Kyoto Day 1 – Dec. 6, 2018

The second day I took a train from Kobe to Kyoto.

After checking in Hotel The Celestine Kyoto Gion, I had late lunch at Mametora Gion which specializes in small dishes cuisines. The environment there was quite comfortable in terms of distance between tables and interior styling & lighting. As it is supposedly to be, the presentation of dishes was great and taste was ordinary ( for me, the taste of this kind of cuisine is never the highlight in the dining experience).

The restaurant of my first dinner in Kyoto was a local store recommended by the concierge of hotel. The food was edible but not delicate as its clientele base is probably the neighborhood round southern area of Kenninji. The area might be one of the most densely populated of Michilin-starred Japanese restaurants in the world but ordinary restaurants are still viable since there’s demand for casual dinning to be met.

As usual, I had gyoza at Senmonten (泉門天) as my main late-night snack in Kyoto. I also had ramen at Tenkaippin as supplementary but it turned out that I’m not a fan of their style.

The release of Super Smash Bros. Ultimate / Special (JP) is the highlight of this trip. As expected nothing special happened on Hanamikoji Dori in Gion.

I was so bored in the hotel that I watched live streaming gameplay of SSBU on Youtube. While I think  gaming is one of my tracking industry, this was my first time to watch live streaming gameplay. To my surprise, it’s quite satisfying and healing to watch the gameplay when the host is shown as anime-style character with cute voice in tandem with facial / body expression.

I will further explore the economics on gaming, eSport and video / music streaming after going back to Taiwan.

Kobe Day 1 – Dec. 5, 2018

The touch screen of my iPhone went dead just when I was checking in my luggage.

So no Google map and photo this trip…

I had beef steak at 麤皮(aragawa) and shabu-shabu at すきやきしゃぶしゃぶ 神戸牛石田. Both were good. Price at 麤皮 was relatively high probably because of special beef used (三田牛).

I stay in Hotel La Suite Kobe Harborland. I might write a review on this hotel without my photo later. Only by telling from the hotel name, you can imagine this is a Japanese-Western style hotel with spacious rooms that probably have harbor view.

One thing about not having cellphone is that you probably acquire information from other media (in my case: I’m about to finish reading a book)

 

Pre-Thesis -Proj B2B

[Preliminary Investment Thesis on Project B2B]

*Background and Initial Thoughts*

This my first day attending the CS China Conference in SZ. I met four companies and saw a product demo presented by HOLT team. Among four companies, one company is in an industry with headwind, one company might have financial difficulties, and one company with high market expectation. The only company caught my eye is one currently with niche market dual brands and large amount investment portfolio.

Before due diligence, I guess is that this might be a multi-year price adjustment opportunity. So, instead of targeting a 12-months return of x%, opportunity might be better measured in IRR of X% in n years.

I had no idea about this company before the meeting. The company has dual sports brand operation. I’m not interested in this kind of business as it generally doesn’t have sustainable competitive advantage. However, the company has large amount of investment portfolio on its balance sheet. The amount is so significant that the company even regards investment as a business segment.

I haven’t took a deep dive into sports brands operation but as long as it’s not losing / burning huge amount of money / cash, the investment portfolio might create an investment opportunity as the market is not good at valuing the those investments leading to discount on investment reflected in company valuation (like Sotfbank).

So initially I want to build the investment thesis around the undervalued financial asset and free operating asset. Not sure how thesis will develop after more research being conducted.

Reasons why market discounts the financial assets in non-financial company

  • The control over financial asset: it’s difficult for minority shareholders to have a say in the Investment/Divestment/Reinvestment/Return of Capital (via dividend or share buyback) decision-making.
    • Potential sol: activism campaign
    • Focus area: background of ultimate owner and what is his current business main focus (you can regard fund management within the company as business unit OR you can think it as a way for someone who has corporate control to “make investment” with permanent capital partially from public    former, meanwhile building up relationship with external investment guys.
  • The investment skill: it’s difficult for the market to determine whether the manager is creating value or destroying value on those financial assets in the long run.
    • Focus area:
      1. Examine the asset quality
      2. Review the “business plan” of fund management and it’s track record

What about the operation of main business

  • Limited brand portfolio and still solving some supply chain problem. Recently brought in some senior managers.
  • Key in this thesis is that as long as this business unit breaks even and does not burn cash, self-sustaining operating asset might be easier to monitor. We will see this after reviewing their financials.

Risks

  • Value trap (what’s the catalyst and how long does it take to unlock the value)
  • Cash flow issue for this type of company (investment management business + non-cashcow, non-financial business)

Tokyo Day 2 – Oct. 24, 2018

The next day we went to Tsukiji for breakfast as we didn’t have enough information about the newly-opened Toyosu fish market.

It’s very clear that tourist traffic decreased substantially even though I heard that outer-market  (jōgai-shijō) stays. Some shops in the outer-market were not open when I visited, not sure whether they’re taking a break after market transition or they’re about to move to Toyosu as well.

My feeling is that it’s the remains of the fish market. Tourist-oriented shops that reply on market traffic as main customer acquisition channel will struggle with significant traffic scale down. Probably one year later, some media will report the status of Tsukiji and do some before and after comparison. My guess is that Tsukiji will become a local market and shops targeting tourists without real specialty will not survive.

After finishing Gyūdon (牛丼) at きつねや, we headed to Asakusa and Ueno to do what tourists should do.

We had sushi for lunch at Seamon Ginza around 1pm so walk-in was okay even in busy area like Ginza. The course dishes were familiar to what I had at Nihonbashi yesterday.

We spend the afternoon in Ginza-Yurakucho-Marunouchi area and the Imperial Palace.

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View towards Hibiya from Imperial Palace
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Statue of Love
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A flower shop

We had dinner at a lovely izakaya called Ginza Shimada (銀座 しまだ) where we stood to have small dishes and drinks. The experience was quite unique (as it’s a high quality stand bar in Ginza) and food was good. Their Japaneses guests even asked us why we knew this restaurant. (well, I googled “the best izakaya in Ginza” and checked on tabelog)

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We concluded the day with drinks and night view of Tokyo Tower at GINZA CASITA at 14F of Hotel The Celestine Ginza.

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A great place for late night drink with view in Ginza