

Oshadhi Kumarasiri

Yamazaki Baking: Profitability to Double Over The Next Few Years

While we expect the gross margin to return to around 36% in the medium term, an improvement of around 340bps QoQ and -120bps YoY to 34% in 4Q22...

Oshadhi Kumarasiri

Yamazaki Baking (2212) | Price Hikes to Test Consumer Appetite

Yamazaki Baking is a domestic food maker. That is a problem right now given the weak yen is hurting input costs and, hence, a real chance they miss...

Mark Chadwick

Japan's Convenience Stores Still Growing, Still Innovating

​Japan's convenience store sector, dominated by 3 major chains, is bouncing back after their first decline in 50 years in 2020, with innovative...

Michael Causton

Fewer Price Hikes in Spring, but Prices Still Rising

April saw fewer price hikes on the year, but major brands are still planning hefty increases soon. Government subsidies for utilities are ending...

Michael Causton

Japan's convenience store sector, dominated by 3 major chains, is bouncing back after their first decline in 50 years in 2020, with innovative...