Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<div>
<a href="https://www.smartkarma.com/entities/freee-kk" target="_blank" data-smartkarma-citation="entities:28424:1" rel="noopener">Freee (4478 JP)</a> (freee) is looking to raise around US$400m via selling a mix of primary and secondary shares. 
We had looked at the company at the time of listing, links to our previous notes are below: 
</div><div><ul style="list-style-type: disc;">
<li><a href="https://www.smartkarma.com/insights/freee-pre-ipo-has-been-growing-fast-but-missing-data-points-leave-quite-a-few-niggling-doubts" target="_blank" rel="noopener">freee K.K. pre-IPO - Has been growing fast but missing data points leave quite a few niggling doubts,</a></li>
<li><a href="https://www.smartkarma.com/insights/freee-k-k-pre-ipo-the-battle-is-far-from-over" target="_blank" rel="noopener">Freee K. K. Pre-IPO - The Battle Is Far from Over,</a></li>
<li>
<a href="https://www.smartkarma.com/insights/free-k-k-ipo-it-s-not-exactly-freee-but-looks-ok-at-the-lower-end" target="_blank" rel="noopener">Freee K.K. IPO - It’s Not Exactly Free but Looks Ok at the Lower-End</a>, and</li>
<li><a href="https://www.smartkarma.com/insights/freee-ipo-trading-priced-at-par-to-comp-it-now-boils-down-to-how-much-premium-it-can-trade-at" target="_blank" rel="noopener">Freee IPO Trading - Priced at Par to Comp, It Now Boils Down to How Much Premium It Can Trade At</a></li>
</ul></div><div>In this note, we'll run the deal through our ECM framework and talk about deal dynamics.</div>


Freee (4478 JP) (freee) is looking to raise around US$400m via selling a mix of primary and secondary shares. 
We had looked at the company at the time of listing, links to our previous notes are below: 

freee K.K. pre-IPO - Has been growing fast but missing data points leave quite a few niggling doubts,
Freee K. K. Pre-IPO - The Battle Is Far from Over,

Freee K.K. IPO - It’s Not Exactly Free but Looks Ok at the Lower-End, and
Freee IPO Trading - Priced at Par to Comp, It Now Boils Down to How Much Premium It Can Trade At
In this note, we'll run the deal through our ECM framework and talk about deal dynamics.

Freee Placement - Needs to Correct by a Whole Lot More

Japan Specialist

Mark Chadwick

Equity Bottom-Up

<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 another set of stunning quarterly revenue growth figures. </li>
<li>The market for cloud-based accounting software is still at its early stages of adoption. </li>
<li>We compare Freee with <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> . Freee's accounting business (on a like-for-like basis) comes out on top. But, Money Forward is cheaper and has a wider range of growth options.</li>
</ul>



freee (4478 JP) reported another set of stunning quarterly revenue growth figures. 
The market for cloud-based accounting software is still at its early stages of adoption. 
We compare Freee with Money Forward (3994 JP) . Freee's accounting business (on a like-for-like basis) comes out on top. But, Money Forward is cheaper and has a wider range of growth options.


Japan Small Cap Growth - Freee or Money Forward?

<div>
<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> (MF) reported a strong finish to FY11/20, with Q4 revenues up 51% YoY.  
</li>
<li>
The core MF Business segment (65% of sales) grew 78% YoY in the quarter to ¥2.2b. 
</li>
<li>
Annual Recurring Revenue (ARR) reached ¥8.25b (72% of total sales) 
</li>
<li>
Gross margin in Q4 was 68.2%, up 7.8ppts from the previous year.  
</li>
<li>
The number of paying customers for the entire group (individuals, sole proprietors and corporations) exceeded 420,000.  
</li>
<li>
Guidance: FY11/21 revenue guided to a range of ¥14.75-15.75b (30-39% YoY) 
</li>
</ul>
</div>
<div>
<div>
Company Description  Money Forward is a financial platform for both individuals and businesses. The rapid adoption of cloud-based Software as a Service (SaaS) is driving rapid sales growth for business accounting software and, with penetration still at low levels, this trend is expected to continue. Money Forward operates under four main domains:  MF Business (cloud accounting), MF Finance (payment services/fund), MF X (technology solutions) and MF Home (personal financial management).   
</div>
</div>




Money Forward (3994 JP) (MF) reported a strong finish to FY11/20, with Q4 revenues up 51% YoY.  


The core MF Business segment (65% of sales) grew 78% YoY in the quarter to ¥2.2b. 


Annual Recurring Revenue (ARR) reached ¥8.25b (72% of total sales) 


Gross margin in Q4 was 68.2%, up 7.8ppts from the previous year.  


The number of paying customers for the entire group (individuals, sole proprietors and corporations) exceeded 420,000.  


Guidance: FY11/21 revenue guided to a range of ¥14.75-15.75b (30-39% YoY) 





Company Description  Money Forward is a financial platform for both individuals and businesses. The rapid adoption of cloud-based Software as a Service (SaaS) is driving rapid sales growth for business accounting software and, with penetration still at low levels, this trend is expected to continue. Money Forward operates under four main domains:  MF Business (cloud accounting), MF Finance (payment services/fund), MF X (technology solutions) and MF Home (personal financial management).   



Japan Small Cap Growth: Money Forward - Strong Finish to the Year

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.

Freee offers cloud-based online accounting and HR/Payroll software to small and medium businesses (SMBs) in Japan. The company operates a subscription-based revenue model, and the adoption of cloud-based accounting and HR software among SMBs is still at a nascent stage compared to other Western markets.The company’s shares have gained 177% YTD outperforming both Nikkei 225 Index and Topix.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/174/972/original/image_65217007521606637862376.png?1606637863" class="editor-image img-responsive" data-smartkarma-image-id="174972"></figure><div class="content-caption">Source: Cap IQ</div>Our “2021 High Conviction” calls for an upside potential of at least 50%. Given the company is a few quarters away from reporting OP, we believe it is likely that the company’s share price will rally more than 50% over the next 12-months.

Freee offers cloud-based online accounting and HR/Payroll software to small and medium businesses (SMBs) in Japan. The company operates a subscription-based revenue model, and the adoption of cloud-based accounting and HR software among SMBs is still at a nascent stage compared to other Western markets.The company’s shares have gained 177% YTD outperforming both Nikkei 225 Index and Topix.Source: Cap IQOur “2021 High Conviction” calls for an upside potential of at least 50%. Given the company is a few quarters away from reporting OP, we believe it is likely that the company’s share price will rally more than 50% over the next 12-months.

2021 High Conviction - Rapid User Growth Will Set You Freee From Losses

<div>
<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>  Business is the key growth driver. New Prime Minister Suga’s push for greater digitalization underpins long-term market growth. A tight labour market and the need to accommodate more flexible work styles are additional tailwinds for Software as a Service (SaaS) providers, a shift that is far behind other developed markets.  
</li>
<li>
Improving momentum of mid-sized corporate customer acquisition. While Money Forward offers services to both individuals and corporations, it is the Business Segment that is the clear earnings and value driver. An expanding suite of SaaS products is about to be rolled out to mid-sized companies, which will drive higher revenue and gross margins.  
</li>
<li>
Earnings forecasts and valuation. We expect strong top line growth of 43% annually through FY11/22. Recurring revenue from the Business domain will continue to rise as a proportion of consolidated sales. A clearer outlook for growth in this segment combined with rising gross margins is expected to support higher stock market valuations. We have high conviction on Money Forward as we head into the New Year.  
</li>
</ul>
</div>




Money Forward (3994 JP)  Business is the key growth driver. New Prime Minister Suga’s push for greater digitalization underpins long-term market growth. A tight labour market and the need to accommodate more flexible work styles are additional tailwinds for Software as a Service (SaaS) providers, a shift that is far behind other developed markets.  


Improving momentum of mid-sized corporate customer acquisition. While Money Forward offers services to both individuals and corporations, it is the Business Segment that is the clear earnings and value driver. An expanding suite of SaaS products is about to be rolled out to mid-sized companies, which will drive higher revenue and gross margins.  


Earnings forecasts and valuation. We expect strong top line growth of 43% annually through FY11/22. Recurring revenue from the Business domain will continue to rise as a proportion of consolidated sales. A clearer outlook for growth in this segment combined with rising gross margins is expected to support higher stock market valuations. We have high conviction on Money Forward as we head into the New Year.  




2021 High Conviction – Money Forward's Great Leap

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Money Forward (3994 JP)

Freee Placement - Needs to Correct by a Whole Lot More

Freee (4478 JP) (freee) is looking to raise around US$400m via selling a mix of primary and secondary shares. In this note, we'll run the deal...

Sumeet Singh

Japan Small Cap Growth - Freee or Money Forward?

We compare Freee's cloud accounting platform with Money Forwards. We carry out some new analysis to compare both on a like-for-like basis.

Mark Chadwick

Japan Small Cap Growth: Money Forward - Strong Finish to the Year

Money Forward (3994) reported a strong finish to FY11/20, with Q4 revenues up 51% YoY. It is our 2021 High Conviction call and we remain bullish...

Mark Chadwick

2021 High Conviction - Rapid User Growth Will Set You Freee From Losses

Our “2021 High Conviction” calls for an upside potential of at least 50%. Given the company is a few quarters away from reporting OP, we believe it...

Shifara Samsudeen, ACMA, CGMA

2021 High Conviction – Money Forward's Great Leap

Money Forward is a high conviction BUY for 2021. We are bullish on the TAM for cloud-based accounting SaaS and believe Money Forward will see rapid...

Mark Chadwick

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)