personal_noteS – Page 3

Japan history (2) – Where does power come from?

2/ Shogunate

Year 1192

Power established by an organized army (most powerful army, by killing opponents), and the recognition from Japan’s Emperor.

Kamakura Shogunate 镰仓幕府 (first Shogunate)

Minamoto no Yoritomo 源頼朝, born into the Minamoto clan, a prominent samurai family.

Defeated the Taira clan in 1185.

Emperor’s real power had decreased already; in 1192, Yoritomo became Sei-i Tai Shōgun, which have power over other feudal lords while the Emperor becomes figurehead.

Shogunate needs to be financially power to organize the most powerful army.

Imperial court came back into power after some time, but then replaced by Ashikaga shogunate 足利幕府, or Muromachi shogunate 室町幕府 (2nd shogunate)

Japan history (1) – Where does power come from?

1/ Taika Reform

Year 645

Power established by killing opponents (Isshi incident).

Emperor Kōtoku 孝徳天皇

Then the reform divided Japan into 66 “provinces”, the head of which may come from head of powerful families / clans.

Basically, before the reform, each powerful family may behave like its own king, but now the whole Japan only has 1 super / centralized Emperor.

Land is nationalized and taxed.

Emperor will over time focus more on religious work, thus getting power as decedents of God.

So $IBB generated negative return over the past 5 years…

And it probably should be down.

Top weighted companies within $IBB are Gilead, Vertex, Amgen and Regeneron.

Gilead 1q 2022 revenue was $6,590 million and 1q 2025 revenue was $6,667 million – no growth for 3 years.

Vertex 1q 2022 revenue was $2,097.5 million and 1q 2025 revenue was $2,770.2 million (but 1q 2024 revenue was $2,690.6, so revenue growth slowed significantly). Additionally, Vertex shows no growth in non-gaap operating income.

Amgen is better – 1q 2022 revenue was $6,238 million and 1q 2025 revenue was $8,149 million. But growth is smaller in operating income vs 3 years ago – non-gaap operating income grew to $3,599 million in 1q 2025 vs $3,140 million in 1q 2022, or ~15% growth in 3 years.

Regeneron 1q 2022 revenue was $2,965 million and 1q 2025 revenue was $3,029 million – no growth vs. 3 years ago and 1q25 vs 1q24 declined 4%.

Gilead and Vertex stock performance is not bad actually.

In the past 3 years, Gilead stock is up 75% and Vertex stock is up 50%.

However, the index is pressured – only those companies with promising new “story” to tell are up meaningfully. Existing business lines are not sexy as shown above.

No rising tide that could lift all boats post covid – only dangerous ones like rising interest rate.

What I don’t understand about robotaxi…

For the same destination, Baidu’s Apollo robotaxi in Shenzhen will charge RMB 125 (before coupon) vs RMB 40 on Didi express (affordable tier, before coupon) and RMB 50 for regular taxi.

What’s also interesting is that Baidu’s robotaxi estimates that it will take 79 minutes!

Meanwhile Didi estimates it’s about 31 minutes, which is in-line with other map apps’ estimates.

Baidu robotaxi charges more than 2x the taxi price and takes more than 2x the time…

Well done.

Attaching the breakdown of Baidu robotaxi fare (before coupon)

Fourth year of decline in household’s new debt

Charting this…

From Jan to May, China’s household added 834.7 billion mid-to-long-term rmb debt.

This is only ~30% of 2021 level (near 3tn), and 40% of 2016 level (2tn rmb). This is the 4th year of decline of newly added debt; it’s only 3% below 2024 level though.

For the full year of 2016 and 2021, China’s household added 5.7 trillion and 6.1 trillion mid-to-long-term rmb debt.

Household’s mid-to-long-term debt is mostly for home buying.

Notable decline in Baijiu stocks

See my previous posts on Baijiu here (Jun 2024) and here (Sep 2024) – concerns on volume growth and the ability to further increase profitability.

While premium Baijiu company like Moutai can still do ok, as key product’s market price is still higher than its ex-factory price, the price gap is narrowing, which means Moutai’s distributors are having a bad time.

The end demand is additionally weak after Chinese gov’s recent liquor ban.

Moutai’s stock price has declined by ~15% since mid-May (1645 -> 1401). Currently, Jun 16 is one of the lowest closing price in 2025, worse than Apr 7 when tariff hit.

However, this represent a buying opportunity I believe.

Besides Moutai, other Baijiu brands stock also declined. Wuliangye has declined about 15% from its peak this year. In fact, it’s more than 10% lower than end of 2019 level (~rmb 133 per share)!

Luzhou Laojiao has declined about 25% from its peak this year.

They are trading at 20x (5% earnings yield, Moutai) and 14x (7% earnings yield, Wuliangye), and 12x (8% earnings yield, Laojiao) LTM earnings, compared with ~1.6% China’s gov bond yield.

China’s home price continued to weaken MoM

Following the previous near flattish China’s real estate price in February 2025, China is seeing weakening in Apr and May, despite the yoy comparison still looks okay.

Key cities’ MoM existing home price index % change was -0.3% and -0.7% in Apr and May 2025.

The yoy comparison shows decline of less than 2% – existing home price index is only down 1.8% and down 1.3% in Apr and May 2025.

Complications in GDP and consumption calculation

In China, owners’ imputed rent at market rate was only adopted as of 2023 GDP figure – 2023 GDP upward, among which CNY 1.343 trillion (~1% of GDP) is due to market rent approach vs cost approach.

Some public/government sponsored consumption are not counted as household consumption, such as public schools, healthcare etc. Therefore the split will make household % lower, but this won’t change total GDP figure. These are both valued on cost basis in China and EU.