In today’s briefing:
- Rakuten: Turning a Corner
- Rorze (6323) | Japan Small Cap Winner
- Softbank Group (9984 JP) 1Q 22 Results – Focus on Fintech and LatAm Holdings
Rakuten: Turning a Corner
- The biggest drawback of Rakuten Inc (4755 JP)’s share price momentum over the last few years was its Mobile business’ losses.
- However, based on Rakuten’s projections, the Mobile business could get close to breaking even by Q4 2023.
- With narrowing Mobile losses and outperforming E-commerce and Fintech, we think it is unreasonable for Rakuten to trade at a 40% discount to the bottom-end of the long-term trend channel.
Rorze (6323) | Japan Small Cap Winner
- We are Bullish on Rorze, a global leader in ultra-clean wafer substrate handling solutions.
- We believe that Rorze is well placed to monetise the long-term growth in semiconductor demand and WFE spend
- The stock has recently underperformed its peer group and valuations collapsed. We see almost 100% upside potential based on a 14x target multiple
Softbank Group (9984 JP) 1Q 22 Results – Focus on Fintech and LatAm Holdings
- Softbank Group’s fintech portfolio companies – and especially those in the largely Softbank-funded Vision Fund 2 – were a meaningful part of the group’s large loss in fiscal 1Q 2022
- However, Klarna and eToro “down rounds” – concluded in early July – do not seem to have been incorporated into June-end losses; the Vision Funds are absorbing the LatAm Fund
- Despite the public markets rebound, Softbank faces multiples challenges, and it is hard to find positives in the Alibaba derivatives contracts
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