External reports (aggregated public sources), Value Investors Club

Value Investors Club

External reports (aggregated public sources)

Equity Bottom-Up

<ul><li>Nextage is a prominent player in Japan’s fragmented used car dealer market</li><li>The company is looking to grow through suburban superstores, similar to CarMax in the US</li><li>Despite recent scandal involving competitors, Nextage is positioned for growth with potential for expansion in Japan's used vehicle market</li></ul><p><em>This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.</em></p>

Nextage is a prominent player in Japan’s fragmented used car dealer marketThe company is looking to grow through suburban superstores, similar to CarMax in the USDespite recent scandal involving competitors, Nextage is positioned for growth with potential for expansion in Japan's used vehicle marketThis content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Japanese Turnaround Situations, Short-Ideas, Azabu Research

Michael Allen

Japanese Turnaround Situations, Short-Ideas

Azabu Research

Azabu Research is a publishing and consulting firm focused on distressed equities in the Japanese market. We specialize in turnaround strategies, corporate combinations, divestitures, and restructuring.

Publisher of the Tokyo Turnaround Letter, which conducts the most thorough research possible of publicly available information, including forensic tests for fraudulent overstatement of assets and understatement of liabilities, as well as rigorous market and industry analysis to assess the underlying strengths of the company’s products or services, the appropriateness of the company’s turnaround strategy, and the skill of its current management team. The average length of a report exceeds 25 pages of text and tables, excluding any disclosures or executive summaries.

We have more than 30 years of experience in applying this process to distressed equities in Japan. Additionally, subscribers have free access to detailed, yet easily navigated earnings models for the target company as well as the top five comparable companies, and unlimited access to the analyst for follow-up questions.

Azabu Research also conducts be-spoke research on a project basis, and provides consulting services to companies looking to restructure, divest, make acquisitions, go public, or improve investor sentiment toward their stock.

Independent Research and Consulting Firm

<ul>
<li>NextAge's stock price dropped nearly 8% on December 5, when the Topix was up, with no apparent news on either the company's website or any local media.</li>
<li>The next day, the Nikkei reported that the Financial Services Agency had raided the company's office after confirming that insurance schemes had been deployed to defraud customers. </li>
<li>This sounds like an old story being leaked by rivals, so we called the company and confirmed: This is most likely old news. </li>
</ul>


NextAge's stock price dropped nearly 8% on December 5, when the Topix was up, with no apparent news on either the company's website or any local media.
The next day, the Nikkei reported that the Financial Services Agency had raided the company's office after confirming that insurance schemes had been deployed to defraud customers. 
This sounds like an old story being leaked by rivals, so we called the company and confirmed: This is most likely old news. 


<ul>
<li>Sales per outlet and gross margin per vehicle were supposed to rise in Q3. Instead, both went south, causing management to lower FY guidance about 50%. </li>
<li>Evidence from the 1st and 2nd quarters that indicated an immanent turnaround simply vanished in the 3rd quarter. </li>
<li>We lower our rating form “Massive Growth at Huge Discount” to “Decent Growth at Reasonable Price, No immanent catalyst.”</li>
</ul>


Sales per outlet and gross margin per vehicle were supposed to rise in Q3. Instead, both went south, causing management to lower FY guidance about 50%. 
Evidence from the 1st and 2nd quarters that indicated an immanent turnaround simply vanished in the 3rd quarter. 
We lower our rating form “Massive Growth at Huge Discount” to “Decent Growth at Reasonable Price, No immanent catalyst.”


<ul>
<li>Simply Wall Street published an article on Aug 20, 2024, suggesting the fair value of Nextage was ¥1,772 or 16% below the previous day's closing price.</li>
<li>Yet, on the Simply Wall Street website’s stock page for Nextage, updated on August 26, they calculate the fair value at ¥5,726, or 189% above the close on Aug 19.</li>
<li>Both cannot be right. Here's an interesting window into how markets mis-price stocks.</li>
</ul>


Simply Wall Street published an article on Aug 20, 2024, suggesting the fair value of Nextage was ¥1,772 or 16% below the previous day's closing price.
Yet, on the Simply Wall Street website’s stock page for Nextage, updated on August 26, they calculate the fair value at ¥5,726, or 189% above the close on Aug 19.
Both cannot be right. Here's an interesting window into how markets mis-price stocks.


Nextage (3186): One Analyst, Two Valuations, Both Wrong

<ul>
<li>NextAge has, in just two short years, moved from number 3 to number 1 in the used car market in Japan. </li>
<li>It’s market share is still less than 7% and we no longer see any meaningful obstacle in the company’s path to 30% share within the next 8 years. </li>
<li>The stock underperformed Topix by 59% following a series of earnings misses, but we think all issues have been resolved. Fair value could be 3x the current price.</li>
</ul>


NextAge has, in just two short years, moved from number 3 to number 1 in the used car market in Japan. 
It’s market share is still less than 7% and we no longer see any meaningful obstacle in the company’s path to 30% share within the next 8 years. 
The stock underperformed Topix by 59% following a series of earnings misses, but we think all issues have been resolved. Fair value could be 3x the current price.


NextAge (3186):  Disruptive Business Model at Massive Discount

Japan

NEXTAGE Co., Ltd. operates a used automobile business. Its main line of business is retail of used domestic cars but it also sells imported cars and SUV/vans. In addition, the company also operates an automobile maintenace business.

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Nextage Co Ltd (3186 JP)

Nextage (3186) - Wednesday, Sep 18, 2024

Nextage is a prominent player in Japan’s fragmented used car dealer market. The company is looking to grow through suburban superstores, similar to...

Value Investors Club

NextAge (3186): Here We Go Again?

NextAge's stock price dropped 8% with no apparent news, but later the Nikkei reported that the Financial Services Agency raided their office for...

Michael Allen

NextAge (3186): What Went Wrong?

Sales per outlet and gross margin were supposed to rise in Q3. Instead, both went south, causing management to lower FY guidance about 50%. A bad...

Michael Allen

Nextage (3186): One Analyst, Two Valuations, Both Wrong

Simply Wall Street published two valuations for Nextage (3186) that were more than 200% apart. We unpack what they got wrong in both cases.

Michael Allen

NextAge (3186): Disruptive Business Model at Massive Discount

Couche tard's bid for 7&i was made possible by a combination of a weak yen and an undervalued stock. NextAge is in a similar situation, but unlike...

Michael Allen

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Nextage (3186) - Wednesday, Sep 18, 2024

Nextage is a prominent player in Japan’s fragmented used car dealer market. The company is looking to grow through suburban superstores, similar to...

Value Investors Club

NextAge (3186): Here We Go Again?

​NextAge's stock price dropped 8% with no apparent news, but later the Nikkei reported that the Financial Services Agency raided their office for...

Michael Allen

NextAge (3186): What Went Wrong?

Sales per outlet and gross margin were supposed to rise in Q3. Instead, both went south, causing management to lower FY guidance about 50%. A bad...

Michael Allen

Nextage (3186): One Analyst, Two Valuations, Both Wrong

Simply Wall Street published two valuations for Nextage (3186) that were more than 200% apart. We unpack what they got wrong in both cases.

Michael Allen

NextAge (3186): Disruptive Business Model at Massive Discount

Couche tard's bid for 7&i was made possible by a combination of a weak yen and an undervalued stock. NextAge is in a similar situation, but unlike...

Michael Allen

NextAge's stock price dropped 8% with no apparent news, but later the Nikkei reported that the Financial Services Agency raided their office for...