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>
<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 Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>The Nikkei was flat over the past five days, while the yen strengthened from ¥136 to ¥132.5/$ </li>
<li>Sony cuts profit outlook due to weak games sales. Segment OP cut ¥50b (-16%) </li>
<li>Japan and US to enter chip alliance to develop next-generation 2-nm semiconductors </li>
</ul>


The Nikkei was flat over the past five days, while the yen strengthened from ¥136 to ¥132.5/$ 
Sony cuts profit outlook due to weak games sales. Segment OP cut ¥50b (-16%) 
Japan and US to enter chip alliance to develop next-generation 2-nm semiconductors 


Japan Stocks on the Move | M3, BayCurrent, Makita, NEC

<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 1QFY03/2023 results yesterday. Revenue grew 22.8% YoY to JPY57.0bn (vs consensus JPY50.8bn) while OP decreased 24.2% YoY to JPY19.0bn (vs consensus JPY16.3bn).</li>
<li>The decline in OP was due to decrease in profit from overseas business where 1QFY03/2022 benefited from the Medlive IPO.</li>
<li>Though m3’s earnings have beaten consensus and the company’s core Medical Platform has seen some recovery in earnings, we would not be rushing to make an entry.</li>
</ul>



M3 Inc (2413 JP)  reported 1QFY03/2023 results yesterday. Revenue grew 22.8% YoY to JPY57.0bn (vs consensus JPY50.8bn) while OP decreased 24.2% YoY to JPY19.0bn (vs consensus JPY16.3bn).
The decline in OP was due to decrease in profit from overseas business where 1QFY03/2022 benefited from the Medlive IPO.
Though m3’s earnings have beaten consensus and the company’s core Medical Platform has seen some recovery in earnings, we would not be rushing to make an entry.


M3: Revenue and OP Beat Consensus but Don’t Rush to Make an Entry

Japan

JMDC Inc. offers information services. The Company provides medical data statistics, life insurance data statistics, health data platform management, and other services. JMDC provides its services throughout Japan.

Software Service, Inc. develops and sells medical information software for hospital uses.  The products include electronic medical carte and order entry system.  The Company also provides training and maintenance services.

Findex Inc plans, develops and maintains software products specialized in healthcare.  The Company also builds and provides medical net-work system for medical industry.

Medical Data Vision Co.,Ltd. was founded in 2003. The company's line of business includes developing integrated medical information systems, analysis of medical information, and business consulting for medical institutions.

ASAHI INTECC CO., LTD. manufactures medical tools as well as both medical and industrial-use stainless wire rope.  The Company's main products include catheters, guidewires, and miniature coils for endoscopic devices.

MEDIPAL HOLDINGS CORPORATION manufactures and sells medical tools and equipment, nursing equipment, and wholesales pharmaceuticals.

SYSMEX CORPORATION manufactures reagents and equipment for clinical tests including hematologic (blood) and immune tests. The Company also develops, manufactures, and trades particle analyzers such as blood coagulation analyzer and related software. Manufacturing and sales outside Japan include the United States, EMEA, China and Asia Pacific regions.

JEOL Ltd. manufactures electron optics instruments and analytical instruments including electron microscope, X-ray diffractometer and spectrometer and thermographs.  The Company also makes semiconductor manufacturing equipment, medical equipment and industrial equipment.

NIHON KOHDEN CORPORATION develops, manufactures, and sells medical equipment, transformers, and power switches and devices.  The Company's products include testing equipment for cerebral nerve such as electroencephalographs, circulatory systems, diagnostic equipment, catheters, biogenic monitoring systems such as electrocardiographs used into patient monitoring systems.

Alfresa Holdings Corporation is a holding company established through the merger of Azwell Inc. and Fukujin Co., Ltd.  The Company's subsidiaries mainly wholesale and manufacture medical related products including medicines, reagents, and medical tools and equipment.

Pro Medicus Limited develops and supplies proprietary software and IT solutions for large medical corporations and individual medical group practices.  The Group's services include billing and management systems for diagnostic imaging providers, clinical reporting systems, and appointment booking services.  Pro Medicus' e-mail system delivers encrypted diagnostic reports to group doctors.

Evolent Health, Inc. provides a purpose-built platform, powered by our technology, proprietary processes and integrated services, enables providers to migrate their economic orientation from fee-for-service, or FFS, reimbursement to payment models that reward high-quality and cost-effective care, or value-based payment models.

Winning Health Technology Group Co., Ltd. develops and sells medical software, and provides technology supporting services and comprehensive information technology solutions to the health care industry.

Winning Health Technology Group Co., Ltd. A (300253 CH)

Winning Health Technology Group Co., Ltd. A

NextGen Healthcare, Inc. develops and markets healthcare information systems. The Company's systems automate medical group practices, physical hospitals, management service organizations, community health centers, and dental schools. NextGen Healthcare offers its services throughout the United States.

Omnicell, Inc. provides an integrated suite of clinical infrastructure and workflow automation solutions for healthcare facilities.  The Company's solutions include pharmacy and supply systems, clinical reference tools, an Internet-based procurement application, and decision support tools.  Omnicell sells and leases its products and services to a range of healthcare facilities.

HealthStream, Inc. offers a Web-based solution to the continuing education and training needs of the healthcare community.  The Company distributes numerous hours of continuing education and training content to doctors, nurses, allied health professionals, and other healthcare workers through its network of distribution partners.

Allscripts Healthcare Solutions, Inc. develops and markets clinical software. The Company's products include electronic health records, electronic prescribing, revenue cycle management, practice management, document management, medication services, hospital care management, emergency department information systems and homecare automation.

Allscripts Healthcare Solutions (MDRX US)

EMIS Group Plc is a healthcare information technology company. The Company computerizes patients' medical records and allows primary, secondary and community healthcare practitioners to view and contribute to a patient's core medical record.

Craneware plc engages in the development, licensing, and ongoing support of computer software for the United States healthcare industry. The company offers access management and strategic pricing products comprising InSight Medical Necessity, which provides medical necessity validation and advance beneficiary notice creation; and Patient Charge Estimator software, which simplifies the process of providing patient bill estimates for inpatient and outpatient services. It also provides charge capture and pricing solutions include Chargemaster Toolkit that automates chargemaster management processes for capturing optimal legitimate reimbursement for hospitals; Physician Revenue Toolkit, a software for managing physician group charges, codes, RVUs, fee schedules, and related information; Pricing Analyzer software that simplifies the price modeling process; Reference Plus, a platform for hospitals to perform chargemaster analysis; Pharmacy ChargeLink, which improves charge capture, pricing, and cost management; and Supplies ChargeLink that optimize reimbursement for codable supplies by identifying missing or invalid charges, as well as offers supporting modules. In addition, the company offers coding integrity solutions consisting of Bill Analyzer, which automates claim and coding reviews to identify missed charges, billing errors, and categorize areas of risk. Further, it provides revenue recovery and retention solutions, including InSight Audit, a Web-based audit management tool to manage claim audits and workflow from one central location; InSight Payment Variance Analyzer, which identifies, tracks, and helps eliminate revenue lost in the form of underpaid claims; and InSight Denials that analyses, tracks, trends, and reports on denial data. Additionally, the company offers companion implementation and consulting services. Craneware plc was founded in 1999 and is headquartered in Edinburgh, the United Kingdom.

Simulations Plus, Inc. develops drug discovery and development simulation software, which is licensed to and used in the conduct of drug research for pharmaceutical companies worldwide.  The Company's other businesses are based on its proprietary software technologies and provide support for the emerging pharmaceutical enterprise.

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: 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

Japan Stocks on the Move | M3, BayCurrent, Makita, NEC

As Japan grapples with record Covid cases and marauding monkeys, we highlight the stocks that were winners and losers over the past week

Mark Chadwick

M3: Revenue and OP Beat Consensus but Don’t Rush to Make an Entry

M3 reported 1QFY03/2023 results yesterday. Both revenue and OP beat consensus estimates and the company's core biz Medical Platform saw some...

Shifara Samsudeen, ACMA, CGMA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

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

Japan Stocks on the Move | M3, BayCurrent, Makita, NEC

As Japan grapples with record Covid cases and marauding monkeys, we highlight the stocks that were winners and losers over the past week

Mark Chadwick

M3: Revenue and OP Beat Consensus but Don’t Rush to Make an Entry

M3 reported 1QFY03/2023 results yesterday. Both revenue and OP beat consensus estimates and the company's core biz Medical Platform saw some...

Shifara Samsudeen, ACMA, CGMA