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 Capital Markets

<ul>
<li>M3’s shares have dropped 37.3% over the last 12-months to JPY5,774 from JPY9,207 as the company’s earnings growth has started slowing down. </li>
<li>The Medical Platform business was a key beneficiary of pandemic which saw accelerated transformation in pharma marketing. Strong growth of Medical Platform helped offset declines in other businesses during pandemic.</li>
<li>M3’s share price has been on a correction as pandemic drove its valuations to all-time highs. M3’s recent earnings revealed that its earnings growth has started decelerating.</li>
</ul>


M3’s shares have dropped 37.3% over the last 12-months to JPY5,774 from JPY9,207 as the company’s earnings growth has started slowing down. 
The Medical Platform business was a key beneficiary of pandemic which saw accelerated transformation in pharma marketing. Strong growth of Medical Platform helped offset declines in other businesses during pandemic.
M3’s share price has been on a correction as pandemic drove its valuations to all-time highs. M3’s recent earnings revealed that its earnings growth has started decelerating.


M3: Share Price Heading into a Correction and Further 20-25% Downside Likely

Equity Bottom-Up

<ul>
<li>Medlive is trading at HK$36.0 per share, 32.4% higher than the company’s IPO price of HK$27.2. The company’s shares have continued to trade at levels higher than its IPO price.</li>
<li>At FY2 EV/Revenue of 34.30x, Medlive appears attractive to us given the company is going through its high-growth phase alongside its proven business model and strong financials.</li>
<li>Medlive is well positioned to benefit from growing demand for digital healthcare in China which is at an early stage. </li>
</ul>


Medlive is trading at HK$36.0 per share, 32.4% higher than the company’s IPO price of HK$27.2. The company’s shares have continued to trade at levels higher than its IPO price.
At FY2 EV/Revenue of 34.30x, Medlive appears attractive to us given the company is going through its high-growth phase alongside its proven business model and strong financials.
Medlive is well positioned to benefit from growing demand for digital healthcare in China which is at an early stage. 


2022 High Conviction – Medlive: Key Beneficiary of Digital Healthcare Marketing in China

<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 its 2QFY03/2022 results on Wednesday (27th October) which saw revenues growing 29.6% YoY to JPY51.2bn while reported OP (including profit from Medlive IPO) for the quarter increased 194.1% YoY to JPY37.3bn. Excluding the impact from Medlive IPO, the adjusted OP grew 21.8% YoY to JPY15.4bn during the second quarter.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/237/973/original/image_42895307621635358784594.png?1635358786" class="editor-image img-responsive" data-smartkarma-image-id="237973"></figure>Source: Company disclosuresThe reported revenue for 2QFY03/2022 was 4.3% higher vs consensus revenue of JPY49.1bn while reported OP for the quarter was 8.5% higher vs consensus OP of JPY34.4bn.

M3 Inc (2413 JP) reported its 2QFY03/2022 results on Wednesday (27th October) which saw revenues growing 29.6% YoY to JPY51.2bn while reported OP (including profit from Medlive IPO) for the quarter increased 194.1% YoY to JPY37.3bn. Excluding the impact from Medlive IPO, the adjusted OP grew 21.8% YoY to JPY15.4bn during the second quarter.Source: Company disclosuresThe reported revenue for 2QFY03/2022 was 4.3% higher vs consensus revenue of JPY49.1bn while reported OP for the quarter was 8.5% higher vs consensus OP of JPY34.4bn.

M3: Strong 2Q Results but Earnings Growth Starts Decelerating

<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 1QFY03/2022 results on Wednesday which saw revenues growing 30.8% YoY while reported operating profit grew 38.2%YoY during the quarter (excl. the impact from stake disposal of <a href="https://www.smartkarma.com/entities/medlive-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:32985:1" rel="noopener">Medlive Technology (2192 HK)</a>). M3’s operating profits during 1QFY03/2022 benefitted from the IPO of Medlive Technology on Hong Kong Stock Exchange in July 2021 with a profit attribution of JPY9.1bn (19.6% of total revenues in 1Q and 36.9% of operating profits excl. Medlive IPO impact).<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/220/968/original/image_968611860161627537893439.png?1627537894" class="editor-image img-responsive" data-smartkarma-image-id="220968"></figure>Source: Company disclosuresThe reported revenue was 3.8% higher than consensus estimates while reported operating profits beat consensus by a huge margin of about 50%.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/220/969/original/image_180657963171627537913658.png?1627537914" class="editor-image img-responsive" data-smartkarma-image-id="220969"></figure>

M3 Inc (2413 JP)  reported 1QFY03/2022 results on Wednesday which saw revenues growing 30.8% YoY while reported operating profit grew 38.2%YoY during the quarter (excl. the impact from stake disposal of Medlive Technology (2192 HK)). M3’s operating profits during 1QFY03/2022 benefitted from the IPO of Medlive Technology on Hong Kong Stock Exchange in July 2021 with a profit attribution of JPY9.1bn (19.6% of total revenues in 1Q and 36.9% of operating profits excl. Medlive IPO impact).Source: Company disclosuresThe reported revenue was 3.8% higher than consensus estimates while reported operating profits beat consensus by a huge margin of about 50%.

M3: Medlive IPO Helped OP Surge in 1Q; Expect Earnings Weakness to Come Through in 2H

Medlive Technology / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/medlive-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:32985:1" rel="noopener">Medlive Technology (2192 HK)</a> operates the largest online professional physician platform in China based on registered physician users in 2020 (Source: Frost &amp; Sullivan). The company generates a majority of its revenues through offering digital marketing services to pharmaceuticals and healthcare companies in China.Medlive priced its IPO at HK$27.2 per share, at the upper end of the IPO price range of HK$24.1-27.2 per share. At the above price, Medlive raised gross proceeds of HK$4.2bn (US$543m) at a market capitalisation of HK$18.8bn and a post-money enterprise value of HK$14.8bn.In our previous insight, we discussed our forecasts and valuation and our DCF based valuation offered price per share of HK$33.05 per share, which is 21% higher than the company’s IPO price of HK$27.2 per share.

Medlive Technology (2192 HK) operates the largest online professional physician platform in China based on registered physician users in 2020 (Source: Frost &amp; Sullivan). The company generates a majority of its revenues through offering digital marketing services to pharmaceuticals and healthcare companies in China.Medlive priced its IPO at HK$27.2 per share, at the upper end of the IPO price range of HK$24.1-27.2 per share. At the above price, Medlive raised gross proceeds of HK$4.2bn (US$543m) at a market capitalisation of HK$18.8bn and a post-money enterprise value of HK$14.8bn.In our previous insight, we discussed our forecasts and valuation and our DCF based valuation offered price per share of HK$33.05 per share, which is 21% higher than the company’s IPO price of HK$27.2 per share.

Medlive IPO: Thoughts on First Day Trading

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)

2022 High Conviction – Medlive: Key Beneficiary of Digital Healthcare Marketing in China

Medlive is well positioned to benefit from growing demand for digital healthcare in China which is at an early stage. We expect Medlive to be a key...

Shifara Samsudeen, ACMA, CGMA

M3: Strong 2Q Results but Earnings Growth Starts Decelerating

The Covid-19 outbreak supported strong growth in m3's earnings, however, with pandemic conditions easing off, earnings growth has started...

Shifara Samsudeen, ACMA, CGMA

M3: Medlive IPO Helped OP Surge in 1Q; Expect Earnings Weakness to Come Through in 2H

M3’s operating profits during 1Q benefitted from the IPO of Medlive on HKEx with a profit attribution of JPY9.1bn (19.6% of revenues and 36.9% of...

Shifara Samsudeen, ACMA, CGMA

Medlive IPO: Thoughts on First Day Trading

Both our DCF-based valuation and relative valuation suggest that the company’s IPO is attractively priced and there is more room for share price to...

Shifara Samsudeen, ACMA, CGMA

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M3: Share Price Heading into a Correction and Further 20-25% Downside Likely

M3’s share price has been on a correction as pandemic drove its valuations to all-time highs. M3's earnings growth has started decelerating our...

Shifara Samsudeen, ACMA, CGMA

2022 High Conviction – Medlive: Key Beneficiary of Digital Healthcare Marketing in China

Medlive is well positioned to benefit from growing demand for digital healthcare in China which is at an early stage. We expect Medlive to be a key...

Shifara Samsudeen, ACMA, CGMA

M3: Strong 2Q Results but Earnings Growth Starts Decelerating

The Covid-19 outbreak supported strong growth in m3's earnings, however, with pandemic conditions easing off, earnings growth has started...

Shifara Samsudeen, ACMA, CGMA

M3: Medlive IPO Helped OP Surge in 1Q; Expect Earnings Weakness to Come Through in 2H

M3’s operating profits during 1Q benefitted from the IPO of Medlive on HKEx with a profit attribution of JPY9.1bn (19.6% of revenues and 36.9% of...

Shifara Samsudeen, ACMA, CGMA

Medlive IPO: Thoughts on First Day Trading

Both our DCF-based valuation and relative valuation suggest that the company’s IPO is attractively priced and there is more room for share price to...

Shifara Samsudeen, ACMA, CGMA