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>
<a href="https://www.smartkarma.com/entities/Freee-kk" target="_blank" data-smartkarma-citation="entities:28424:1" rel="noopener">freee (4478 JP)</a> reported 2QFY06/2022 earnings today. Revenue grew 38.5% YoY to JPY3.31bn, marginally below consensus revenue of JPY3.47bn.</li>
<li>Operating losses for the quarter was JPY544m (16.4% of revenues vs 17.8% in 2QFY06/2021) which was well below consensus operating loss of JPY673.1 (19.4% of consensus revenue.</li>
<li>Though revenues fell slightly below consensus, we think 2Q results have eased some of the concerns we had over freee’s acquisition of Ninja Sign and its path to profits.</li>
</ul>



freee (4478 JP) reported 2QFY06/2022 earnings today. Revenue grew 38.5% YoY to JPY3.31bn, marginally below consensus revenue of JPY3.47bn.
Operating losses for the quarter was JPY544m (16.4% of revenues vs 17.8% in 2QFY06/2021) which was well below consensus operating loss of JPY673.1 (19.4% of consensus revenue.
Though revenues fell slightly below consensus, we think 2Q results have eased some of the concerns we had over freee’s acquisition of Ninja Sign and its path to profits.


Freee 2Q: OP Beat Wipes Out Concerns on Mid/Large User Growth and Profitability

Research from Mita Securities, Mita Securities

Mita Securities

Research from Mita Securities

Mita Securities provides a full scale diversified investment banking and financial services. A comprehensive investment banking department, specializes in rights offerings advisory, take-over bids agents, M&A etc. Including a proprietary trading desk, and wealth management department that offers brokerage, custody, real estate, and full proxy services.

<ul>
<li>
We initiate coverage of Money Forward, Inc. (3994, Money Forward, the company) with a target price of 5,650 yen and a Hold rating.
</li>
<li>
We forecast sales of 20.6bn yen for FY11/22 (+32.1% YoY) and 26.4bn yen for FY11/23 (+27.7% YoY)
</li>
<li>
Our target price is based on a target EV/Sales multiple of 10.5x for FY11/23
</li>
</ul>



We initiate coverage of Money Forward, Inc. (3994, Money Forward, the company) with a target price of 5,650 yen and a Hold rating.


We forecast sales of 20.6bn yen for FY11/22 (+32.1% YoY) and 26.4bn yen for FY11/23 (+27.7% YoY)


Our target price is based on a target EV/Sales multiple of 10.5x for FY11/23



Money Forward (3994): SaaS & Fintech Combined. Initiating Coverage with a Hold

Japan Specialist

Mark Chadwick

<ul>
<li>Money Forward reported full year results post close on Friday. The stock will react negatively...probably.  </li>
<li>The stock is down 45% from its 52-week high, along with most high growth SaaS stocks </li>
<li>The fundamentals, earnings and growth remain intact, but valuations are unlikely to recover as excess liquidity drains out of the market.  One for patient LT investors</li>
</ul>


Money Forward reported full year results post close on Friday. The stock will react negatively...probably.  
The stock is down 45% from its 52-week high, along with most high growth SaaS stocks 
The fundamentals, earnings and growth remain intact, but valuations are unlikely to recover as excess liquidity drains out of the market.  One for patient LT investors


Money Forward (3934) - Solid, Not Spectacular

<ul>
<li>Freee’s shares have lost about 38.2% over the last 12-months. The company is trading at FY+2 EV/Revenue of 15.23x at a slight premium to historical low of 11.27x.</li>
<li>Freee’s acquisition of Sight Visit has dragged down the market sentiment as the upside from the acquisition is lower. We expect the monetisation of Ninja Sign to be faster and successful.</li>
<li>We think Freee’s current multiples are a lot cheaper and offers a good opportunity to buy the stock.</li>
</ul>


Freee’s shares have lost about 38.2% over the last 12-months. The company is trading at FY+2 EV/Revenue of 15.23x at a slight premium to historical low of 11.27x.
Freee’s acquisition of Sight Visit has dragged down the market sentiment as the upside from the acquisition is lower. We expect the monetisation of Ninja Sign to be faster and successful.
We think Freee’s current multiples are a lot cheaper and offers a good opportunity to buy the stock.


Freee: Current Drop in Multiples Offer a Good Entry

Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>In <a href="https://www.smartkarma.com/insights/topix-inclusions-who-is-ready-4-0" target="_blank" data-smartkarma-citation="insights:61777" rel="noopener">TOPIX Inclusions: Who Is READY? 4.0</a>, I identified <a href="https://www.smartkarma.com/entities/freee-kk" target="_blank" data-smartkarma-citation="entities:28424:1" rel="noopener">freee (4478 JP)</a> as a potential TOPIX Inclusion candidate based on their ability to satisfy key Section Transfer Requirements.</li>
<li>Previously, I have discussed a pair trade involving <a href="https://www.smartkarma.com/entities/freee-kk" target="_blank" data-smartkarma-citation="entities:28424:1" rel="noopener">freee (4478 JP)</a> and its close competitor <a href="https://www.smartkarma.com/entities/money-forward-inc" target="_blank" data-smartkarma-citation="entities:25919:1" rel="noopener">Money Forward (3994 JP)</a> in <a href="https://www.smartkarma.com/insights/topix-inclusion-money-forward-3994-could-outperform-freee-4478-until-end-of-month" target="_blank" data-smartkarma-citation="insights:54585" rel="noopener">TOPIX Inclusion: Money Forward (3994) Could Outperform Freee (4478)</a>.</li>
<li>Below is a look at the reasons for why the timing might be good for reversing this Trade and going LONG Freee - SHORT Money Forward.
</li>
</ul>


In TOPIX Inclusions: Who Is READY? 4.0, I identified freee (4478 JP) as a potential TOPIX Inclusion candidate based on their ability to satisfy key Section Transfer Requirements.
Previously, I have discussed a pair trade involving freee (4478 JP) and its close competitor Money Forward (3994 JP) in TOPIX Inclusion: Money Forward (3994) Could Outperform Freee (4478).
Below is a look at the reasons for why the timing might be good for reversing this Trade and going LONG Freee - SHORT Money Forward.



TOPIX Inclusion Pre-Event Pair Trade: LONG Freee - SHORT Money Forward

Japan

Money Forward, Inc. develops mobile application software. The Company produces automatic household account book softwares, household account book application softwares, and other products. Money Forward also provides personal financial management, cloud based accounting solutions, and other services.

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Money Forward (3994 JP)

Freee 2Q: OP Beat Wipes Out Concerns on Mid/Large User Growth and Profitability

Freee’s share price started falling as earnings over the last 2-3 quarters concerned investors over its path to profits. 2Q OP beat has eased these...

Shifara Samsudeen, ACMA, CGMA

Money Forward (3994): SaaS & Fintech Combined. Initiating Coverage with a Hold

We initiate coverage of Money Forward, Inc. (3994, Money Forward, the company) with a target price of 5,650 yen and a Hold rating.

Mita Securities

Money Forward (3934) - Solid, Not Spectacular

Money Forward's fundamentals, earnings and growth remain intact, but valuations are unlikely to recover as excess liquidity drains out of the...

Mark Chadwick

Freee: Current Drop in Multiples Offer a Good Entry

Freee’s acquisition of Sight Visit has dragged down the market sentiment. Freee’s current multiples are a lot cheaper and offers a good opportunity...

Shifara Samsudeen, ACMA, CGMA

TOPIX Inclusion Pre-Event Pair Trade: LONG Freee - SHORT Money Forward

Freee is a TOPIX Inclusion pre-event candidate and this might act as a catalyst to help them outperform their close peer Money Forward and the...

Janaghan Jeyakumar, CFA

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