Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

GigaDevice Semiconductor  / Technical Analysis

Market dynamics remain largely positive which continues to support our constructive outlook, and we view recent weakness as a buying opportunity. Below we highlight notable recent developments and actionable stocks within the Technology, Financials, and Materials Sectors.

Market dynamics remain largely positive which continues to support our constructive outlook, and we view recent weakness as a buying opportunity. Below we highlight notable recent developments and actionable stocks within the Technology, Financials, and Materials Sectors.

China Technology Sector Improving -- Add Exposure

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

Today after market-close, cloud-based business accounting software company <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>  <a href="https://s3-ap-northeast-1.amazonaws.com/mf-wp/wp-content/uploads/20210607153424/Notice-Regarding-Approval-of-Stock-Market-Listing-Transfer-to-the-First-Section-of-the-Tokyo-Stock-Exchange.pdf" target="_blank" rel="noopener">announced</a> they had received approval to move from Mothers Section to the First Section of the Tokyo Stock Exchange, effective 14th June 2021.TSE1 reassignment triggers inclusion into the TOPIX Index and the Inclusion Event can be expected to occur at the close of trading on 29th July 2021.In this insight, we take a look at the Index Inclusion Parameters and the Fundamentals of the company to evaluate the upside potential of the TOPIX Inclusion Event.

Today after market-close, cloud-based business accounting software company Money Forward (3994 JP)  announced they had received approval to move from Mothers Section to the First Section of the Tokyo Stock Exchange, effective 14th June 2021.TSE1 reassignment triggers inclusion into the TOPIX Index and the Inclusion Event can be expected to occur at the close of trading on 29th July 2021.In this insight, we take a look at the Index Inclusion Parameters and the Fundamentals of the company to evaluate the upside potential of the TOPIX Inclusion Event. 

Japan Specialist

Mark Chadwick

Equity Bottom-Up

The recent sharp sell-off in global growth stocks has provided an opportunity for long-term investors to buy <a href="https://www.smartkarma.com/entities/freee-kk" target="_blank" data-smartkarma-citation="entities:28424:1" rel="noopener">freee (4478 JP)</a>  at more attractive prices. Having fallen 45% from its peak earlier this year, the stock now trading at a trailing 12M EV/Revenue of 37x. 
Is that cheap enough? Well, the company is growing revenue at close to 50% YoY. If we assume that rate of growth is maintained into the next fiscal year, the stock would be much closer to a 20x multiple and much closer to the average of small cap Japanese growth companies currently trading at 15x revenue. 
There is a good buying opportunity opening up for patient investors.   
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/205/714/original/freee3.png?1620815258" class="editor-image img-responsive" data-smartkarma-image-id="205714"></figure>
</section>
<div class="content-caption">Source: Company presentation</div>

The recent sharp sell-off in global growth stocks has provided an opportunity for long-term investors to buy freee (4478 JP)  at more attractive prices. Having fallen 45% from its peak earlier this year, the stock now trading at a trailing 12M EV/Revenue of 37x. 
Is that cheap enough? Well, the company is growing revenue at close to 50% YoY. If we assume that rate of growth is maintained into the next fiscal year, the stock would be much closer to a 20x multiple and much closer to the average of small cap Japanese growth companies currently trading at 15x revenue. 
There is a good buying opportunity opening up for patient investors.    



Source: Company presentation
 

Japan Small Cap Growth: FREEE (4478) - Opportunities Opening Up

<ul>
<li>
<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> remains our High Conviction long for 2021. </li>
<li>1Q21 consolidated sales rose 45% YoY to ¥3.5b with gross profit rising 53% to ¥2.5b (73% gross margin)</li>
<li>Annual Recurring Revenue rose 35% YoY to ¥9b, driven by continued customer acquisition (now exceeds 464,000 paying customers)</li>
</ul>



Money Forward (3994 JP) remains our High Conviction long for 2021. 
1Q21 consolidated sales rose 45% YoY to ¥3.5b with gross profit rising 53% to ¥2.5b (73% gross margin)
Annual Recurring Revenue rose 35% YoY to ¥9b, driven by continued customer acquisition (now exceeds 464,000 paying customers)


Small Cap Japan Growth: Money Forward (3994)

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

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.

Thematic (Sector/Industry)

• LARGE CAP RESULTS - 13th APRIL •<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/200/386/original/image_36527959121618346539491.png?1618346540" class="editor-image img-responsive" data-smartkarma-image-id="200386"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div>RESULTS - Only 38% of Tuesdays 69 results announcements scored positively. Of the largest-cap stocks reporting, <a href="https://www.smartkarma.com/entities/toho-co-ltd" target="_blank" data-smartkarma-citation="entities:7806:1" rel="noopener">Toho (9602 JP)</a> cinemas has yet to bottom out but is still in profit. 'New wave' software companies <a href="https://www.smartkarma.com/entities/sansan-inc" target="_blank" data-smartkarma-citation="entities:28112:1" rel="noopener">Sansan (4443 JP)</a> and <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> are growing into their extreme valuations, while <a href="https://www.smartkarma.com/entities/pasona-group-inc" target="_blank" data-smartkarma-citation="entities:15778:1" rel="noopener">Pasona's</a> under-appreciated margin transformation continues. <figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/200/403/original/image_63727914331618348873715.png?1618348877" class="editor-image img-responsive" data-smartkarma-image-id="200403"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/200/404/original/image_12260447541618348911606.png?1618348912" class="editor-image img-responsive" data-smartkarma-image-id="200404"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/200/405/original/image_35233699051618348944141.png?1618348944" class="editor-image img-responsive" data-smartkarma-image-id="200405"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/200/406/original/image_14670185761618348969100.png?1618348969" class="editor-image img-responsive" data-smartkarma-image-id="200406"></figure>• LARGE CAP FORECASTS/REVISIONS - 13th APRIL •<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/200/407/original/image_58511005871618349036093.png?1618349036" class="editor-image img-responsive" data-smartkarma-image-id="200407"></figure>FORECASTS/REVISIONS - Two-thirds of annual forecasts/revisions were positive, with <a href="https://www.smartkarma.com/entities/toho-co-ltd" target="_blank" data-smartkarma-citation="entities:7806:1" rel="noopener">Toho (9602 JP)</a> and <a href="https://www.smartkarma.com/entities/j-front-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:8947:1" rel="noopener">J Front Retailing (3086 JP)</a> the leading largest-cap optimists. <a href="https://www.smartkarma.com/entities/santen-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:8602:1" rel="noopener">Santen Pharmaceutical (4536 JP)</a> revised down following a delay in the approval of glaucoma implant DE-128.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/200/408/original/image_63605452481618349380112.png?1618349381" class="editor-image img-responsive" data-smartkarma-image-id="200408"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/200/409/original/image_46822562891618349413296.png?1618349413" class="editor-image img-responsive" data-smartkarma-image-id="200409"></figure>

• LARGE CAP RESULTS - 13th APRIL •Source for all charts &amp; tables: Japan AnalyticsRESULTS - Only 38% of Tuesdays 69 results announcements scored positively. Of the largest-cap stocks reporting, Toho (9602 JP) cinemas has yet to bottom out but is still in profit. 'New wave' software companies Sansan (4443 JP) and Money Forward (3994 JP) are growing into their extreme valuations, while Pasona's under-appreciated margin transformation continues. • LARGE CAP FORECASTS/REVISIONS - 13th APRIL •FORECASTS/REVISIONS - Two-thirds of annual forecasts/revisions were positive, with Toho (9602 JP) and J Front Retailing (3086 JP) the leading largest-cap optimists. Santen Pharmaceutical (4536 JP) revised down following a delay in the approval of glaucoma implant DE-128.

🇯🇵 JAPAN • Results & Revisions 04/​​​​​​13 - Pasona (Grata) & J Front Retailing

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)

China Technology Sector Improving -- Add Exposure

Market dynamics remain largely positive which continues to support our constructive outlook, and we view recent weakness as a buying opportunity....

Vermilion Research

TOPIX Inclusion: Money Forward (3994 JP)

High-growth SaaS company Money Forward (3994 JP) is getting promoted to TSE1, triggering a large TOPIX Inclusion Event on 29th July 2021. The...

Janaghan Jeyakumar, CFA

Japan Small Cap Growth: FREEE (4478) - Opportunities Opening Up

The recent sharp sell-off in global growth stocks has provided an opportunity for long-term investors to buy freee (4478 JP) at more attractive...

Mark Chadwick

Small Cap Japan Growth: Money Forward (3994)

Strong Q1 results underpin our high conviction Bullish stance on the stock. Q1 revenue grew 45%. Robust sales growth was driven by 51% sales growth...

Mark Chadwick

🇯🇵 JAPAN • Results & Revisions 04/13 - Pasona (Grata) & J Front Retailing

RESULTS - Only 38% of Tuesdays 69 results announcements scored positively. Of the largest-cap stocks reporting, Toho (9602 JP) cinemas has yet to...

Campbell Gunn

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Technology Sector Improving -- Add Exposure

Market dynamics remain largely positive which continues to support our constructive outlook, and we view recent weakness as a buying opportunity....

Vermilion Research

TOPIX Inclusion: Money Forward (3994 JP)

High-growth SaaS company Money Forward (3994 JP) is getting promoted to TSE1, triggering a large TOPIX Inclusion Event on 29th July 2021. The...

Janaghan Jeyakumar, CFA

Japan Small Cap Growth: FREEE (4478) - Opportunities Opening Up

The recent sharp sell-off in global growth stocks has provided an opportunity for long-term investors to buy freee (4478 JP) at more attractive...

Mark Chadwick

Small Cap Japan Growth: Money Forward (3994)

Strong Q1 results underpin our high conviction Bullish stance on the stock. Q1 revenue grew 45%. Robust sales growth was driven by 51% sales growth...

Mark Chadwick

🇯🇵 JAPAN • Results & Revisions 04/​​​​​​13 - Pasona (Grata) & J Front Retailing

RESULTS - Only 38% of Tuesdays 69 results announcements scored positively. Of the largest-cap stocks reporting, Toho (9602 JP) cinemas has yet to...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 04/13 - Pasona (Grata) & J Front Retailing