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

Steven Chen

Quality-first, Business-perspective Strategy

Thematic (Sector/Industry)

<ul>
<li>The market has been so diligently hitting new highs this year, which may surprise many investors and annoy some like us;</li>
<li>Of course, there is nothing we can do about this, while, on the positive side, we do know what to buy in case of a more favorable market condition;</li>
<li>We put together our wish list for the new year containing top picks that we dream of buying a lot of when their valuations have turned south vastly.</li>
</ul>


The market has been so diligently hitting new highs this year, which may surprise many investors and annoy some like us;
Of course, there is nothing we can do about this, while, on the positive side, we do know what to buy in case of a more favorable market condition;
We put together our wish list for the new year containing top picks that we dream of buying a lot of when their valuations have turned south vastly.


Equity Bottom-Up

<ul>
<li>Japan's largest M&amp;A advisor for SMEs reported its Q2 results for the current FY ending March 2021;</li>
<li>The company continued to underperform its major peers in growth throughout the pandemic;</li>
<li>The economic moat remained intact, in our opinion, and venturing businesses kept booming;</li>
<li>We see the decline in volume as a major risk to our previous valuation assumption and will keep a close eye in this regard.</li>
</ul>


Japan's largest M&amp;A advisor for SMEs reported its Q2 results for the current FY ending March 2021;
The company continued to underperform its major peers in growth throughout the pandemic;
The economic moat remained intact, in our opinion, and venturing businesses kept booming;
We see the decline in volume as a major risk to our previous valuation assumption and will keep a close eye in this regard.


Nihon M&A Center: Our Takeaways From The Q2 Results

<ul>
<li>Without a doubt, Nihon M&amp;A Center offers a lot of qualities that we like;</li>
<li>However, the valuation should discourage many alpha-seeking investors, including us;</li>
<li>The high price multiple resonates with the low-total-return estimate based on our DCF analysis.</li>
</ul>


Without a doubt, Nihon M&amp;A Center offers a lot of qualities that we like;
However, the valuation should discourage many alpha-seeking investors, including us;
The high price multiple resonates with the low-total-return estimate based on our DCF analysis.


Nihon M&A Center: Superior Quality But Hefty Valuation

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

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.

<div><p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p></div><div>
<p>Our best and worst pair is child apparel specialist <a href="https://www.smartkarma.com/entities/nishimatsuya-chain-co-ltd" target="_blank" data-smartkarma-citation="entities:13375:1" rel="noopener">Nishimatsuya Chain (7545 JP)</a> and food ingredients maker <a href="https://www.smartkarma.com/entities/riken-vitamin-co-ltd" target="_blank" data-smartkarma-citation="entities:20980:1" rel="noopener">Riken Vitamin (4526 JP)</a>. </p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/162/836/original/2020-10-01_06-09-42.png?1601500212" class="editor-image img-responsive" data-smartkarma-image-id="162836"></figure><div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/162/837/original/2020-10-01_06-13-47.png?1601500441" class="editor-image img-responsive" data-smartkarma-image-id="162837"></figure><p>Source for all charts &amp; tables: Japan Analytics</p>
</div>
<hr>
<div><p style="text-align: center;"><strong>DAILY STATS</strong></p></div>
<hr>
<div><p style="text-align: center;"><strong>20 Quarterly Results</strong></p></div>
<div><ul style="list-style-type: disc;">
<li><p><strong>Results Score:</strong> 30% Positive / 10% Neutral / 60% Negative</p></li>
<li><p><strong>Average Results Score Change:</strong> -1.9 points</p></li>
<li><p><strong>Average % Change in Revenue:</strong> -7.5% Quarter YoY / -9.9% Rolling TTM YoY </p></li>
<li><p><strong>Average Operating Profit Margin Change:</strong> -10.1ppt</p></li>
<li><p><strong>Percentage Making Quarterly Losses:</strong> 20%</p></li>
</ul></div>
<hr>
<div><p style="text-align: center;"><strong>15 Annual • 7 Interim Forecasts/Revisions</strong></p></div>
<div><ul style="list-style-type: disc;">
<li><p>Annual Forecast/Revision Score: 35% Positive / 6% Neutral / 59% Negative</p></li>
<li><p>Interim Forecast/Revision Score Change: 60% Positive / 0% Neutral / 40% Negative</p></li>
<li><p>Average Forecast/Revision Score Change: +0.6 points</p></li>
</ul></div>
</div>

• BEST &amp; WORST •
Our best and worst pair is child apparel specialist Nishimatsuya Chain (7545 JP) and food ingredients maker Riken Vitamin (4526 JP). 

Source for all charts &amp; tables: Japan Analytics


DAILY STATS

20 Quarterly Results

Results Score: 30% Positive / 10% Neutral / 60% Negative
Average Results Score Change: -1.9 points
Average % Change in Revenue: -7.5% Quarter YoY / -9.9% Rolling TTM YoY 
Average Operating Profit Margin Change: -10.1ppt
Percentage Making Quarterly Losses: 20%


15 Annual • 7 Interim Forecasts/Revisions

Annual Forecast/Revision Score: 35% Positive / 6% Neutral / 59% Negative
Interim Forecast/Revision Score Change: 60% Positive / 0% Neutral / 40% Negative
Average Forecast/Revision Score Change: +0.6 points



🇯🇵 JAPAN • Results & Revisions 09/​​​30 - Nishimatsuya Chain, Adastria, Strike, Riken Vitamin

<ul>
<li>One of our previous articles briefly touched upon the M&amp;A market for Japanese SMEs;</li>
<li>Given the promising prospect of the space, we would like to explore and compare the top three players;</li>
<li>Our evaluation is conducted from both business fundamentals and share valuation perspectives.</li>
</ul>


One of our previous articles briefly touched upon the M&amp;A market for Japanese SMEs;
Given the promising prospect of the space, we would like to explore and compare the top three players;
Our evaluation is conducted from both business fundamentals and share valuation perspectives.


A Deeper Look into Japan's SME M&A Advisory Boutiques

Japan

Strike Company, Limited is mainly engaged in M&A intermediary services for various business types.  The Company also offers advisory services.

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Strike (6196 JP)

Our Wish List for 2021

We put together our wish list for 2021 containing top picks that we dream of buying a lot of when their valuations can turn south vastly.

Steven Chen

Nihon M&A Center: Our Takeaways From The Q2 Results

Despite the formidable economic moat, superior profitability, and booming venturing businesses, we would stay cautious concerning the near-term...

Steven Chen

Nihon M&A Center: Superior Quality But Hefty Valuation

The high price multiple resonates with the low-total-return projection based on our DCF analysis and should discourage many alpha-seeking investors.

Steven Chen

🇯🇵 JAPAN • Results & Revisions 09/30 - Nishimatsuya Chain, Adastria, Strike, Riken Vitamin

• BEST & WORST • Our best and worst pair is home centre Keiyo (8168 JP) and the department store J Front Retailing (3086 JP) although the...

Campbell Gunn

A Deeper Look into Japan's SME M&A Advisory Boutiques

It is not difficult to understand the promising prospect of the space, driven by a combination of multiple structural shifts in the country: e.g.,...

Steven Chen

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Our Wish List for 2021

We put together our wish list for 2021 containing top picks that we dream of buying a lot of when their valuations can turn south vastly.

Steven Chen

Nihon M&A Center: Our Takeaways From The Q2 Results

Despite the formidable economic moat, superior profitability, and booming venturing businesses, we would stay cautious concerning the near-term...

Steven Chen

Nihon M&A Center: Superior Quality But Hefty Valuation

The high price multiple resonates with the low-total-return projection based on our DCF analysis and should discourage many alpha-seeking investors.

Steven Chen

🇯🇵 JAPAN • Results & Revisions 09/​​​30 - Nishimatsuya Chain, Adastria, Strike, Riken Vitamin

• BEST & WORST • Our best and worst pair is home centre Keiyo (8168 JP) and the department store J Front Retailing (3086 JP) although the...

Campbell Gunn

A Deeper Look into Japan's SME M&A Advisory Boutiques

It is not difficult to understand the promising prospect of the space, driven by a combination of multiple structural shifts in the country: e.g.,...

Steven Chen

🇯🇵 JAPAN • Results & Revisions 09/30 - Nishimatsuya Chain, Adastria, Strike, Riken Vitamin