Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

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

<p>Oracle Japan dropped 15% on Friday (June 25) after the announcement of disappointing results on Thursday. The share price is down 39% from its 52-week high (reached in February) and down 21% since we last wrote on the company at the end of March.</p><p>What to do with it now?</p><p>Performance deteriorated significantly in 4Q of FY May-21, when a 23.4% year-on-year decline in Cloud &amp; On-Premise License revenues more than offset growth in service and hardware, resulting in a 5.8% decline in operating profit and a 5.5% decline in net profit.</p><p>On top of that, management is guidance for an increase in revenues of only 1% to 4% and an increase in EPS of 0.3% to 2.9% in the new fiscal year, pointing to a slow recovery with little room left for cost cutting.</p><p>With the forward (guidance-based) P/E ratio down to 22x, Oracle Japan may no longer be a short, but it is not much of an investment either. If you like the business, look at the parent company.</p><p>In the same three months to May, Oracle Corp. (NYSE: ORCL) reported 8% growth in revenues, 5% growth in operating profit and a 40% operating margin (vs. 34% for Oracle Japan). ORCL is selling at 17x projected earnings.</p>

Oracle Japan dropped 15% on Friday (June 25) after the announcement of disappointing results on Thursday. The share price is down 39% from its 52-week high (reached in February) and down 21% since we last wrote on the company at the end of March.What to do with it now?Performance deteriorated significantly in 4Q of FY May-21, when a 23.4% year-on-year decline in Cloud &amp; On-Premise License revenues more than offset growth in service and hardware, resulting in a 5.8% decline in operating profit and a 5.5% decline in net profit.On top of that, management is guidance for an increase in revenues of only 1% to 4% and an increase in EPS of 0.3% to 2.9% in the new fiscal year, pointing to a slow recovery with little room left for cost cutting.With the forward (guidance-based) P/E ratio down to 22x, Oracle Japan may no longer be a short, but it is not much of an investment either. If you like the business, look at the parent company.In the same three months to May, Oracle Corp. (NYSE: ORCL) reported 8% growth in revenues, 5% growth in operating profit and a 40% operating margin (vs. 34% for Oracle Japan). ORCL is selling at 17x projected earnings.

Oracle Japan (4716 JP): No Longer a Short, but Not Much of an Investment

Value Investing

Vladimir Dimitrov, CFA

<ul>
<li>After having a go at SAP during the last earnings release in March, Oracle is due to announce its quarterly results this week.</li>
<li>The company continues to strengthen its dominant position in the Enterprise Resource Planning space and is seeing stronger momentum.</li>
<li>The supply-constrained Oracle Cloud Infrastructure offers a key competitive advantage for Oracle's ERP and database services.</li>
</ul>


After having a go at SAP during the last earnings release in March, Oracle is due to announce its quarterly results this week.
The company continues to strengthen its dominant position in the Enterprise Resource Planning space and is seeing stronger momentum.
The supply-constrained Oracle Cloud Infrastructure offers a key competitive advantage for Oracle's ERP and database services.


Oracle: The Turning Point Of The Business

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

CapitaLand Ascendas REIT / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/ascendas-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:39:1" rel="noopener">Ascendas Real Estate Investment Trust (AREIT SP)</a> aims to raise around US$320m (S$430m) to acquire the balance 75% stake in Galaxis. </p></div><div><p>This will be the second placement in under six months. Links to our previous coverage are below:</p></div><div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/areit-placement-expected-to-be-dpu-accretive-but-the-acquisition-might-take-a-while" target="_blank" rel="noopener">AREIT Placement - Expected to Be DPU Accretive but the Acquisition Might Take a While</a></li>
<li><a href="https://www.smartkarma.com/insights/areit-paying-for-acquisition-with-only-equity-doesn-t-add-up-dpu-to-fall-by-3-4" target="_blank" rel="noopener">AREIT - Paying for Acquisition with Only Equity Doesn’t Add Up, DPU to Fall by 3-4%</a></li>
<li><a href="https://www.smartkarma.com/insights/ascendas-reit-placement-multiple-acquisitions-to-be-made-starting-from-us-office-properties" target="_blank" rel="noopener">Ascendas REIT Placement - Multiple Acquisitions to Be Made, Starting From US Office Properties</a></li>
</ul></div>

Ascendas Real Estate Investment Trust (AREIT SP) aims to raise around US$320m (S$430m) to acquire the balance 75% stake in Galaxis. This will be the second placement in under six months. Links to our previous coverage are below:
AREIT Placement - Expected to Be DPU Accretive but the Acquisition Might Take a While
AREIT - Paying for Acquisition with Only Equity Doesn’t Add Up, DPU to Fall by 3-4%
Ascendas REIT Placement - Multiple Acquisitions to Be Made, Starting From US Office Properties


Ascendas REIT Placement - Smaller than the Last Deal, Should Be Accretive as Well

Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

Procore Technologies  / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/procore-technologies-inc" target="_blank" data-smartkarma-citation="entities:28882:1" rel="noopener">Procore Technologies Inc (PCOR US)</a> , US construction project management software unicorn, has decided to tap capital markets with IPO again. In March, company filed updated S-1 registration document with the SEC but did not specify expected price range and how many shares it plans to sell to investors. We have favorable view on Procore Technologies IPO and believe that President Biden’s $2T infrastructure plan will have a positive impact on construction industry in the United States and especially on the business of Procore.  </p><p><a href="https://www.smartkarma.com/entities/procore-technologies-inc" target="_blank" data-smartkarma-citation="entities:28882:1" rel="noopener">Procore Technologies Inc (PCOR US)</a>  has raised a total of ~$650 million in funding over 14 rounds, according to Crunchbase. Tech unicorn was backed by leading venture capital firms ICONIQ Strategic Partners, Bessemer Venture Partners, Tiger Global Management and D1 Capital Partners. We believe Procore will go public this month. Goldman Sachs, J.P. Morgan, Barclays and Jefferies are lead underwriters on the deal.   </p>

Procore Technologies Inc (PCOR US) , US construction project management software unicorn, has decided to tap capital markets with IPO again. In March, company filed updated S-1 registration document with the SEC but did not specify expected price range and how many shares it plans to sell to investors. We have favorable view on Procore Technologies IPO and believe that President Biden’s $2T infrastructure plan will have a positive impact on construction industry in the United States and especially on the business of Procore.  Procore Technologies Inc (PCOR US)  has raised a total of ~$650 million in funding over 14 rounds, according to Crunchbase. Tech unicorn was backed by leading venture capital firms ICONIQ Strategic Partners, Bessemer Venture Partners, Tiger Global Management and D1 Capital Partners. We believe Procore will go public this month. Goldman Sachs, J.P. Morgan, Barclays and Jefferies are lead underwriters on the deal.   

Procore Technologies IPO: Valuation Update. Shifting Focus to $2T Infrastructure Plan

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<div><p><a href="https://www.smartkarma.com/entities/linklogis" target="_blank" data-smartkarma-citation="entities:31126:1" rel="noopener">Linklogis (9959 HK)</a> is a leading technology solution provider for supply chain finance in China. Its solutions optimise the payment cycle of supply chain transactions and digitalize the entire workflow of supply chain finance. Linklogis will commence trading on Friday, 9 April. Linklogis priced its IPO at HK$17.58 and <a href="https://inews.hket.com/article/2926566/%E3%80%90%E6%96%B0%E8%82%A1IPO%E3%80%91%E8%81%AF%E6%98%93%E8%9E%8D%E7%A7%91%E6%8A%809959%E6%9A%97%E7%9B%A4%E3%80%80%E7%8F%BE%E5%8D%876-%E3%80%81%E6%97%A9%E6%AE%B5%E6%9B%BE%E8%B7%8C%E8%BF%91%E4%B8%80%E6%88%90?mtc=40001&amp;srkw=IPO%E6%9C%80%E5%BF%AB%E6%9C%80%E9%BD%8A" target="_blank" rel="noopener">currently trading around 6% higher</a> at HK$18.70 in the Futu securities grey market. The grey market performance is a welcome surprise in light of the choppy market conditions and declining market sentiment on Chinese tech names. The most recent HKEx tech IPO, <a href="https://www.smartkarma.com/entities/bairong" target="_blank" data-smartkarma-citation="entities:31486:1" rel="noopener">Bairong (1569395D CH)</a>, closed -16% below its IPO price on the first day and has not yet recovered.    </p></div><div><p>In <a href="https://www.smartkarma.com/insights/linklogis-ipo-initiation-isupply" target="_blank" data-smartkarma-citation="insights:47017" rel="noopener">Linklogis IPO Initiation: ISupply</a>, we stated that Linklogis is an attractive play on China’s supply chain finance market by combining a sensible monetisation model, high customer retention rate (good revenue visibility) and strong operating leverage. In <a href="https://www.smartkarma.com/insights/linklogis-ipo-every-little-helps" target="_blank" data-smartkarma-citation="insights:49480" rel="noopener">Linklogis IPO: Every Little Helps</a>, we noted that based on the PHIP which discloses the 2020 results and recent developments, we continue to believe that Linklogis’ fundamentals are attractive. In <a href="https://www.smartkarma.com/insights/linklogis-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:49693" rel="noopener">Linklogis IPO: Valuation Insights</a>, we noted that the IPO price range is reasonable.</p></div><div><div><div class="content-highlight"><p>Updating for the final IPO net raise, our base-case DCF derived price target of HK$19.28 per share. Our DCF sensitivity analysis shows that the IPO price remains reasonable and the grey market factors in achievable market share and margin forecasts. We continue to think that the IPO price represents good value. </p></div></div></div>

Linklogis (9959 HK) is a leading technology solution provider for supply chain finance in China. Its solutions optimise the payment cycle of supply chain transactions and digitalize the entire workflow of supply chain finance. Linklogis will commence trading on Friday, 9 April. Linklogis priced its IPO at HK$17.58 and currently trading around 6% higher at HK$18.70 in the Futu securities grey market. The grey market performance is a welcome surprise in light of the choppy market conditions and declining market sentiment on Chinese tech names. The most recent HKEx tech IPO, Bairong (1569395D CH), closed -16% below its IPO price on the first day and has not yet recovered.    In Linklogis IPO Initiation: ISupply, we stated that Linklogis is an attractive play on China’s supply chain finance market by combining a sensible monetisation model, high customer retention rate (good revenue visibility) and strong operating leverage. In Linklogis IPO: Every Little Helps, we noted that based on the PHIP which discloses the 2020 results and recent developments, we continue to believe that Linklogis’ fundamentals are attractive. In Linklogis IPO: Valuation Insights, we noted that the IPO price range is reasonable.Updating for the final IPO net raise, our base-case DCF derived price target of HK$19.28 per share. Our DCF sensitivity analysis shows that the IPO price remains reasonable and the grey market factors in achievable market share and margin forecasts. We continue to think that the IPO price represents good value. 

United States

Oracle Corporation supplies software for enterprise information management. The Company offers databases and relational servers, application development and decision support tools, and enterprise business applications. Oracle's software runs on network computers, personal digital assistants, set-top devices, PCs, workstations, minicomputers, mainframes, and massively parallel computers.

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Oracle Corp (ORCL US)

Oracle Japan (4716 JP): No Longer a Short, but Not Much of an Investment

Oracle Japan dropped 15% on weak 4Q results. Sales and profits both declined and FY Mar-22 guidance is for low single-digit recovery. It no longer...

Scott Foster

Oracle: The Turning Point Of The Business

After having a go at SAP during the last earnings release in March, Oracle is due to announce its quarterly results this week. The company...

Vladimir Dimitrov, CFA

Ascendas REIT Placement - Smaller than the Last Deal, Should Be Accretive as Well

Ascendas Real Estate Investment Trust (AREIT SP) aims to raise around US$320m (S$430m) to acquire the balance 75% stake in Galaxis.

Sumeet Singh

Procore Technologies IPO: Valuation Update. Shifting Focus to $2T Infrastructure Plan

Procore IPO is still one the most anticipated IPOs in 2021 and we believe Procore shares have substantial upside potential to last round valuation...

Andrei Zakharov

Linklogis IPO: Trading Debut

Linklogis priced its IPO at HK$17.58 and trading around 6% higher at HK$18.70 in the Futu securities grey market. We continue to think that the IPO...

Arun George

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