Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

TSE Tokyo Price Index TOPIX / Technical Analysis

<ul>
<li>The MSCI ACWI index ACWI-US briefly fell below major support at $90.50-$91.50, though we do not consider it a "decisive" breakdown and we now see a false breakdown (bullish).</li>
<li>On MSCI ACWI (local currency), a false breakdown appears to already be in place, which is bullish as long as the index does not break to a new low.</li>
<li>MSCI EM (EEM-US) continues to hold above $36.50-$37 support, while MSCI ACWI ex-US (ACWX-US) and EAFE (EFA-US) remain above supports at $45 and $65-$66, respectively. Pullback is likely over.</li>
</ul>


The MSCI ACWI index ACWI-US briefly fell below major support at $90.50-$91.50, though we do not consider it a "decisive" breakdown and we now see a false breakdown (bullish).
On MSCI ACWI (local currency), a false breakdown appears to already be in place, which is bullish as long as the index does not break to a new low.
MSCI EM (EEM-US) continues to hold above $36.50-$37 support, while MSCI ACWI ex-US (ACWX-US) and EAFE (EFA-US) remain above supports at $45 and $65-$66, respectively. Pullback is likely over.


Japan Bullishly Inflecting; Constructive Outlook Intact; Global Pullback Likely Over

S&P BSE SENSEX Index / Technical Analysis

<ul>
<li>Many major indexes are still testing (and holding above) critical supports. This includes MSCI ACWI (ACWI-US), TOPIX/TOPIX Small/Nikkei 225, EURO STOXX 50, STOXX Europe 600, and the DAX</li>
<li>Our overall outlook remains neutral, and we continue to see many attractive buying opportunities, especially out of Japan, India, and a new one -- Brazil.</li>
<li>Buy ideas focus on the Consumer Discretionary and Financials Sectors, with the vast majority of stock recommendations from Japan, India, and Brazil</li>
</ul>


Many major indexes are still testing (and holding above) critical supports. This includes MSCI ACWI (ACWI-US), TOPIX/TOPIX Small/Nikkei 225, EURO STOXX 50, STOXX Europe 600, and the DAX
Our overall outlook remains neutral, and we continue to see many attractive buying opportunities, especially out of Japan, India, and a new one -- Brazil.
Buy ideas focus on the Consumer Discretionary and Financials Sectors, with the vast majority of stock recommendations from Japan, India, and Brazil


Europe, Japan, $ACWI Testing Critical Supports; Rising DXY, Global Sovereign Yields a Major Headwind

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>The government has promised consumers price inflation for almost a decade now but the only real result of this policy is that we’ve seen record levels of household saving. </li>
<li>Now, however, supply chain and other issues are quickly beginning to force up prices of basic products and these increases are having a real impact on household budgets.</li>
<li>How long this situation may last is the big question but the focus on price means discount food retailers like <a href="https://www.smartkarma.com/entities/kobe-bussan-co-ltd" target="_blank" data-smartkarma-citation="entities:4701:1" rel="noopener">Kobe Bussan (3038 JP)</a> are likely to boom.</li>
</ul>


The government has promised consumers price inflation for almost a decade now but the only real result of this policy is that we’ve seen record levels of household saving. 
Now, however, supply chain and other issues are quickly beginning to force up prices of basic products and these increases are having a real impact on household budgets.
How long this situation may last is the big question but the focus on price means discount food retailers like Kobe Bussan (3038 JP) are likely to boom.


Japanese Households Focus on Price as Inflation Fears Spike

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

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

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/157/903/original/2020-09-09_10-14-19.png?1599614088" class="editor-image img-responsive" data-smartkarma-image-id="157903"></figure><div class="content-caption">Source for all charts: Japan Analytics</div>LISTED RESTAURANTS - Japan currently has 102 listed restaurant companies with an aggregate market value of ¥4.9 trillion, representing 2.6% of all listed companies and 0.9% of total market value. Only thirteen companies are capitalised at over ¥100 billion, and forty-one have a market value of less than ¥10 billion. The Sector is ripe for consolidation and COVID-19 should provide a catalyst for an acceleration of the process.  Both <a href="https://www.smartkarma.com/entities/create-restaurants-holdings-inc" target="_blank" data-smartkarma-citation="entities:11513:1" rel="noopener">create restaurants (3387 JP)</a>, and <a href="https://www.smartkarma.com/entities/colowide-co-ltd" target="_blank" data-smartkarma-citation="entities:13967:1" rel="noopener">Colowide (7616 JP)</a> have positioned themselves as consolidators, but have become highly leveraged in the process.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/157/917/original/File%202020-09-09%2010%2025%2051.jpeg?1599614981" class="editor-image img-responsive" data-smartkarma-image-id="157917"></figure>Also, the Sector is highly fragmented and segmented by type of food and concept. Only nineteen companies can be deemed 'diversified'. Furthermore, there are only five listed take-out/delivery specialists, of which <a href="https://www.smartkarma.com/entities/ride-on-express-co-ltd" target="_blank" data-smartkarma-citation="entities:2812:1" rel="noopener">Ride On Express (6082 JP)</a> has been the best performer. Overall, the Sector has declined by 3.6% over one year and by 3.2% over three months - a third quartile performance. Colowide's 31% rise over the last month has pushed the Sector into fourth place amongst our thirty market Sectors, fueled by the apparent success of the tender offer for <a href="https://www.smartkarma.com/entities/ootoya-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:7329:1" rel="noopener">OOTOYA (2705 JP)</a>.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/157/928/original/2020-09-09_10-38-37.png?1599615530" class="editor-image img-responsive" data-smartkarma-image-id="157928"></figure>YUTAI KEN - One important consideration for investors to note is the widespread practice of offering kabunushi yutai-ken. In addition to dividends, shareholders are sent coupons that can be redeemed at most of the company's restaurants. Many specialist publications review such programs and offer stock recommendations based on the yutai-yield. As a result, restaurant companies in Japan have some of the highest shareholder counts among listed companies. As coupon-customers normally top-up their spending, this practice helps provide a basic level of cash flow but is a costly exercise to administer. However, there is the added benefit of limiting the number of shares for shorting.<a href="https://www.smartkarma.com/entities/yoshinoya-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:14630:1" rel="noopener"></a>100,000+ CLUB - <a href="https://www.smartkarma.com/entities/yoshinoya-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:14630:1" rel="noopener">Yoshinoya (9861 JP)</a>, <a href="https://www.smartkarma.com/entities/atom-corp" target="_blank" data-smartkarma-citation="entities:12420:1" rel="noopener">Atom (7412 JP)</a>, <a href="https://www.smartkarma.com/entities/zensho-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:4586:1" rel="noopener">Zensho (7550 JP)</a>, <a href="https://www.smartkarma.com/entities/kappa-create-co-ltd" target="_blank" data-smartkarma-citation="entities:19456:1" rel="noopener">Kappa Create (7421 JP)</a>, <a href="https://www.smartkarma.com/entities/komeda-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:24019:1" rel="noopener">Komeda (3543 JP)</a>, and <a href="https://www.smartkarma.com/entities/create-restaurants-holdings-inc" target="_blank" data-smartkarma-citation="entities:11513:1" rel="noopener">create (3387 JP)</a> are all in the top-fifty listed companies ranked by the number of shareholders. All exceed 100,000 shareholders -  beef-bowl chain Yoshiniya has 308,265 exceeding <a href="https://www.smartkarma.com/entities/mitsui-co-ltd" target="_blank" data-smartkarma-citation="entities:20799:1" rel="noopener">Mitsui (8031 JP)</a> which has twenty-four times the capitalisation.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/157/942/original/2020-09-09_11-15-31.png?1599617746" class="editor-image img-responsive" data-smartkarma-image-id="157942"></figure>In this DETAIL below, we shall review Colowide's long-term performance, returns and valuation and offer a view on the prospects for further consolidation. The Colowide group currently comprises of two listed chains - <a href="https://www.smartkarma.com/entities/kappa-create-co-ltd" target="_blank" data-smartkarma-citation="entities:19456:1" rel="noopener">Kappa Create (7421 JP)</a> and <a href="https://www.smartkarma.com/entities/atom-corp" target="_blank" data-smartkarma-citation="entities:12420:1" rel="noopener">Atom (7412 JP)</a> and the franchise chain Reins International which also operates in Asia and the US.

Source for all charts: Japan AnalyticsLISTED RESTAURANTS - Japan currently has 102 listed restaurant companies with an aggregate market value of ¥4.9 trillion, representing 2.6% of all listed companies and 0.9% of total market value. Only thirteen companies are capitalised at over ¥100 billion, and forty-one have a market value of less than ¥10 billion. The Sector is ripe for consolidation and COVID-19 should provide a catalyst for an acceleration of the process.  Both create restaurants (3387 JP), and Colowide (7616 JP) have positioned themselves as consolidators, but have become highly leveraged in the process.Also, the Sector is highly fragmented and segmented by type of food and concept. Only nineteen companies can be deemed 'diversified'. Furthermore, there are only five listed take-out/delivery specialists, of which Ride On Express (6082 JP) has been the best performer. Overall, the Sector has declined by 3.6% over one year and by 3.2% over three months - a third quartile performance. Colowide's 31% rise over the last month has pushed the Sector into fourth place amongst our thirty market Sectors, fueled by the apparent success of the tender offer for OOTOYA (2705 JP).YUTAI KEN - One important consideration for investors to note is the widespread practice of offering kabunushi yutai-ken. In addition to dividends, shareholders are sent coupons that can be redeemed at most of the company's restaurants. Many specialist publications review such programs and offer stock recommendations based on the yutai-yield. As a result, restaurant companies in Japan have some of the highest shareholder counts among listed companies. As coupon-customers normally top-up their spending, this practice helps provide a basic level of cash flow but is a costly exercise to administer. However, there is the added benefit of limiting the number of shares for shorting.100,000+ CLUB - Yoshinoya (9861 JP), Atom (7412 JP), Zensho (7550 JP), Kappa Create (7421 JP), Komeda (3543 JP), and create (3387 JP) are all in the top-fifty listed companies ranked by the number of shareholders. All exceed 100,000 shareholders -  beef-bowl chain Yoshiniya has 308,265 exceeding Mitsui (8031 JP) which has twenty-four times the capitalisation.In this DETAIL below, we shall review Colowide's long-term performance, returns and valuation and offer a view on the prospects for further consolidation. The Colowide group currently comprises of two listed chains - Kappa Create (7421 JP) and Atom (7412 JP) and the franchise chain Reins International which also operates in Asia and the US.

🇯🇵 Japan • Colowide (7616 JP) - A Bite Too Far

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Together with its strong half-year earnings today, at the lunch break Zensho Holdings announced a share buyback and a share swap for the remaining shares in subsidiary Coco’s.The company beat its half-year forecast by 9.8% at the OP continuing, announced that it would repurchase 1m shares (149.95m outstanding excluding treasury stock) and offered to swap 0.67 shares of its own stock (¥2,378 at the close of the morning session)  for each share of Coco’s Japan (¥1,413 at the close of the morning session). The premium was thus about 12.8% vs. the morning close or 10.8% vs. the previous close. This looks light to us and we expand on this below.

Together with its strong half-year earnings today, at the lunch break Zensho Holdings announced a share buyback and a share swap for the remaining shares in subsidiary Coco’s.The company beat its half-year forecast by 9.8% at the OP continuing, announced that it would repurchase 1m shares (149.95m outstanding excluding treasury stock) and offered to swap 0.67 shares of its own stock (¥2,378 at the close of the morning session)  for each share of Coco’s Japan (¥1,413 at the close of the morning session). The premium was thus about 12.8% vs. the morning close or 10.8% vs. the previous close. This looks light to us and we expand on this below.

Zensho – Turning Coco’s Into a Wholly Owned Subsidiary Looks Opportunistic

Japan

McDonald's Holdings Company (Japan), Ltd. operates a hamburger fast food restaurant chain throughout Japan.  The Company operates its own stores and franchise stores.

Skylark Co. Ltd. mainly operates a family restaurant chain across Japan.  The Company offers Japanese-style, Western-style, and Asia-style foods for a wide variety of targeted customer segments.  Skylark also sells food and provides delivery servies.

RESORTTRUST, INC. plans, develops, markets, and operates timeshare resort hotels under the "XIV" and "SUN MEMBERS" brand name.  The Company's resort facilities are located in the suburb of major Japanese cities.  Resorttrust operates golf courses.

ROUND ONE Corporation operates bowling alleys and video game arcades.  The Company operates primarily in the Osaka area.

TORIDOLL Holdings Corporation operates a variety of restaurants such as skewered grill chicken, Japanese noodle, ramen noodle, Japanese-style pancake, and pasta restaurants.  The Company operates its business at food courts in shopping centers, stations, highway rest areas, and suburbs.

create restaurants holdings inc. operates direct-run Western, Chinese, and Japanese restaurants.  The Company also operates fast food restaurants.

create restaurants holdings inc. (3387 JP)

SAIZERIYA CO., LTD. operates an Italian restaurant chain based in the Tokyo metropolitan area.  The Company's menu includes pizza, pasta, seafood, and meat entrees.

KYORITSU MAINTENANCE CO., LTD operates student dormitories and dormitories for young businessmen throughout Japan.  The Company builds condominiums and dormitories.

Food & Life Companies Limited operates sushi restaurant chains. The Company operates kaiten sushi stores and restaurants, sushi takeout, sushi bars with snacks, and more. Food & Life Companies serves customers worldwide.

FUJI KYUKO CO., LTD. provides passenger rail and bus transportation and taxi services in Shizuoka, Yamanashi, and Kanagawa prefectures.  The Company leases and sells real estate, operates department store, and offers construction works. Fuji Kyuko also operates amusement parks, hotels, golf course, skiing ground, restaurants, and other leisure-related businesses.

Genting Singapore Limited, through its subsidiaries, develops resort properties as well as operates casinos. The Company has casinos and integrated resorts in different parts of the world, including Australia, the Americas, Malaysia, the Philippines and the United Kingdom.

MGM China Holdings Ltd. owns a luxury resort, hotel, and casino located in Macau. The Company is also exploring other casino gaming development opportunities in Macau.

Wynn Macau, Limited owns and operates Wynn Macau, a destination casino resort currently featuring hotel rooms and suites, a casino, casual and fine dining restaurants, retail space and leisure amenities.

Jubilant Foodworks Ltd. owns and operates fast food chains. The Company offers donuts, baked goods, coffee, bagels, muffin, fruit milkshakes, smoothies, tea, sandwiches, pizza, and beverages. Jubilant Foodworks serves its products to customers throughout India.

Jollibee Foods Corporation owns, franchises and manages a network of fast food restaurants under the trade name Jollibee. The Company was incorporated in 1978.

Minor International PCL is a global company focused on three primary businesses including restaurants, hotels and lifestyle brands distribution.

Norwegian Cruise Line Holdings Ltd. operates a fleet of passenger cruise ships. The Company offers an array of cruise itineraries as well as theme cruises, while markets its services through various distribution channels including retail and travel agents, consumer direct, international sales, as well as incentive sales. Norwegian Cruise extends its services worldwide.

Planet Fitness, Inc. owns and operates a chain of fitness clubs. The Company offers offers personal fitness training programs for its members. Planet Fitness serves customers in the United States.

Caesars Entertainment, Inc. owns and operates as a chain of resorts. The Company offers casino, poker, roulette, and other gaming facilities, as well as provides food and beverages services. Caesars Entertainment serves customers in the United States.

Choice Hotels International, Inc. franchises hotel properties.  The Company franchises hotels throughout the United States, Puerto Rico, and the District of Columbia, as well as other countries.  Choice Hotels' properties operate under the Comfort, Quality, Clarion, Sleep, Rodeway, Econo Lodge, and MainStay brand names.

ZENSHO Holdings CO., LTD. operates a fast food chain specialized in GYUDON which serves bowls of rice topped with seasoned beef based in Kanto.      The Company operates also diversifying into other types of food chains such as "Coco's" and "Big Boy" in Japan.

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Zensho Holdings (7550 JP)

Japan Bullishly Inflecting; Constructive Outlook Intact; Global Pullback Likely Over

The MSCI $ACWI briefly fell below our $90.50 support but quickly reclaimed, suggesting a false breakdown and the likely end to this pullback in...

Vermilion Research

Europe, Japan, $ACWI Testing Critical Supports; Rising DXY, Global Sovereign Yields a Major Headwind

Europe $STOXX 50, Japan $TOPIX $Nikkei 225, $ACWI Testing Critical Supports; Rising $DXY, Global Sovereign Yields Remain Major Headwinds for global...

Vermilion Research

Japanese Households Focus on Price as Inflation Fears Spike

Pressure on household budgets from rising prices – real and perceived – are causing Japanese consumers to focus even further on prices. This will...

Michael Causton

🇯🇵 Japan • Colowide (7616 JP) - A Bite Too Far

LISTED RESTAURANTS

Campbell Gunn

Zensho – Turning Coco’s Into a Wholly Owned Subsidiary Looks Opportunistic

Together with its strong half-year earnings today, at the lunch break Zensho Holdings announced a share buyback and a share swap for the remaining...

Mio Kato

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Japan Bullishly Inflecting; Constructive Outlook Intact; Global Pullback Likely Over

​The MSCI $ACWI briefly fell below our $90.50 support but quickly reclaimed, suggesting a false breakdown and the likely end to this pullback in...

Vermilion Research

Europe, Japan, $ACWI Testing Critical Supports; Rising DXY, Global Sovereign Yields a Major Headwind

Europe $STOXX 50, Japan $TOPIX $Nikkei 225, $ACWI Testing Critical Supports; Rising $DXY, Global Sovereign Yields Remain Major Headwinds for global...

Vermilion Research

Japanese Households Focus on Price as Inflation Fears Spike

Pressure on household budgets from rising prices – real and perceived – are causing Japanese consumers to focus even further on prices. This will...

Michael Causton

🇯🇵 Japan • Colowide (7616 JP) - A Bite Too Far

LISTED RESTAURANTS

Campbell Gunn

Zensho – Turning Coco’s Into a Wholly Owned Subsidiary Looks Opportunistic

Together with its strong half-year earnings today, at the lunch break Zensho Holdings announced a share buyback and a share swap for the remaining...

Mio Kato

The MSCI $ACWI briefly fell below our $90.50 support but quickly reclaimed, suggesting a false breakdown and the likely end to this pullback in...