In today’s briefing:
- Nikkei 225 Rebal – Beating a Dead Horse
- Seven Bank – Assets 39x Loans | Strong 7% Loan Growth | ATM Transactions +8% | Retail Accounts +9%
- IStyle Growth Following Amazon Shareholding
- Carta Holdings (3688 Jp) -Pushing Forward with Earnings Structure Improvements
Nikkei 225 Rebal – Beating a Dead Horse
- The September 2023 Nikkei 225 Rebalance is tomorrow at the close. This will engender a lot of buying of three names, and a lot of selling of 3 names.
- It will also engender a funding trade of nearly ¥460bn.
- I am going to beat the dead horse and warn about certain issues with this rebalance.
Seven Bank – Assets 39x Loans | Strong 7% Loan Growth | ATM Transactions +8% | Retail Accounts +9%
- Seven Bank Ltd (8410 JP) is the 7-11 convenience store bank, which focuses on ATM fees more than loans, so its cash is JPY952bn vs loans JPY35bn at FY23.
- Loan growth in 1Q24 is 7% YoY, one of strongest in Japan and it is accelerating in recent periods, alongside 8-9% growth in ATM transactions, retail accounts
- Exceptionally strong ATM transactions abroad at 92.4m in 1Q24 vs 66.5m in 1Q23, including US, Indonesia and Philippines.
IStyle Growth Following Amazon Shareholding
- @Cosme continues to carve out a significant share of the cosmetics market, with record sales last year.
- @Cosme appeals to a wide cross section of the population but this is about to get even wider once it starts selling via Amazon, its biggest shareholder.
- While there is debate about whether Amazon will increase its stake, what is certain is that Amazon will help drive iStyle’s sales growth.
Carta Holdings (3688 Jp) -Pushing Forward with Earnings Structure Improvements
Specific measures for structural reforms are being implemented one after another.
CARTA Holdings had announced the withdrawal from unprofitable businesses (game and hometown tax payment businesses), a ¥1 bn reduction in SG&A expenses centered on fixed costs, the integration of four direct sales subsidiaries, and other streamlining measures leading up to the 2Q FY23/12 earnings announcement, and on September 5, 2023, the company’s board of directors newly approved a resolution to call for voluntary retirement.
While the macroeconomic downturn was particularly noticeable in the April-June 2023 earnings results, with advertising companies downwardly revising their forecasts one after another, no other company has implemented such drastic measures like CARTA Holdings has, and this move is worth highlighting for its future sharp recovery.
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