In this briefing:
- CKD (6407) Hit Buy China Slowdown. Now Excessively Cheap and Cutting Costs.
- Goldwin Tops Sports Market Growth Through Store Investment
- IKEA: Small Store Rollout in Japan to Start in 2020
- Share Classifications: Mid-December 2018 Snapshot
- Idemitsu Kosan Tactical Support with Macro Cycle Drag
1. CKD (6407) Hit Buy China Slowdown. Now Excessively Cheap and Cutting Costs.
To us the shares are have now fully discounted the current spate of bad news. The company has a very strong balance sheet and owns 10% in itself. The shares are on 0.9x book, they yield 3.7% and trade on a 3/20 EV/ebitda multiple of 3.8x, assuming ebitda next year of Y16.5bn. Unless one is exceedingly bearish on the outlook for the global economy, then these shares are starting to look attractive here. They have fallen 65% year to date, yet longer term management has a clear strategy with regards to improving profitability.
2. Goldwin Tops Sports Market Growth Through Store Investment
Marketing of sports brands has become increasingly retail-led in the last decade and a focus on retailing has enabled Goldwin (8111 JP) to make serious gains while the two biggest domestic brands, Asics Corp (7936 JP) and Mizuno Corp (8022 JP), have been distracted by overseas expansion.
Goldwin took a close look at its beleaguered business 15 years ago and decided retail could be its salvation.
At current rates it will catch up with Mizuno’s domestic sales in a few years.
Overall, we are bullish about Goldwin but also the wider sports category because sports and sports fashion is in many ways one of the few consumer categories to be largely immune to a demographically challenged market like Japan – all age segments are buying into sports apparel, including the over 60s.
3. IKEA: Small Store Rollout in Japan to Start in 2020
IKEA Japan is following its parent company’s international strategy of opening smaller stores and expanding e-commerce. The first small store in Japan is now confirmed and will open in a high profile location in Harajuku.
With the correct design and positioning, it should help IKEA Japan back onto a higher growth path, and give Nitori Holdings (9843 JP) some competition at last – if only a little.
4. Share Classifications: Mid-December 2018 Snapshot
This weekly share class summary is a companion insight to Travis Lundy‘s H/A Spread & Southbound Monitor – most recently discussed in H/A Spread & Southbound Monitor – Going Into Year End.
This share class monitor provides a snapshot of the premium/discounts for various share classifications around the region, and comprises four sets of data:
1. 82 ADRs
2. 105 Korean Prefs
3. 22 Regional Dual Classes
4. 7 Foreign/Local Thai shares
The average premium/discount for each set over a one-year period is graphed below.
For a granular breakdown of each set, PDFs are attached at the bottom of this insight.
5. Idemitsu Kosan Tactical Support with Macro Cycle Drag
Idemitsu Kosan (5019 JP) decline is nearing exhaustion support and sets up a tactical trade higher.
MACD breach of floor support now turns this key pivot level into a cap resistance on a recovery cycle. It also calls for a new and lower trading range.
Macro support breaks must be mended to turn the cycle from bearish back to neutral and will require a series of positive rally cycles for basing to unfold.
Tactical buy supports are outlined along with our tactical rally target, macro pivot resistance and the stop level.
