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.

Equity Bottom-Up

<ul>
<li>Zozo reported yesterday missing slightly across the board with OP missing consensus by 6.7% on a 0.7% miss at the top line. </li>
<li>GMV was reasonable due to apparent generosity on reward points and strong promotional spending. </li>
<li>OP guidance of ¥51.5bn was noticeably below consensus and while Zozo is considered conservative we expect a miss and long-term stagnation.</li>
</ul>


Zozo reported yesterday missing slightly across the board with OP missing consensus by 6.7% on a 0.7% miss at the top line. 
GMV was reasonable due to apparent generosity on reward points and strong promotional spending. 
OP guidance of ¥51.5bn was noticeably below consensus and while Zozo is considered conservative we expect a miss and long-term stagnation.


Zozo – Operating Leverage Apparently Less Fun On The Downside

Telco/Internet specialist

Kirk Boodry

Redex Research

<ul>
<li>Results for Q4 and FY22 guidance were mixed with platform sales and revenue largely in-line but margins slightly weaker</li>
<li>The loss of a major B2B customer wipes out almost all the growth in that segment but core consumer growth remains solid (10%+) as do operating KPIs </li>
<li>The read across to parent Z Holdings is limited as the difference in company guidance and consensus operating profit is less than 1% of ZHD consolidated</li>
</ul>


Results for Q4 and FY22 guidance were mixed with platform sales and revenue largely in-line but margins slightly weaker
The loss of a major B2B customer wipes out almost all the growth in that segment but core consumer growth remains solid (10%+) as do operating KPIs 
The read across to parent Z Holdings is limited as the difference in company guidance and consensus operating profit is less than 1% of ZHD consolidated


Zozo - Q4 21 Results Reaction: Mixed but Underlying Consumer Growth Remains Solid

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

NTT (Nippon Telegraph & Telephone) / Event-Driven

<ul>
<li>The April-June TSE FFW Methodology Revision moves favour certain sectors over others. There is nearly ¥500bn of telecom stocks to buy with 60+% of that in four names.</li>
<li>Other factors may support some of the names as well. </li>
<li>There is enough excess buying to warrant trading tilts and keeping fundamental positions even as forward earnings multiples have expanded to multi-year highs.</li>
</ul>


The April-June TSE FFW Methodology Revision moves favour certain sectors over others. There is nearly ¥500bn of telecom stocks to buy with 60+% of that in four names.
Other factors may support some of the names as well. 
There is enough excess buying to warrant trading tilts and keeping fundamental positions even as forward earnings multiples have expanded to multi-year highs.


Strong Telecom Flows in TOPIX FFW Transition Months

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

<ul>
<li>Among many e-commerce names, <a href="https://www.smartkarma.com/entities/monotaro-co-ltd" target="_blank" data-smartkarma-citation="entities:15441:1" rel="noopener">MonotaRO Co Ltd (3064 JP)</a> is one of the most promising with operating profitability predicted to improve by 200 bps to 14.0% by 2023.</li>
<li>Unlike many e-commerce players, the company doesn’t strain itself financially while pursuing revenue growth through expansion.</li>
<li>At 35.8x OP, MonotaRo is not cheap to be outright bullish. However, it is a reasonable long hedge to allow you to short a lot of other names in e-commerce.</li>
</ul>


Among many e-commerce names, MonotaRO Co Ltd (3064 JP) is one of the most promising with operating profitability predicted to improve by 200 bps to 14.0% by 2023.
Unlike many e-commerce players, the company doesn’t strain itself financially while pursuing revenue growth through expansion.
At 35.8x OP, MonotaRo is not cheap to be outright bullish. However, it is a reasonable long hedge to allow you to short a lot of other names in e-commerce.


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. 

<ul>
<li>LINE Gift has doubled its user base to 20 million in a year, and added merchants like Seven Eleven, but isn’t content with this. </li>
<li>It has only just integrated with Zozo and Yahoo Shopping and expects these new partners, as well as new TV ad campaigns, to deliver a major increase in user numbers.</li>
<li>The collaboration with Z Holdings' through Yahoo Shopping and Zozo shows the potential for leveraging the groups' huge user base.</li>
</ul>


LINE Gift has doubled its user base to 20 million in a year, and added merchants like Seven Eleven, but isn’t content with this. 
It has only just integrated with Zozo and Yahoo Shopping and expects these new partners, as well as new TV ad campaigns, to deliver a major increase in user numbers.
The collaboration with Z Holdings' through Yahoo Shopping and Zozo shows the potential for leveraging the groups' huge user base.


Japan

ZOZO Inc operates internet shopping sites for apparel.  The Company also provides communication services relating to apparel such as blogs by fashion moguls and internet chat room for users.

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ZOZO Inc (3092 JP)

Zozo – Operating Leverage Apparently Less Fun On The Downside

Zozo reported yesterday missing slightly across the board with OP guidance of ¥51.5bn noticeably below consensus and while Zozo is considered...

Mio Kato

Zozo - Q4 21 Results Reaction: Mixed but Underlying Consumer Growth Remains Solid

Zozo posted mixed results and guidance with platform sales and guidance largely in-line but profitability below consensus.

Kirk Boodry

Strong Telecom Flows in TOPIX FFW Transition Months

The Telecom Sector is the biggest sector beneficiary of TOPIX FFW flows over the next few months. Still bullish NTT vs the others near-term. All...

Travis Lundy

MonotaRo: A Rare Winner in E-Commerce

While most e-commerce players are fighting each other and the e-commerce arms of traditional businesses, MonotaRo operates in a niche with very...

Oshadhi Kumarasiri

LINE Gift: The Next Stage

LINE Gift has doubled its user base to 20 million in a year but has plans to grow much bigger and is a great example of the potential to leverage...

Michael Causton

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