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>Shift offers outsourced software testing services and is the market leader in Japan. Software testing market is estimated at JPY5.5trn in Japan but only 1% of the market is outsourced.</li>
<li>The company has been rebranding itself from software testing provider to digital transformation (DX) and business services provider and this expansion has further potential to drive growth in the long-term.</li>
<li>Though Shift’s valuation multiples look expensive, we think there is further upside given the strong growth in top line alongside further improvement in margins.</li>
</ul>


Shift offers outsourced software testing services and is the market leader in Japan. Software testing market is estimated at JPY5.5trn in Japan but only 1% of the market is outsourced.
The company has been rebranding itself from software testing provider to digital transformation (DX) and business services provider and this expansion has further potential to drive growth in the long-term.
Though Shift’s valuation multiples look expensive, we think there is further upside given the strong growth in top line alongside further improvement in margins.


2023 High Conviction: Shift’s Growth Strategy Starting to Deliver Results

Japan Specialist

Mark Chadwick

BayCurrent Consulting  / Equity Bottom-Up

<ul>
<li>BayCurrent remains the key beneficiary of the trend towards digital transformation (DX) and Japan's efforts to catch-up with global competitors</li>
<li>Q2 sales growth of 33% highlights continued structural opportunity that should remain in place for at least a decade</li>
<li>We believe that the share price can double over the next few years as the stock prices in the secular growth story</li>
</ul>


BayCurrent remains the key beneficiary of the trend towards digital transformation (DX) and Japan's efforts to catch-up with global competitors
Q2 sales growth of 33% highlights continued structural opportunity that should remain in place for at least a decade
We believe that the share price can double over the next few years as the stock prices in the secular growth story


BayCurrent (6532) | Riding the Wave of Digitization

Thematic (Sector/Industry)

<ul>
<li>The Nikkei was flat over the past five days, while the yen strengthened from ¥136 to ¥132.5/$ </li>
<li>Sony cuts profit outlook due to weak games sales. Segment OP cut ¥50b (-16%) </li>
<li>Japan and US to enter chip alliance to develop next-generation 2-nm semiconductors </li>
</ul>


The Nikkei was flat over the past five days, while the yen strengthened from ¥136 to ¥132.5/$ 
Sony cuts profit outlook due to weak games sales. Segment OP cut ¥50b (-16%) 
Japan and US to enter chip alliance to develop next-generation 2-nm semiconductors 


Japan Stocks on the Move | M3, BayCurrent, Makita, NEC

<ul>
<li>The company will report Q1 earnings today. We think they will beat expectations</li>
<li>The stock has been a poor performer so far this year, despite profitable growth</li>
<li>BayCurrent is THE key beneficiary of Digital Transformation in Japan</li>
</ul>


The company will report Q1 earnings today. We think they will beat expectations
The stock has been a poor performer so far this year, despite profitable growth
BayCurrent is THE key beneficiary of Digital Transformation in Japan


BayCurrent (6532) | Jumping in Ahead of Earnings

<ul>
<li>
<a href="https://www.smartkarma.com/entities/baycurrent-consulting-inc" target="_blank" data-smartkarma-citation="entities:25985:1" rel="noopener">Baycurrent Consulting (6532 JP)</a> reported 4QFY02/2022 results today. Revenue grew 30.9% YoY to JPY16.2bn while OP increased 61.3% YoY to JPY6.8bn.</li>
<li>Full-Year FY02/2022 revenues grew 34.4% YoY to JPY57.6bn and OP increased 58.7% YoY to JPY21.5bn. Both revenue and OP beat guidance by 1.9% and 2.4% respectively.</li>
<li>BayCurrent’s shares are down 30% since its peak in September 2021, and we think current share price offers a good entry point.</li>
</ul>



Baycurrent Consulting (6532 JP) reported 4QFY02/2022 results today. Revenue grew 30.9% YoY to JPY16.2bn while OP increased 61.3% YoY to JPY6.8bn.
Full-Year FY02/2022 revenues grew 34.4% YoY to JPY57.6bn and OP increased 58.7% YoY to JPY21.5bn. Both revenue and OP beat guidance by 1.9% and 2.4% respectively.
BayCurrent’s shares are down 30% since its peak in September 2021, and we think current share price offers a good entry point.


BayCurrent: Strong Results but Guidance Seems Too Conservative

Japan

Persol Holdings Co., Ltd. provides human resource solutions to a wide variety of customers worldwide. The Company's main operations include temporary staffing services, contract services, and employment services. Temp Holdings also provides outsourcing services and employment support services for job seekers.

MEITEC CORPORATION provides high-end engineering outsourcing services targeting the R&D sector in various industries such as automobile, telecommunication, semiconductors, consumer electronics, and industrial machinery.

TechnoPro Holdings, Inc. offers services and solutions in mechanical and electronic design, IT and software development, and wide range of technological fields through outsourcing. The Company also has presence in biological, chemical and construction management businesses.

OUTSOURCING Inc. provides outsourcing services for manufacturing companies. The Company mainly provides services for industries such as food, electric equipment, transport machine, chemical, and metal.  Outsourcing also provides worker dispatching service.

BeNext-Yumeshin Group Co. provides temporary help services. The Company provides personnel staffing services, technician staffing services, overseas staffing services, and other services. BeNext-Yumeshin Group also provides office building leasing, restaurants management, vocational training, and other services.

en-japan inc. provides Internet-based recruiting solutions. The Company provides recruitment information for job seekers. en-japan's web site allows member employers to access its database of job seekers. The Company also provides recruitment consulting services.

Funai Soken Holdings Inc. provides management and financial consulting services.  The Company, through its subsidiaries, also operates logistics information, publishing, and real estate businesses.

JAC Recruitment Co., Ltd. provides recruiting agency services. The Company focuses on international business area that includes job offers from foreign companies and overseas subsidiaries of Japanese companies.

NOMURA Co., Ltd. is a contractor of displays and interior designs.  The Company mainly plans and provides display services for commercial, cultural, and exhibition facilities.  Nomura produces displays, interior designs, and promotional and advertising materials.

Pasona Group Inc. manages companies that provide placement and staffing services for clients in the information technology sector.

Seek Limited operates an Internet website.  The Company offers online employment advertisements and online training in Australia and New Zealand, and offers online employment advertisements in the United Kingdom targeted at Australian and New Zealand job seekers.

Exponent, Inc. is a science and engineering consulting firm that provides solutions and information to complex problems. The Company performs scientific research and analysis, or evaluations, to solve complicated issues facing a range of industries and governments.

CBIZ, Inc. provides professional business services to companies throughout the United States.  The Company provides accounting and tax, employee benefits, wealth management, property and casualty insurance, payroll, and HR consulting services.  CBIZ also provides internal audit, litigation advisory, healthcare consulting, medical practice management, and other services.

Dun & Bradstreet Holdings, Inc. provides data and analytics solutions. The Company delivers workflows to inform commercial credit decisions and other related services. Dun & Bradstreet Holdings serves customers worldwide.

Manpowergroup Inc. provides non-governmental employment services through offices located around the world. The Company's principal operations include temporary staffing services, contract services, and training and testing of temporary and permanent workers. Manpower provides employment services to a wide variety of customers.

TriNet Group, Inc. provides human resource and consultancy services. The Company offers payroll, tax administration, risk protection, performance management, compensation consulting, and employee benefit plans. TriNet Group serves technology, advertising, banking, and government sectors in the United States.

Korn/Ferry International is a global provider of talent management solutions, with a presence throughout the Americas, Asia Pacific, Europe, the Middle East and Africa. The firm delivers services and solutions that help clients cultivate greatness through the attraction, engagement, development and retention of their talent.

ALS Limited is a commercial services company with national and international operations. The Company's services include analytical and testing services, producing industrial and commercial chemical products, and hospitality, cleaning, and catering products.

Insperity, Inc. offers human resources and business optimization services.  The Company offers recruiting, employment screening, retirement, business insurance and technology services.  Insperity also offers performance management, expense management, time and attendance, and organizational planning software.

DKSH Holding AG offers international market expansion services with a focus in Asia. The Company provides an integrated portfolio of services, including sourcing, marketing, sales, distribution and after-sales services related to the Consumer Goods, Healthcare, Performance Materials and Technology markets.

Baycurrent Consulting , Inc. offers comprehensive consulting services in a wide variety of industries. The company's main focus areas are business strategy consulting, IT consulting, and IT integration.

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BayCurrent Consulting (6532 JP)

2023 High Conviction: Shift’s Growth Strategy Starting to Deliver Results

Being the market leader and having created a barrier in the enterprise software testing segment, Shift is well positioned to benefit from strong...

Shifara Samsudeen, ACMA, CGMA

BayCurrent (6532) | Riding the Wave of Digitization

BayCurrent remains the key beneficiary of the trend towards digital transformation (DX) and Japan's efforts to catch-up with global competitors....

Mark Chadwick

Japan Stocks on the Move | M3, BayCurrent, Makita, NEC

As Japan grapples with record Covid cases and marauding monkeys, we highlight the stocks that were winners and losers over the past week

Mark Chadwick

BayCurrent (6532) | Jumping in Ahead of Earnings

BayCurrent is the best play on Digital Transformation in Japan. We see continued earnings growth in the long-term due to the company's ability to...

Mark Chadwick

BayCurrent: Strong Results but Guidance Seems Too Conservative

BayCurrent reported 4QFY02/2022 results today. Revenue grew 30.9% YoY to JPY16.2bn while OP increased 61.3% YoY to JPY6.8bn. We think the company's...

Shifara Samsudeen, ACMA, CGMA

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