IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Medlive Technology / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/medlive-technology-co-ltd" target="_blank" data-smartkarma-citation="entities:32985:1" rel="noopener">Medlive Technology (MLT HK)</a> is the largest online professional physician platform in China as measured by the number of registered physician users as of 31 December 2020, according to Frost &amp; Sullivan. Medlive derives most of its revenue from providing solutions that facilitate healthcare marketing to physicians. Medlive ranked first among physician platform-based digital healthcare marketing service providers in China as measured by revenue in 2020, with a 21.4% market share, according to Frost &amp; Sullivan. Medlive is pre-marketing an HKEx IPO to raise around $500 million, according to press reports.</p><p>Medlive is a JV between <a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener">M3 Inc (2413 JP)</a> and Tiantian, each with 50% stakes. Medlive has been a consolidated subsidiary of M3, with M3 holding the right to nominate the majority of Medlive directors, but M3 will forego this right upon Medlive's listing. Also, upon listing, M3 will be deconsolidated (equity-method affiliate) from M3 financials. </p><p>Digital healthcare marketing service providers focus on various aspects of the digital healthcare marketing market and have competitive advantages in different areas. For example, internet hospitals and pharmaceutical e-commerce platforms, such as <a href="https://www.smartkarma.com/entities/ping-an-healthcare-and-technology-company-limited" target="_blank" data-smartkarma-citation="entities:27008:1" rel="noopener">Ping An Healthcare and Technology Company Limited (1833 HK)</a> and <a href="https://www.smartkarma.com/entities/jd-health-international-inc" target="_blank" data-smartkarma-citation="entities:29677:1" rel="noopener">JD Health (6618 HK)</a>, have large consumer user bases for advertising and selling non-prescription drugs. Medlive believes that it can compete with these players for a slice of healthcare companies’ marketing budgets due to its large and engaged physician user base, which enables it to reach a wider group of physicians more efficiently and achieve a better return on marketing spending. </p><div class="content-highlight"><p>Medlive has strong fundamentals due to fast-paced revenue growth, rising margin and strong cash generation. Overall, we believe that the Medlive IPO is worth a look. </p></div><p><strong><em>For readers interested in IPOs of upcoming healthtech companies, we highlight:</em></strong> </p><p><a href="https://www.smartkarma.com/insights/linkdoc-technology-ipo-initiation-building-with-big-data" target="_blank" data-smartkarma-citation="insights:53384" rel="noopener">LinkDoc Technology IPO Initiation: Building with Big Data</a> </p><p><a href="https://www.smartkarma.com/insights/we-doctor-ipo-initiation-patient-revolution" target="_blank" data-smartkarma-citation="insights:50009" rel="noopener">We Doctor IPO Initiation: Patient Revolution</a> </p>

Medlive Technology (MLT HK) is the largest online professional physician platform in China as measured by the number of registered physician users as of 31 December 2020, according to Frost &amp; Sullivan. Medlive derives most of its revenue from providing solutions that facilitate healthcare marketing to physicians. Medlive ranked first among physician platform-based digital healthcare marketing service providers in China as measured by revenue in 2020, with a 21.4% market share, according to Frost &amp; Sullivan. Medlive is pre-marketing an HKEx IPO to raise around $500 million, according to press reports.Medlive is a JV between M3 Inc (2413 JP) and Tiantian, each with 50% stakes. Medlive has been a consolidated subsidiary of M3, with M3 holding the right to nominate the majority of Medlive directors, but M3 will forego this right upon Medlive's listing. Also, upon listing, M3 will be deconsolidated (equity-method affiliate) from M3 financials. Digital healthcare marketing service providers focus on various aspects of the digital healthcare marketing market and have competitive advantages in different areas. For example, internet hospitals and pharmaceutical e-commerce platforms, such as Ping An Healthcare and Technology Company Limited (1833 HK) and JD Health (6618 HK), have large consumer user bases for advertising and selling non-prescription drugs. Medlive believes that it can compete with these players for a slice of healthcare companies’ marketing budgets due to its large and engaged physician user base, which enables it to reach a wider group of physicians more efficiently and achieve a better return on marketing spending. Medlive has strong fundamentals due to fast-paced revenue growth, rising margin and strong cash generation. Overall, we believe that the Medlive IPO is worth a look. For readers interested in IPOs of upcoming healthtech companies, we highlight: LinkDoc Technology IPO Initiation: Building with Big Data We Doctor IPO Initiation: Patient Revolution 

Medlive Technology IPO Initiation: What's Up, Doc?

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

<p><a href="https://www.smartkarma.com/entities/cyberagent-inc" target="_blank" rel="noopener">Cyberagent Inc (4751 JP)</a> reported its 2QFY09/21 financial results after market closed on 28<sup>th</sup>. Both revenue and OP beat consensus by 14.6% and 114.7% respectively during the quarter.</p><p>The company has revised its FY09/2021 forecasts upwards given that it has already reached its OP target for the year. Cyberagent’s gaming business released two new titles, which have allowed the company’s overall revenues and OP to hit an all-time high. The internet advertising business has also improved post-COVID and splitting ABEMA between its Free Business Unit and Premium Business Unit appears to have been a good move for the company.</p>

Cyberagent Inc (4751 JP) reported its 2QFY09/21 financial results after market closed on 28th. Both revenue and OP beat consensus by 14.6% and 114.7% respectively during the quarter.The company has revised its FY09/2021 forecasts upwards given that it has already reached its OP target for the year. Cyberagent’s gaming business released two new titles, which have allowed the company’s overall revenues and OP to hit an all-time high. The internet advertising business has also improved post-COVID and splitting ABEMA between its Free Business Unit and Premium Business Unit appears to have been a good move for the company.

CyberAgent: Strong 2Q Results Driven by Gaming; Upward Revisions to Full-Year Forecasts

<p><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 4QFY03/21 and full-year FY03/2021 results on Friday. The company’s revenue for 4QFY03/21 grew 31.1% YoY while operating income for the quarter more than doubled to JPY15.5bn.</p><p>For full-year FY03/21, m3’s revenue grew 29% YoY while operating profit for the year increased 69% YoY (+74% YoY on a comparable basis). Both revenue and OP for the year were a touch higher than consensus estimates.</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/202/605/original/image_37571584521619393056990.png?1619393057" class="editor-image img-responsive" data-smartkarma-image-id="202605"></figure>

M3 Inc (2413 JP)  reported its 4QFY03/21 and full-year FY03/2021 results on Friday. The company’s revenue for 4QFY03/21 grew 31.1% YoY while operating income for the quarter more than doubled to JPY15.5bn.For full-year FY03/21, m3’s revenue grew 29% YoY while operating profit for the year increased 69% YoY (+74% YoY on a comparable basis). Both revenue and OP for the year were a touch higher than consensus estimates.

M3: Robust FY03/2021 Earnings Driven by Pandemic; Shares Are Still Expensive Even After Recent Drop

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Thematic (Sector/Industry)

<p style="text-align: center;"><strong>• THE POST-COVID ROTATION •</strong></p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/191/288/original/2021-02-28_08-38-14.png?1614469105" class="editor-image img-responsive" data-smartkarma-image-id="191288"></figure><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/191/290/original/2021-02-28_08-57-32.png?1614470265" class="editor-image img-responsive" data-smartkarma-image-id="191290"></figure></section></section><section class="figure"><div style="text-align: center;" class="content-caption"> Source for all charts &amp; tables: Japan Analytics</div></section><p><strong>THE 2021 ROTATION ACCELERATES</strong> - As we noted in <a href="https://www.smartkarma.com/insights/japan-the-post-covid-rotation-from-growth-to-value-begins-02-05-results-revisions-update" target="_blank" data-smartkarma-citation="insights:47877" rel="noopener">The Post-COVID Rotation from Growth to Value Begins</a>, the Japanese equity market has been led by overvalued and overvalued for most of the last year overbought high-quality growth companies in the <strong>Technology Hardware</strong>, <strong>Electrical Equipment</strong>, <strong>Internet</strong>, and <strong>Healthcare</strong> Sectors. These companies were deemed to be 'COVID-resistant' and were consistently well-bid regardless of price. The stocks leading this 'charge' were <a href="https://www.smartkarma.com/entities/m3-inc" target="_blank" data-smartkarma-citation="entities:13316:1" rel="noopener">M3 (2413 JP),</a><a href="https://www.smartkarma.com/entities/lasertec-corp" target="_blank" data-smartkarma-citation="entities:4126:1" rel="noopener">Lasertec (6920 JP)</a>, <a href="https://www.smartkarma.com/entities/monotaro-co-ltd" target="_blank" data-smartkarma-citation="entities:15441:1" rel="noopener">MonotaRO (3064 JP)</a>, <a href="https://www.smartkarma.com/entities/chugai-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:4489:1" rel="noopener">Chugai Pharmaceutical (4519 JP)</a>, and <a href="https://www.smartkarma.com/entities/nidec-corp" target="_blank" data-smartkarma-citation="entities:7245:1" rel="noopener">Nidec (6594 JP)</a>, while the only cyclical Sector that has seen a major recovery was Energy. Meanwhile, shares in domestically-orientated Sectors and companies heavily exposed to COVID-related delines in business activity languished despite valuations reaching ten or twenty-year lows. </p><p><strong>PEAKED?</strong> - Over the last twenty trading days during which TOPIX reached 1,974.99. The <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> breached 30,000, many of these market leaders have seen a significant correction, while the market has rotated into domestic, cyclical, and financial Sectors - as illustrated by our Sector Relative Price Score timelines in the chart above. In the<strong> DETAIL</strong> Section below, we will review the current market technicals after Friday's 4% N225 decline and look at the leading stocks on both 'sides' of this rotation trade.</p>

• THE POST-COVID ROTATION • Source for all charts &amp; tables: Japan AnalyticsTHE 2021 ROTATION ACCELERATES - As we noted in The Post-COVID Rotation from Growth to Value Begins, the Japanese equity market has been led by overvalued and overvalued for most of the last year overbought high-quality growth companies in the Technology Hardware, Electrical Equipment, Internet, and Healthcare Sectors. These companies were deemed to be 'COVID-resistant' and were consistently well-bid regardless of price. The stocks leading this 'charge' were M3 (2413 JP),Lasertec (6920 JP), MonotaRO (3064 JP), Chugai Pharmaceutical (4519 JP), and Nidec (6594 JP), while the only cyclical Sector that has seen a major recovery was Energy. Meanwhile, shares in domestically-orientated Sectors and companies heavily exposed to COVID-related delines in business activity languished despite valuations reaching ten or twenty-year lows. PEAKED? - Over the last twenty trading days during which TOPIX reached 1,974.99. The Nikkei 225 (NKY INDEX) breached 30,000, many of these market leaders have seen a significant correction, while the market has rotated into domestic, cyclical, and financial Sectors - as illustrated by our Sector Relative Price Score timelines in the chart above. In the DETAIL Section below, we will review the current market technicals after Friday's 4% N225 decline and look at the leading stocks on both 'sides' of this rotation trade.

🇯🇵 JAPAN • The Post-COVID Rotation Accelerates

<div style="text-align: center;"><strong>• NET GAIN • </strong></div><div><div class="content-caption">
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/189/590/original/2021-02-19_07-20-52.png?1613686864" class="editor-image img-responsive" data-smartkarma-image-id="189590"></figure><p></p></section> Source for all charts &amp; tables: Japan Analytics</div></div><div>
<p><strong>NET GAIN</strong> - Forecast Aggregate Net Income for the universe of  Japanese listed companies ended the quarter 23.8%  higher than three months ago - an increase of  ¥5.2 trillion. As a result, the market's forward earnings multiple has declined to 28 times following a 10% increase in total market value (ex REITs). The increase in forecast operating income is a more modest 10.2% reflecting the degree of previously-projected COVID-related extraordinary losses.</p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/189/591/original/2021-02-19_07-29-59.png?1613687413" class="editor-image img-responsive" data-smartkarma-image-id="189591"></figure></section><p><strong>TRAILING TWELVE MONTHS (TTM)</strong> - Trailing revenues and operating profits are still falling by 9.9% and 26.3%, respectively; however, operating income rose by 4.1% quarter-on-quarter as margins improved by 30 basis points. Despite a reasonable effort at cost-cutting, aggregate operating margins are still  228 bps below their mid-2018 peak, and it will take at least another eight quarters for that gap to be closed.</p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/189/595/original/2021-02-19_07-38-34.png?1613687927" class="editor-image img-responsive" data-smartkarma-image-id="189595"></figure></section><p><strong>FORECASTS</strong> - The majority of companies are forecasting for the year ending next month. Despite no change in the aggregate revenue forecast, the outlook for operating income increased by ¥3.7 trillion during the quarter resulting in a 50 bps operating margin uplift. </p>
</div><section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/189/596/original/2021-02-19_07-40-09.png?1613688021" class="editor-image img-responsive" data-smartkarma-image-id="189596"></figure><hr></section><p><strong>POSITIVE MOMENTUM</strong> - Both our forward-looking Results Score and Results &amp; Revision Score have returned to the positive after less than one year. Whether this merits a new thirty-year high in TOPIX is, however, a moot point. We would note that the Cabinet Office Leading Indicator of Business Conditions for December turned down for the first time since April 2020.   </p></section><div></div><div>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/189/597/original/2021-02-19_08-02-24.png?1613689355" class="editor-image img-responsive" data-smartkarma-image-id="189597"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/189/694/original/2021-02-19_16-02-06.png?1613718138" class="editor-image img-responsive" data-smartkarma-image-id="189694"></figure><hr></section><p><strong>SECTOR BREAKDOWN</strong> - The leading sectors in terms of one-month change in Results &amp; Revision Score are <strong>Other Commercial Products</strong>, <strong>Autos</strong>,<strong> Other Consumer Products</strong>, <strong>Metals</strong>, and <strong>Building Materials.</strong> The RRS 'losers' are <strong>Utilities</strong>, <strong>Internet Content &amp; Services</strong>, <strong>Food, Beverages &amp; Tobacco,</strong><strong>Retail</strong>, and <strong>Healthcare</strong>.  </p>
</div><div>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/189/700/original/2021-02-19_16-05-32.png?1613718344" class="editor-image img-responsive" data-smartkarma-image-id="189700"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/189/701/original/2021-02-19_16-06-12.png?1613718383" class="editor-image img-responsive" data-smartkarma-image-id="189701"></figure></section><hr>
</div><section></section><div><div>
<p>In the <strong>DETAIL</strong> section below, we shall review the actual results and initial and revised forecasts by Sector and highlight the best and worst-performing companies by one-quarter revenue and margin changes.</p>
<hr>
<p></p>
</div></div>

• NET GAIN • 
 Source for all charts &amp; tables: Japan Analytics
NET GAIN - Forecast Aggregate Net Income for the universe of  Japanese listed companies ended the quarter 23.8%  higher than three months ago - an increase of  ¥5.2 trillion. As a result, the market's forward earnings multiple has declined to 28 times following a 10% increase in total market value (ex REITs). The increase in forecast operating income is a more modest 10.2% reflecting the degree of previously-projected COVID-related extraordinary losses.
TRAILING TWELVE MONTHS (TTM) - Trailing revenues and operating profits are still falling by 9.9% and 26.3%, respectively; however, operating income rose by 4.1% quarter-on-quarter as margins improved by 30 basis points. Despite a reasonable effort at cost-cutting, aggregate operating margins are still  228 bps below their mid-2018 peak, and it will take at least another eight quarters for that gap to be closed.
FORECASTS - The majority of companies are forecasting for the year ending next month. Despite no change in the aggregate revenue forecast, the outlook for operating income increased by ¥3.7 trillion during the quarter resulting in a 50 bps operating margin uplift. 
POSITIVE MOMENTUM - Both our forward-looking Results Score and Results &amp; Revision Score have returned to the positive after less than one year. Whether this merits a new thirty-year high in TOPIX is, however, a moot point. We would note that the Cabinet Office Leading Indicator of Business Conditions for December turned down for the first time since April 2020.   
SECTOR BREAKDOWN - The leading sectors in terms of one-month change in Results &amp; Revision Score are Other Commercial Products, Autos, Other Consumer Products, Metals, and Building Materials. The RRS 'losers' are Utilities, Internet Content &amp; Services, Food, Beverages &amp; Tobacco,Retail, and Healthcare.  



In the DETAIL section below, we shall review the actual results and initial and revised forecasts by Sector and highlight the best and worst-performing companies by one-quarter revenue and margin changes.




🇯🇵 JAPAN • IT’S A WRAP - Winter 2020 Results & Revisions Review

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)

Medlive Technology IPO Initiation: What's Up, Doc?

Medlive is pre-marketing an HKEx IPO to raise around $500 million, according to press reports. The fundamentals are strong due to fast-paced...

Arun George

CyberAgent: Strong 2Q Results Driven by Gaming; Upward Revisions to Full-Year Forecasts

Cyberagent reported its 2QFY09/21 financial results after market. Both revenue and OP beat consensus by 14.6% and 114.7% respectively during the...

Shifara Samsudeen, ACMA, CGMA

M3: Robust FY03/2021 Earnings Driven by Pandemic; Shares Are Still Expensive Even After Recent Drop

M3 reported its 4QFY03/21 and full-year FY03/2021 results on Friday. The company’s revenue for 4QFY03/21 grew 31.1% YoY while operating income for...

Shifara Samsudeen, ACMA, CGMA

🇯🇵 JAPAN • The Post-COVID Rotation Accelerates

Over the last 20 trading days during which TOPIX reached 1,974.99, many market leaders have seen a significant correction, and there has been a...

Campbell Gunn

🇯🇵 JAPAN • IT’S A WRAP - Winter 2020 Results & Revisions Review

NET GAIN - Forecast Aggregate Net Income for the universe of Japanese listed companies ended the quarter 23.8% higher than three months ago - an...

Campbell Gunn

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