Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/arteria-networks-corp" target="_blank" data-smartkarma-citation="entities:27807:1" rel="noopener">ARTERIA Networks Corp (4423 JP)</a> ended the year with a flourish as accelerating revenue and profitability growth allowed it to exceed its full-year targets despite market worries for most of FY20 that it would fall short. As important, the company has released its mid-term financial plan with growth expectations through FY25 that are well-ahead of consensus expectations. We believe markets have underestimated the company’s growth potential as it leverages a collection of high-quality assets including Japan’s fourth-largest fiber network to operate in selected market segments that are growing faster than the overall industry. We remain at Buy.

ARTERIA Networks Corp (4423 JP) ended the year with a flourish as accelerating revenue and profitability growth allowed it to exceed its full-year targets despite market worries for most of FY20 that it would fall short. As important, the company has released its mid-term financial plan with growth expectations through FY25 that are well-ahead of consensus expectations. We believe markets have underestimated the company’s growth potential as it leverages a collection of high-quality assets including Japan’s fourth-largest fiber network to operate in selected market segments that are growing faster than the overall industry. We remain at Buy.

Arteria Networks Q4 20 Results: Robust Growth in Mid-Term Plan

Arteria Networks is a facilities-based provider of fixed telecom services that stands out for having the fourth-largest fiber network in Japan whilst it is also a major provider of ISP services to condominiums. Its main business is the provision of Internet and network services to Enterprise customers and the company is well positioned to grow, especially as a coronavirus-driven demand shift expands the market. We initiate coverage at Buy supported by a ¥2,380 target price for FY21-end implying 48% potential upside.

Arteria Networks is a facilities-based provider of fixed telecom services that stands out for having the fourth-largest fiber network in Japan whilst it is also a major provider of ISP services to condominiums. Its main business is the provision of Internet and network services to Enterprise customers and the company is well positioned to grow, especially as a coronavirus-driven demand shift expands the market. We initiate coverage at Buy supported by a ¥2,380 target price for FY21-end implying 48% potential upside.  

Arteria Networks - Focused Growth Supported by High-Quality Assets (Initiation of Coverage)

Arteria posted mixed Q3 20 results as an easing of Covid-19 restrictions helped sales growth recover although higher operating costs remain a drag on profitability. Management has kept its full-year guidance intact and we suspect that the result will be a lot like Q3 with a revenue beat but profitability miss.   Shares are traded down 2% on the expectation that FY20e targets may be out of reach but the focus should be on the sustainable demand for Arteria products and services as the corporate environment shifts.

Arteria posted mixed Q3 20 results as an easing of Covid-19 restrictions helped sales growth recover although higher operating costs remain a drag on profitability. Management has kept its full-year guidance intact and we suspect that the result will be a lot like Q3 with a revenue beat but profitability miss.   Shares are traded down 2% on the expectation that FY20e targets may be out of reach but the focus should be on the sustainable demand for Arteria products and services as the corporate environment shifts. 

Arteria Networks Q3 20 Results: Encouraging Return to Top-Line Growth Despite Margin Shortfall

<a href="https://www.smartkarma.com/entities/arteria-networks-corp" target="_blank" data-smartkarma-citation="entities:27807:1" rel="noopener">ARTERIA Networks Corp (4423 JP)</a> posted Q2 results modestly below consensus on disruption from coronavirus but re-iterated guidance for the full year. Revenue growth in Q2 of 2% tracked Q1 but operating income fell by 9% (v 7% growth in Q1) on higher infrastructure and customer service costs. These were higher than expected and the potential for this kind of impact is what took 15% off the share price over the last three months. The message this quarter is better as there are signs that the operating environment has improved and full-year guidance remains in reach.

ARTERIA Networks Corp (4423 JP) posted Q2 results modestly below consensus on disruption from coronavirus but re-iterated guidance for the full year. Revenue growth in Q2 of 2% tracked Q1 but operating income fell by 9% (v 7% growth in Q1) on higher infrastructure and customer service costs. These were higher than expected and the potential for this kind of impact is what took 15% off the share price over the last three months. The message this quarter is better as there are signs that the operating environment has improved and full-year guidance remains in reach.

Arteria Networks - Q2 20 Results: On Track to Meet Full-Year Guidance

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

The global rally appears to be losing steam as the bearish rising wedge patterns we highlighted last week in the MSCI ACWI, ACWI ex-US, EM, and EAFE indexes ended up breaking down. Additionally, the aforementioned indexes and major indexes in Europe, Japan, and Hong Kong have been unable to break above longer-term resistance. While we believe global equities remain vulnerable to a pullback, some near-term consolidation is another possibility. For now we believe some consolidation makes sense as we remain in a sort of wait-and-see period as it relates to what will happen as countries and states aim to re-open.

The global rally appears to be losing steam as the bearish rising wedge patterns we highlighted last week in the MSCI ACWI, ACWI ex-US, EM, and EAFE indexes ended up breaking down. Additionally, the aforementioned indexes and major indexes in Europe, Japan, and Hong Kong have been unable to break above longer-term resistance. While we believe global equities remain vulnerable to a pullback, some near-term consolidation is another possibility. For now we believe some consolidation makes sense as we remain in a sort of wait-and-see period as it relates to what will happen as countries and states aim to re-open.

Global Equity Rally Losing Upside Momentum

Japan

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.

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ARTERIA Networks Corp (4423 JP)

Arteria Networks Q4 20 Results: Robust Growth in Mid-Term Plan

Arteria met guidance for FY20 and posted targets for FY25 that are well-ahead of consensus expectations. Weakness earlier in the year re-set...

Kirk Boodry

Arteria Networks - Focused Growth Supported by High-Quality Assets (Initiation of Coverage)

Arteria shares have lagged as markets worry that it may fall short of financial targets for FY20 but we expect a return to growth in FY21. We are...

Kirk Boodry

Arteria Networks Q3 20 Results: Encouraging Return to Top-Line Growth Despite Margin Shortfall

Arteria re-iterated full-year guidance after Q3 results that were solid on the top line but challenging for profitability.

Kirk Boodry

Arteria Networks - Q2 20 Results: On Track to Meet Full-Year Guidance

Arteria Network posted Q2 results slightly below consensus on the impact of coronavirus but there is evidence that demand is improving and full...

Kirk Boodry

Global Equity Rally Losing Upside Momentum

The global rally appears to be losing steam as the bearish rising wedge patterns we highlighted last week in the MSCI ACWI, ACWI ex-US, EM, and...

Vermilion Research

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