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/nihon-m-a-center-inc" target="_blank" data-smartkarma-citation="entities:17616:1" rel="noopener">Nihon M&amp;A Center (2127 JP)</a> reported 3QFY03/2022 results. Revenue declined 9.9% YoY to JPY9.8bn (vs consensus JPY13.6bn) while OP dropped 21.9% YoY to JPY3.2bn (vs consensus JPY6.1bn).</li>
<li>Though there had been an increase in the no. of transactions completed during the quarter, revenue declined due to price pressures.</li>
<li>Share price has declined 22.8% during today’s trade due to weaker-than-expected earnings and we think full-year FY03/2022E guidance is too hard to achieve.</li>
</ul>



Nihon M&amp;A Center (2127 JP) reported 3QFY03/2022 results. Revenue declined 9.9% YoY to JPY9.8bn (vs consensus JPY13.6bn) while OP dropped 21.9% YoY to JPY3.2bn (vs consensus JPY6.1bn).
Though there had been an increase in the no. of transactions completed during the quarter, revenue declined due to price pressures.
Share price has declined 22.8% during today’s trade due to weaker-than-expected earnings and we think full-year FY03/2022E guidance is too hard to achieve.


Nihon M&A: Weak Earnings and Guidance for Full-Year Seems Too Optimistic

BayCurrent Consulting  / Equity Bottom-Up

<ul>
<li>Baycurrent’s share price has moved up 41.3% YTD with the company reporting strong earnings for 3QFY02/2023 which beat consensus estimates by a huge margin.</li>
<li>With pandemic conditions fading off, share price began to fall with top-line growth declining slightly. However, growth rates have bounced back, and margins have seen strong improvement reaching new highs.</li>
<li>Though share priced has rallied significantly over the last few months, we think there is further upside driven by value-added projects and expansion into new consulting areas.</li>
</ul>


Baycurrent’s share price has moved up 41.3% YTD with the company reporting strong earnings for 3QFY02/2023 which beat consensus estimates by a huge margin.
With pandemic conditions fading off, share price began to fall with top-line growth declining slightly. However, growth rates have bounced back, and margins have seen strong improvement reaching new highs.
Though share priced has rallied significantly over the last few months, we think there is further upside driven by value-added projects and expansion into new consulting areas.


Baycurrent Consulting: High Value-Added Projects and New Consulting Areas Drive New Phase of Growth

Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>Japanese stocks shrugged off weakness in overseas markets to close up for the second week running</li>
<li>All eyes were on the BOJ, which did absolutely nothing.  The Yield Curve will be defended at all costs</li>
<li>Stocks on our watchlist returned about +1.5% this week. They have been consolidating for the past 6 months</li>
</ul>


Japanese stocks shrugged off weakness in overseas markets to close up for the second week running
All eyes were on the BOJ, which did absolutely nothing.  The Yield Curve will be defended at all costs
Stocks on our watchlist returned about +1.5% this week. They have been consolidating for the past 6 months


<ul>
<li>OVERSEAS: SPX +0.7%  SOX +1.35; Beta rally continues on lower CPI print expectations;  Cyclicals lead 10/11 SPX Sectors positive; MSFT considers $10bn OPEN AI investment; Record Boeing orders in 2022. </li>
<li>JAPAN: NKY Futs +0.3% premium to Cash; USDJPY steady ¥132.1; Hot Tokyo CPI print; Big wage hikes at Fast Retail;  Travel - China strikes back; +ve JP Boeing supply chain. </li>
<li>DAILY NUGGETS: Hydrogen - a clean alternative. Japan is set to lead as companies ramp up R&amp;D protection with a view to commercialisation.</li>
</ul>


OVERSEAS: SPX +0.7%  SOX +1.35; Beta rally continues on lower CPI print expectations;  Cyclicals lead 10/11 SPX Sectors positive; MSFT considers $10bn OPEN AI investment; Record Boeing orders in 2022. 
JAPAN: NKY Futs +0.3% premium to Cash; USDJPY steady ¥132.1; Hot Tokyo CPI print; Big wage hikes at Fast Retail;  Travel - China strikes back; +ve JP Boeing supply chain. 
DAILY NUGGETS: Hydrogen - a clean alternative. Japan is set to lead as companies ramp up R&amp;D protection with a view to commercialisation.


Good Morning Japan |Beta Rally Continues on Expectations of Tame CPI Print

<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

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)

Nihon M&A: Weak Earnings and Guidance for Full-Year Seems Too Optimistic

3Q earnings below consensus which has led to more than 20% fall in share price. Though the company hasn't changed previous guidance, 4Q is the...

Shifara Samsudeen, ACMA, CGMA

Baycurrent Consulting: High Value-Added Projects and New Consulting Areas Drive New Phase of Growth

Baycurrent’s share price has moved up 41.3% YTD. Though share price is close to all-time high, we think there is further upside driven by value...

Shifara Samsudeen, ACMA, CGMA

Japan Weekly | BayCurrent, Mercari

The Japan Weekly looks at the events that have been impacting the Japanese market over the past week and the stocks that have moved the markets.

Mark Chadwick

Good Morning Japan |Beta Rally Continues on Expectations of Tame CPI Print

JAPAN: NKY Futs +0.3% premium to Cash; USDJPY steady ¥132.1; Hot Tokyo CPI print; Big wage hikes at Fast Retail; Travel - China strikes back; +ve...

Mark Chadwick

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

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