Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>We share weekly commentaries on stocks in our coverage that had a good or bad week </li>
<li>Fast Retailing was the standout performer, trading up 11% this week</li>
<li>Wooden spoons for Money Forward and Yaskawa, both lower after reporting earnings</li>
</ul>


We share weekly commentaries on stocks in our coverage that had a good or bad week 
Fast Retailing was the standout performer, trading up 11% this week
Wooden spoons for Money Forward and Yaskawa, both lower after reporting earnings


Japan Stock Commentary | Uniqlo, Yaskawa and Money Forward

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/money-forward-inc" target="_blank" data-smartkarma-citation="entities:25919:1" rel="noopener">Money Forward (3994 JP)</a> reported 2QFY11/2022 results yesterday. Revenue grew 27.2% YoY to JPY5.08bn (vs consensus JPY5.13bn). Operating losses for the quarter was JPY2.2bn (vs consensus JPY1.9bn).</li>
<li>MF’s top line growth has been slowing down, and the company continues to spend heavily on advertising to acquire users for its SaaS business.</li>
<li>Though MF continues to grow its user base, it comes at the cost of profits.</li>
</ul>



Money Forward (3994 JP) reported 2QFY11/2022 results yesterday. Revenue grew 27.2% YoY to JPY5.08bn (vs consensus JPY5.13bn). Operating losses for the quarter was JPY2.2bn (vs consensus JPY1.9bn).
MF’s top line growth has been slowing down, and the company continues to spend heavily on advertising to acquire users for its SaaS business.
Though MF continues to grow its user base, it comes at the cost of profits.


Money Forward: Growth at the Cost of Profits

Telco/Internet specialist

Kirk Boodry

Redex Research

<ul>
<li>Q2 financial results were in-line or better than management targets but lagged consensus expectations</li>
<li>Guidance for Q3 is slightly disappointing with the target range for revenue mostly below expectations whilst promotional and marketing spend continues to expand</li>
<li>The secular growth story is attractive and operating KPI growth remains robust but investors probably needed more from a stock that trades at 7.5x EV/FY22 rev in a risk-off environment</li>
</ul>


Q2 financial results were in-line or better than management targets but lagged consensus expectations
Guidance for Q3 is slightly disappointing with the target range for revenue mostly below expectations whilst promotional and marketing spend continues to expand
The secular growth story is attractive and operating KPI growth remains robust but investors probably needed more from a stock that trades at 7.5x EV/FY22 rev in a risk-off environment


Money Forward - Q2 22 Results Reaction: Mixed Results Short of Consensus

<ul>
<li>Money Forward has one of the largest SaaS/Fintech platforms in Japan and is a key beneficiary of corporate digital transformation </li>
<li>The stock has fallen 48% year to date as valuations crashed with global SaaS multiples</li>
<li>We think MF will emerge from downturn in good shape. At 10x EV/Rev, we see 22% upside (maybe even 55%....)</li>
</ul>


Money Forward has one of the largest SaaS/Fintech platforms in Japan and is a key beneficiary of corporate digital transformation 
The stock has fallen 48% year to date as valuations crashed with global SaaS multiples
We think MF will emerge from downturn in good shape. At 10x EV/Rev, we see 22% upside (maybe even 55%....)


Money Forward (3994) | SaaS Crash Survivor

<ul>
<li>
<a href="https://www.smartkarma.com/entities/Freee-kk" target="_blank" data-smartkarma-citation="entities:28424:1" rel="noopener">freee (4478 JP)</a>  reported 3QFY06/2022 results on Friday. Revenue grew 35.7% YoY to JPY3.65bn (vs consensus JPY3.63bn) driven by strong growth in paying users.</li>
<li>Operating losses declined to 18.5% of revenues during the quarter from 24.0% in the same period a year ago.</li>
<li>The company’s shares moved up by about 9% at the end of Friday’s close following its earnings announcement.</li>
</ul>



freee (4478 JP)  reported 3QFY06/2022 results on Friday. Revenue grew 35.7% YoY to JPY3.65bn (vs consensus JPY3.63bn) driven by strong growth in paying users.
Operating losses declined to 18.5% of revenues during the quarter from 24.0% in the same period a year ago.
The company’s shares moved up by about 9% at the end of Friday’s close following its earnings announcement.


Freee: Strong User Growth and Improvement in Profitability; Shares Are a Lot Cheaper

Japan

Money Forward, Inc. develops mobile application software. The Company produces automatic household account book softwares, household account book application softwares, and other products. Money Forward also provides personal financial management, cloud based accounting solutions, and other services.

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Money Forward (3994 JP)

Japan Stock Commentary | Uniqlo, Yaskawa and Money Forward

We share our weekly commentaries on stocks in our coverage universe that have appreciated or dropped by a significant amount during the course of...

Mark Chadwick

Money Forward: Growth at the Cost of Profits

MF's revenue and EBIT for 2QFY11/22 fell below consensus. It seems that the top line growth has started decelerating while MF continues to spend...

Shifara Samsudeen, ACMA, CGMA

Money Forward - Q2 22 Results Reaction: Mixed Results Short of Consensus

Money Forward Q2 results met or beat its own targets but fell short of a more optimistic consensus. Guidance for Q3 sales also disappoints whilst...

Kirk Boodry

Money Forward (3994) | SaaS Crash Survivor

Money Forward has one of the largest SaaS/Fintech platforms in Japan and is a key beneficiary of corporate digital transformation. It is a SaaS...

Mark Chadwick

Freee: Strong User Growth and Improvement in Profitability; Shares Are a Lot Cheaper

3Q revenue grew 35.7% YoY driven by strong growth in paying users. freee added more than 57k paying users during the quarter. Freee has a clear...

Shifara Samsudeen, ACMA, CGMA

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