Japan Specialist

Mark Chadwick

Equity Bottom-Up

<div><ul>
<li><a href="https://www.smartkarma.com/entities/grace-technology-inc" target="_blank" data-smartkarma-citation="entities:26786:1" rel="noopener">Grace Technology (6541 JP)</a>  stock price has declined by around 66% over the past six months.</li>
<li>
Two consecutive quarters of weak sales in the high margin MMS segment has led many long only funds to dump the shares.  
</li>
<li>
Management attributes the weakness to COVID, with the business relying on face-to-face consulting services to generate much of the revenue. We suspect that the market had missed the impact of consulting sales and overestimated the contribution from higher margin SaaS recurring revenue.  
</li>
<li>However, the longer-term demand for manual standardization and modularization, to save clients significant time and money, has not changed.  </li>
<li>
Difficult operating conditions are likely to have persisted into the September quarter. However, with most of the workforce now fully vaccinated, it is reasonable to assume a recovery from the December quarter onwards.  
</li>
</ul></div>


Grace Technology (6541 JP)  stock price has declined by around 66% over the past six months.

Two consecutive quarters of weak sales in the high margin MMS segment has led many long only funds to dump the shares.  


Management attributes the weakness to COVID, with the business relying on face-to-face consulting services to generate much of the revenue. We suspect that the market had missed the impact of consulting sales and overestimated the contribution from higher margin SaaS recurring revenue.  

However, the longer-term demand for manual standardization and modularization, to save clients significant time and money, has not changed.  

Difficult operating conditions are likely to have persisted into the September quarter. However, with most of the workforce now fully vaccinated, it is reasonable to assume a recovery from the December quarter onwards.  



Japan

Grace Technology Inc. offers advertising services. The Company provides advertising manual production services and related translation services.

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Grace Technology (6541 JP)

Grace Technology (6541) | Manual Labour

Two poor quarters does not a bad business make. Manual creation remains a burden for large B2B companies and Grace offers an attractive, cost...

Mark Chadwick

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