Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<ul>
<li>M3’s share price dropped around 9% after 4QFY03/2023 earnings, however, it went up by more than 8% since then following the announcement regarding the acquisition of Kantar’s healthcare research businesses.</li>
<li>Our estimates suggest that new acquisition would not contribute to any meaningful growth in the near term. Despite having large no. of M&amp;A deals, growth rates have started to fall.</li>
<li>We think there is further downside to <a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener">M3 Inc (2413 JP)</a> 's consensus FY+2 earnings estimates and we would recommend shorting the stock.</li>
</ul>


M3’s share price dropped around 9% after 4QFY03/2023 earnings, however, it went up by more than 8% since then following the announcement regarding the acquisition of Kantar’s healthcare research businesses.
Our estimates suggest that new acquisition would not contribute to any meaningful growth in the near term. Despite having large no. of M&amp;A deals, growth rates have started to fall.
We think there is further downside to M3 Inc (2413 JP) 's consensus FY+2 earnings estimates and we would recommend shorting the stock.


M3: Growth Slowing Down Despite Long List of M&As Continuing

<ul>
<li>
<a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener">M3 Inc (2413 JP)</a>  reported 4QFY03/2023 results on Friday. Both revenue and OP increased 3.1% and 52.0% YoY to ¥55.7bn (vs consensus ¥60.8bn) and ¥16.0bn (vs consensus ¥17.8bn) respectively.</li>
<li>We previously raised concerns over slowdown in medical platform earnings, and it seems that m3 has not been able to generate meaningful growth from its overseas businesses.</li>
<li>The company expects FY03/2024E revenue growth to further drop to about 8.3% marking the slowest annual increase in revenue over the last two decades.</li>
</ul>



M3 Inc (2413 JP)  reported 4QFY03/2023 results on Friday. Both revenue and OP increased 3.1% and 52.0% YoY to ¥55.7bn (vs consensus ¥60.8bn) and ¥16.0bn (vs consensus ¥17.8bn) respectively.
We previously raised concerns over slowdown in medical platform earnings, and it seems that m3 has not been able to generate meaningful growth from its overseas businesses.
The company expects FY03/2024E revenue growth to further drop to about 8.3% marking the slowest annual increase in revenue over the last two decades.


M3: Guidance Points to Further Slowdown in Growth

<ul>
<li>
<a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener">M3 Inc (2413 JP)</a> reported 3QFY03/2023 earnings today. Revenue increased 12.6% YoY to JPY64.6bn (vs consensus JPY62.6bn) while OP decreased 3.0% YoY to JPY22.0bn (vs consensus JPY22.8bn).</li>
<li>In line with our expectation, m3 has mentioned that it expects pharma marketing revenues to slow down with pharmaceutical companies cutting down their budgets.</li>
<li>Though m3 has made a large no. of M&amp;A deals to pursue growth, we have not seen extraordinary growth in overseas biz and think there is significant downside risk.</li>
</ul>



M3 Inc (2413 JP) reported 3QFY03/2023 earnings today. Revenue increased 12.6% YoY to JPY64.6bn (vs consensus JPY62.6bn) while OP decreased 3.0% YoY to JPY22.0bn (vs consensus JPY22.8bn).
In line with our expectation, m3 has mentioned that it expects pharma marketing revenues to slow down with pharmaceutical companies cutting down their budgets.
Though m3 has made a large no. of M&amp;A deals to pursue growth, we have not seen extraordinary growth in overseas biz and think there is significant downside risk.


M3: Slow Down in Pharma Marketing a Significant Downside Risk

<ul>
<li>
<a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener">M3 Inc (2413 JP)</a>  reported 2QFY03/2023 results yesterday. Revenue grew 10.6% YoY to JPY56.7bn (vs consensus JPY54.7bn) while OP increased 31.5% YoY to JPY17.9bn (vs consensus JPY17.0bn).</li>
<li>The company’s earnings were mainly driven by Covid-19 related trials and a weaker Yen which mainly helped the overseas business post strong results.</li>
<li>M3’s growth prospects remain stagnant and the company’s valuation multiple is still expensive as earnings expectation has started to decline.</li>
</ul>



M3 Inc (2413 JP)  reported 2QFY03/2023 results yesterday. Revenue grew 10.6% YoY to JPY56.7bn (vs consensus JPY54.7bn) while OP increased 31.5% YoY to JPY17.9bn (vs consensus JPY17.0bn).
The company’s earnings were mainly driven by Covid-19 related trials and a weaker Yen which mainly helped the overseas business post strong results.
M3’s growth prospects remain stagnant and the company’s valuation multiple is still expensive as earnings expectation has started to decline.


M3: Covid Related Trials and Yen Depreciation Support Earnings Beat

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>The theme we have seen over the past four weeks is an increasing number of indexes reversing 4-10-month downtrends and/or breaking above important resistance levels, with no failed breakouts.</li>
<li>We continue to believe that global equities are going through a bottoming process, but the real test will come during the eventual pullback, which we believe we are now experiencing.</li>
<li>We are watching to see whether these breakout levels and important moving averages (e.g., 50-day MAs) will hold.</li>
</ul>


The theme we have seen over the past four weeks is an increasing number of indexes reversing 4-10-month downtrends and/or breaking above important resistance levels, with no failed breakouts.
We continue to believe that global equities are going through a bottoming process, but the real test will come during the eventual pullback, which we believe we are now experiencing.
We are watching to see whether these breakout levels and important moving averages (e.g., 50-day MAs) will hold.


Japan Among the Latest to Break Out; Buy Ideas in Growth/Cyclicals and Consumer Staples

Japan

M3, Inc. supplies medical information services for doctors through the Internet. The Company also supports marketing of pharmaceutical companies and medical equipment manufacturers.

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M3 Inc (2413 JP)

M3: Growth Slowing Down Despite Long List of M&As Continuing

m3's shares have been up 8% the last few weeks and the company also announced acquisition of Kantar's healthcare assets. Despite having a long list...

Shifara Samsudeen, ACMA, CGMA

M3: Guidance Points to Further Slowdown in Growth

M3's 4Q earnings were below consensus and guidance for FY03/24E revenue growth is the lowest in more than 2 decades. slowdown in pharma mktg and...

Shifara Samsudeen, ACMA, CGMA

M3: Slow Down in Pharma Marketing a Significant Downside Risk

Decelerating pharma mktg and end of Covid-19 projects pose significant downside risk. Though m3 has no. of other businesses, these are at early...

Shifara Samsudeen, ACMA, CGMA

Japan Among the Latest to Break Out; Buy Ideas in Growth/Cyclicals and Consumer Staples

Japan is the latest major country to break out, and we are buyers. Japan continues to be considerably further along in the bottoming process...

Vermilion Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

M3: Growth Slowing Down Despite Long List of M&As Continuing

m3's shares have been up 8% the last few weeks and the company also announced acquisition of Kantar's healthcare assets. Despite having a long list...

Shifara Samsudeen, ACMA, CGMA

M3: Guidance Points to Further Slowdown in Growth

M3's 4Q earnings were below consensus and guidance for FY03/24E revenue growth is the lowest in more than 2 decades. slowdown in pharma mktg and...

Shifara Samsudeen, ACMA, CGMA

M3: Slow Down in Pharma Marketing a Significant Downside Risk

Decelerating pharma mktg and end of Covid-19 projects pose significant downside risk. Though m3 has no. of other businesses, these are at early...

Shifara Samsudeen, ACMA, CGMA

M3: Covid Related Trials and Yen Depreciation Support Earnings Beat

m3's 2Q earnings beat consensus driven by Covid related projects and weaker yen which helped overseas biz post strong results. Medical Platform is...

Shifara Samsudeen, ACMA, CGMA

Japan Among the Latest to Break Out; Buy Ideas in Growth/Cyclicals and Consumer Staples

Japan is the latest major country to break out, and we are buyers. Japan continues to be considerably further along in the bottoming process...

Vermilion Research