Japan Specialist

Mark Chadwick

Equity Bottom-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> provides online accounting software for Japan's SMEs, providing all of the time-saving tools that small business owners need to grow. It is the Japanese version of <a href="https://www.smartkarma.com/entities/xero-ltd" target="_blank" data-smartkarma-citation="entities:390:1" rel="noopener">Xero Ltd (XRO AU)</a> or Quickbooks by <a href="https://www.smartkarma.com/entities/intuit-inc" target="_blank" data-smartkarma-citation="entities:8235:1" rel="noopener">Intuit Inc (INTU US)</a> </li>
<li>Money Forward (MF) and its domestic peer <a href="https://www.smartkarma.com/entities/freee-kk" target="_blank" data-smartkarma-citation="entities:28424:1" rel="noopener">freee (4478 JP)</a> dominate the Japanese online market, which is growing in the region of 60-70% YoY.</li>
<li>There is a huge addressable market with low online penetration. MF has the potential to build a strong competitive moat, in the absence of the global majors.</li>
<li>Today, MF looks similar to Xero in 2013. If MF follows the same growth trajectory, investors could be looking at a 9-bagger.  </li>
</ul>



Money Forward (3994 JP) provides online accounting software for Japan's SMEs, providing all of the time-saving tools that small business owners need to grow. It is the Japanese version of Xero Ltd (XRO AU) or Quickbooks by Intuit Inc (INTU US) 
Money Forward (MF) and its domestic peer freee (4478 JP) dominate the Japanese online market, which is growing in the region of 60-70% YoY.
There is a huge addressable market with low online penetration. MF has the potential to build a strong competitive moat, in the absence of the global majors.
Today, MF looks similar to Xero in 2013. If MF follows the same growth trajectory, investors could be looking at a 9-bagger.  


Small Cap Growth: Money Forward (3994) - Be Audit You Can Be

Equity Analyst, LightStream Research

Supun Walpola

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.

<p><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> (MF) reported its 2Q FY11/20 financial results last week. MF’s 2Q FY11/20 revenue beat consensus by 6.1% and the operating loss was also lower than the consensus. However, despite this, we believe MF’s 2Q FY11/20 financial results should be interpreted with caution. We go through MF’s 2Q FY11/20 financial results in detail below.</p>

Money Forward (3994 JP) (MF) reported its 2Q FY11/20 financial results last week. MF’s 2Q FY11/20 revenue beat consensus by 6.1% and the operating loss was also lower than the consensus. However, despite this, we believe MF’s 2Q FY11/20 financial results should be interpreted with caution. We go through MF’s 2Q FY11/20 financial results in detail below.

Money Forward: 2Q Results Are a Mixed Bag; We Remain Cautious

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Thematic (Sector/Industry)

<div>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/146/359/original/2020-07-16_06-39-04.png?1594849241" class="editor-image img-responsive" data-smartkarma-image-id="146359"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/146/360/original/2020-07-16_06-42-12.png?1594849361" class="editor-image img-responsive" data-smartkarma-image-id="146360"></figure><div class="content-caption">Source • Japan Analytics</div>
<p><strong><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></strong>- Money Forward's impressive revenue growth continued unabated in the second quarter. However necessary the ¥611 million (22% of sales) quarterly advertising budget is to sustain such revenue momentum, the lack of 'margin' improvement has shaved two points from our Results Score. The shares are close to a new Relative Price Score high and to being Overbought. We would trim into any announcement bounce above ¥8,000.</p>
<p style="text-align: center;"><strong>DAILY STATS</strong></p>
</div><hr><div><p style="text-align: center;"><strong>66 Quarterly Results</strong></p></div><div><ul>
<li>
<strong>Results Score:</strong> 10 Positive / 9 Neutral / 47 Negative</li>
<li>
<strong>Average Results Score Change:</strong> -5.4</li>
<li>
<strong>Average % Change in Revenue:</strong> -14.7% Quarter YoY / +1.3% Rolling TTM YoY</li>
<li>
<strong>Average Operating Profit Margin Change:</strong> -3.2ppt</li>
<li>
<strong>Percentage Making Quarterly Losses:</strong> 42%</li>
</ul></div><hr><div><p style="text-align: center;"><br><strong>24 Annual • 9 Interim Forecasts/Revisions</strong></p></div><div><ul>
<li>
<strong>Annual Forecast/Revision Score:</strong> 7 Positive / 4 Neutral / 13 Negative</li>
<li>
<strong>Interim Forecast/Revision Score Change:</strong> 1 Positive / 0 Neutral / 8 Negative</li>
<li>
<strong>Average Forecast/Revision Score Change:</strong> -9.3</li>
</ul></div>


Source • Japan Analytics
Money Forward (3994 JP)- Money Forward's impressive revenue growth continued unabated in the second quarter. However necessary the ¥611 million (22% of sales) quarterly advertising budget is to sustain such revenue momentum, the lack of 'margin' improvement has shaved two points from our Results Score. The shares are close to a new Relative Price Score high and to being Overbought. We would trim into any announcement bounce above ¥8,000.
DAILY STATS
66 Quarterly Results

Results Score: 10 Positive / 9 Neutral / 47 Negative

Average Results Score Change: -5.4

Average % Change in Revenue: -14.7% Quarter YoY / +1.3% Rolling TTM YoY

Average Operating Profit Margin Change: -3.2ppt

Percentage Making Quarterly Losses: 42%
 24 Annual • 9 Interim Forecasts/Revisions

Annual Forecast/Revision Score: 7 Positive / 4 Neutral / 13 Negative

Interim Forecast/Revision Score Change: 1 Positive / 0 Neutral / 8 Negative

Average Forecast/Revision Score Change: -9.3


🇯🇵 JAPAN • Results & Revisions 15th July - Money Forward, TKP, Nachi-Fujikoshi, Tokyo Steel

<p><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>’s (MF) share price has increased by around 70% since the first week of April. This is mostly due to the perception that enterprise SaaS operations are a defensive business model during the pandemic. However, we believe the concerns we had about MF in our previous notes are still valid. Despite shifting to a more affordable (at the same time less profitable for MF) price plan, and spending heavily on subsidies, MF’s enterprise SaaS business has not seen a marked increase in new customers. We see positives for MF in its fintech operations, however, these businesses are still in their early stages of monetisation. We also believe MF’s chances of turning profitable is slim in the next few years as we expect the company to spend heavily on customer acquisition. We believe further upside for MF is limited in the short-run. Our SOTP valuation gives MF a FY1 target price of JPY 6,707, which is only a slight upside from the current market price (of JPY 6,580 as of 8th of July 2020).</p>

Money Forward (3994 JP)’s (MF) share price has increased by around 70% since the first week of April. This is mostly due to the perception that enterprise SaaS operations are a defensive business model during the pandemic. However, we believe the concerns we had about MF in our previous notes are still valid. Despite shifting to a more affordable (at the same time less profitable for MF) price plan, and spending heavily on subsidies, MF’s enterprise SaaS business has not seen a marked increase in new customers. We see positives for MF in its fintech operations, however, these businesses are still in their early stages of monetisation. We also believe MF’s chances of turning profitable is slim in the next few years as we expect the company to spend heavily on customer acquisition. We believe further upside for MF is limited in the short-run. Our SOTP valuation gives MF a FY1 target price of JPY 6,707, which is only a slight upside from the current market price (of JPY 6,580 as of 8th of July 2020).

Money Forward: Upside Is Capped in the Short-Run

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

<p>Money Forward stock is currently offering an attractive entry point for both short-term traders and long-term investors. The stock’s price and RS exhibit bullish short-term reversals at 2.5-year base support -- buy. The size of the base implies a price target of ~9,300 JPY or +47% from current levels. Our long-term bullish thesis will remain intact as long as the stock does not decisively break below 5450 support... <em>see chart below</em>.</p>

Money Forward stock is currently offering an attractive entry point for both short-term traders and long-term investors. The stock’s price and RS exhibit bullish short-term reversals at 2.5-year base support -- buy. The size of the base implies a price target of ~9,300 JPY or +47% from current levels. Our long-term bullish thesis will remain intact as long as the stock does not decisively break below 5450 support... see chart below.

Company Spotlight: Buy Money Forward, Inc. (3994-JP)

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)

Small Cap Growth: Money Forward (3994) - Be Audit You Can Be

Money Forward (3994 JP) is the Japanese

Mark Chadwick

Money Forward: 2Q Results Are a Mixed Bag; We Remain Cautious

Money Forward (3994 JP) (MF) reported its 2Q FY11/20 financial results last week. MF’s 2Q FY11/20 revenue beat consensus by 6.1% and the operating...

Supun Walpola

🇯🇵 JAPAN • Results & Revisions 15th July - Money Forward, TKP, Nachi-Fujikoshi, Tokyo Steel

Money Forward (3994 JP)- Money Forward's impressive revenue growth continued unabated in the second quarter. However necessary the ¥611 million...

Campbell Gunn

Money Forward: Upside Is Capped in the Short-Run

Money Forward (3994 JP)’s (MF) share price has increased by around 70% since the first week of April. This is mostly due to the perception that...

Supun Walpola

Company Spotlight: Buy Money Forward, Inc. (3994-JP)

Money Forward stock is currently offering an attractive entry point for both short-term traders and long-term investors. The stock’s price and RS...

Vermilion Research

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