In today’s briefing:
- Softbank Group – Fortress Sale Looks Better when Returns and Exchange Rate Considered
- Money Forward (3994) | SaaS Crash Survivor
- Money Forward – Q2 22 Results Reaction: Mixed Results Short of Consensus
- Money Forward: Growth at the Cost of Profits
- Renesas Electronics (6723 JP): Tie-Ups with Tata Group Add to Growth Potential
- Skills Matrix Disclosures Give Us the Opportunity to See Through The “Sham Board, Disclosures”
Softbank Group – Fortress Sale Looks Better when Returns and Exchange Rate Considered
- Softbank sale of Fortress removes an asset that is surplus to requirements at a price that is not as bad as headlines suggest
- A sale to Mubadala at ~$1bn seems low versus the $3.3bn it paid in 2017 but dividend payments and a strong yen mean a c. 70% loss is actually ~10%
- The discount has modestly narrowed recently but VF valuations likely to remain volatile whilst worries on China tech regulation persist
Money Forward (3994) | SaaS Crash Survivor
- Money Forward has one of the largest SaaS/Fintech platforms in Japan and is a key beneficiary of corporate digital transformation
- The stock has fallen 48% year to date as valuations crashed with global SaaS multiples
- We think MF will emerge from downturn in good shape. At 10x EV/Rev, we see 22% upside (maybe even 55%….)
Money Forward – Q2 22 Results Reaction: Mixed Results Short of Consensus
- Q2 financial results were in-line or better than management targets but lagged consensus expectations
- Guidance for Q3 is slightly disappointing with the target range for revenue mostly below expectations whilst promotional and marketing spend continues to expand
- The secular growth story is attractive and operating KPI growth remains robust but investors probably needed more from a stock that trades at 7.5x EV/FY22 rev in a risk-off environment
Money Forward: Growth at the Cost of Profits
- Money Forward (3994 JP) reported 2QFY11/2022 results yesterday. Revenue grew 27.2% YoY to JPY5.08bn (vs consensus JPY5.13bn). Operating losses for the quarter was JPY2.2bn (vs consensus JPY1.9bn).
- MF’s top line growth has been slowing down, and the company continues to spend heavily on advertising to acquire users for its SaaS business.
- Though MF continues to grow its user base, it comes at the cost of profits.
Renesas Electronics (6723 JP): Tie-Ups with Tata Group Add to Growth Potential
- Renesas and Tata Group companies have announced a new partnership in electronic systems and wireless telecom for automotive and other applications.
- Specifically, they are working on the development of electric vehicles and industrial system solutions combining their semiconductor, IT system and manufacturing expertise.
- This should provide a significant boost to their business in India and global markets. As Mio Kato wrote in late April, Renesas – Like We Said… Accelerating
Skills Matrix Disclosures Give Us the Opportunity to See Through The “Sham Board, Disclosures”
- I would like to discuss about the Nikkei article, “More companies disclose skill matrix at June shareholder meetings.”
- On the argument “it is unclear whether it will contribute to improve corporate governance,” the key is whether the company is building corporate governance with quality in rapidly changing days.
- While it’s true that “the content of skill-matrix disclosure varies,” I expect that the process of selecting directors will be improved in the future as issues are clarified through disclosure.
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