Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>Z HD's media business accounts for 80% of consolidated earnings.</li>
<li>We believe that the combination of Yahoo Japan and LINE is driving new synergies and growth opportunities.</li>
<li>We believe that the media business alone could justify an EV of ¥4.5t, way above ZHD's current EV of ¥3.5t</li>
</ul>


Z HD's media business accounts for 80% of consolidated earnings.
We believe that the combination of Yahoo Japan and LINE is driving new synergies and growth opportunities.
We believe that the media business alone could justify an EV of ¥4.5t, way above ZHD's current EV of ¥3.5t


<ul>
<li>Z Holdings has the best ecosystem in Japan with 30% top line growth over the past year</li>
<li>We think that Z HD can out grow the competition in E-Commerce this year by leveraging group synergies</li>
<li>Z HD has earmarked an aggressive ¥35b to grow its Commerce Business this year </li>
</ul>


Z Holdings has the best ecosystem in Japan with 30% top line growth over the past year
We think that Z HD can out grow the competition in E-Commerce this year by leveraging group synergies
Z HD has earmarked an aggressive ¥35b to grow its Commerce Business this year 


Z Holdings (4689) | The Expanding Opportunity in E-Commerce

Telco/Internet specialist

Kirk Boodry

Redex Research

Thematic (Sector/Industry)

<ul>
<li>Japanese Internet companies are testing lows from the 2020 tech selloff whilst Rakuten stands out for reaching levels last seen in 2010</li>
<li>Z Holdings is at a two-year low but has fallen the same distance from its recent high (-53%) </li>
<li>Both face robust competition from Amazon, which has doubled its eCommerce GMV in Japan over the last four years (Rakuten +60%, core Z Holdings +47%)</li>
</ul>


Japanese Internet companies are testing lows from the 2020 tech selloff whilst Rakuten stands out for reaching levels last seen in 2010
Z Holdings is at a two-year low but has fallen the same distance from its recent high (-53%) 
Both face robust competition from Amazon, which has doubled its eCommerce GMV in Japan over the last four years (Rakuten +60%, core Z Holdings +47%)


Japan Internet - Fresh Lows for Many with Rakuten the Lowest Since 2010

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 three Japanese telecoms reported earnings this week. <a href="https://www.smartkarma.com/entities/softbank-corp" target="_blank" data-smartkarma-citation="entities:27445:1" rel="noopener">Softbank Corp (9434 JP)</a> was disappointing (and slightly confusing). <a href="https://www.smartkarma.com/entities/kddi-corp" target="_blank" data-smartkarma-citation="entities:639:1" rel="noopener">KDDI Corp (9433 JP)</a> was much of a muchness.</li>
<li>
<a href="https://www.smartkarma.com/entities/nippon-telegraph-telephone-corporation" target="_blank" data-smartkarma-citation="entities:623:1" rel="noopener">NTT (Nippon Telegraph &amp; Telephone) (9432 JP)</a>  looked the best, and announced the largest buyback - ¥400bn or 3%. But it comes from a government sale, not the market. </li>
<li>Nevertheless, the company is doing what it promised and executing on its promise. And despite the "bullishness" in the revenue forecast, earnings forecasts to March 2023 look conservative.</li>
</ul>


The three Japanese telecoms reported earnings this week. Softbank Corp (9434 JP) was disappointing (and slightly confusing). KDDI Corp (9433 JP) was much of a muchness.

NTT (Nippon Telegraph &amp; Telephone) (9432 JP)  looked the best, and announced the largest buyback - ¥400bn or 3%. But it comes from a government sale, not the market. 
Nevertheless, the company is doing what it promised and executing on its promise. And despite the "bullishness" in the revenue forecast, earnings forecasts to March 2023 look conservative.


NTT (9432) - Salutary Earnings Salutary Buyback, More to Go

<ul>
<li>Softbank Corp will meet its mid-term business plan commitment of ¥1,000bn in FY22 operating income but it needs a boost from valuation gains from PayPay to get there</li>
<li>Operationally, it is forecasting a 11% EBITDA decline driven by mobile revenue erosion and higher marketing expense with the lack of a growth contribution from Z Holdings apparent</li>
<li>The good news is the dividend is unchanged.  We expect a better story from NTT and KDDI later in the week but stable returns provide support</li>
</ul>


Softbank Corp will meet its mid-term business plan commitment of ¥1,000bn in FY22 operating income but it needs a boost from valuation gains from PayPay to get there
Operationally, it is forecasting a 11% EBITDA decline driven by mobile revenue erosion and higher marketing expense with the lack of a growth contribution from Z Holdings apparent
The good news is the dividend is unchanged.  We expect a better story from NTT and KDDI later in the week but stable returns provide support


Softbank Corp Q4 21 Results Reaction: Behind the Headlines, Disappointing Guidance

Japan

USEN-NEXT HOLDINGS Co.,Ltd. provides network information services. The Company provides video contents distribution, music contents distribution, and other services. USEN-NEXT HOLDINGS also provides internet agency, mobile communication, and other services.

Stream Media Corporation provides management of artists events and medias. The Company manages activities of Korean artists in Japan, and plans and organizes activities including their music and appearances at events, official mobile sites,  fan club sites, and others in commercials. Stream Media also provides Korean channel broadcasting services,

OKINAWA CELLULAR TELEPHONE COMPANY provides cellular and car phone services in Okinawa Prefecture.  The Company also sells cellular phones and accessories.

ARTERIA Networks Corporation provides telecommunication services. The Company offers internet connection, virtual private network construction, colocation, mobile connection, mobile device management, optical fiber network construction, and other services.

Vision Inc. provides a variety of telecommunication services, including fixed-line telecom, wireless telecom and wifi services. The company also provides distribution and lease service of office equipments and communications equipments.

FreeBit Co., Ltd. provides Internet connectivity outsourcing services for Internet service providers.  The Company also offers ubiquitous networking environment.  FreeBit provides consulting services for Internet related businesses as well.

Japan Communications Inc. provides telecommunication services to corporate clients.  The Company also provides wireless high-speed internet access mainly to consumers.

Broadmedia Corporation provides broadband service, CDN (contents delivery network), and media contents belonging to Softbank broadcasting. Broadmedia also markets game on demand service.

BroadBand Tower, Inc. operates Internet data centers to provide space services and Internet connectivity services.  The Company also distributes video contents on the Internet.

FORVAL TELECOM, INC. is a telecommunication services reseller, and provides discount international and domestic telephone and cellular phone services for the business and private sectors.  The Company also sells prepaid telephone cards and calling card services, and also does network and systems consulting.

Snap Inc. provides technology and social media services. The Company develops mobile camera application products and services that allow users to send and receive photos, drawings, text, and videos. Snap serves customers worldwide.

CAR Group Limited operates as a digital marketplace for vehicles. The Company provides a diversified portfolio of brands to sell and buy cars. CAR Group serves customers worldwide.

Match Group, Inc. is a dating service provider. The Company offers diverse portfolio of apps and services which enables connections across the spectrum of age, race, gender, sexual orientation, and backgrounds. Match Group serves customers worldwide.

Pinterest, Inc. operates and maintains social networking site. The Company provides online venue for personal photos, ideas, oddities, decorations, places to visit, recipes, and other items. Pinterest serves customers worldwide.

IAC Inc operates as a holding company. The Company, through its subsidiaries, provides media and Internet services. IAC serves customers worldwide.

Domain Holdings Australia Limited offers multi-platform property solutions. The Company operates an online portal that delivers property marketing solutions for residential, new development, and commercial properties. Domain Holdings Australia serves buyers, sellers, renters, and investors in Australia.

EverQuote, Inc. operates as an Internet based marketing firm. The Company, through its platform, enables consumers to connect with auto insurance carriers and agents to meet their auto insurance needs. EverQuote serves customers in the United States.

Hello Group Inc. operates as a mobile-based social networking platform. The Company enables users to establish and expand social relationships based on location and interests. Hello Group operates out of the Peoples Republic of China.

World Wrestling Entertainment, Inc. operates as a media and entertainment company. The Company offers live wrestling events, television programming, music publishing, advertising, licensing, and home video streaming services. World Wrestling distributes its programs worldwide in various languages.

Fox Corporation operates as an entertainment company. The Company produces and licenses news, sports, and entertainment content for distribution through cable television systems, direct broadcast satellite operators, telecommunications companies, and online video distributors. Fox also manages broadcast studios, theaters, editing bays, sound stages, and other production facilities.

LY Corporation operates as an internet search engine "Yahoo! JAPAN". The Company provides electronic commerce and settlement finance services for small medium enterprises and individuals. LY also operates media business including search linked advertising and display advertising services.

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LY (4689 JP)

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