COVID-19下的零售业策略：全球金融危 机的影 响.docx

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1、Asia Pacific Equity Research 27 March 2020Japan Equity Research RetailDairo Murata AC(81-3) 6736 8620dairo.muratajpmorgan Bloomberg JPMA MURATA Qianqian Pu(81-3) 6736-9648qianqian.pujpmchase JPMorgan Securities Japan Co., Ltd.J. P MorganRetail Sector Strategy Under COVID-19Implications from the Glob

2、al Financial Crisis; Search for Intrinsic ValueInvestment strategy under COVID-19: Japanese retail stocks have declined as investment conditions deteriorate due to the COVID-19 pandemic and its impact on economic growth. In this report, we consider an investment strategy for these challenging invest

3、ment conditions. Specifically, we focus on 1) the investment implications of earnings and stock price trends around the time of the global financial crisis, 2) the resilience of earnings when sales decline, and 3) intrinsic value based on balance sheets. We think it is important to 1) own mainly sto

4、cks in subsectors that we believe are safer, 2) select those stocks that are likely to rebound if market conditions normalize in the next one to two months, and 3) take into consideration supply/demand factors. Changes in details of the shock: From mid-January to early February, it was thought that

5、the COVID-19 outbreak in Hubei Province would hurt Japanese retailers through a) their Chinese businesses, b) supply chain disruptions, and c) a decline in demand from overseas visitors to Japan. However, since midFebruary, concerns about the spread of the disease in Japan have led to increased dema

6、nd for masks and disinfecting/sterilizing products, hoarding of everyday items, and shopping and working from home. We think the effects, which vary from subsector to subsector, are positive for drugstores, discount stores, and e- commerce; slightly positive for convenience stores; and negative for

7、department stores, restaurants, urban commercial districts, and amusement facilities. Future scenarios: The extent and duration of COVID-19 fears are key. The number of new cases in China has declined, and we believe the outbreak could gradually come under control in Japan in the medium term, but th

8、e Tokyo Olympic Games have been postponed. Our core scenario assumes that the situation in Europe and the United States, where the outbreak is the most serious, will gradually normalize starting in the summer. Our risk scenario for consumer spending in Japan is a downward spiral in which a decline i

9、n demand leads to a deterioration in corporate earnings and bankruptcies, which in turn lead to concerns about employment and incomes and a negative wealth effect from the decline in stock prices, which in turn lead to growing concerns about the future and a deterioration in consumer sentiment, whic

10、h in turn depress spending. We will be watching what emergency economic policies the government comes up with to prevent such developments, and when. We recommend holding more defensive stocks: We recommend owning stocks and subsectors with stable earnings, on the assumptions that COVID-19 concerns

11、will persist and the market will be volatile. Candidates from this perspective are drugstores and discount stores, and among the stocks we cover, Pan Pacific International Holdings, Cosmos Pharmaceutical, Nitori Holdings, Kusuri no Aoki Holdings, Matsumotokiyoshi Holdings, Sundrug, and Tsuruha Holdi

12、ngs. However, we would consider revising portfolios with a focus on valuations as many of these stocks have already outperformed on expectations for stable earnings and benefits from the COVID-19 pandemic. Rebound candidates: We think stocks that look promising if the market normalizes in the next f

13、ew months are 1) major ones that have pulled back substantially owing to exogenous factors and 2) those with intrinsic value. An example of the first type is Fast Retailing. Examples of the second type are Adastria and some other specialty retailers and department stores. Fund closings, moves by pub

14、lic funds, and other supply/demand factors also need to be noted. There have been effects from short covering of some stocks. Stocks in our coverage that could be affected by such moves include AEON, Skylark, Shimamura, Yamada Denki, and Lawson.See page 28 for analyst certification and important dis

15、closures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider th

16、is report as only a single factor in making their investment decision. jpmorganmarkets Comparison with Global Financial Crisis, and Investment ImplicationsConditions during 2008 global financial crisisImplications from developments during previous global recessionAssuming the COVID-19 pandemic conti

17、nues, we would expect a previously unforeseen decline in demand globally, and a global recession is possible. We thus believe it is worth refemng back to the severe global recession caused by the 2008- 2011 global financial crisis (GFC).Stocks prices corrected for four years due to GFCFigure 4 shows

18、 the performance of Japans retail sector share price index during the GFC. Looking first at absolute share prices, the GFC appears to have originated in the decline in U.S. housing prices in mid-2007, and after that share prices corrected for more than four years until 2011, due to the GFC and globa

19、l economic recession (although not shown, the Great East Japan Earthquake and the European financial crisis in 2011 were also factors behind the share price correction continuing). Absolute share prices did not really start recovering in Japan until Abenomics policies started to take effect in 2H 20

20、12.Convenience store operators outperformed strongly, albeit owing to one-time external factorsTurning to relative share prices, the retail sector index substantially outperformed at the start of the shock and through 2008 in particular. The retail index substantially outperformed the market as a wh

21、ole, because while TOPIX was undergoing a severe correction retailers including convenience stores benefited from special demand, and their absolute share prices held up, as described below. The retail index then greatly underperformed in 1H 2009, partly in reaction to its previous outperformance, a

22、nd after that the retail index maintained a range both in absolute and relative terms.COVID-19s initial impact more severe than GFCWe think the lessons to be learned from the GFC include (1) it took a considerable time for macroeconomic conditions and the retail sector index to recover, and (2) the

23、GFC was an external shock, but the retail index did not outperform throughout its duration (for one reason or another, it only greatly outperformed when concerns over the overall picture contrasted with relatively reassuring signs at retailers). In addition, based on Figure 4, aspects including the

24、speed of share price correction and degree of relative outperformance look likely to be higher in response to COVID-19 from 2020, compared with the first stage of the GFC in 2007-2008. Based on Figure 4, it appears that the movements seen during the GFC from 2007 until start-2009 will occur in only

25、four months during 2020.Important differences between GFC and COVID-19 pandemicHowever, it is important to understand the difference between the shocks created by the GFC and by COVID-19. (1) The GFC was a financial crisis, while COVID-19 is a crisis of the real economy. In addition, COVID-19 is a c

26、oncern among people, and concerns may be larger this time than during the GFC. (2) Since the GFC, the structure of demand and supply of the Japanese stock market may have changed (government funds, passive funds, hedge funds, etc.).950.850750650 n55045035007/10717Yen1300.门1100u100090019/920/3Price f

27、or US property started to dropJuly 9th, highest price of 18,262 yen for Nikkei M1.3Qdex after IT bubble0.708/108/709/109/710/110/7XTOPIX Retail IndexTOPIX Retail/TOPIX11Stock price dropped globally due to COVID-19I.0.920/921/321/922/322/9TOPIX Retail IndexTOPIX Retail/TOPIXSource: Bloomberg, J.P. Mo

28、rganWhat stocks were big winners during GFC? Conclusion is straightforward2x relative share price outperformance, albeit wholly owing to one-time external factorsSpecial demand stocks during COVID-19 pandemic, and similaritiesBelow we review the performance of the leading Japanese retail subsectors

29、during the GFC, and look for investment implications for the current COVID-19 shock.In conclusion, during the GFC the market shares of companies with structural pricing advantages for their merchandise such as Nitori Holdings, Fast Retailing, Cosmos Pharmaceutical and Pan Pacific International Holdi

30、ngs (PPIH) rose very fast, and their relative share prices outperformed substantially. Convenience store companies outperformed strongly at the start of the GFC, but this was partly owing to a tailwind from external one-time factors such as the introduction of Taspo, and the growth trend in their sa

31、les and share prices subsequently tailed off.CVS under GFC: Case study (1)Convenience store operators viewed as safe during GFCFigure 5 shows same-store sales and the relative share prices of the big three convenience store companies. From start-2008 until summer 2008, same-store sales growth was un

32、usually strong at the major convenience store operators, and their relative share prices outperformed substantially (in particular at the pure convenience store companies, Lawson and FamilyMart). This performance reflected the robust sales and earnings that accompanied the introduction of Taspo (an

33、RFID card required to buy cigarettes from vending machines, aimed at preventing purchasing by minors). This was a purely external factor, but convenience stores were a rare subsector that provided reassurance during the GFC, and we think this is why they outperformed substantially.We see similaritie

34、s with the subsectors currently benefiting from special demand (including drugstores, discount stores and supermarkets). However, the convenience store companies? relative share prices then coirected substantially over the subsequent year or so, mainly because their sales slowed down as Taspo effect

35、s faded away. Nevertheless, they tended to slightly outperform when looking at the GFC period as a whole.Figure 5: Convenience store operators5 same-store sales (above) and relative share prices (below) during GFC %Source: Bloomberg, J.P. MorganDrugstores under GFC: Case study (2)Cosmos was stronges

36、t performer by far among drugstoresSales generally robust at leading drugstore companies; Cosmos doing bestMoving on to drugstores, Figure 6 shows their same-store sales and relative share prices during the GFC. It appears that same-store sales generally tended to rise at all the drugstore companies

37、 during the GFC (although at times sales appear to have relatively stagnated to an extent at companies including Matsumotokiyoshi and Sundrug, due to individual factors). Meanwhile, Cosmos Pharmaceutical maintained the best sales trend during the GFC. It consistently increased its market share by co

38、ntinuously appealing to consumers via low prices during the recession. As a result, it had by far the best share price performance among drugstore companies during the GFC. After Cosmos, the share prices of companies including Tsuruha Holdings, Kusuri No Aoki Holdings and Sundrug also held up well.

39、In contrast, the performance of Sugi Holdings and Matsumotokiyoshi was relatively soft (but their relative share prices still generally performed well).Compared with GFC, growth stages and management strategies at drugstore companies have changedIn the same way, we think that price-competitive compa

40、nies like Cosmos may continue to take share in relative terms during the COVID-19 recession. Furthermore, it must be borne in mind when comparing the current phase with the GFC that in many cases aspects including growth stage, prioritization of pharmaceutical dispensing, and management teams, syste

41、ms and strategies have changed considerably at the leading drugstore companies.Figure 6: Drugstores same-store sales YoY growth (above) and relative share prices (below) during GFC%3.5Matsumoto Kiyoshi Cosmos Tsuruha Kusuri no Aoki Sugi Sundrug0.5Source: Bloomberg, J.P. MorganComprehensive retailers

42、 and home center companies under GFC: Case study (3)Nitori and PPIH greatly outperformed during GFC with assistance from price appealNitori exploited yen hyperappreciation to continue price cutting strategy during GFC; share expanded dramaticallyFigure 7 shows sales and relative share prices at disc

43、ount store companies, comprehensive retailers and home center companies. The first thing that catches the eye is the impact of Nitori Holdings9 seven strategic price reduction campaigns during FY2008-FY2009. Amid recession conditions, its same-store sales expanded remarkably, and it established an o

44、verwhelming market position and share. The GFC saw a conventional phase of yen appreciation accompanying a risk-off movement, and the yen strengthened from the 100/$ level in 2008 to the 70/$ level in 2011. Nitori waged aggressive low-price campaigns, assisted by yen appreciating lowering the import

45、 COGS. Its share price performance was also more than double in relative terms.PPIH also used GFC to further consolidate popularity among consumersPPIHs share price also strongly outperformed as it maintained steady growth in same-store sales by appealing through low prices, principally for daily ne

46、cessities. In contrast, as shown in Figure 7 same-store sales tended to fall and relative share price performance was around lx at companies including Aeon and Ryohin Keikaku.Forex developments are different this time, but customer developments are similarForex movements in the current phase differ

47、from the GFC, and we do not think companies like Nitori will be able to drive up share through strategic price cutting this time. Nevertheless, during a recession it is necessary to offer appealing prices and merchandise quality and line-ups to strengthen support from customers. We thus think that N

48、itori and PPIH will retain their relative strategic advantage when considering factors like business models and economies of scale.Figure 7: Same-store sales YoY growth (above) and relative share prices (below) during GFC at discount stores, comprehensive retailers and home center companies %X3.00PPIH Aeon Nitori Ryohin Keikaku2.502.001.501.000.50Source: Bloomberg, J.P. MorganUniqlo had powerful growth driver during GFCUniqlo appears to be doing relatively well, but dramatic share expansion seen during GFC may b