Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

<ul>
<li>Consumer mobile revenue fell 7% but that partly reflects how sales were reported a year ago. Reported ARPU was down 5% whilst price cut erosion narrowed</li>
<li>Operating income YTD is 94% of full-year targets leaving room for Softbank to achieve its goal even with increased investment spending</li>
<li>This was a relatively uneventful quarter and we remain at Buy</li>
</ul>


Consumer mobile revenue fell 7% but that partly reflects how sales were reported a year ago. Reported ARPU was down 5% whilst price cut erosion narrowed
Operating income YTD is 94% of full-year targets leaving room for Softbank to achieve its goal even with increased investment spending
This was a relatively uneventful quarter and we remain at Buy


Softbank Corp (Buy) - Q3 22 Results Reaction: Modest Mobile Improvement, on Track to Meet Targets

Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>OVERSEAS. Another strong post Fed Day with SPX breaks 4100 level; Slew of big tech after hours: AMZN; Google, AAPL-Mkt doesn't like; Ford, not to be left out, MISSES</li>
<li>JAPAN. NKY Futs +0.5% vs Cash; USDJPY 128.69;  Mgmt Transitions,  Sony and Z-HD make changes; Earnings:  Sony +ve;  -ve Panasonic (but special case); Murata - last of bad news ?</li>
<li>DAILY NUGGETS. Panasonic – Still deciding. Seems we have to wait a bit longer on the impact of the IRA credits.</li>
</ul>


OVERSEAS. Another strong post Fed Day with SPX breaks 4100 level; Slew of big tech after hours: AMZN; Google, AAPL-Mkt doesn't like; Ford, not to be left out, MISSES
JAPAN. NKY Futs +0.5% vs Cash; USDJPY 128.69;  Mgmt Transitions,  Sony and Z-HD make changes; Earnings:  Sony +ve;  -ve Panasonic (but special case); Murata - last of bad news ?
DAILY NUGGETS. Panasonic – Still deciding. Seems we have to wait a bit longer on the impact of the IRA credits.


Good Morning Japan | SPX Breakout but After-Hours Earnings Sap FOMO; Sony Beat; Pana-Still Deciding

<ul>
<li>Management has cut its FY23 EBITDA target from its long-term goal of ¥390bn to c. ¥363bn as its core ad and eCommerce performance gets weaker</li>
<li>Advertising revenue fell 1% YoY whilst eCommerce volumes (GTV) on the core third-party marketplace Yahoo!Shopping were also down significantly</li>
<li>The outlook for FY23 is further blurred by management changes to address business challenges and deeper LINE/Yahoo integration.  We are lowering our target price to ¥425</li>
</ul>


Management has cut its FY23 EBITDA target from its long-term goal of ¥390bn to c. ¥363bn as its core ad and eCommerce performance gets weaker
Advertising revenue fell 1% YoY whilst eCommerce volumes (GTV) on the core third-party marketplace Yahoo!Shopping were also down significantly
The outlook for FY23 is further blurred by management changes to address business challenges and deeper LINE/Yahoo integration.  We are lowering our target price to ¥425


Z Holdings (Neutral) - Q3 22 Results Reaction: Lofty EBITDA Targets Cut on Erosion in Core Business

<ul>
<li>OVERSEAS.  US stocks rally on Fed paus(ing); Duration gets extended spurring +5% SOX move; AMD results provide comfort for Semis; Meta Beats !  Off to the races!</li>
<li>JAPAN.  NKY Futs +0.2% vs Cash; Yen Stronger at USDJPY 129.02 post Fed;  BOJ shows commitment buying  $180 bn JGBs in Jan;   Earnings: Positive Keyence; Negative Kyocera; Disaster Sumi Chemicals. </li>
<li>DAILY NUGGETS. Race for Talent. Japan retail major lifts wages, as (wage) hike momentum gathers. Issue for Japan is lack of workers !</li>
</ul>


OVERSEAS.  US stocks rally on Fed paus(ing); Duration gets extended spurring +5% SOX move; AMD results provide comfort for Semis; Meta Beats !  Off to the races!
JAPAN.  NKY Futs +0.2% vs Cash; Yen Stronger at USDJPY 129.02 post Fed;  BOJ shows commitment buying  $180 bn JGBs in Jan;   Earnings: Positive Keyence; Negative Kyocera; Disaster Sumi Chemicals. 
DAILY NUGGETS. Race for Talent. Japan retail major lifts wages, as (wage) hike momentum gathers. Issue for Japan is lack of workers !


Good Morning Japan | Blast off ! "Disinflation Process Has Started";AMD Spurs Tech Rally; Meta Beats

<ul>
<li>Japan trails global peers in the proportion of payments that are cashless but it is starting to close the gap led by Internet and telecom companies</li>
<li>Rakuten is a fintech leader in Japan (15% of cashless payments) but PayPay is closing the gap as it ramps up cashless app users</li>
<li>We expect compound annual growth in the mid-teens but margin expansion will be limited by competitive intensity</li>
</ul>


Japan trails global peers in the proportion of payments that are cashless but it is starting to close the gap led by Internet and telecom companies
Rakuten is a fintech leader in Japan (15% of cashless payments) but PayPay is closing the gap as it ramps up cashless app users
We expect compound annual growth in the mid-teens but margin expansion will be limited by competitive intensity


Japan Fintech - Cashless Payments Competition Is Heating Up

Japan

USEN-NEXT HOLDINGS Co.,Ltd. provides network information services. The Company provides video contents distribution, music contents distribution, and other services. USEN-NEXT HOLDINGS also provides internet agency, mobile communication, and other services.

Stream Media Corporation provides management of artists events and medias. The Company manages activities of Korean artists in Japan, and plans and organizes activities including their music and appearances at events, official mobile sites,  fan club sites, and others in commercials. Stream Media also provides Korean channel broadcasting services,

OKINAWA CELLULAR TELEPHONE COMPANY provides cellular and car phone services in Okinawa Prefecture.  The Company also sells cellular phones and accessories.

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.

Vision Inc. provides a variety of telecommunication services, including fixed-line telecom, wireless telecom and wifi services. The company also provides distribution and lease service of office equipments and communications equipments.

FreeBit Co., Ltd. provides Internet connectivity outsourcing services for Internet service providers.  The Company also offers ubiquitous networking environment.  FreeBit provides consulting services for Internet related businesses as well.

Japan Communications Inc. provides telecommunication services to corporate clients.  The Company also provides wireless high-speed internet access mainly to consumers.

Broadmedia Corporation provides broadband service, CDN (contents delivery network), and media contents belonging to Softbank broadcasting. Broadmedia also markets game on demand service.

BroadBand Tower, Inc. operates Internet data centers to provide space services and Internet connectivity services.  The Company also distributes video contents on the Internet.

FORVAL TELECOM, INC. is a telecommunication services reseller, and provides discount international and domestic telephone and cellular phone services for the business and private sectors.  The Company also sells prepaid telephone cards and calling card services, and also does network and systems consulting.

Snap Inc. provides technology and social media services. The Company develops mobile camera application products and services that allow users to send and receive photos, drawings, text, and videos. Snap serves customers worldwide.

CAR Group Limited operates as a digital marketplace for vehicles. The Company provides a diversified portfolio of brands to sell and buy cars. CAR Group serves customers worldwide.

Match Group, Inc. is a dating service provider. The Company offers diverse portfolio of apps and services which enables connections across the spectrum of age, race, gender, sexual orientation, and backgrounds. Match Group serves customers worldwide.

Pinterest, Inc. operates and maintains social networking site. The Company provides online venue for personal photos, ideas, oddities, decorations, places to visit, recipes, and other items. Pinterest serves customers worldwide.

IAC Inc operates as a holding company. The Company, through its subsidiaries, provides media and Internet services. IAC serves customers worldwide.

Domain Holdings Australia Limited offers multi-platform property solutions. The Company operates an online portal that delivers property marketing solutions for residential, new development, and commercial properties. Domain Holdings Australia serves buyers, sellers, renters, and investors in Australia.

EverQuote, Inc. operates as an Internet based marketing firm. The Company, through its platform, enables consumers to connect with auto insurance carriers and agents to meet their auto insurance needs. EverQuote serves customers in the United States.

Hello Group Inc. operates as a mobile-based social networking platform. The Company enables users to establish and expand social relationships based on location and interests. Hello Group operates out of the Peoples Republic of China.

World Wrestling Entertainment, Inc. operates as a media and entertainment company. The Company offers live wrestling events, television programming, music publishing, advertising, licensing, and home video streaming services. World Wrestling distributes its programs worldwide in various languages.

Fox Corporation operates as an entertainment company. The Company produces and licenses news, sports, and entertainment content for distribution through cable television systems, direct broadcast satellite operators, telecommunications companies, and online video distributors. Fox also manages broadcast studios, theaters, editing bays, sound stages, and other production facilities.

LY Corporation operates as an internet search engine "Yahoo! JAPAN". The Company provides electronic commerce and settlement finance services for small medium enterprises and individuals. LY also operates media business including search linked advertising and display advertising services.

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LY (4689 JP)

Softbank Corp (Buy) - Q3 22 Results Reaction: Modest Mobile Improvement, on Track to Meet Targets

On balance a good quarter with solid progress to year-end targets. Headline mobile erosion was higher than we expected but ARPU declines were in...

Kirk Boodry

Good Morning Japan | SPX Breakout but After-Hours Earnings Sap FOMO; Sony Beat; Pana-Still Deciding

NKY Futs indicate +0.5% but are unlikely to be realised as the damper from earnings after hours in the US likely weighs on sentiment. Apple...

Mark Chadwick

Z Holdings (Neutral) - Q3 22 Results Reaction: Lofty EBITDA Targets Cut on Erosion in Core Business

We have another winter surprise from ZHD as weakness in both advertising sales and eCommerce will keep the company from meeting its FY23 EBITDA target

Kirk Boodry

Good Morning Japan | Blast off ! "Disinflation Process Has Started";AMD Spurs Tech Rally; Meta Beats

NKY Futs +0.2% vs Cash;USDJPY 129.02 post-Fed. Watch our homegrown SPE names today to follow the lead of the SOX. Today, Sony is on tap. Watching...

Mark Chadwick

Japan Fintech - Cashless Payments Competition Is Heating Up

Japan telecom and Internet companies are driving growth in cashless payments led by Rakuten in credit cards and PayPay in cashless apps. This is a...

Kirk Boodry

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