Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

<ul>
<li>FY22 EBITDA guidance is disappointing as strategic investments accelerate yet again and leaving investors uncertain on whether previous guidance for FY23 can be met</li>
<li>We think ZHD's FY23 target of ¥ 390bn in EBITDA is reachable but a meaningful beat, which is factored into consensus, is less likely</li>
<li>So FY22 is another transition year but without the excitement on the potential for LINE as an alternative theme. It is better to be on the sidelines. </li>
</ul>


FY22 EBITDA guidance is disappointing as strategic investments accelerate yet again and leaving investors uncertain on whether previous guidance for FY23 can be met
We think ZHD's FY23 target of ¥ 390bn in EBITDA is reachable but a meaningful beat, which is factored into consensus, is less likely
So FY22 is another transition year but without the excitement on the potential for LINE as an alternative theme. It is better to be on the sidelines. 


Z Holdings Q4 21 Results Reaction: Growth Pushed Back a Year; Downgrade to Neutral

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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.

<ul>
<li>Zozo reported yesterday missing slightly across the board with OP missing consensus by 6.7% on a 0.7% miss at the top line. </li>
<li>GMV was reasonable due to apparent generosity on reward points and strong promotional spending. </li>
<li>OP guidance of ¥51.5bn was noticeably below consensus and while Zozo is considered conservative we expect a miss and long-term stagnation.</li>
</ul>


Zozo reported yesterday missing slightly across the board with OP missing consensus by 6.7% on a 0.7% miss at the top line. 
GMV was reasonable due to apparent generosity on reward points and strong promotional spending. 
OP guidance of ¥51.5bn was noticeably below consensus and while Zozo is considered conservative we expect a miss and long-term stagnation.


Zozo – Operating Leverage Apparently Less Fun On The Downside

<ul>
<li>Results for Q4 and FY22 guidance were mixed with platform sales and revenue largely in-line but margins slightly weaker</li>
<li>The loss of a major B2B customer wipes out almost all the growth in that segment but core consumer growth remains solid (10%+) as do operating KPIs </li>
<li>The read across to parent Z Holdings is limited as the difference in company guidance and consensus operating profit is less than 1% of ZHD consolidated</li>
</ul>


Results for Q4 and FY22 guidance were mixed with platform sales and revenue largely in-line but margins slightly weaker
The loss of a major B2B customer wipes out almost all the growth in that segment but core consumer growth remains solid (10%+) as do operating KPIs 
The read across to parent Z Holdings is limited as the difference in company guidance and consensus operating profit is less than 1% of ZHD consolidated


Zozo - Q4 21 Results Reaction: Mixed but Underlying Consumer Growth Remains Solid

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

NTT (Nippon Telegraph & Telephone) / Event-Driven

<ul>
<li>The April-June TSE FFW Methodology Revision moves favour certain sectors over others. There is nearly ¥500bn of telecom stocks to buy with 60+% of that in four names.</li>
<li>Other factors may support some of the names as well. </li>
<li>There is enough excess buying to warrant trading tilts and keeping fundamental positions even as forward earnings multiples have expanded to multi-year highs.</li>
</ul>


The April-June TSE FFW Methodology Revision moves favour certain sectors over others. There is nearly ¥500bn of telecom stocks to buy with 60+% of that in four names.
Other factors may support some of the names as well. 
There is enough excess buying to warrant trading tilts and keeping fundamental positions even as forward earnings multiples have expanded to multi-year highs.


Strong Telecom Flows in TOPIX FFW Transition Months

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

<ul>
<li>Among many e-commerce names, <a href="https://www.smartkarma.com/entities/monotaro-co-ltd" target="_blank" data-smartkarma-citation="entities:15441:1" rel="noopener">MonotaRO Co Ltd (3064 JP)</a> is one of the most promising with operating profitability predicted to improve by 200 bps to 14.0% by 2023.</li>
<li>Unlike many e-commerce players, the company doesn’t strain itself financially while pursuing revenue growth through expansion.</li>
<li>At 35.8x OP, MonotaRo is not cheap to be outright bullish. However, it is a reasonable long hedge to allow you to short a lot of other names in e-commerce.</li>
</ul>


Among many e-commerce names, MonotaRO Co Ltd (3064 JP) is one of the most promising with operating profitability predicted to improve by 200 bps to 14.0% by 2023.
Unlike many e-commerce players, the company doesn’t strain itself financially while pursuing revenue growth through expansion.
At 35.8x OP, MonotaRo is not cheap to be outright bullish. However, it is a reasonable long hedge to allow you to short a lot of other names in e-commerce.


Japan

ZOZO Inc operates internet shopping sites for apparel.  The Company also provides communication services relating to apparel such as blogs by fashion moguls and internet chat room for users.

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ZOZO Inc (3092 JP)

Z Holdings Q4 21 Results Reaction: Growth Pushed Back a Year; Downgrade to Neutral

Guidance for FY22 profitability growth is disappointing and whilst targets for the following year are probably achievable, a material beat is off...

Kirk Boodry

Zozo – Operating Leverage Apparently Less Fun On The Downside

Zozo reported yesterday missing slightly across the board with OP guidance of ¥51.5bn noticeably below consensus and while Zozo is considered...

Mio Kato

Zozo - Q4 21 Results Reaction: Mixed but Underlying Consumer Growth Remains Solid

Zozo posted mixed results and guidance with platform sales and guidance largely in-line but profitability below consensus.

Kirk Boodry

Strong Telecom Flows in TOPIX FFW Transition Months

The Telecom Sector is the biggest sector beneficiary of TOPIX FFW flows over the next few months. Still bullish NTT vs the others near-term. All...

Travis Lundy

MonotaRo: A Rare Winner in E-Commerce

While most e-commerce players are fighting each other and the e-commerce arms of traditional businesses, MonotaRo operates in a niche with very...

Oshadhi Kumarasiri

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