China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

<ul>
<li>ZHD F3Q22 (C4Q22) net revenue slightly missed our est. and cons. by (2%) and (1%). Adjusted EBITDA margin was in line with our est. excluding impact from PayPay consolidation. </li>
<li>PayPay will continue to be the growth driver for ZHD with increase in unit spending supported by premium credit card offering and deepening integration with group’s other services.</li>
<li>We upgrade ZHD to BUY and raise our TP to JPY 435 to reflect beat in profitability and upsides in PayPay</li>
</ul>


ZHD F3Q22 (C4Q22) net revenue slightly missed our est. and cons. by (2%) and (1%). Adjusted EBITDA margin was in line with our est. excluding impact from PayPay consolidation. 
PayPay will continue to be the growth driver for ZHD with increase in unit spending supported by premium credit card offering and deepening integration with group’s other services.
We upgrade ZHD to BUY and raise our TP to JPY 435 to reflect beat in profitability and upsides in PayPay


Z Holdings (4689.JP) Upgrade to BUY: Leaner Business Lines with PayPay Drives Growth

Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>Wage pressures continue to build in Japan. The country's largest employer of part-time workers, AEON, is raising wages. Same goes for systems operator, TIS</li>
<li>It has been a disappointing year for shareholders of Z Holdings - perhaps a management change and new round of restructuring will help</li>
<li>Divergent fortunes for SPE names Screen and Lasertec. Suspect this has more to do with short term positioning. The fundamentals are broadly similar</li>
</ul>


Wage pressures continue to build in Japan. The country's largest employer of part-time workers, AEON, is raising wages. Same goes for systems operator, TIS
It has been a disappointing year for shareholders of Z Holdings - perhaps a management change and new round of restructuring will help
Divergent fortunes for SPE names Screen and Lasertec. Suspect this has more to do with short term positioning. The fundamentals are broadly similar


Japan Weekly | Z Holdings, Money Forward, Screen, Lasertec

Telco/Internet specialist

Kirk Boodry

Redex Research

<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

<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

Japan

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

LY (4689 JP)

Z Holdings (4689.JP) Upgrade to BUY: Leaner Business Lines with PayPay Drives Growth

We upgrade ZHD to BUY and raise our TP to JPY 435 to reflect beat in profitability and upsides in PayPay. We expect the group could reach its...

Blue Lotus Research Institute

Japan Weekly | Z Holdings, Money Forward, Screen, Lasertec

We take a look at the stocks that have been moving the Japanese equity markets over the past week. Z Holdings was the standout performer on restra...

Mark Chadwick

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

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)