Equity Analyst, LightStream Research

Oshadhi Kumarasiri

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.

Event-Driven

<ul>
<li>One of Japan’s largest internet companies, <a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Inc (4755 JP)</a> applied to list its consolidated subsidiary, <a href="https://www.smartkarma.com/entities/rakuten-bank-ltd" target="_blank" data-smartkarma-citation="entities:35638:1" rel="noopener">Rakuten Bank (EBANKZ JP)</a> on the Tokyo Stock Exchange on the 4th of July.</li>
<li>With steady customer account growth mostly assured through leveraging Rakuten’s eco-system with more than 36.0m monthly active users, Rakuten Bank is likely to be valued at over ¥500bn.</li>
<li>Thus, we think the Rakuten Bank IPO could change Rakuten’s fortunes and help the share price bounce back from a 10-year low level.</li>
</ul>


One of Japan’s largest internet companies, Rakuten Inc (4755 JP) applied to list its consolidated subsidiary, Rakuten Bank (EBANKZ JP) on the Tokyo Stock Exchange on the 4th of July.
With steady customer account growth mostly assured through leveraging Rakuten’s eco-system with more than 36.0m monthly active users, Rakuten Bank is likely to be valued at over ¥500bn.
Thus, we think the Rakuten Bank IPO could change Rakuten’s fortunes and help the share price bounce back from a 10-year low level.


Rakuten's Fortunes Could Change With The Rakuten Bank IPO

Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

<ul>
<li>KDDI's entire network was out over the weekend and whilst service has been restored, there are still sporadic complaints </li>
<li>There are near-term risks for higher user churn and lost Q2 revenue, but these are on the margin and downside should be manageable (i.e. no change on company guidance)</li>
<li>Looking past near-term weakness, KDDI remains an attractive defensive play </li>
</ul>


KDDI's entire network was out over the weekend and whilst service has been restored, there are still sporadic complaints 
There are near-term risks for higher user churn and lost Q2 revenue, but these are on the margin and downside should be manageable (i.e. no change on company guidance)
Looking past near-term weakness, KDDI remains an attractive defensive play 


KDDI (Buy) - Network Outage Is a Bad Look but Concerns Should Fade over Time

<ul>
<li>Rakuten's stake in Goto is worth ¥13bn and the IPO of the latter in April and the subsequent value re-rating could provide some (very) modest offset to operating losses</li>
<li>Our forecasts remain unchanged from our mid-month update although we would flag up potential electricity resale upside for Rakuten and the sector from utility resale </li>
<li>We have lowered our price target to ¥1,000 from ¥1,150 but uncertainty over the timing of a Bank listing, mobile recovery and return to profitability keep us cautious</li>
</ul>


Rakuten's stake in Goto is worth ¥13bn and the IPO of the latter in April and the subsequent value re-rating could provide some (very) modest offset to operating losses
Our forecasts remain unchanged from our mid-month update although we would flag up potential electricity resale upside for Rakuten and the sector from utility resale 
We have lowered our price target to ¥1,000 from ¥1,150 but uncertainty over the timing of a Bank listing, mobile recovery and return to profitability keep us cautious


Rakuten (Neutral) - A Surprising Win with Goto Although Its Mobile Challenges Remain

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.

<ul>
<li>Tencent sold US$3bn worth of SEA shares in Jan 22. The rest of its stake was locked up for six months.</li>
<li>The initial stake sale by Tencent didn’t go down too well and the stock is now trading over 63% below the deal price.</li>
<li>In this note, we will talk about the lock-up dynamics and recent updates.</li>
</ul>


Tencent sold US$3bn worth of SEA shares in Jan 22. The rest of its stake was locked up for six months.
The initial stake sale by Tencent didn’t go down too well and the stock is now trading over 63% below the deal price.
In this note, we will talk about the lock-up dynamics and recent updates.


SEA Lock-Up - Tencent Is once Again About to Be Free to Trim Its US$8bn Stake

Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

Independent Leading Corporate Governance Research

Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

<ul>
<li>On June 1, the Nikkei Shimbun carried an article titled "Parent-subsidiary listing, investors cynical about 'governance barrier'". I would like to discuss the issues in the article.</li>
<li>The dissolution of parent-subsidiary listings has accelerated, with approximately 20% of parent-subsidiary listings having been dissolved for 2 years. On the other hand, plans for new subsidiary listings are underway.</li>
<li>Rakuten and Panasonic are telling the market that they are not very good at generating cash flow. Not coincidentally, the stock prices of these companies are suffering from underperformance.</li>
</ul>


On June 1, the Nikkei Shimbun carried an article titled "Parent-subsidiary listing, investors cynical about 'governance barrier'". I would like to discuss the issues in the article.
The dissolution of parent-subsidiary listings has accelerated, with approximately 20% of parent-subsidiary listings having been dissolved for 2 years. On the other hand, plans for new subsidiary listings are underway.
Rakuten and Panasonic are telling the market that they are not very good at generating cash flow. Not coincidentally, the stock prices of these companies are suffering from underperformance.


Listing a Subsidiary May Tell Market that the Parent Company Isn't Confident in Generating Cash Flow

Japan

Rakuten Group, Inc. provides Internet services. The Company offers Internet finance services which including "Rakuten Card" and "Rakuten Bank". Rakuten Group also provides digital content services including electronic book services.

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Rakuten (4755 JP)

Rakuten's Fortunes Could Change With The Rakuten Bank IPO

The market is generally appreciative of Rakuten when its Internet Services performs and is quick to punish it when the Mobile business fails. The...

Oshadhi Kumarasiri

KDDI (Buy) - Network Outage Is a Bad Look but Concerns Should Fade over Time

KDDI's network outage was large-scale but financial and operational impacts should be limited to Q2 and our overall outlook on the stock as an...

Kirk Boodry

Rakuten (Neutral) - A Surprising Win with Goto Although Its Mobile Challenges Remain

The IPO of Goto was a win for Softbank Vision Fund but Rakuten has also come out well surfacing ¥13bn in value from early stage investments and...

Kirk Boodry

SEA Lock-Up - Tencent Is once Again About to Be Free to Trim Its US$8bn Stake

Tencent sold US$3bn worth of SEA shares in Jan 22. The rest of its stake was locked up for six months, which will soon be over.

Sumeet Singh

Listing a Subsidiary May Tell Market that the Parent Company Isn't Confident in Generating Cash Flow

On June 1, the Nikkei Shimbun carried an article titled "Parent-subsidiary listing, investors cynical about 'governance barrier'". I would like to...

Metrical Inc

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