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

<a href="https://www.smartkarma.com/entities/change-inc" target="_blank" data-smartkarma-citation="entities:27414:1" rel="noopener">Change Inc (3962 JP)</a>  offers IT human resource development training services in Japan. The company’s share price has more than quadrupled over the past 12-months to JPY3,420 per share from JPY805 per share a year ago. In this insight, we examine the company’s business model and its financials to understand what has caused the significant rally in the company’s share price.With the spread of COVID-19 in Japan, many companies have started shifting to working from home, whereby the digitisation of businesses has gathered speed.Change Inc has benefitted from this trend leading to a 65.7% YoY increase in the company’s FY09/2020 revenues and a 235.2% increase in operating income.

Change Inc (3962 JP)  offers IT human resource development training services in Japan. The company’s share price has more than quadrupled over the past 12-months to JPY3,420 per share from JPY805 per share a year ago. In this insight, we examine the company’s business model and its financials to understand what has caused the significant rally in the company’s share price.With the spread of COVID-19 in Japan, many companies have started shifting to working from home, whereby the digitisation of businesses has gathered speed.Change Inc has benefitted from this trend leading to a 65.7% YoY increase in the company’s FY09/2020 revenues and a 235.2% increase in operating income.

Change Inc: Digitisation of Public Enterprises in Japan to Drive Earnings

Quality-first, Business-perspective Strategy, Urbem (HK) Limited

Steven Chen

Quality-first, Business-perspective Strategy

<ul>
<li>Founder-led Technology One has the capability to earn superior returns on capital while expanding predictably and profitably alongside a massive runaway, in our opinion.</li>
<li>Although the share seems a bit elevated at the moment, we feel that the name should be worth following among long-term, quality-focused investors who can wait patiently.</li>
</ul>


Founder-led Technology One has the capability to earn superior returns on capital while expanding predictably and profitably alongside a massive runaway, in our opinion.
Although the share seems a bit elevated at the moment, we feel that the name should be worth following among long-term, quality-focused investors who can wait patiently.


Technology One: Our Top SaaS Pick From APAC

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

<ul>
<li>Last week, Japanese ERP and digital consulting firm oRo reported its Q3 results demonstrating weakness across both business segments;</li>
<li>The market sold off upon the "bad" news;</li>
<li>At the same time, long-term investors may want to figure out whether there is a secular deterioration of business fundamentals or just a temporary glitch.</li>
</ul>


Last week, Japanese ERP and digital consulting firm oRo reported its Q3 results demonstrating weakness across both business segments;
The market sold off upon the "bad" news;
At the same time, long-term investors may want to figure out whether there is a secular deterioration of business fundamentals or just a temporary glitch.


<a href="https://www.smartkarma.com/entities/oro-co-ltd" target="_blank" data-smartkarma-citation="entities:26941:1" rel="noopener">oRo Co Ltd (3983 JP)</a> reported its 3Q2020 results today which saw 22.8% YoY decline in revenue while OP for the quarter dropped 32.1% YoY during the quarter. Both business segments saw YoY decline in revenue during the period. The company’s revenue and OP both fell below consensus estimates by 13.6% and 15.8% respectively.In our previous insight on the company <a href="https://www.smartkarma.com/insights/oro-another-stock-capable-of-making-pm-suga-s-digitalisation-dream-a-real" target="_blank" data-smartkarma-citation="insights:43954" rel="noopener">oRo: Another Stock Capable of Making PM Suga’s Digitalisation Dream a Real</a> , we highlighted that the company’s revenues and margins are impacted by the ongoing Covid-19 pandemic. During the company’s 1H2020 earnings announcement, the company mentioned that the business conditions have recovered since June, however, 3Q2020 results show that the conditions have not yet improved as evident by the QoQ drop in revenue and margins.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/171/157/original/image_16203616221605205781684.png?1605205782" class="editor-image img-responsive" data-smartkarma-image-id="171157"></figure><div class="content-caption">Source: Company Disclosures</div>

oRo Co Ltd (3983 JP) reported its 3Q2020 results today which saw 22.8% YoY decline in revenue while OP for the quarter dropped 32.1% YoY during the quarter. Both business segments saw YoY decline in revenue during the period. The company’s revenue and OP both fell below consensus estimates by 13.6% and 15.8% respectively.In our previous insight on the company oRo: Another Stock Capable of Making PM Suga’s Digitalisation Dream a Real , we highlighted that the company’s revenues and margins are impacted by the ongoing Covid-19 pandemic. During the company’s 1H2020 earnings announcement, the company mentioned that the business conditions have recovered since June, however, 3Q2020 results show that the conditions have not yet improved as evident by the QoQ drop in revenue and margins.Source: Company Disclosures

ORo: Earnings Growth Hasn’t Resumed Yet but We Are Looking for Entry Points

Japan

oRo Co., Ltd. develops and provides enterprise planning software. The Company also offers web based marketing services.

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oRo Co Ltd (3983 JP)

Change Inc: Digitisation of Public Enterprises in Japan to Drive Earnings

Change Inc's share price has more than quadrupled over the past 12-months to JPY3,420 per share from JPY805 per share a year ago and we examine...

Shifara Samsudeen, ACMA, CGMA

Technology One: Our Top SaaS Pick From APAC

Although the share seems a bit elevated at the moment, we feel that Technology One should be worth following among long-term, quality-focused...

Steven Chen

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

ORO: Our Takeaways From Q3 Results

When the market sells off upon "bad" news, long-term investors may want to figure out whether there is a secular deterioration or just a temporary...

Steven Chen

ORo: Earnings Growth Hasn’t Resumed Yet but We Are Looking for Entry Points

oRo reported its 3Q2020 results today which saw 22.8% YoY decline in revenue while OP for the quarter dropped 32.1% YoY during the quarter.

Shifara Samsudeen, ACMA, CGMA

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