Research Coverage of Japanese Listed Companies, Shared Research Inc

Shared Research

Research Coverage of Japanese Listed Companies

Shared Research Inc

Pioneering research coverage of Japanese listed companies. Now customizable and interactive for global institutional investors. Corporate access reimagined.

Equity Bottom-Up

<ul><li>Sales increased by 157.1% YoY to JPY8.1bn, achieving 24.5% of the full-year target, with gross profit up 193.9%.</li><li>Real Estate Investment Support sales rose 177.4% YoY, with an operating profit of JPY140mn, reversing a prior loss.</li><li>Real Estate Management sales grew 10.6% YoY, with operating profit up 55.0% YoY, and an OPM of 18.0%.</li></ul>

Sales increased by 157.1% YoY to JPY8.1bn, achieving 24.5% of the full-year target, with gross profit up 193.9%.Real Estate Investment Support sales rose 177.4% YoY, with an operating profit of JPY140mn, reversing a prior loss.Real Estate Management sales grew 10.6% YoY, with operating profit up 55.0% YoY, and an OPM of 18.0%.

FaithNetwork Co Ltd (3489 JP): 1H FY03/25 flash update

<ul><li>Sales increased to JPY2.0bn (+46.2% YoY), but operating loss widened to JPY425mn, with recurring loss at JPY1.8bn.</li><li>Real Estate Investment Support segment sales rose 50.6% YoY, but operating loss widened to JPY469mn.</li><li>Real Estate Management segment sales grew 18.7% YoY, with operating profit up 129.4% YoY to JPY44mn.</li></ul>

Sales increased to JPY2.0bn (+46.2% YoY), but operating loss widened to JPY425mn, with recurring loss at JPY1.8bn.Real Estate Investment Support segment sales rose 50.6% YoY, but operating loss widened to JPY469mn.Real Estate Management segment sales grew 18.7% YoY, with operating profit up 129.4% YoY to JPY44mn.

FaithNetwork Co Ltd (3489 JP): Q1 FY03/25 flash update

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

In January and February we saw a large wave of TSE1 Section Transfers as many small cap names rushed to get promoted before the new (and more stringent) Section Transfer Requirements were implemented. In contrast, not a single TSE1 Section Transfer was announced in the month of March 2021. 
However, this is only the calm before the storm.
In April 2021, we are expecting dozens of companies to enjoy TOPIX Index upweights as a result of the annual liquidity factor review (and this will mean dozens of downweights too). On the other hand, although fewer companies will qualify under the new rules, small-cap companies could use M&amp;A as an alternative route to Section Transfers to meet criteria as discussed below in this insight.
Furthermore, I have discussed the changes to Quiddity's pre-events watchlist and provided performance updates for one "Live" event stock which is expected to have its Inclusion event at the end of April 2021 and 9 "Post" event stocks that completed their Inclusion Events at the end of January 2021 and February 2021.

In January and February we saw a large wave of TSE1 Section Transfers as many small cap names rushed to get promoted before the new (and more stringent) Section Transfer Requirements were implemented. In contrast, not a single TSE1 Section Transfer was announced in the month of March 2021. 
However, this is only the calm before the storm.
In April 2021, we are expecting dozens of companies to enjoy TOPIX Index upweights as a result of the annual liquidity factor review (and this will mean dozens of downweights too). On the other hand, although fewer companies will qualify under the new rules, small-cap companies could use M&amp;A as an alternative route to Section Transfers to meet criteria as discussed below in this insight.
Furthermore, I have discussed the changes to Quiddity's pre-events watchlist and provided performance updates for one "Live" event stock which is expected to have its Inclusion event at the end of April 2021 and 9 "Post" event stocks that completed their Inclusion Events at the end of January 2021 and February 2021. 

It was shaping up to be a decent TOPIX Inclusion."And Then The Murders Began."*I first identified <a href="https://www.smartkarma.com/entities/faithnetwork-co-ltd" target="_blank" data-smartkarma-citation="entities:29132:1" rel="noopener">FaithNetwork Co Ltd (3489 JP)</a> as a potential TSE1 candidate in my insight <a href="https://www.smartkarma.com/insights/topix-inclusion-pre-events-recent-tachiaigai-bunbai-round-up" target="_blank" data-smartkarma-citation="insights:40509" rel="noopener">TOPIX Inclusion Pre-Events: Recent "Tachiaigai Bunbai" Round-Up</a> in June 2020. The company had explicitly stated they were working towards a TSE1 move when they launched a <a href="https://www2.tse.or.jp/disc/34890/140120200616445521.pdf" target="_blank" rel="noopener">tachiaigai bunbai offering on 16th June 2020</a>. The price was ¥1092 at the time. However, I did not ask investors to buy this name at that time given the uncertain timeline. That was the only offering in the previous 12 months.However, considering the new section transfer requirements I changed my view on this stock to an explicit buy recommendation on 29th September 2020 as explained in <a href="https://www.smartkarma.com/insights/topix-inclusion-trade-summary-sep-2020" target="_blank" data-smartkarma-citation="insights:43700" rel="noopener">TOPIX Inclusion Trade Summary: Sep 2020</a>. The stock was ¥1190 by then. From that point to early February, the share price gained +23.5% (despite having dipped to the ¥1050-60s level in the interim) with majority of this gain coming in the last 5 trading days prior to my latest insight on February 7, <a href="https://www.smartkarma.com/insights/topix-inclusion-faithnetwork-3489-jp" target="_blank" data-smartkarma-citation="insights:47840" rel="noopener">TOPIX Inclusion: FaithNetwork (3489 JP)</a> which came when the company announced its ascension to TSE1.Despite that recent jump, the share price is still 40+% below its IPO Price of ¥2,500 roughly three years ago and I identified the event as a "Small Size Large Impact" (PURPLE) category TOPIX Inclusion in the Quiddity framework so was bullish.Yesterday afternoon we got new news which puts all this in doubt. More below the fold.<hr>* "And Then The Murders Began" is a twitter meme which suggests...<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/195/328/original/Screenshot+2021-03-18+at+7.37.05+PM.png?1616068887" class="editor-image img-responsive" data-smartkarma-image-id="195328"></figure></section>

It was shaping up to be a decent TOPIX Inclusion."And Then The Murders Began."*I first identified FaithNetwork Co Ltd (3489 JP) as a potential TSE1 candidate in my insight TOPIX Inclusion Pre-Events: Recent "Tachiaigai Bunbai" Round-Up in June 2020. The company had explicitly stated they were working towards a TSE1 move when they launched a tachiaigai bunbai offering on 16th June 2020. The price was ¥1092 at the time. However, I did not ask investors to buy this name at that time given the uncertain timeline. That was the only offering in the previous 12 months.However, considering the new section transfer requirements I changed my view on this stock to an explicit buy recommendation on 29th September 2020 as explained in TOPIX Inclusion Trade Summary: Sep 2020. The stock was ¥1190 by then. From that point to early February, the share price gained +23.5% (despite having dipped to the ¥1050-60s level in the interim) with majority of this gain coming in the last 5 trading days prior to my latest insight on February 7, TOPIX Inclusion: FaithNetwork (3489 JP) which came when the company announced its ascension to TSE1.Despite that recent jump, the share price is still 40+% below its IPO Price of ¥2,500 roughly three years ago and I identified the event as a "Small Size Large Impact" (PURPLE) category TOPIX Inclusion in the Quiddity framework so was bullish.Yesterday afternoon we got new news which puts all this in doubt. More below the fold.* "And Then The Murders Began" is a twitter meme which suggests...

FaithNetwork TOPIX Inclusion: And Then The Murders Began

During the month of February 2021, one of the most anticipated TOPIX Inclusion candidates, <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a> completed its TOPIX Inclusion Event. We also saw four new names announce their TSE1 moves during this month, among which was <a href="https://www.smartkarma.com/entities/faithnetwork-co-ltd" target="_blank" data-smartkarma-citation="entities:29132:1" rel="noopener">FaithNetwork Co Ltd (3489 JP)</a> the third stock out of the four pre-event bets highlighted in <a href="https://www.smartkarma.com/insights/topix-inclusion-trade-summary-sep-2020" target="_blank" data-smartkarma-citation="insights:43700" rel="noopener">TOPIX Inclusion Trade Summary: Sep 2020</a>. During this month, we also introduced new pre-event picks to be added to our list in <a href="https://www.smartkarma.com/insights/topix-inclusions-who-is-ready-3-0" target="_blank" data-smartkarma-citation="insights:48306" rel="noopener">TOPIX Inclusions: Who Is READY? 3.0</a>. In this insight, I have provided performance updates for 4 "Live" event stocks which are expected to have Inclusion Events at the end of March/April 2021 and 17 "Post" event stocks that completed their Inclusion Events at the end of January 2021 and February 2021.

During the month of February 2021, one of the most anticipated TOPIX Inclusion candidates, Toshiba Corp (6502 JP) completed its TOPIX Inclusion Event. We also saw four new names announce their TSE1 moves during this month, among which was FaithNetwork Co Ltd (3489 JP) the third stock out of the four pre-event bets highlighted in TOPIX Inclusion Trade Summary: Sep 2020. During this month, we also introduced new pre-event picks to be added to our list in TOPIX Inclusions: Who Is READY? 3.0. In this insight, I have provided performance updates for 4 "Live" event stocks which are expected to have Inclusion Events at the end of March/April 2021 and 17 "Post" event stocks that completed their Inclusion Events at the end of January 2021 and February 2021. 

Japan

FaithNetwork Co. Ltd. operates real estate ownership and development services. The Company provides home renovation, housing loans, real estate brokerage, and other services. FaithNetwork also offers construction services. FaithNetwork serves customers in Japan.

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FaithNetwork Co Ltd (3489 JP)