In today’s briefing:
- Thinking About Japanese Banks – Go Big, Go Small, Go Insurance
- Mitsui & Co To Buy Out Relia (4708) – Moshi Moshi Is TOO CHEAP
- Bond Watch – Will Japan Pull the Rug from Under the Yield Curve Control?
- Money Forward (3994) | Corporate ARR +55% YoY
- A Few Students Were Motivated by Assignments from Their Teachers, and They Performed Differently
- Interiors Long-Term Growth in Japan a Plus for Nitori
- Money Forward – Q4 Results Reaction: Encouraging Signs of User Growth and Monetization
Thinking About Japanese Banks – Go Big, Go Small, Go Insurance
- Japanese Banks have had a good run recently. From the day before the BOJ changed the 10yr yield target in December in its YCC programme to today, +30% vs TOPIX.
- The question is how that is spread out. There are lots of banks. Some are cheaper than others. Some are better than others. Can we draw conclusions to trade better?
- If you are looking at Japanese Banks to play a change in BOJ policy when Governor Kuroda’s term ends shortly, there are definitely conclusions one can draw. I offer comments.
Mitsui & Co To Buy Out Relia (4708) – Moshi Moshi Is TOO CHEAP
- Mitsui&Co has been in Relia Inc (4708 JP) for a long time. As part of investing in BPO/RPA/AI services, they are buying out Relia, merging it with a KDDI sub.
- They are buying it at an all-time high, and a 50% premium. Looks nice. But it’s not nice enough.
- This is one of those times when I can reiterate, Japan Needs More Cowbell.
Bond Watch – Will Japan Pull the Rug from Under the Yield Curve Control?
- Markets price more than 35 bps ahead of the BoJ meeting. Is that too much?
- BoJ is not scared of inflation. They fear a lack of market functioning in JGB markets.
- JPY may be overbought into the meeting, while USTs are oversold
Money Forward (3994) | Corporate ARR +55% YoY
- Money Forward Q4 sales rose +42% YoY to Y6.2bn driven by corporate ARR (+55% YoY)
- Full year revenue guidance for FY11/23 is in line with consensus
- We still see over 20% upside in the stock if the company hits the top end of revenue guidance
A Few Students Were Motivated by Assignments from Their Teachers, and They Performed Differently
- Forcing companies to submit ROE targets as measure to counter the fact that half of companies languish below 1x P/B is like a teacher asking students to submit an assignment.
- If that motivates the management, good for them. However, in our experience, only a small percentage of students are motivated by the teacher’s words and see their performance improve.
- If companies are asked to submit ROE targets, they shouldn’t simply meet them by changing capital structure through shareholder returns, but should achieve them through investments for future earnings growth.
Interiors Long-Term Growth in Japan a Plus for Nitori
- Growth in the Japanese home interiors and furniture markets is set to continue long-term.
- At present, just a handful of brands have any major presence led by Nitori Holdings (9843 JP) which continues to expand market share.
- With multiple formats, Nitori looks set to continue to dominate but faces competition from unlikely quarters, especially Yamada Denki (9831 JP).
Money Forward – Q4 Results Reaction: Encouraging Signs of User Growth and Monetization
- Q4 revenue growth of 43% was driven by growth in sales to corporates (+54%) on new user growth, customer mix, and upside from cross-selling
- EBITDA erosion improved from the peak losses of Q3 and whilst it has not issued full-year FY23 guidance, it says it expects steady improvements as the year goes on
- This was a good quarter but we expect that is largely reflected in the share price after a 61% run over the last six months
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