Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

<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 Specialist

Mark Chadwick

Thematic (Sector/Industry)

<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

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

<ul>
<li>The gift market has contracted in recent years as corporate and formal gift giving has declined, but companies and individuals are enthusiastic adopters of digital gifting thanks to the convenience. </li>
<li>Businesses, in particular, are using eGifts as marketing and promotion tools and Giftee is one of the biggest beneficiaries of this trend. </li>
<li>The convenience and low cost of these services suggests considerable potential for expansion going forward, even if the consumer online gift market will increasingly be owned by LINE.</li>
</ul>


The gift market has contracted in recent years as corporate and formal gift giving has declined, but companies and individuals are enthusiastic adopters of digital gifting thanks to the convenience. 
Businesses, in particular, are using eGifts as marketing and promotion tools and Giftee is one of the biggest beneficiaries of this trend. 
The convenience and low cost of these services suggests considerable potential for expansion going forward, even if the consumer online gift market will increasingly be owned by LINE.


Giftee: Digital Gifting Surges for Consumer Businesses

<ul>
<li>Results for Q2 were better than we expected as B2B sales growth remained robust whilst cost savings on the consumer side boosted margins</li>
<li>A rather robust decline in revenue for Lohaco is the only negative that stands out but this was partially anticipated whilst the corresponding cost savings are a boon</li>
<li>An 11% increase in operating profit for Q2 offsets weakness from the previous report and puts the company on track to meet guidance for full-year growth</li>
</ul>


Results for Q2 were better than we expected as B2B sales growth remained robust whilst cost savings on the consumer side boosted margins
A rather robust decline in revenue for Lohaco is the only negative that stands out but this was partially anticipated whilst the corresponding cost savings are a boon
An 11% increase in operating profit for Q2 offsets weakness from the previous report and puts the company on track to meet guidance for full-year growth


Askul Q2 23 Results Reaction: B2B Growth and B2C Cost Savings Drive Solid Quarter

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.

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LY (4689 JP)

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

Giftee: Digital Gifting Surges for Consumer Businesses

Online gift giving by businesses and consumers has increased rapidly in recent years and should expand further with Giftee one of the main...

Michael Causton

Askul Q2 23 Results Reaction: B2B Growth and B2C Cost Savings Drive Solid Quarter

A solid Q2 puts Askul back on track for full-year growth in operating profit driven by high single-digit growth in B2B eCommerce

Kirk Boodry

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