In today’s briefing:
- TOPIX Big April Basket 23: 100% Hit Rate for High Conviction Basket; Focus on Surprises Next
- Trial IPO to Drive Tech Innovation Targeting Convenience Stores
- Seven & I: Earnings Peak and Valuation Multiples Nearing Breaking Point
- Japan’s SmartRyde Raises $3.4m to Grow Airport Transfer Services
TOPIX Big April Basket 23: 100% Hit Rate for High Conviction Basket; Focus on Surprises Next
- The TOPIX liquidity factor removal names (upweights) for April 2023 were announced after the close on Friday 7th April 2023 as expected.
- According to the announcement, 22 names will see their Liquidity Factors removed and experience index inflows later this month.
- Today was the first day of trading post-announcement and the 22 names gained +1.1% (+0.47% vs the TOPIX Index). I feel there could be more upside for some names.
Trial IPO to Drive Tech Innovation Targeting Convenience Stores
- A lot has been said and written about Trial’s IPO but much of this relates to pass performance and comparing it to supermarkets.
- As the company’s latest Trial Go store in Fukuoka shows, Trial is a tech-based retailer and a true discounter, and discounting is where the growth is in Japanese FMCG.
- Trial thinks its technology can reduce costs significantly, improving margins while allowing it to roll out more small format stores to compete with convenience stores. It may be right.
Seven & I: Earnings Peak and Valuation Multiples Nearing Breaking Point
- Seven & I Holdings (3382 JP) was down as much as 5% on Friday on weak FQ4 earnings as the company’s revenue and OP missed consensus by 1.9% and 2.6% respectively.
- Earnings likely peaked in FQ3 as fuel retail margin and merchandise sales trend reversed in FQ4.
- Given the reversal of fuel retail margin and merchandise sales trend and the negative impact of the exchange rate, the risk rewards appear favourable for a short trade.
Japan’s SmartRyde Raises $3.4m to Grow Airport Transfer Services
- SmartRyde, a Japan-based marketplace for pre-booked airport transfers, has raised around 450 million yen (US$3.4 million) through a third-party allocation of shares and a subordinated loan from Japan Finance Corporation.
- NVenture Capital led this series A+ funding round, which also saw participation from investors such as SMBC Venture Capital, Yamaguchi Capital, and Hiroshima Venture Capital.
- SmartRyde provides its transfer services to over 700 airports worldwide.
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