Equity Analyst, LightStream Research

Oshadhi Kumarasiri

An equity research analyst with over 7 years of experience in multiple sectors. Previously worked for one of the world's largest asset managers with about USD2.5trn in AUM, covering small and micro-cap companies in the consumer sphere across Europe and developed Asia. Also experienced in covering multiple industries including banking, insurance and asset management, retail, tech, telco and REIT.

Equity Analyst

Asia Growth Hits The Breaks, KOSE Tumbles 12.2%

Further Downside Is Possible As Kose Keeps Losing Ground in Japan

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

On the back of the optimism over revenue growth from the Chinese cosmetics market, Japanese cosmetics companies with significant exposure to the Chinese cosmetics market (<a href="https://www.smartkarma.com/entities/shiseido-company-limited" target="_blank" data-smartkarma-citation="entities:5718:1" rel="noopener">Shiseido Company (4911 JP)</a> and <a href="https://www.smartkarma.com/entities/kose-corp" target="_blank" data-smartkarma-citation="entities:18009:1" rel="noopener">Kose Corp (4922 JP)</a>) had a stellar rally and outperformed Topix by 12.2% and 6.3% respectively, since the most recent quarterly earnings.As a result, Kose’s consensus FY+2 EV/OP multiple has reached a new high of 33.4x, compared to the past five-year median of 15.1x.Meanwhile the Kao/Kose price ratio stands at 0.4, which is 12% below the 90-day average ratio and in line with minus two times the standard deviation of the 90-day average ratio, making <a href="https://www.smartkarma.com/entities/kao-corp" target="_blank" data-smartkarma-citation="entities:12933:1" rel="noopener">Kao Corp (4452 JP)</a> a hedge on the long side to a short Kose trade.

On the back of the optimism over revenue growth from the Chinese cosmetics market, Japanese cosmetics companies with significant exposure to the Chinese cosmetics market (Shiseido Company (4911 JP) and Kose Corp (4922 JP)) had a stellar rally and outperformed Topix by 12.2% and 6.3% respectively, since the most recent quarterly earnings.As a result, Kose’s consensus FY+2 EV/OP multiple has reached a new high of 33.4x, compared to the past five-year median of 15.1x.Meanwhile the Kao/Kose price ratio stands at 0.4, which is 12% below the 90-day average ratio and in line with minus two times the standard deviation of the 90-day average ratio, making Kao Corp (4452 JP) a hedge on the long side to a short Kose trade.

Kose Corp

Kose: At a New EV/OP Peak