Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>OVERSEAS. SPX -1.1% as Fed Hawks rhetoric ratches up; All 11 Sectors -ve as Beta Sold; ALPHABET-7.7% AI fails to impress; Disney +8% after-hours with earnings beat/job cuts. </li>
<li>JAPAN.  NKY Futs -0.8% vs Cash; USDJPY 131.41; Japan looking to ease restrictions for China Inbound;  EARNINGS: Pan Pac/SMM Strong vs weak Subaru which -ve production cut; Toyota out today. </li>
<li>DAILY NUGGETS. EPIC fail from Alphabet's "BARD". Aren't these events supposed to  be choreographed ????</li>
</ul>


OVERSEAS. SPX -1.1% as Fed Hawks rhetoric ratches up; All 11 Sectors -ve as Beta Sold; ALPHABET-7.7% AI fails to impress; Disney +8% after-hours with earnings beat/job cuts. 
JAPAN.  NKY Futs -0.8% vs Cash; USDJPY 131.41; Japan looking to ease restrictions for China Inbound;  EARNINGS: Pan Pac/SMM Strong vs weak Subaru which -ve production cut; Toyota out today. 
DAILY NUGGETS. EPIC fail from Alphabet's "BARD". Aren't these events supposed to  be choreographed ????


Good Morning Japan |Hawks Re-Emerge + Epic "BARD" Fail Sinks Google; Pan Pac Beat/Subaru Miss

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

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

<ul>
<li>This is the Third of HRTech sector series and the four companies that we have covered under this series have since reported earnings.</li>
<li>HRTech market has undergone rapid changes and 2023 will bring in more value to the recent transformation such as Hybrid work models and metaverse that the industry has witnessed.</li>
<li>Of the four companies, except for Recruit, other three continues to perform positively with Visional recording the highest growth among the four.</li>
</ul>


This is the Third of HRTech sector series and the four companies that we have covered under this series have since reported earnings.
HRTech market has undergone rapid changes and 2023 will bring in more value to the recent transformation such as Hybrid work models and metaverse that the industry has witnessed.
Of the four companies, except for Recruit, other three continues to perform positively with Visional recording the highest growth among the four.


HRTech Sector Series: Hybrid Work Models and Metaverse to See More Prominence in 2023

<ul>
<li>It is time we review our 2022 high conviction call. Our conviction short Recruit has fallen 41.5% since we made our call on the stock on 01st December 2022.</li>
<li>Though Staffing and Matching &amp; Solutions businesses have bounced back post-Covid, HR Tech biz’s earnings have started to fall with weakening of labour markets.</li>
<li>With global recruitment markets facing challenges with weakening of global economies, we think <a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a> 's shares have further room to fall in 2023E.</li>
</ul>


It is time we review our 2022 high conviction call. Our conviction short Recruit has fallen 41.5% since we made our call on the stock on 01st December 2022.
Though Staffing and Matching &amp; Solutions businesses have bounced back post-Covid, HR Tech biz’s earnings have started to fall with weakening of labour markets.
With global recruitment markets facing challenges with weakening of global economies, we think Recruit Holdings (6098 JP) 's shares have further room to fall in 2023E.


2022 High Conviction Recruit: More Room for Shares to Fall

Quality-first, Business-perspective Strategy, Urbem (HK) Limited

Steven Chen

Quality-first, Business-perspective Strategy

<ul>
<li>Kakaku.com Inc. can be a rare species among listed companies in Japan;</li>
<li>We had multiple email exchanges and meetings with the management team for a deep-dive view covering corporate cultural, management style, capital allocation, business model, and competitive strength.</li>
<li>We would wait for a 20%-30% pullback in the share price before looking to add to our position but would certainly remain reluctant to sell any share that we own.</li>
</ul>


Kakaku.com Inc. can be a rare species among listed companies in Japan;
We had multiple email exchanges and meetings with the management team for a deep-dive view covering corporate cultural, management style, capital allocation, business model, and competitive strength.
We would wait for a 20%-30% pullback in the share price before looking to add to our position but would certainly remain reluctant to sell any share that we own.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit Holdings (6098 JP)</a> reported 2QFY03/2023 earnings today. Revenue increased 25.3% YoY to JPY878.4bn (vs consensus JPY842.7bn) while EBIT decreased 8.2% YoY to JPY108.5bn (vs consensus JPY116.1bn).</li>
<li>HR Tech's top line growth further slowed down to 40.2% YoY while adjusted EBITDA margin of the segment declined to 30.4% from 40.6% in the same period a year ago.</li>
<li>The company’s 2QFY03/2023 earnings were better than we expected, however, it shows that the earnings growth is slowing down with weakening of labour markets globally.</li>
</ul>



Recruit Holdings (6098 JP) reported 2QFY03/2023 earnings today. Revenue increased 25.3% YoY to JPY878.4bn (vs consensus JPY842.7bn) while EBIT decreased 8.2% YoY to JPY108.5bn (vs consensus JPY116.1bn).
HR Tech's top line growth further slowed down to 40.2% YoY while adjusted EBITDA margin of the segment declined to 30.4% from 40.6% in the same period a year ago.
The company’s 2QFY03/2023 earnings were better than we expected, however, it shows that the earnings growth is slowing down with weakening of labour markets globally.


Recruit 2Q: Outlook for HR Tech Business Becomes Challenging

Japan

Recruit Holdings Co. Ltd. operates information providing services in human resource, housing, bridal, travel, restaurants, beauty, automobiles, and education and more. The company also operate staffing services and advertising business.

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Recruit Holdings (6098 JP)

Good Morning Japan |Hawks Re-Emerge + Epic "BARD" Fail Sinks Google; Pan Pac Beat/Subaru Miss

Fed Hawks rhetoric ratches up; ALHABET-7.7% AI fails to impress; . Japan looking to ease restrictions for China Inbound; JAPAN EARNINGS: Pan Pac...

Mark Chadwick

HRTech Sector Series: Hybrid Work Models and Metaverse to See More Prominence in 2023

This is the 3rd of HRTech sector series. The market in 2023 will witness more value coming from recent transformations such as Hybrid work models...

Shifara Samsudeen, ACMA, CGMA

2022 High Conviction Recruit: More Room for Shares to Fall

It is time we review our high conviction short for 2022. Recruit's share price is down more than 42% and with labour markets weakening, we think...

Shifara Samsudeen, ACMA, CGMA

Kakaku.com Inc.: A Deep-Dive View

Kakaku.com Inc. has impressed us as a rare species compared to many other Japanese companies and is probably the most investable publicly-traded...

Steven Chen

Recruit 2Q: Outlook for HR Tech Business Becomes Challenging

Recruit, our high conviction short is down 31% YTD. Outlook for HR Tech segment remains bleak though staffing and Matching & Solutions businesses...

Shifara Samsudeen, ACMA, CGMA

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